INAPPROPRIATE USE OF PART 8 PROCEDURE: “AN ENTIRELY UNSATISFACTORY WAY TO PROCEED”: HIGH COURT DECISION
In Victory House General Partner Ltd v RGB P&C Ltd [2018] EWHC 102 (TCC) Miss Joanna Smith QC (sitting as a Deputy) was clear in her view that a claimant had used the Part 8 procedure inappropriately.
“In my judgment this would be an entirely unsatisfactory way to proceed. Not only is it unlikely to be consistent with the Overriding Objective, but it also risks prejudice to one or other of the parties in the presentation of their case”
THE JUDGMENT
Introduction
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This claim arises out of the development and conversion of an existing office building into an 87 bedroom hotel at Victory House, Leicester Square, London (“the Hotel“).
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The hearing came before me as a Part 8 Claim made by Victory House General Partner Limited (“VH“), the employer under a building contract made in about October 2015 (“the Contract“) pursuant to which VH engaged RGB P&C Limited (“RGB“) as contractor to design and construct the Hotel.
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By way of an Additional Claim and an application for summary judgment dated 5 January 2018, RGB seeks to enforce an adjudicator’s decision dated 7 November 2017 (“the Decision“) made against VH upholding RGB’s entitlement to payment under the Contract pursuant to RGB’s interim payment application 30 (“Application 30“) of 11 July 2017.
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The Part 8 Claim seeks a declaration that the Decision was invalid for breach of natural justice, together with declarations which relate directly to the substance of the Decision.
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At the outset of the hearing, I explored with counsel the extent to which Part 8 was the correct procedure for pursuit of the substantive claim and, after hearing submissions on the point, I gave a short judgment in which I rejected VH’s case that the substantive claim was suitable for determination under the Part 8 procedure, relying in particular on the judgment of Jefford J in Merit Holdings Limited v Michael J Lonsdale Limited [2017] EWHC 2450 (TCC).
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In my judgment, the matters raised on the Part 8 Claim, which include matters of disputed fact, are not suitable for resolution under the Part 8 procedure which is only to be used where the claimant seeks the Court’s decision on a question which is unlikely to involve a substantial dispute of fact. It is not an answer to this point to suggest, as Mr Mort QC did on behalf of VH, that issues could be resolved in the Part 8 proceedings on the basis of assumed facts, but that in the event of the decision being unfavourable to his client, he would then be in a position to challenge any disputed matters of fact at a later time in further substantive proceedings. In my judgment this would be an entirely unsatisfactory way to proceed. Not only is it unlikely to be consistent with the Overriding Objective, but it also risks prejudice to one or other of the parties in the presentation of their case. I concur with Jefford J’s judgment in Merit Holdings Limited v Michael J Lonsdale Limited [2017] EWHC 2450 (TCC) at paragraph 22 that it is likely to lead to the court arriving at ill-formulated and ill-informed decisions. In the event of a subsequent challenge to such a decision, there will be no saving of costs and resources and no advantage in permitting determination of the issues to be expedited.
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Accordingly, the declarations sought in the Part 8 claim, with the exception of the declaration that the Decision was invalid for breach of natural justice which will be addressed in the context of RGB’s claim for summary judgment, need to be dealt with under the Part 7 Procedure which will enable the parties’ respective positions on the disputed issues to be fully and properly explored. I shall invite the parties’ submissions on directions for the pursuit of the claim under Part 7 in due course.
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My decision on the Part 8 Claim left the issue of enforcement to be determined on RGB’s application for summary judgment.
THE RESULT
The defendant obtained summary judgment on its Additional Claim. Directions for converting the Part 7 proceedings into Part 8 proceedings were to be made at a later date.