 |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | |
England and Wales High Court (Technology and Construction Court) Decisions |
||
|
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> MW High Tech Projects UK Ltd v Greenhalgh & Ors [2022] EWHC 2000 (TCC) (27 July 2022) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2022/2000.html Cite as: [2022] EWHC 2000 (TCC) |
||
[New search] [Printable PDF version] [Help]
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
Rolls Building Fetter Lane, London, EC4Y 1NL |
||
B e f o r e :
____________________
| MW HIGH TECH PROJECTS UK LIMITED |
Claimant |
|
- and |
||
| (1) MR PETER GREENHALGH (2) MR SPENCER BABER (3) MR JOHN TAYLOR |
Defendant |
____________________
Daniel Shapiro QC & James Sharpe (instructed by Beale & Co LLP) for the Defendant
Hearing date: 29th June 2022
____________________
Crown Copyright ©
Mrs Justice O'Farrell:
i) the Claimant's application to amend the Particulars of Claim in Claim HT-2021-000094;
ii) the Claimant's application for an order consolidating Claim HT-2021-000094 and Claim HT-2021-000438;
iii) the Defendants' application to strike out parts of the claims, and/or for summary judgment in respect of those parts, on the basis that the relevant parts of the pleading in each case have no real prospect of success and/or are so vague as to amount to an abuse of process or are likely to obstruct the just disposal of the proceedings;
iv) the Defendants' application for disclosure, by way of Initial Disclosure or Extended Disclosure; and
v) the Defendants' application for further time to file and serve their defence.
Background to the dispute
i) the Suez Project at the Eco Park, Charlton Lane, Shepperton, Surrey, comprising a gasification facility, designed to process 60,000 tonnes per year of mixed municipal waste, and an anaerobic digestion facility, designed to process 40,000 tonnes of food waste per annum;
ii) the Levenseat Project at Levenseat, Forth in Lanarkshire, comprising a gasification facility, designed to process 90,000 tonnes per year of refuse derived fuel ("RDF");
iii) the Hull Project at Cleveland Street, Kingston-upon-Hull, Yorkshire, comprising a gasification facility, designed to process in the region of 300,000 tonnes per year of RDF.
i) Mr Greenhalgh was a statutory director of the Claimant from 14 July 2004 to 29 November 2016;
ii) Mr Baber was a statutory director of the Claimant and managing director from 10 October 2014 to 21 September 2016;
iii) Mr Taylor was a statutory director of the Claimant and chief financial officer from 1 May 2013 to 31 March 2017.
Section 170 - Scope and nature of general duties
(1) The general duties specified in sections 171 to 177 are owed by a director of a company to the company.
(3) The general duties are based on certain common law rules and equitable principles as they apply in relation to directors and have effect in place of those rules and principles as regards the duties owed to a company by a director.
(4) The general duties shall be interpreted and applied in the same way as common law rules or equitable principles, and regard shall be had to the corresponding common law rules and equitable principles in interpreting and applying the general duties.
Section 171 - Duty to act within powers
A director of a company must
(a) act in accordance with the company's constitution; and
(b) only exercise powers for the purposes for which they are conferred.
Section 173 - Duty to exercise independent judgment
(1) A director of a company must exercise independent judgment.
(2) The duty is not infringed by his acting
(a) in accordance with an agreement duly entered into by the company that restricts the future exercise of discretion by its directors; or
(b) in a way authorised by the company's constitution.
Section 174 - Duty to exercise reasonable care, skill and diligence
(1) A director of a company must exercise reasonable care, skill and diligence.
(2) This means the care, skill and diligence that would be exercised by a reasonably diligent person with
(a) the general knowledge, skill and diligence to be expected of a person carrying out the functions carried out by the director in relation to the company; and
(b) the general knowledge, skill and experience that the director has.
Section 178 - Civil consequences of breach of general duties
(1) The consequences of breach (or threatened breach) of section 171 to 177 are the same as would apply if the corresponding common law rule or equitable principle applied.
(2) The duties in those sections (with the exception of section 174 (duty to exercise reasonable care, skill and diligence)) are, accordingly, enforceable in the same way as any other fiduciary duty owed to a company by its directors.
Proceedings
The applications
i) have no real prospect of success; and/or
ii) are so vague as to amount to an abuse of process or otherwise be likely to obstruct the just disposal of the proceedings; and/or
iii) fail to comply with CPR 16.4; and/or
iv) are not supported by sufficient documentation as required by paragraph 5.1 of CPR PD51U so that the Defendants can understand the case they have to meet and respond to the same;
be struck out pursuant to CPR 3.4(2)(a) or (b) and/or summary judgment be given on those parts of the claim pursuant to CPR 24.2.
Claimant's application to amend
i) the Claimant limits its claims to damages and interest in respect of any cause of action for breach of contract or for breach of the 2006 Act to claims which accrued six or less years before the issue of the Claim Form on 17 March 2021 and sets out its case as to accrual of causes of action for breach of contract and breach of the statutory duties under sections 171, 173 and 174 of the 2006 Act;
ii) the Claimant sets out particulars of its allegations that the Defendants failed to act in accordance with the Claimant's constitution, namely, the rules of procedure and the Red Book;
iii) the Claimant sets out its claim that it relies on the pleaded allegations of breach, whether taken individually or in any combination, as causative of its losses.
Test on applications to amend
i) In exercising the court's discretion whether to allow an amendment, the overriding objective is of the greatest importance. Although the court will have regard to the desirability of determining the real dispute between the parties, it must also deal with the case justly and at proportionate cost, which includes (amongst other things) saving expense, ensuring that the case is dealt with expeditiously and fairly, and allocating to it no more than a fair share of the court's limited resources.
ii) Therefore, such applications always involve the court striking a balance between injustice to the applicant if the amendment is refused, and injustice to the opposing party and other litigants in general, if the amendment is permitted.
iii) The proposed amendment must be clearly formulated, coherent and adequately particularised.
iv) An application to amend will be refused if it is clear that the proposed amendment has no real prospect of success.
v) An amendment is late if it could have been advanced earlier, or involves duplication of steps in the litigation, costs and effort. Lateness is not an absolute, but a relative concept. It depends on a review of the nature of the proposed amendment, the quality of the explanation for its timing, and a fair appreciation of the consequences in terms of work wasted and consequential work to be done.
vi) It is incumbent on a party seeking the indulgence of the court to be allowed to raise a late claim to provide a good explanation for the delay.
vii) The lateness of an application will weigh as one factor against the applicant in the court's consideration of the application, especially if it will result in additional or wasted expenditure in the pursuit or defence of the action.
viii) Any prejudice caused by the amendments must be compensatable in costs and the public interest in the administration of justice must not be significantly harmed.
Limitation
8. The Claimant's causes of action for breaches of contract accrued when the breaches took place and/or its causes of action for breaches of the 2006 Act accrued when damage was sustained as a result.
9. Given that the Defendants have intimated since service of proceedings that they intend to rely upon defences of limitation, for the avoidance of doubt the Claimant expressly limits its claims to damages and interest in respect of any cause of action for breach of contract or for breach of the 2006 Act arising out of the Suez EPC contract and/or the Suez Variation and/or the Levenseat EPC contract which accrued 6 or less years before the issue of the claim form on 17 March 2021.
133. By reason of one or more of the aforesaid breaches in section 4 and/or this section, the Claimant entered into the Suez Variation and did so at far too low a price.
134. This is a no transaction case. Had each Defendant not breached one or more of his duties then the Claimant should not and would not have entered into the Suez Variation.
(1) If and insofar as necessary, the Claimant should and would have terminated the Suez EPC contract.
(2) Further or alternatively, the Claimant should and would not have prepared and submitted a revised contract price for the purposes of the Suez EPC contract.
(3) Alternatively, after SITA had rejected the revised contract price, the Claimant should not and would not have negotiated with SITA and/or prepared or submitted further contract prices.
(4) Alternatively, the Claimant would have prepared and submitted further revised contract prices well in excess of £100 million and/or with revised terms which SITA would not have accepted and/or SITA would not have entered into the Suez Variation or preceded with the Suez Project pursuant to a contract with the Claimant.
198. By reason of one or more of the aforesaid breaches in section 4 and/or this section, the Claimant entered into the Levenseat EPC contract and did so at far too low a price.
199. This is a no transaction case. Had each Defendant not breached one or more of his duties then:
(1) the Claimant should not and would not have entered into the Levenseat EPC contract;
(2) alternatively, the Claimant should and would have prepared and submitted revised contract prices totalling well in excess of £100 million and/or terms which Levenseat would not have accepted and/or Levenseat would not have entered into the Levenseat EPC contract or preceded with the Levenseat Project pursuant to a contract with the Claimant
201. By reason of one or more of the aforesaid breaches in section 4 and/or this section, the Claimant has suffered loss and damage.
Section 171 claims
7. The claimant claims damages and interest. Its causes of action are breaches of contract and breaches of ss. 174, 173 and/or 171 of the 2006 Act.
32. First on 12 August 2009 and then on 5 May 2015 M+W Germany (as the sole shareholder of the Claimant) brought rules of procedure into force with immediate effect by special resolutions (alternatively agreements) to which Chapter 3 of the 2006 Act applied. By virtue of ss.17 and 257 of the 2006 Act, the special resolutions (alternatively agreements) and thus the rules of procedure became part of the Claimant's constitution and the Defendants' duties under s.171 of the 2006 Act included complying with the rules of procedure.
33. As to those rules of procedure:
(1) the 2009 rules of procedure provided
(2) the 2015 rules of procedure provided
34. In the premises from 5 May 2015 the M+W Red Book was also incorporated into the Claimant's constitution for the purposes of the 2006 Act such that from 5 May 2015 the Defendants' duties under s.171 of the 2006 Act also included complying with the M+W Red Book.
35. The M+W Red Book contained PRM requirements and for the Claimant those requirements included those matters set out in paragraphs 39 and 40 below.
131. For the avoidance of doubt, the matters complained about in sub-paragraphs 128(6), 129(9-12), (14-15), 130(6), (8), (16), (24), (27-30), (35-39), (45) and (48) above amounted to breaches by each Defendant of his duty under s.171 of the 2006 Act.
196. For the avoidance of doubt, the matters complained about in sub-paragraphs 195(6), (20-21), (24-25), (27-30), (32), (40) and (43) above amounted to breaches by each Defendant of his duty under s.171 of the 2006 Act.
Causal link between breach and loss
i) assertions that it relies on the identified failures of the Defendants as breaches of their duties and contracts: "whether taken individually or in any combination" (paragraphs 48-49, 128-130 and 195); and
ii) its case that the Claimant entered into the Suez Variation and/or the Levenseat EPC contract and, as a result, suffered loss and damage: "by reason of one or more of the aforesaid breaches" (paragraphs 133, 136, 198, 199 and 201).
Consolidation
i) The claims concern the same parties in the same capacities.
ii) The parties have the same legal representation.
iii) The claims concern different projects but a common feature is that they are all waste to energy projects.
iv) Different factual allegations are relied on as amounting to the breaches, but the claims are concerned with the same employment contracts for each Defendant, the same obligations under the 2006 Act, and similar, or the same, types of breach.
v) In each claim the causal link identified is the same, namely, that had the Defendants not breached their obligations, the relevant contract would not have been entered into.
vi) The basis on which the loss in each claim is quantified is the same, namely, the loss resulting from the Claimant's entry into the relevant contract.
Application to strike out or for summary judgment
i) the claims in contract and pursuant to sections 171 and 173 of the 2006 Act have no real prospect of success;
ii) claims based on allegations of breach that occurred more than six years prior to the issue of the claim forms are statute-barred;
iii) the claims pursuant to section 174 of the 2006 Act and the losses claimed are so vague and unparticularised that they amount to an abuse of process or are likely to obstruct the just disposal of the proceedings;
iv) the Particulars of Claim fail to comply with CPR 16.4(1);
v) the Claimant has failed to provide sufficient documentation so that the Defendants can understand the case they have to meet.
i) the claims in contract and pursuant to sections 171 and 173 of the 2006 Act disclose arguable claims in law;
ii) the allegations of breach that occurred more than six years prior to the issue of the claim forms are relevant to the allegations that the Defendants were in breach of their contractual and statutory obligations in entering into the material agreements and reliance is placed on continuing breaches up to the date of those agreements;
iii) the claims pursuant to section 174 of the 2006 Act and the losses claimed are sufficiently particularised so that the Defendants may understand the nature of the claims made and respond to them;
iv) the alleged failure to comply with CPR 16.4(1) is disputed and is no longer relied on by the Defendants as a separate ground;
v) the Claimant has provided documentation in accordance with its obligations under the disclosure pilot practice direction.
The applicable test
"The court may strike out a statement of case if it appears to the court:
(a) that the statement of case discloses no reasonable grounds for bringing or defending the claim;
(b) that the statement of case is an abuse of the court's process or is otherwise likely to obstruct the just disposal of the proceedings "
"The court may give summary judgment against a claimant on the whole of a claim or on a particular issue if
(a) it considers that
(i) that claimant has no real prospect of succeeding on the claim or issue; and
(b) there is no other compelling reason why the case or issue should be disposed of at a trial."
i) The court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success: Swain v Hillman [2001] 1 All ER 91.
ii) A "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8].
iii) In reaching its conclusion the court must not conduct a "mini-trial". If the pleaded facts do not disclose any legally recognisable claim against a defendant, it is liable to be struck out. However, the factual averments made in support of the claim should be accepted unless, exceptionally, they are demonstrably untrue or unsupportable: Okpabi v Royal Dutch Shell plc [2021] UKSC 3 at [20]-[22].
iv) The court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550; Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63.
v) If the court is satisfied that it has before it all the evidence necessary for the proper determination of a short point of law or construction and the parties have had an adequate opportunity to address the question in argument, it should grasp the nettle and decide it: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.
vi) However, it is not appropriate to strike out a claim in an area of developing jurisprudence, since in such areas, decisions as to novel points of law should be based on actual findings of fact: Barratt v Enfield BC [2001] 2 AC 550 per Lord Browne-Wilkinson at p.557.
vii) The court must be certain that the claim is bound to fail; unless it is certain, the case is inappropriate for striking out: Hughes v Colin Richards & Co [2004] EWCA Civ 266 per Peter Gibson LJ [22]-[23]; Rushbond v JS Design Partnership [2021] EWCA Civ 1889 per Coulson LJ at [41]-[42].
Claims in contract and under sections 171 & 173 of the 2006 Act
Whether the claims are statute-barred
Whether section 174 claims adequately pleaded
CPR 16.4(1)
Disclosure
"Save as provided below, and save in the case of a Part 7 claim form without particulars of claim or a Part 8 claim form, each party must provide to all other parties at the same time as its statement of case an Initial Disclosure List of Documents that lists and is accompanied by copies of
(1) the key documents on which it has relied (expressly or otherwise) in support of the claims or defences advanced in its statement of case (and including the documents referred to in that statement of case); and
(2) the key documents that are necessary to enable the other parties to understand the claim or defence they have to meet."
"Initial Disclosure is not required where
(1) the parties have agreed to dispense with it (see paragraph 5.8 below);
(2) the court has ordered that it is not required (see paragraph 5.10 below); or
(3) a party concludes and states in writing, approaching the matter in good faith, that giving Initial Disclosure would involve it or any other party providing (after removing duplicates, and including documents referred to at paragraph 5.4(3)(a)) more than (about) whichever is the larger of 1000 pages or 200 documents (or such higher but reasonable figure as the parties may agree), at which point the requirement to give Initial Disclosure ceases for all parties for the purposes of the case."
"A party giving Initial Disclosure
(1) is under no obligation to undertake a search for documents beyond any search it has already undertaken or caused to be undertaken for the purposes of the proceedings (including in advance of the commencement of the proceedings);
(3) need not provide unless requested documents by way of Initial Disclosure if such documents
(a) have already been provided to the other party, whether by disclosure before proceedings start (see CPR 31.16) or through pre-action correspondence or otherwise in the period following intimation of the proceedings (and including when giving Initial Disclosure with a statement of case that is being amended); or
(b) are known to be or have been in the other party's possession;
(4) need not disclose adverse documents."
"Unless otherwise ordered, or agreed between the parties, copies of documents shall be provided in electronic form for the purpose of Initial Disclosure. The Initial Disclosure List of Documents should be filed but the documents must not be filed."
i) the Defendants' service contracts;
ii) the Special Resolutions bringing into effect Rules of Procedure in 2009 and 2015;
iii) the Claimant's internal project risk management requirements and procedures, including the Red Book;
iv) documents prepared during the tender process for the projects as part of the internal project risk management requirements in order to obtain PIRA, TERA and TFU approval and enter into the contracts;
v) P&IDs;
vi) the EPC contracts for each project and the Suez Variation agreement;
vii) relevant sub-contracts, including the sub-contracts with Outotec for each project;
viii) correspondence and other documents referred to in the statements of case.
i) the sub-contract documentation provided is incomplete;
ii) the risk management documents are incomplete and do not cover the full extent of PIRA, TERA and TFU for the projects;
iii) the project design documents are incomplete;
iv) the employment contracts are incomplete;
v) the internal risk review documents are incomplete;
vi) correspondence between the Defendants and external parties relating to the pricing of the projects is incomplete.
"In an appropriate case the court may, on application, and whether or not Initial Disclosure has been given, require a party to disclose documents to another party where that is necessary to enable the other party to understand the claim or defence they have to meet or to formulate a defence or a reply."
i) Item 4 all reports to the Board regarding the Levenseat, Suez and Hull Projects, including reports in the lead up to the Projects, the inception of the Projects and throughout the course of them;
ii) Items 5, 6, 16 and 25 if not yet disclosed, the PIRA, TERA and TFU documents, including all annexures, for each project;
iii) Items 8, 18 and 27 all minutes of the CRC meetings in respect of the approvals to enter into the material contracts for each project;
iv) Items 13, 22 and 31 all internal and external audit reports on each of the projects.
Conclusion
i) the Claimant has permission to amend the Particulars of Claim in Claim HT-2021-000094;
ii) Claim HT-2021-000094 and Claim HT-2021-000438 are consolidated;
iii) the Defendants' application to strike out parts of the pleading or for summary judgment on those parts is dismissed;
iv) the Claimant shall give further disclosure to the Defendants of the categories of documents set out above;
v) the Defendants have further time to file and serve the Consolidated Defence until after such disclosure.