England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY & CONSTRUCTION COURT

		Royal Courts of Justice Rolls Building London, EC4A 1NL
		16/10/2015

 


Mr Justice Fraser:

Introduction to the proceedings

1. This action concerns a building at 50 Finsbury Square, London EC2 ("the Building"). The Claimant, Bloomberg LP ("Bloomberg") is the tenant of the Building, and is a limited partnership incorporated in Delaware in the United States. The First and Second Defendants (to whom collectively I shall refer as "Sandberg") are an engineering consultancy partnership, and the limited liability partnership that Bloomberg claims later became liable for its acts after a re-organisation of the partnership's affairs. On this application, there is no difference of interest between them, they are jointly represented, and nothing turns on the date that any assumption of liability by the Second Defendant for the First Defendant's acts occurred. The Third Defendant ("Buro Happold") is an engineering company that was employed by the Standard Life Assurance Company Ltd ("Standard Life"), the freehold owners of the Building, to advise on certain aspects of works at the Building.
2. The Part 20 Defendant, Malling Pre-cast Ltd ("Malling") were contractors who designed, fabricated and installed stone cladding to the Building. After Bloomberg issued proceedings against all three defendants, Sandberg issued Part 20 proceedings against Malling making a claim for contribution. This judgment concerns an application issued by Malling seeking to strike out those Part 20 proceedings, alternatively summary judgment in its favour in the Part 20 proceedings, for reasons that are explained further below.
3. This action is at an early stage. Pleadings have been served in the main action, but apart from the Part 20 Claim Form dated 19 May 2015 by Sandberg against Malling, the only other pleadings in the Part 20 proceedings are the Particulars of Part 20 Claim served by Sandberg against Malling. There is no document yet served formally by Buro Happold against Malling, although Ms Sinclair QC appeared for Buro Happold on Malling's application against Sandberg, served a skeleton argument and made submissions. The points that arise against the Sandberg Part 20 claim by Malling would also arise against Buro Happold, were Buro Happold to issue its own Part 20 proceedings against Malling and Malling to take the same points (which it almost certainly would). Also, Malling had issued its application against Sandberg before Buro Happold had served its defence in the main action, and before it had issued any Part 20 proceedings against Malling. Buro Happold therefore wished to address the Court on the points that arose upon this application, as identical issues would arise in its own Part 20 proceedings against Malling, were it to issue them. There was no opposition to Buro Happold's appearance by either Malling or Sandberg, although certain contingent submissions were made at the beginning of the hearing of the application on costs. Full argument on any costs orders will take place once the outcome of the Malling application is known upon the handing down of this judgment, and so I declined to state in advance what costs orders might be made between Malling and Buro Happold, although I was invited at the commencement of the hearing to do so. I am grateful to the assistance of all three leading counsel for their written and oral arguments.
4. Because the actions are at such an early stage – no case management conference has yet been heard, there have been no directions and there is no witness evidence – the facts are, although not currently controversial, made by way of assumption at this stage. The real issue or issues on this application arise as a result of an express contract term in the collateral warranty executed by Malling in Bloomberg's favour, which I explain in greater detail in paragraph 8 below.
5. Bloomberg and Standard Life entered into a lease dated 19 September 2000 whereby Bloomberg agreed to become the tenant of the Building. That lease was preceded by an agreement for lease between the same parties dated 14 June 2000, pursuant to which Standard Life agreed to perform certain works to the Building (although the works must have been already underway by then). Practical Completion of those works was achieved on 29 August 2000. Malling performed cladding works for Standard Life as part of those wider works. Malling was a trade contractor and the method of procurement was that of management contracting; the construction manager appointed by Standard Life was Schal. The trade contract entered into by Malling with Standard Life was dated 20 December 1999, and included stone cladding and precast concrete works. The trade contract required Malling to furnish warranties, and on 20 December 2000 Malling entered into a warranty with Bloomberg ("the Malling Warranty"). By this mechanism the ultimate tenant of the Building obtained direct rights of action against the trade contractors in certain circumstances.
6. The main action has arisen because there has been a failure that has led to a Cladding Tile falling from the Building to the street below, and both immediate remedial works, and further works, became necessary as a result of this. Large pieces – indeed, any pieces – of cladding falling to the ground from the exterior of any building is a scenario that obviously should not occur. In summary, the history is as follows. In 2001 two soffit Cladding Tiles fell from the exterior of the Building to the street below. This led to an investigation and remedial works which were performed in 2001 and 2002. Sandberg was involved in these, reviewed the fixings used as part of the Cladding system at the Building, and came to certain conclusions in a report of 29 June 2001. The conclusions, which included one that the Cladding Tiles were "potentially unsafe", led to a meeting between all the parties (including the parties to the Part 20 proceedings) which was held on 25 October 2001. A final report was later produced by Sandberg on 16 January 2002, and as a result of this investigation certain remedial works were performed to the cladding by Malling. These were performed between 19 October 2001 and 18 February 2002. On 4 March 2002 Sandberg entered into a written contract (executed as a deed) with Standard Life to provide façade consultancy services in connection with the performance and completion of the works at the Building. On 8 April 2002, pursuant to a requirement to do so in that appointment, Sandberg executed a warranty with Bloomberg warranting their performance under the appointment with Standard Life. In June 2002 Buro Happold produced a Condition Survey. Buro Happold had already, in a deed of warranty dated 20 December 2000, itself warranted to Bloomberg performance of its duties in respect of the services it had performed for Standard Life.
7. What then occurred relevant to the proceedings is that on 8 July 2013 in the early hours, a soffit Cladding Tile (or parts of it) fell to the pavement from a 7^th level Spandrel Beam on the Moorgate elevation of the Building. This tile was sizeable. Needless to say, investigations followed and Bloomberg (which has certain obligations of repair and reinstatement under the lease in any case) performed temporary works to make the Building safe, the cost of which is pleaded as being approximately £470,000. Further works are required and the estimated budget cost of those further works is pleaded in the sum of £2 million.

The application

8. Bloomberg issued separate proceedings against each of Sandberg, Buro Happold and Malling. The Claim Form in each is dated 29 November 2013. Bloomberg's action against Malling has not proceeded, due to reliance by Malling upon clause 6 of the Malling Warranty that had been executed by Malling in Bloomberg's favour, which Malling argued in correspondence (in an argument accepted by Bloomberg) as constituting a complete contractual defence to any claim against it. It is that provision which forms the basis of this application by Malling. Clause 6 states as follows, under the heading "Limitation":

"Notwithstanding the date hereof no proceedings shall be commenced against the Contractor after the expiry of twelve years from the date of issue of the last written statement by the Client that practical completion of the Project has been achieved under the Contract".

It is common ground that the date to which the phrase "the date of issue of the last written statement by the Client that practical completion of the Project has been achieved" refers is 29 August 2000.

9. The claim brought by Sandberg against Malling (and the claim broadly proposed to be brought by Buro Happold against Malling, should this application by Malling fail) is one of contribution in the following terms, taken from the Part 20 Claim Form:

"….notwithstanding its position on liability (which remains denied) Sandberg claims a contribution from Malling pursuant to the Civil Liability (Contribution) Act 1978. In addition to carrying out that work [the works prior to Practical Completion] Malling was also asked to review it at the same time as Sandberg's review. Malling also executed a collateral warranty benefitting Bloomberg. In these proceedings, Sandberg contends (1) Malling's fixings were defective both in design and workmanship; (2) Malling's review was inadequate and it provided incorrect information; (3) Malling was in breach of its obligations under the collateral warranty and its tortious duty to Bloomberg and (4) (if, contrary to Sandberg's Defence, Bloomberg establishes liability against Sandberg), Malling is liable to Bloomberg for the same damage".

10. There are therefore claims both for breach of duty and breach of the terms of the collateral warranty alleged against Malling. Malling brings its current application under CPR Part 3.4(2)(a) and CPR Part 24.2. The test for the Court to apply under each of these two rules is different. Under the former, a statement of case (in this instance, the Part 20 Claim Form) must disclose no reasonable grounds for bringing the claim. This rule is to be used when, even if true, the facts do not disclose a legally recognisable claim. The Court must be certain the claim is bound to fail. Under the latter rule, a party is entitled to summary judgment on the whole of a claim or on a particular issue if it considers that (a) there is no real prospect of the other party succeeding on that claim or issue, or (b) there is no other compelling reason why the case or issue should be disposed of at a trial. Here, Malling seeks summary judgment on the whole of the Part 20 proceedings.
11. Mr Bartlett QC for Malling frankly accepted that the test for the application to succeed under CPR Part 3.4(2)(a) was a higher test than that for summary judgment under CPR Part 24.2, but said that there was no practical difference in this case because the fundamental issue was the construction of a clause in a contract. However, he did accept that it was more appropriate for Malling to obtain summary judgment against Sandberg than to strike out Sandberg's Part 20 proceedings as not disclosing a legally recognisable claim, which requires the Court to be certain that the Part 20 claim was bound to fail. This was sensible and in my judgment correct. The Part 20 proceedings are framed in a conventional way and certainly disclose a "legally recognisable" claim. It would be difficult for the Court, at this stage and on what is sparse material, to conclude with certainty that the Part 20 claim was bound to fail. I therefore turn to the substantive arguments on the application to reach conclusions applying the test for summary judgment. If Malling fails to demonstrate that the part 20 claimant has no reasonable prospects of success, on the whole claim or on the issues, then it will not succeed on its application for summary judgment, nor will it succeed on its application to strikeout the entire Part 20 proceedings under CPR Part 3.4(2)(a). The arguments by Malling are however exactly the same under both rules; at times, all the parties proceeded in the same way as though the application was the trial of a preliminary issue on a point of law. That does not, in my view, make any difference in the sense that my decisions on the points that were in fact argued would be the same. However, this judgment is a ruling upon a summary judgment application.
12. Mr Bartlett QC also wished to preserve, for potential future argument at a later date, an argument that Malling was not "liable in respect of the same damage" and that this was another reason why the contribution proceedings could not proceed. Legal argument on the "same damage" issue therefore formed no part of the grounds upon which he relied in this application.

The issues on the application

13. Malling relies on the wording of clause 6 (set out in paragraph 8 above) as giving it a complete defence to any contribution proceedings at all by any other party in these proceedings. The point of construction is said to be whether the words "no proceedings shall be commenced against the Contractor" are taken to mean either that no proceedings shall be commenced by Bloomberg (the position adopted by Sandberg), or whether "no proceedings" should be taken to include proceedings by any other party, including contribution proceedings, against Malling. This is Malling's argument and, if accepted, Malling submit that the contractual term would then mean that no contribution proceedings could proceed in this matter, whether commenced by Sandberg or any other party, because the Part 20 proceedings were commenced after 28 August 2012. The primary question for the Court is framed in Malling's skeleton argument as being "whether Sandberg can rely on s1(3) of the Civil Liability (Contribution) Act 1978 to override Malling's contractual defence". There is then said to be a secondary question, which is (if the answer to the primary question is that Sandberg can bring contribution proceedings), "whether such reliance can extend to damage which occurred after the cut-off date". The "cut-off date" is an expression adopted in the skeleton arguments and at the hearing, and refers to the date 12 years after Practical Completion, namely 28 August 2012.

Outline of submissions

14. Mr Bartlett QC amplified his written skeleton with elegant oral submissions which approached the matter in the following way:

1) Due to the correct construction of clause 6 of the Malling Warranty, there was no basis for any claim against Malling by any other party being considered as falling within the scope of section 1(3) of the Civil Liability (Contribution) Act 1978 ("the Act") at all;

2) If that were wrong, and the Act did apply, then the correct construction of clause 6 of the Malling Warranty meant that such proceedings could not succeed because that was the effect in law of clause 6 of the contract agreed between Malling and Bloomberg in the Malling Warranty;

3) The doctrine of contra proferentem could and should be used by the Court to assist it in the process of construing the clause and its effect. Any doubt should be resolved in Malling's favour as a result;

4) There were policy reasons that meant that any party in the position of Malling was entitled to know the date after which its potential liability for works would come to an end. There was only an obligation upon Malling to keep insurance in place up to the cut-off date. There was also a clear policy in the Act that respected contractually agreed limits, and the Act did not disturb or override contractually agreed rights or defences.

5) These matters taken together meant that no contribution proceedings against Malling could or should succeed or even proceed, and this was for similar reasons that had led to the acceptance by Bloomberg that it could not succeed in its direct claim against Malling.

6) If, contrary to these points, contribution proceedings against Malling could proceed, there was no prospect of any recovery by Sandberg for contribution from Malling for any damage that occurred after 28 August 2012, due to reasons of limitation. The Court could and should make a declaration to this effect at this stage of the action.

15. The primary grounds of opposition to the arguments advanced by Malling were from Sandberg, for whom Mr Patten QC appeared. He submitted that the effect of clause 6 of the Malling Warranty was to act as a procedural, rather than a substantive, bar of the cause of action against Malling that Bloomberg would have. As a matter of statutory construction therefore, any remedy that Bloomberg had was barred from proceeding, but Bloomberg's underlying substantive right was not extinguished. The proviso in the second part of section 1(3) of the Act therefore was not available to assist Malling in its objective on the application.
16. Ms Sinclair QC for Buro Happold adopted the submissions of Mr Patten QC, but also approached the matter from a different point of view. She counselled caution in accepting some of Malling's submissions regarding "commercial purpose" in the absence of any evidence of the factual matrix regarding formation of the contract terms. This was because in the Buro Happold Warranty that was executed by Buro Happold in Bloomberg's favour, there was no equivalent of clause 6 to be found. She also submitted that there were other contractual routes that could have been adopted at the time by Malling, had the purpose for which Malling now contends clause 6 to be aimed at were intended, in particular a so-called "net contribution clause". She submitted that Malling, in its alternative arguments for a declaration, failed properly to distinguish between "damage" and "damages".

Analysis

17. Clause 1(1) of the Act provides as follows:

"Subject to the following provisions of this section, any person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with him or otherwise)".

Clause 1(3) provides:

"A person shall be liable to make contribution by virtue of subsection (1) above notwithstanding that he has ceased to be liable in respect of the damage in question since the time when the damage occurred, unless he ceased to be liable by virtue of the expiry of a period of limitation or prescription which extinguished the right on which the claim against him in respect of the damage was based".

18. The Act provides a mechanism for a party, liable for damages to another (here, Bloomberg), to recover some or all of those damages from another party also liable for the same damage. It militates against the common law rule that a party responsible (with others) for loss might find itself saddled with liability for the whole loss. As one can see from the date of the statute, it has been in force for some decades.
19. There is no difference between the parties, as one would not expect there to be, regarding the principles to be adopted in the process of contractual construction. These are set out in Rainy Sky SA v Kookmin Bank [2011] UKSC 50, [2011] 1 WLR 2900 and more recently restated in Arnold v Britton [2015] UKSC 36. In that case, Lord Neuberger, with whom Lord Sumption and Lord Hughes agreed, emphasised seven factors^[1] in that case concerning construction of contract terms. The first three of those factors are notable in the context of this application.
20. Firstly, commercial common sense and surrounding circumstances, which are relied upon in the cases as aids to construction:

"…should not be invoked to undervalue the importance of the language of the provision which is to be construed. The exercise of interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save perhaps in a very unusual case, that meaning is most obviously to be gleaned from the language of the provision".

Lord Neuberger explained that this is entirely understandable, given that the parties have control over the language they use. Secondly, the less clear the centrally relevant words to be interpreted are, the more ready the court will be to depart from their natural meaning. Poor drafting is more likely to lead to a situation where the court will intervene. Thirdly, commercial common sense is not to be invoked retrospectively. Some contract terms do not lead to happy results for one party; sometimes, they may lead to disastrous results. However, retrospection is to be avoided.

21. Malling argues that, applying the relevant process of construction to clause 6, "no proceedings" must mean – indeed, in commercial common sense terms, it is said by Malling it can only be taken to mean – proceedings by any other party, not simply proceedings by Bloomberg. This matches, it is said, the obligation upon Malling to insure for the like period. The purpose, Malling submits, of the provision is that there would come a point in time at which Malling would know it was no longer liable to proceedings arising from the works performed on the Building.
22. Given there is no evidence yet available, there is no real explanation or background or analysis of the "factual matrix" at the time that the clause in question or the Malling Warranty as a whole – or the trade contract itself – was concluded. However, Mr Bartlett QC, again frankly, submitted that there was no evidence to suggest that anyone at the time of drafting or agreeing the clause (or the rest of the Malling Warranty) considered contribution at all, or the effect of the agreement on the underlying legal rights of Bloomberg. As he put it "it would not cross anyone's mind in a month of Sundays that there was any difference between rights and remedies", by which he meant the legal effect of what the agreement would in fact achieve, in law, on Bloomberg's rights and therefore on potential future contribution claims after the "cut off date" were concerned. That may be correct, but does not of itself have any effect upon what the true nature of the agreement is with respect to the underlying potential legal rights. It is the legal effect of the agreement upon the nature of Bloomberg's underlying legal right or rights that is important for the purpose of considering contribution and the Act. It does not matter, in my judgment, whether the contracting parties at the time addressed their minds to the potential contribution position many years in the future or not. The contract term must first be analysed, and then its legal effect considered upon Bloomberg's underlying legal right.
23. Turning to Mr Bartlett QC's reliance upon the contra proferentem rule, I bear in mind the judgment of Lord Neuberger MR in K/S Victoria Street v House of Fraser (Stores Management) Ltd [2012] 2 WLR 470, 498 when he said^[2]:

"...such rules are rarely if ever of any assistance when it comes to construing commercial contracts. Quite apart from raising abstruse issues as to who is the proferens (and, in particular, whether the issue turns on the precise facts of the case or hypothetical analysis) "rules" of interpretation such as contra proferentem are rarely decisive as to the meaning of any provisions of a commercial contract. The words used, commercial sense, and the documentary and factual content, are, and should be, normally enough to determine the meaning of a contractual provision".

24. Here it is hotly disputed on this application which of the parties would be the proferens. It is hard to see, of the different candidates, how it could be Sandberg. Malling submits that it is Malling who is entitled to the benefit of the doctrine, because of the standard terms of the warranties provided by all the trade contractors. At this stage of the action, it is difficult to see that such a conclusion could be reached on a summary judgment application without evidence to that effect, but in any event, I do not consider that the doctrine would assist Malling. I find application of the doctrine to be of no assistance whatsoever, for the reasons set out in K/S Victoria Street v House of Fraser (Stores Management) Ltd. However, even were I to attempt to apply the doctrine, it would be practically impossible because the absence of the same clause in the Buro Happold Warranty means that at this stage of the action, and without any specific evidence on the application, the court is not in a position to decide which party was the proferens, and therefore in whose favour the doctrine would operate.
25. In any event, the words used in the clause are clear, and I do not consider there to be any ambiguity. "No proceedings" in this contractual context, in what is a warranty between Bloomberg and Malling, can only, absent more, mean proceedings by Bloomberg. Further, it is the passage of time from the date of practical completion that acts upon the rights of Bloomberg in the way explained, with the result that after the cut-off date the parties agreed that "no proceedings" would be commenced. The clause is headed "Limitation" and although that heading is not conclusive, it is of assistance. I consider that the phrase "no proceedings" applies to proceedings instituted by Bloomberg, and I do not consider application of the doctrine of contra proferentem could give Malling the benefit of interpreting those words as having a far wider, or different, effect.
26. In Oxford University Fixed Assets Ltd v Architects Design Partnership (1994] 64 Con LR 12 His Honour Judge Humphrey LLoyd QC held that an architect was not entitled to contribution from the contractor in respect of a claim by the employer for damages for negligence and breach of contract which was barred, as between the employer and the contractor, by the issue of the final certificate. However, I do not consider that case assists. The nature of a final certificate as a result of the terms of the contract, conclusive and therefore binding as between the employer and contractor, and its effect upon the rights of the employer, is not the same as the effect of the passage of time upon the rights of Bloomberg in the instant case. In my view the clause in question here only becomes effective, or comes to be considered, after the expiry of a period of time, namely the 12 years from the date of Practical Completion. That period is the same (coincidentally or not) as a period of limitation under the Limitation Act for specialties, but the length of the period of time is not directly relevant. Malling must establish that by reason of the passage of time, the underlying right of Bloomberg would be extinguished. The reason that Malling must establish that point is because that is the only way the proviso in sub-section 1(3) would become available to Malling, in order to prevent a claim for contribution succeeding under the statutory claim that Sandberg would, absent operation of the proviso, have.
27. The approach in Oxford University Fixed Assets Ltd v Architects Design Partnership and the analysis of the learned Judge concerning the point of time at which cessation of liability was to be considered, was approved in Co-operative Retail Services Ltd v Taylor Young Partnership Ltd [2002] 1 WLR 1419 by Lord Hope. Paragraphs [52] to [60] of the speech of Lord Hope are relied upon by Malling as demonstrating that Sandberg's right to contribution must be found to exist at the time that contribution is sought. It is said by Malling that sub-section 1(3) of the Act has in mind a procedural bar such as dismissal on the grounds of want of prosecution, or operation of a statutory limitation period. Malling expressly submits that such "a procedural bar is to be distinguished from a substantive defence". I do not accept that construction of sub-section 1(3) of the Act. The limitation period does not have to be a statutory one, although it may be (and in many cases will be). It is the effect of the passage of time upon the underlying legal right that is important. The procedural bar does not have to be restricted to the types of bar identified by Malling. Because consideration is required of the nature of the underlying right, and whether that underlying right continues to exist in law – although the right could not be enforced by reason of such a bar – there will be some types of bar (such as a dismissal for want of prosecution) that are obviously procedural. However, that does not mean that the only procedural bar is such an obvious one as that. There are other bars, and passage of time and limitation is traditionally in English law seen as constituting a bar to the prosecution of a legal right, rather than extinguishment of it. If a right is extinguished, in law it no longer exists. It is for that reason that the expression "substantive bar" is not wholly accurate, because if extinguished, there is nothing in law to be barred. However, regardless of the terminology, if the right remains in existence, but cannot be advanced for procedural reasons, that may make no difference to a party in Bloomberg's position, but would make a considerable difference to a party seeking contribution due to the wording of the Act. This is because of the wording of section 1(3).
28. For Buro Happold, Ms Sinclair QC drew a distinction between what she termed "No Liability Cases" and "Cessation of Liability Cases".

1) No Liability Cases were those where a party from whom contribution was sought was never 'liable' to the ultimate claimant for the damage suffered by that party. In that case, contribution was not available. She placed the Co-operative Retail and Oxford University cases in this category.

2) Cessation of Liability Cases were those where the party from whom contribution is sought was 'liable' to the ultimate claimant at an earlier time but that liability had since ceased. The effect of section 1(3) in such cases was that contribution became no longer available in only one sub-category of such cases. Neither judgment, nor settlement, nor the expiry of other periods of limitation (whether statutory or contractual) would bar the right to contribution.

29. I accept that distinction. When the matter is approached in that way, it can be seen that this is plainly a cessation of liability case. The cessation occurs due to the passage of time. So far as her submissions on settlement are concerned, she relied upon authority including Heaton v AXA [2002] 2 AC 329 at [85] in the speech of Lord Rodger. Although a settlement is not involved here, the situation that Lord Rodger identified as "a kind of legal eternal triangle that was already familiar to classical Roman lawyers" was described by him as having its key not in legal logic, but in legal policy. Whilst not necessary to consider legal policy in the instant case, Ms Sinclair's point, when comparing the different contract terms which Buro Happold agreed in that warranty with those in the Malling Warranty, is a good one. To construe the Malling Warranty in the way contended for by Mr Bartlett QC would require ascribing to Bloomberg an objective intention to protect Malling's commercial interests at the expense of parties seeking contribution from Malling in the future. That is inherently unlikely.
30. Malling submits that although there was a cessation of liability on the part of Malling, the nature of that cessation is such that it extinguished Bloomberg's right. I do not consider that to be correct. The nature of the cessation is such, in my judgment, that it bars the enforcement by Bloomberg of its right – it is therefore a procedural bar. The underlying legal right is not extinguished.
31. I reject Mr Bartlett QC's argument that as a result of the correct construction of clause 6, the Act does not apply to Malling at all. That is not, in my view, correct. This was the primary limb of his argument and in my judgment it fails. The Act plainly applies to "any person liable in respect of any damage suffered by another person" and prima facie, on the assumed facts, that would apply to Malling. Malling originally performed the cladding works, was involved in the review in 2001 and 2002, and performed the remedial works undertaken at that time. Malling potentially falls within the terms of the Act as "any person liable", and the Part 20 proceedings are the process by which the claims for contribution by Sandberg will be considered, so that any relevant findings can be made in respect of contribution. My finding on this primary limb of Malling's argument can be further tested by considering whether contribution proceedings could have been brought by Sandberg (for example) if the event had occurred two years after Practical Completion, and Bloomberg had chosen (for whatever reason) to issue proceedings solely against Sandberg. Clause 6 could not possibly be said in those circumstances to "take Malling outside the Act" to prevent a contribution claim proceeding.
32. I therefore turn to the second limb of Malling's argument, which in my view is the correct way of considering Malling's application, namely by considering whether Malling can obtain the benefit of the proviso in section 1(3) of the Act. It is necessary to consider the correct construction of clause 6 of the Malling Warranty in order to consider if Malling can be said to have "ceased to be liable by virtue of the expiry of a period of limitation or prescription which extinguished the right on which the claim against" Malling in respect of the damage was based. This would then entitle Malling to the benefit of the proviso contained in section 1(3) of the statute itself.
33. Malling relies primarily upon the same reasoning in this limb too. However, Oxford University Fixed Assets Ltd v Architects Design Partnership (1994] 64 Con LR 12 is plainly distinguishable. I have already explained that there is a considerable difference between the effect of a final certificate under the terms of a contract, and what it may (or may not) do to the underlying legal rights of an employer, and the effect of the passage of time upon Bloomberg's rights in the context of Clause 6.
34. It was argued for Malling that businessmen want finality and it would make sense for the agreement to be interpreted in the way contended for, in order to provide that finality. This approach, in my view, runs perilously close to contravening Lord Neuberger's third factor in Arnold. Hindsight is a wonderful thing, and there is no doubt that any party facing contribution proceedings would, retrospectively, wish to have relevant contractual provisions take effect as extinguishing underlying rights (thus giving the benefit of the proviso) rather than being seen as a procedural bar. However, that does not mean that it is the correct approach to construction in any event. It is also said by Malling that there is no change that takes place as a result of the effluxion of time, because the extent of the liability is defined from the start. Although an ingenious argument, I do not consider that to be correct. It is the passage of time that leads to the inability (on the part of Bloomberg, given my view of the correct construction of the clause) to commence proceedings. The change only takes place as a result of effluxion of time under clause 6, and for no other reason.
35. It was said on Malling's behalf that the effect of the contentions of the other parties on the application was to have the court construe clause 6 as though it were part of the Limitation Acts, subjecting it to the type of minute juridical analysis that might be required or forgivable when construing a statute, but could not be used when attempting to construe a commercial contract. This point was made in response to analysis by both Sandberg, but more particularly Buro Happold, that demonstrated that in some circumstances, rights can become extinguished. If, however, the meaning of the words in clause 6 is plain, all that the court has to do is consider what the effect of those words is on the underlying legal right. That does not involve construing the clause as though it were a statute, and I do not consider that such an approach is required in order to construe "no proceedings" as meaning no proceedings by Bloomberg.
36. I therefore am not persuaded by the second limb of Mr Bartlett QC's argument that Malling is, as a result of clause 6, able to demonstrate that it is entitled to the benefit of the proviso in section 1(3) of the Act. I do not consider that it is.

Conclusion

37. In my judgment, the correct legal analysis of clause 6 is that it presents a procedural bar to any right Bloomberg may have against Malling being enforced in proceedings brought by Bloomberg that are issued after the cut-off date. That does not extinguish the underlying substantive right, which remains. Malling is not therefore able to demonstrate that Sandberg has no real prospect of succeeding on its Part 20 Claim.
38. Finally on this issue, the overall effect of Mr Bartlett QC's submissions would, if he were right, be that parties could effectively "contract out" of the operation of the Act that has been put in place by Parliament to benefit other third parties, those third parties not being parties to the contract between (in this case) Bloomberg and Malling. Whether this is something that could ever be accomplished by the mechanism of the passage of time (rather than, say, using a net contribution clause) is not something that was fully argued before me. However, even if this was possible in a contractual limitation provision (and I have reservations about that) it would doubtless take very clear words to accomplish it. The words of clause 6 do not accomplish it. Although this point was touched on only in a peripheral way during oral argument, Malling and Bloomberg do not appear to have even attempted to "contract out" of the operation of the Act, or to have chosen in their contractual framework to put either of them outside the operation of the Act so far as contribution is concerned. However, given my findings on the meaning of the term, it is not necessary to consider this point further.
39. The answers to the issues posed on the application are therefore in Sandberg's favour and Malling is not, in my judgment, entitled to have summary judgment in its favour on the Part 20 proceedings, nor is Malling entitled to have those proceedings struck out.

Declaratory relief

40. Mr Bartlett QC had a further limb to his application which was that if the court concluded that Sandberg was entitled to rely upon the Act and its contribution proceedings survived, "whether such reliance can extend to damage which occurred after the cut-off date". The "cut-off date" is 28 August 2012. When this was explored at the hearing, it transpired that Malling wished to have a declaration made on the summary judgment application. At my suggestion, the form of that declaration was then drafted and submitted after the hearing. It is framed in this way:

"If or in so far as Bloomberg LP succeeds against Sandberg in Claim No: HT-13-051, in respect of "damage" (within the meaning of section 1 of the Civil Liability (Contribution) Act 1978) which occurred after 28^[3] August 2012, Sandberg is not entitled to contribution from Malling Pre-Cast Ltd in respect of such damage".

41. Malling relies upon the court's inherent jurisdiction to grant a declaratory judgment preserved under section 19(2)(b) of the Senior Court Acts 1981.
42. The authorities make clear that one of the considerations for the court when asked to make a declaration is whether it would serve a useful purpose; Office of Fair Trading v Foxtons [2009] EWCA Civ 288, [2010] 1 WLR 663. Malling submits that the useful purpose of this declaration would be "that it defines the practical effect of clause 6 of the warranty for the purposes of the present litigation". Both of the other parties urge me not to grant such a declaration for different reasons.
43. I decline to make such a declaration for each of the following reasons:

1) Making a declaration of this nature on an application for summary judgment that has failed may be suitable in other cases (although I have doubts about that), but not in this one, which is concerned with damage and limitation on very sparse assumed facts. These are highly fact sensitive areas. None of the assumed facts are concerned with the date or dates of damage. Making a declaration that states in positive terms that a party in Sandberg's position is not entitled to contribution for damage occurring after a fixed date is, in my view, fraught with potential difficulty.

2) Bloomberg's Particulars of Claim are rather lacking in any detail in terms of the date of damage. This may be because at this stage of the action investigations are not sufficiently well advanced in order for Bloomberg to plead dates with any degree of accuracy, or it may be for other reasons. As Mr Bartlett QC put it in his skeleton argument "the date or dates of damage are not closely defined". Again, against the framework of the case as currently pleaded, the court would be making a declaration stating that there could be no recovery by way of contribution for damage occurring after a particular fixed date.

3) There is no defence yet served by Malling in the Part 20 proceedings and it is difficult to frame what the exact issue in the Part 20 proceedings would be, in relation to which the declaration is sought. There has to be an issue in the proceedings for the court to make a declaration.

4) There is a danger, in making such a declaration, of deciding an issue summarily when that issue is not capable of being decided summarily without a trial.

5) There is also a danger that making such a declaration now could lead to later argument as to whether other issues that may subsequently arise in the proceedings have, or have not, already been decided by the court because they do, or do not, fall within the scope of the declaration. That would run the risk of simply turning into an expensive distraction for all concerned.

6) Finally, I am not persuaded that there is any utility in making such a declaration in any event.

44. It may be that issues of limitation arise in the Part 20 proceedings or even in the main action. At this stage of the case, it is not possible to discern whether that will be the case. However, whether they do or not, in my view making a declaration as requested will not assist in any respect and would run the considerable risk of being counter-productive.
45. I will hear counsel on the precise terms of the order consequent upon this judgment, and costs.

Note 1   Paragraphs [17] to [23]    [Back]

Note 2   Paragraph [68]    [Back]

Note 3   The original draft had 18 August 2012, but this obvious typographical error was corrected with the agreement of all the parties    [Back]