So said His Honour Judge Hicks in his various judgments so far in Royal Brompton Hospital National Health Trust vs Hammond and others (15 others at the last count).
The trust entered into a JCT80 contract with Taylor Woodrow Construction for £18m. Taylor Woodrow commenced arbitration proceedings, claiming almost the same amount again in variations and claims. The trust counterclaimed, then settled and paid Taylor Woodrow £6.2m and bore its own costs in the arbitration. This amounted (it says) to an astonishing £2m.
The trust then looked around to see whether these sums were recoverable from its team, which included PMI as project manager and Austin Associates as M&E engineer.
The trust issued a writ against the team in 1993. The case is interesting both as a demonstration of the cost and complexity of multiparty litigation and because the four judgments handed down relate to common issues on major construction projects.
Judgment 1: January 1999 The first argument raised by the team was that the trust’s claim to recover the cost of the arbitration and settlement should be struck out. In the arbitration proceedings, all of the variations and delays alleged by Taylor Woodrow were not looked at in detail, nor was a detailed cause-and-effect analysis concluded. The settlement compromised issues of liability, as well as issues of amount. It settled both claim and counterclaim.
The team said this meant that the settlement could not form the basis of a claim against them. “No it doesn’t,” said Judge Hicks, although he went on to emphasise that the trust must prove the liability of each member of the team independently and then try to establish relevant loss – an unenviable task.
Judgment 2: July 1999 The architect tried to bring Taylor Woodrow back in on the basis that if it was liable, Taylor Woodrow should contribute because it was liable for the “same damage” – loss of liquidated damages. Taylor Woodrow had been given an indemnity by the trust against third-party claims as part of the settlement of the arbitration proceedings. So, if the architect had succeeded, Taylor Woodrow’s share would have reduced the architect’s liability to the trust.
A conundrum: taken together, JCT80 and the M&E spec seem to require both the contractor and M&E engineer to supply key drawings – so how is liability apportioned if they aren’t forthcoming?
Judge Hicks “unhesitatingly” concluded that this was not correct: the trust was arguing that it had accepted a less advantageous settlement than it could have obtained had the architect competently handled its duties. That was not the “same damage”. “I find that conclusion plain and obvious” he commented (it has now gone to the Court of Appeal), while emphasising that the trust had still to establish that it was handicapped in negotiating the settlement and the loss that resulted – again, a bit tricky.
Judgment 3: July 1999 This time, Judge Hicks had to look at the effects of wrangling between the team members. Austin Associates applied for permission to amend its defence to allege defaults by PMI. If Austin Associates was allowed to do this, the trust wanted permission to re-amend its claims against PMI.
PMI objected on the grounds that it was prejudiced by the 12-year gap between project and trial. It failed: Judge Hicks said that, although it was true that PMI’s witnesses would have to address new allegations about events that had taken place a long time ago, the documents would in any case carry most of the weight.
He said: “In very heavy and voluminously documented construction litigation of this kind, which … will be tried so many years after the event, all or most of the factual issues are likely to turn on the contemporaneous documentation rather than on personal recollection.” So, no prejudice was caused by the delay.
Judgment 4: December 1999 At last, we get into the nitty-gritty. Austin Associates was to provide co-ordination drawings in sufficient detail “that the contractor … may use them for construction purposes, although it is recognised that the provision of installation drawings may be necessary” before tender. It did not.
The question was then whether clause 5.4 of the JCT80 contract applied to the co-ordination drawings. “Yes,” said Judge Hicks – they were clearly necessary “to enable the contractor to complete the works”. That being so, did Austin Associates simply have to use “diligence” in producing the co-ordination drawings, as its counsel argued? Or was it required to use skill, care and diligence to ensure that the
co-ordination drawings were provided so that the contractor could carry out the work? The judge thought Austin Associates’ suggestion was “hopelessly vague and unrealistic in the context of a … major building project”.
Postscript
Ann Minogue is a partner in solicitor CMS Cameron McKenna.
