Swansea Stadium Management Company Ltd v City & County of Swansea & Anor, Court of Appeal - Technology and Construction Court, August 15, 2018, [2018] EWHC 2192 (TCC)

Resolution Date:August 15, 2018
Issuing Organization:Technology and Construction Court
Actores:Swansea Stadium Management Company Ltd v City & County of Swansea & Anor
 
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Neutral Citation Number: [2018] EWHC 2192 (TCC)

Case No: HT-2017-000262

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

TECHNOLOGY AND CONSTRUCTION COURT (QBD)

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 15/08/2018

Before:

MRS JUSTICE O'FARRELL

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Between:

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Justin Mort QC & Tom Owen (instructed by DJM Solicitors) for the Claimant

Paul Darling QC (instructed by Reynolds Porter Chamberlain LLP) for the Second Defendant

Hearing dates: 7th June 2018

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Mrs Justice O'Farrell:

  1. The matter before the court is the Second Defendant's application for summary judgment against the Claimant in respect of part of the claim, alternatively for that part of the claim to be struck out, on the ground that the limitation period had expired when proceedings were commenced.

    Background

  2. The proceedings concern the Liberty Stadium in Swansea. The First Defendant is the freehold owner of the stadium. The Claimant is the leasehold owner and operator of the stadium for the benefit of the Swansea City Association Football Club Ltd.

  3. By a contract dated 17 June 2004, executed as a deed, the First Defendant engaged the Second Defendant as contractor to carry out the design and construction of the stadium (``the Building Contract'').

  4. The works were commenced in about September 2003.

  5. On 1 April 2005 Gardiner & Theobald (``G&T''), the Employer's Agent under the Building Contract, sent the following letter to the Second Defendant (then known as Interserve Project Services Limited):

    ``Re: New Stadium

    For and on behalf of the Employer, the City and County of Swansea, we are writing in accordance with Clause 16.1 of the Conditions of Contract, to inform you that the Works have reached Practical Completion as at 31 March 2005.

    As you are aware there are still some works to complete and defects to be made good and we will be issuing a schedule next week.''

  6. On 22 April 2005 the First Defendant granted a lease of the stadium to the Claimant for a term of 50 years. The lease contains a tenant's repairing covenant.

  7. In about April 2005 the Claimant (as ``the Beneficiary''), the First Defendant (as ``the Employer'') and the Second Defendant (as ``the Contractor'') entered into an undated collateral warranty, executed as a deed (``the Collateral Warranty''). Although the document on its face identifies Interserve plc as ``the Guarantor'', it transpires that Interserve plc did not in fact execute the Collateral Warranty.

  8. On 30 May 2008 the final account for the works was agreed.

  9. Under cover of a letter dated 26 May 2011, G&T enclosed the Notice of Completion of Making Good Defects, which was stated to be achieved on 14 April 2011.

  10. On 14 June 2012 the First Defendant and the Second Defendant entered into a settlement agreement in respect of outstanding sums due under the final account.

    The proceedings

  11. On 4 April 2017 the Claimant issued the claim form, seeking damages in the sum of £1.3 million approximately against the defendants in respect of alleged defects in the stadium, namely: (i) paint delamination and associated corrosion to the exposed steel structural elements of the stadium; and (ii) inadequate resistance for foot traffic of the surface of the concourse and mezzanine floor, causing visitors to slip and fall.

  12. The pleaded case against the Second Defendant is that:

    i) the design and construction of the concourse flooring, and the supply, construction and painting of the steelwork were defective (``the Original Construction Claims''); and

    ii) the Second Defendant failed to identify and rectify the flooring and/or paintwork defects pursuant to its obligations under clauses 16.2 and 16.3 of the Building Contract (``the Clause 16 Claims'').

  13. The Claimant pleads that the defects were caused by breaches of the Building Contract on the part of the Second Defendant and that such breaches constituted breaches of the Collateral Warranty on the part of the Second Defendant.

  14. In its Defence dated 13 November 2017 the Second Defendant pleads that the claims are time barred because the claim was commenced more than 12 years after 31 March 2005, the date of practical completion.

    The application

  15. The Second Defendant seeks the following orders:

    i) summary judgment in favour of the Second Defendant on the claims made in paragraphs 89(1) to (5) inclusive and 93(1) to (4) inclusive of the Particulars of Claim and striking out of those paragraphs from the Particulars of Claim; and

    ii) the Claimant's claims in paragraphs 103-105 of the Particulars of Claim be confined to the breaches alleged in paragraphs 89(6) and 93(5) of the Particulars of Claim.

  16. The claims made in paragraphs 89(1) to (5) are the Original Construction Claims in respect of the flooring. The claims made in paragraphs 93(1) to (4) are the Original Construction Claims in respect of the painting.

  17. The claims made in paragraphs 103-105 are the allegations of breach of the Collateral Warranty. The claim made in paragraphs 89(6) is the Clause 16 Claim in respect of the flooring and the claim made in paragraph 93(5) is the Clause 16 Claim in respect of the painting. It is common ground that for the purpose of this application there is no limitation defence to the Clause 16 Claims.

  18. The issue before the court is whether the Second Defendant can establish that the Claimant has no real prospect of succeeding on the Original Construction Claims because they are barred by limitation.

    The Building Contract

  19. The Building Contract was the JCT Standard Form of Building Contract with Contractor's Design 1998 edition (incorporating amendments 1 to 4), subject to bespoke amendments made by the parties.

  20. Clause 2 obliged the Second Defendant to complete the design and carry out the works.

  21. Clause 16.1 (as amended) states as follows:

    ``When in the reasonable opinion of the Employer the Works have reached Practical Completion and the Contractor has complied with clause 6A.5.1 or has complied sufficiently with clause 6A.5.2, whichever clause is applicable, the Employer shall give the Contractor a written statement to that effect, which statement shall not be unreasonably delayed or withheld, and Practical Completion of the Works shall be deemed for all the purposes of this Contract to have taken place on the day named in such statement.''

  22. Clause 6A.5.2 is the relevant provision and concerns the Second Defendant's obligation to provide a health and safety file:

    ``... within the time reasonably required in writing by the Planning Supervisor to the Contractor the Contractor shall provide, and shall ensure that any subcontractor, through the Contractor, provides, such information to the Planning Supervisor ... as the Planning Supervisor reasonably requires for the preparation, pursuant to regulations 14(d), 14(e) and 14(f) of the CDM Regulations, of the health and safety file required by the CDM Regulations.''

  23. Clause 16.2 (as amended) states:

    ``Any defects, shrinkages or other faults which shall appear within the Defects Liability Period and which are due to failure of the Contractor to comply with his obligations under this Contract or to frost occurring before Practical Completion of the Works, shall be specified by the Contractor in a Draft Schedule of Defects which he shall deliver to the Employer not later than 14 days after the expiration of the said Defects Liability Period, and the Employer may within 21 days of receipt of such Draft Schedule notify the Contractor of his comments and any further such defects, shrinkages or other faults which are to be included in the Schedule. 28 days after delivery of the Draft Schedule to the Employer the Contractor shall deliver to the Employer a Schedule of Defects which shall be based upon the Draft Schedule and shall take account of the comments and further items notified by the Employer (if any) and within a reasonable time after delivery of such Schedule the defects, shrinkages and other faults therein specified shall be made good.''

  24. Clause 16.3 states:

    ``Notwithstanding clause 16.2 the Employer may whenever he considers it necessary so to do, issue instructions requiring any defect, shrinkage or other fault which shall appear within the Defects Liability Period and which is due to failure of the Contractor to comply with his obligations under this Contract ... to be made good and the Contractor shall within a reasonable time after receipt of such instructions comply with the same at no cost to the Employer...

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