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

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

		Royal Courts of Justice Strand, London, WC2A 2LL
		10/12/2015

Mr Justice Edwards-Stuart:

Introduction

1. This is an application for disclosure by the London Borough of Bromley ("Bromley") against the defendant, Mr Heckel, a project manager. Mr Heckel traded under the name of SJH Associates ("SJH"). There is also an application to extend the time for service of the Particulars of Claim.
2. According to a pre-action protocol letter dated 30 January 2014 from Bromley to Mr Heckel, he was engaged in 2007 as Project Manager for a project to build a Children and Family Centre for the Surestart programme. The Centre was to be built on a site adjacent to the Castlecombe Primary School, which was managed by Bromley. It is alleged that Mr Heckel was instructed by the School on behalf of Bromley.
3. It is not in dispute that Mr Heckel obtained tenders for the work and prepared a report on those tenders. Those reports recommended the appointment of Keyspace Ltd ("Keyspace") and Vinstrata Builders (London) Ltd ("Vinstrata") in relation to the construction and enabling works, respectively. Those two contractors were appointed, probably by the School, in 2008.
4. It is Mr Heckel's case, as RPC made very clear in its letter in response of 2 May 2014, that there was no written engagement between him and the School (or, indeed, Bromley). He was engaged orally. In addition, he says that he was separately engaged by the School under a Services Package Agreement in relation to property management. According to Mr Heckel, under the terms of this agreement the School was able to call on him for assistance in relation to minor property management issues in return for a small annual fee of £525.
5. In its letter of 30 January 2014 Bromley alleges that Mr Heckel's duties included sourcing and appointing competent contractors, "programming and project management" and "complying with Building Control and Building Regulations Requirements". It is not clear whether the latter allegation refers only to arranging the necessary consents and approvals, or is intended to refer to an absolute obligation to ensure that the requirements of the Building Regulations were complied with. The latter, I would have thought, would not be a realistic allegation.
6. The letter then goes on to allege that it was reasonably foreseeable that a failure to manage the site to the standard of a competent Project Manager "could result in defective workmanship and a defective structure". It was alleged that Mr Heckel was negligent in that he failed "to identify early signs of deterioration during the defects period and address subsequent latent defects identified by LBB's surveyor". The letter said also that Mr Heckel failed to take steps to mitigate the defective condition of the works. Although the letter does not explain how anything done by Mr Heckel would have prevented the defects in design or workmanship, it makes the broad assertion that SJH was responsible for the management of all ongoing works and that, had it performed its duties in accordance with its professional appointment and with reasonable care and skill, the defects would not have occurred.
7. Mr Heckel was asked to provide, within 14 days, copies of the following documents, which Bromley said it believed to be within his possession or control:

The building contract between the School and/or SJH and Keyspace.

The building contract between the School and/or SJH and Vinstrata.

The tender documentation in respect of the supply and installation of a modular building by Keyspace.

The tender documentation in respect of the enabling works by Vinstrata.

The letter of appointment from the School to SJH.

A schedule of SJH's Professional Indemnity insurance.

8. Mr Heckel says, although this was not made explicit in RPC's letter of 2 May 2014, that he delivered copies of all the papers in his possession to Bromley on 5 October 2012 under cover of a letter dated 4 October 2012. The letter did not identify the documents that were enclosed: it said simply "Please find enclosed copy of documentation as requested". However, copies of the documents enclosed with that letter were subsequently provided by RPC in July 2015 and these included documents relating to the tenders and the tender report.
9. It seems that Bromley has no record of ever having received these documents, but in July 2015 copies were supplied again by RPC. Those documents did not include copies of the two building contracts or, unsurprisingly, any letter of engagement addressed to Mr Heckel or SJH. A rather surprising suggestion has been made by Mr Bradshaw that Mr Heckel or SJH may have themselves entered into the building contracts. This does not sit easily with the fact that the purchase orders to the two contractors were issued by the School (and were enclosed with Bromley's letter of 30 January 2014). That apart, there is not a shred of evidence for Mr Bradshaw's suggestion, which strikes me as improbable in the extreme. In my experience, no consultant in the position of Mr Heckel would dream of entering into a building contract on behalf of his client and thereby assume personally all the obligations of an employer.
10. In relation to the documents requested, in its letter of 2 May 2015 RPC said this:

"6.1.1 The School, rather than our client, contracted with Keyspace and VBLL. Our client is not in possession of the requested contractual documents.

6.1.2 As stated above, our client was verbally instructed by the School to "project manage" the construction of the Centre. No letter of instruction from the School exists. It is noteworthy that you have embarked on this cause [sic] of action without even acknowledging this basic point; and

6.1.3 There is no basis on which you are entitled to any documents or information relating to our client's insurance arrangements."

This could hardly have been clearer.

11. According to the letter of 30 January 2014 the Centre was defectively constructed and the defects were so serious that eventually it had to be demolished. What were described as "significant faults" were discovered in July 2012, at which time the estimated cost of the remedial works was said to be £220,000. Nine months later, in March 2013, the roof was inspected and in January 2014 the rebuilding costs were estimated at over £465,000.
12. On 5 September 2014 Bromley issued a claim form against Mr Heckel. On about 1 December 2014 the claim form was served on Mr Heckel, together with an application for disclosure of "all documents within his possession, custody or control relating to the matters at issue between the Parties". Four things can be noted at once about this application:

a. it was not an application for pre-action disclosure because the claim form had already been issued; and

b. it was not an application for specific disclosure, because it was not limited to any particular class or classes of documents; and

c. since no Defence had been served, it was not immediately obvious what matters "were at issue between the Parties"; and

d. In the circumstances the disclosure sought went much wider than the ambit of standard disclosure.

13. Ms Hannah McCarthy appeared for Bromley, instructed by Bromley's Resources Department, and Mr Scott Allen for Mr Heckel, instructed by RPC.

The course of the application in more detail

14. The application was supported by a witness statement of Mr Jonathan Bradshaw, a solicitor retained on contract by Bromley. At paragraph 2 of this application he said:

"The facts stated herein are either true to my own knowledge or have been derived by me from the study of the documents in this matter."

The witness statement was not, as it should have been, supported by a statement of truth. The effect of this is that so far as the facts stated in the witness statement were derived by Mr Bradshaw from a study of the documents in the case, those facts were not supported by any form of assertion that they were true, only that they were not within his own knowledge because they had been derived from a study of the documents.

15. At paragraphs 13-15, Mr Bradshaw said this:

"13. I understand that the terms of SJH's involvement was set out in a written agreement ("the Contract"), which is (inter alia) the subject of this Application.

14. SJH organised two tenders - one for the construction of the building and another for the ground works. Tenders were returned to him and he advised the School of the outcome and recommended one company ("Vinstrata") for the ground works and the other ("Keyspace") to erect a pre-fabricated building over those ground works.

15. I understand that those contracts were made by SJH with the two companies, although no copy of either the tender papers or the contracts was ever produced either to the Council or to the school's officers. I am also seeking copies of those contracts in this application. "

16. Nowhere in his witness statement did Mr Bradshaw state the basis of his understanding as set out in paragraphs 13 and 15. This is a matter of some importance because Bromley had by then been told, in the clearest terms, that Mr Heckel's engagement as Project Manager was made orally and that he does not have copies of the two building contracts. A surprising feature of this witness statement is that it made no mention of RPC's letter of 2 May 2014. This shows, perhaps, why a statement of truth is important and why it is necessary for the deponent to a witness statement to state the sources of his information or belief. Further, I remain wholly unclear as to what possible ground Mr Bradshaw could have had for thinking that Mr Heckel might have entered into either of the two building contracts on his own account.
17. At the hearing of the application for disclosure, Ms McCarthy made it clear that it was limited to the copy of Mr Heckel's engagement and two copies of the two building contracts. By this time, Mr Heckel had made a witness statement dated 5 November 2014 in which he repeated the contention that he did not have any of these documents in his possession and that, in particular, there never had been any written terms of engagement.
18. In response to the witness statement by Mr Heckel Mr Bradshaw made a further witness statement, dated 10 November 2015, in which he said, at paragraph 7:

"Again, in my experience as a Solicitor with extensive experience of dealing with contracts, I find it difficult to understand how the Defendant failed to enter into any formal written contracts."

This appears to be a further allegation that Mr Heckel entered into the building contracts on his own account. I find it difficult to understand what experience Mr Bradshaw may have had as a solicitor that has led him to think that Mr Heckel might have entered into formal building contracts in his own name on behalf of the School.

19. Turning to the disclosure application itself, even as now limited by Ms McCarthy, the application is in my view quite hopeless. If Mr Heckel does not have copies of the relevant documents, he cannot disclose them. Both he and his solicitors have asserted that there was no contract of engagement and that Mr Heckel does not have in his possession copies of the building contracts. There is no material which would justify the court going behind the statement of Mr Heckel, and therefore in this case there can be no question of making an order against Mr Heckel for disclosure of documents which he says he does not possess. The application is even less compelling in circumstances where it is quite likely to be the case that either Bromley or the School has copies of the building contracts sitting in a file somewhere.
20. In these circumstances the application for disclosure must be dismissed.

The application for an extension of time for service of the Particulars of Claim

21. As I have already said, Bromley seeks an extension of time for service of the Particulars of Claim. That application is to extend time for service until 42 days after the date of provision of copies of the documents requested in the disclosure application. Since the application was made before the time for service of the Particulars of Claim had expired, this is not an application for relief from sanctions. It must therefore be considered in the more general context of the Overriding Objective (see the White Book, paragraphs 3.9.6.2 and 7.6.8).
22. One difficulty facing Bromley is that the application for the extension of time is contingent upon there being an order for disclosure and the provision of the relevant documents, because the date of the latter acts as the trigger for the 42 day extension. If no documents are produced, the application for the extension of time falls away because there is no start date for the 42 day period. However, this is simply the product of careless drafting and, if the point had been raised with Ms McCarthy, she would almost certainly have applied to amend the application to request an extension period that, in the alternative, ran from the date of the order refusing disclosure.
23. In the circumstances, I think it would not be fair to refuse the extension of time on that simple ground. I will therefore consider the application as if Ms McCarthy had applied to make an appropriate amendment to the application notice.
24. Mr Allen drew my attention to the judgment of Cooke J in Nomura International plc v Granada Group Ltd [2008] Bus LR 1, where he said, at paragraphs 37 and 41:

"37. In my judgment, when regard is had to these authorities the key question must always be whether or not, at the time of issuing a Writ, the claimant was in a position properly to identify the essence of the tort or breach of contract complained of and if given appropriate time to marshall what it knew, to formulate Particulars of Claim. If the claimant was not in a position to do so, then the claimant could have no present intention of prosecuting proceedings, since it had no known basis for doing so. Whilst therefore the absence of present intention to prosecute proceedings is not enough to constitute an abuse of process, without the additional absence of known valid grounds for a claim, the latter carries with it, as a matter of necessity, the former. If a claimant cannot do that which is necessary to prosecute the claim by setting out the basis of it, even in a rudimentary way, a claimant has no business to issue a Claim Form at all "in the hope that something may turn up". The effect of issuing a Writ or Claim Form in such circumstances is, so the plaintiff/claimant hopes, to stop the limitation period running and thus deprive the defendant of a potential limitation defence. The plaintiff/claimant thus, unilaterally, by its own action, seeks to achieve for itself an extension of the time allowed by statute for the commencement of an action, even though it is in no position properly to formulate a claim against the relevant defendant. That must, in my judgment, be an abuse of process and one for which there can be no remedy save that of striking out the proceedings so as to deprive the claimant of its putative advantage. The illegitimate benefit hopefully achieved can only be nullified by this means. Whatever powers may be available to the court for other abuses, if this is an abuse, there is only one suitable sanction.

. . .

In my judgment therefore if Nomura, at the time of issuing its Claim Form, was not in a position to do the minimum necessary to set out the nature of the claim it was making, it would be seeking an illegitimate benefit, namely the prevention of further time running under the Limitation Acts for a claim which it could not properly identify or plead. That would be an abuse of the process of the court. Insofar as it sought to make any claim in contract, it would be necessary for it to be able to identify the particular contract and the alleged breach. In the case of any breach of tortious duty, it would be necessary for it to be in a position to identify the essential acts or omissions which constituted the breach of duty, negligence or negligent misstatement. For the purposes of negligent misstatement, Nomura would have to be able to identify what advice or information was inaccurate and what was given negligently, at least in essence. If Nomura was not in a position to do this, it was not in a position properly to issue a claim, since it could not have proceeded properly to plead Particulars of Claim without the off chance occurring that something would turn up. In such circumstances it could have no present intention to pursue a claim since it had no sufficient idea of the claim it wished to pursue."

25. These observations are apposite to this case, because Bromley has accepted that the claim form was issued when it was in order to prevent the running of time. If it was truly unable to set out the nature of the claim that it intended to make, then the issue of the claim form would have been an abuse of the process of the court for the reasons given by Cooke J in these passages.
26. However, in support of the application for specific disclosure, Ms McCarthy had submitted in her skeleton argument that to refuse the application would be to deny the Claimant to the evidence necessary to understand and "properly plead the claim". During the hearing Ms McCarthy disclaimed any suggestion that, in the absence of the relevant documents, Bromley could not plead a claim at all against Mr Heckel: she submitted that it was not in a position to plead it "properly", in other words such that it would not require amendment once the documents became available. In the context of a claim against a project manager, that in my view is a proper position to take.
27. I consider that Bromley could have pleaded, and could now plead, a claim against Mr Heckel with or without sight of his retainer (assuming, contrary to the evidence, that such a retainer exists). I have already set out how, in its letter of claim dated 30 January 2014, Bromley has alleged that Mr Heckel was instructed to undertake certain duties and that it was reasonably foreseeable that a failure to discharge their duties properly could result in the building being defectively constructed. In making these observations I am not to be taken as indicating that such a claim would have any merit: I am merely stating that I agree with Ms McCarthy that a claim could be formulated.
28. But since receipt of RPC's letter of 2 May 2014 Bromley has known that it was Mr Heckel's case that he was retained orally and that there were no written terms of engagement. Bromley has known also that it has itself been unable to trace any letter of engagement of Mr Heckel by either itself or the School.

Should the court exercise its discretion to extend the time?

29. In Lincolnshire County Council v Mouchel Business Services Ltd [2014] EWHC 352 (TCC), Stuart-Smith J said this, at paragraph 45:

"To my mind, the established principles, the amendments to the CPR that I have identified, and the terms of the Protocol all point in one direction: parties who issue late are obliged to act promptly and effectively and, in the absence of sound reasons (which will seldom if ever include a continuing failure to comply with pre-action protocol requirements) the proceedings should be served within four months or in accordance with any direction from the Court. A claimant who does not do so and (where the Protocol for Construction & Engineering Disputes applies) who does not obtain directions on notice does so at extreme peril."

30. I agree entirely with these observations. Bromley's application was framed initially in quite unreasonably wide terms: it was effectively seeking disclosure of almost Peruvian Guano scope prior to service of its Particulars of Claim. That was bound to fail. Even if it had limited its application to the documents sought by Ms McCarthy, it would have known that Mr Heckel was saying that he had no written terms of engagement and that he did not possess copies of the two building contracts. In those circumstances, it should have been self-evident to Bromley that its application would have to be supported by the most cogent evidence if the court was to be persuaded to make an order for disclosure in the face of Mr Heckel's assertion that he did not have copies of the documents in question.
31. Far from being supported by cogent evidence, Bromley's application - supported as it was by a witness statement that did not contain any adequate statement of truth - completely ignored what Bromley had been told in RPC's letter of 2 May 2014. Further, it was based on what Mr Bradshaw said he understood without giving any explanation of the basis of that understanding. Accordingly, since the application for disclosure was doomed to failure, there was no merit whatever in the application for an extension of time. Had it been heard in December 2014 it would have been refused and Bromley would have had to serve its Particulars of Claim by the required date, namely 5 January 2015.
32. The following statement, at paragraph 11 of Mr Bradshaw's second witness statement, dated 10 November 2015, is revealing:

"The Claim was issued to protect the Council against time bar. When the Claim was issued, we immediately applied for a Hearing of the matter now before this Court."

33. That statement is simply untrue. The claim form was issued on 5 September 2014, but the application was not issued until shortly before 1 December 2014. By no stretch of the imagination can leaving a gap of nearly 3 months between the issue of the claim form and the issue of the application be described as doing something "immediately". There is, therefore, no excuse whatever for Bromley's failure to issue the application when (or very soon after) it issued the claim form.
34. Not only did Bromley delay in making this application, but also it never pursued an application for pre-action disclosure of the documents requested in its letter of 30 January 2014. This would have been understandable, given the clear statements in RPC's letter of 2 May 2014 (ie. to the effect that Mr Heckel did not have copies of the construction contracts and that is engagement by the School was verbal), but for the fact that it then made an application in December 2014 seeking, amongst other things, the same documents.
35. Turning to the period after 5 January 2015, on the basis of Mr Bradshaw's second witness statement it appears that he made three telephone calls to the TCC office between the date of issue of the application, 1 December 2014, and the date of his letter to the court on 21 August 2015. This is because he said he made calls "approximately every two months" during this period. Whilst the lack of any response to these calls to the court office is not to be excused, Mr Bradshaw's pursuit of a hearing date was at best dilatory. He finally wrote to complain on 21 August 2015 expressing concern at what had been going on. I do not know why he waited over eight months before writing to the court.
36. Ms McCarthy submitted that it would be grossly unfair to deprive Bromley of the possibility of pursuing a claim worth nearly £500,000. This is usually a powerful point, but I have to say that serious difficulties face Bromley in this particular claim. It seems that Bromley effectively contracted for a pre-fabricated modular building. Mr Heckel was engaged as a Project Manager, not as a designer. It is not usually part of a project manager's duties to check the design or make periodic inspections of the quality of the work. A project manager is concerned with co-ordination and administration of the overall project. For example, a project manager would not ordinarily be concerned with applications by the contractor for interim payments or the rectification of defects.
37. It seems that the main problems with the building involved the design and construction of the floor and the roof and the construction of the external hardstanding. Taking the floors by way of example, these were constructed on a grid of steel girders supported on blockwork. Rafters spanned between the steel girders over which was laid a damp proof insulating membrane. Battens were laid over the membrane on which the 18 mm floor grade plywood was placed and secured. The flooring became damp and spongy because moisture was trapped between the top of the insulating membrane and the underside of the plywood. It is not clear to me whether the dampness within the structure of the floor was solely the result of condensation consequent upon lack of ventilation or was also contributed to by leaks from other parts of the building.
38. But whatever the true cause, it is quite hard to see how these defects in the construction of a prefabricated building could be laid at the door of a project manager. True it is that SJH described itself as building consultants, but it seems that its role was that of property management rather than involvement in design or construction.
39. It may be that Bromley can make out a case against Mr Heckel for his failure to respond promptly or effectively to the complaints about the state of the building, but I have great difficulty in seeing how the measure of damages appropriate to a breach of duty of that sort would include the cost of repair of the original defects. So whilst I bear in mind that there may be a case for Mr Heckel to answer - on the information available it is not possible to say - I strongly suspect that the quantum of that claim will be a great deal less than the £500,000 mentioned by Ms McCarthy.
40. Mr Allen has submitted that the issue of the claim form was itself an abuse of the process and that it should therefore be struck out. For the reasons I have given, I do not consider that the issue of the claim form was an abuse of the process because I consider that a claim of some sort could have been formulated. But a consequence of that conclusion is that, given the events as I have outlined them, I can find no justification whatever for the failure to serve Particulars of Claim within the time required by the rules.
41. Although I accept that those acting for Bromley are not entirely to blame for the delay in listing this application, the fact is that Bromley should never have made the application in the first place because, if Ms McCarthy's submission is correct - as I have held it to be, it could have served its Particulars of Claim by the required date.
42. In these circumstances, the observations of Stuart Smith J in Mouchel, which I have quoted above, are directly in point. Having issued proceedings at the last minute, Bromley was under an obligation to act promptly and effectively. This it signally failed to do. I consider that Bromley has shown no good reason for the grant of an extension of time within which to serve its Particulars of Claim, and so the application for an extension of time is refused.