TRYING TO SQUEEZE A PART 7 CASE INTO A PART 8 APPLICATION: DISPUTES OF FACT MAKE PART 8 UNSUITABLE

In ISG Retail Ltd v FK Construction Ltd [2024] EWHC 878 (TCC) Neil Moody KC, sitting as a Deputy High Court Judge, considered the question of whether a case was suitable for Part 8 determination.  He decided that there were issues of fact in the dispute between the parties which made the matter unsuitable for Part 8, the action needed to be transferred to Part 7.

 

 

In order to succeed in a Part 8 claim the Claimant must generally first establish that it is unlikely to involve a substantial dispute of fact. The Claimant must necessarily argue that the issues are relatively straightforward and the evidence self-contained. It is not unusual for the Defendant to emphasise potential factual disputes in support of submissions that the proceedings should be dismissed. This case is a rather extreme example of the genre. The Claimant contends that there are two short points to be determined: first, whether a contractual term is a condition precedent, and second, whether it was breached. The Defendant argues that the question of compliance involves the examination of a great deal of factual material. It further relies upon waiver and estoppel and submits that the points are wholly unsuitable for Part 8 determination. It argues that the one day time estimate was inadequate and relies upon 25 authorities. The Claimant’s response is that the Defendant is obfuscating the issues and has deployed “every conceivable argument” in a bid to persuade the Court not to decide the case on a Part 8 basis”

 

THE CASE

The parties were in dispute in relation to a construction contract.

“These parties are serial litigants. I was told that the disputes between them had produced 12 adjudications, eight sets of High Court proceedings and two appeals to the Court of Appeal.”

The current dispute related to to an adjudication where an extension of time was granted. The claimant argued that before an extension was granted the defendant had to comply with a condition precedent in relation to delivering particulars of the delay. The defendant argued that there was no condition precedent, alternatively that by the claimant’s conduct it was estopped or had waived its entitlement to rely on that particular contractual clause.

WAS THIS SUITABLE FOR PART 8 DISPOSAL?

For Part 8 to be used there has to be no substantial dispute on the facts.

 

 

    1. In ING Bank NV v. Ros Roca SA [2011] EWCA Civ 353 Stanley Burton noted [77]:

 

In general Part 8 proceedings are wholly unsuitable for the trial of an issue of estoppel. Once such a claim is disputed, save in exceptional cases, the proceedings will cease to comply with CPR r 8.1(2)(a), since they will cease to be proceedings in which the parties do not seek the court’s decision only on questions which are ‘unlikely to involve a substantial dispute of fact’. A disputed claim of estoppel should be carefully pleaded.

    1. In CLS Civil Engineering Limited v. WJG Evans and Sons [2024] EWHC 1194, I was able to decide Part 8 proceedings which involved allegations of estoppel. That was in circumstances where the alleged estoppels were clearly articulated, the factual background was largely non-contentious, and it could be seen that that the estoppels stood no real prospect of success. By contrast, in Sleaford the Deputy Judge held at [63] that arguments of waiver based on site practice were unsuitable for Part 8 determination.

 

 

  1. I did not find FK’s articulation of its case on waiver and estoppel to be altogether satisfactory. I pressed Mr Hargreaves to formulate the legal propositions for which he contended and to map them across to the facts of this case. In the end the principles contended for and their application were not entirely clear.

THE END RESULT: NOT SUITABLE FOR PART 8 – TRANSFERRED TO PART 7

The disputes as to fact meant that the matter was not suitable for Part 8 and had to be transferred to Part 7.

 

    1. Standing back and cutting through all this, it is clear that: (a) FK provided repeated early warnings of delay; (b) ISG engaged with those early warnings; (c) ISG made no complaint that the warnings were inadequate or non-compliant; (d) FK thereafter continued to issue EWNs in the same format; (e) FK arguably relied on ISG’s stance in doing so; and (f) FK subsequently expended costs on its EoT claim. I can see that ISG may well have arguments as to whether they made any representation by word or conduct, and/or, if so, whether it was unequivocal, and/or whether it would be unconscionable for ISG to rely on its contractual rights. But in my judgment FK has an arguable case of waiver and/or estoppel which has a real prospect of success. It is clear to me that the arguments on waiver and estoppel are likely to involve substantial disputes of fact and that they need to be properly pleaded out. Stanley Burton LJ’s dictum in ING Bank is applicable here. It is not satisfactory and it is not fair to either side for the Court to be asked to decide multiple formulations of estoppel and waiver on the basis of a disputed factual background and without the parties’ cases being pleaded out.

 

 

Is it permissible to seek the final determination of one aspect of an adjudication by Part 8 proceedings?

 

    1. The point argued by Mr Hargreaves that taking a single part of the adjudication for final determination by way of Part 8 proceedings was a “category error” does not strictly arise for determination. But since it is a point of pure law and it was fully argued, I will state my brief conclusion. I see no reason why one part of an adjudicator’s decision should not be the subject of final determination under Part 8 if the issue is otherwise suitable for Part 8 determination (ie it is unlikely to involve a substantial dispute of fact). This is particularly so if the balance of the adjudicator’s decision is uncontentious (which may be the position in the present case); otherwise the parties would be required to litigate matters which are not in dispute. I note that this was essentially the conclusion reached by Edwards-Stuart J in Geoffrey Osbourne Ltd v Atkins Rail Ltd [2009] EWHC 2425 at [18] and I respectfully agree with him.

 

Conclusion and Disposal

    1. I conclude therefore that these proceedings are not suitable for Part 8 determination and I decline to make any declarations. I reach this conclusion because I consider there are likely to be substantial disputes of fact (a) as to whether FK was in breach of clause 9(5), and (b) as to whether ISG has waived its entitlement to rely upon any breach, and/or is estopped from so relying. I decline to make any declaration as to whether clause 9(5) is a condition precedent. There is little purpose in deciding the construction points without also deciding the issues of breach and waiver/ estoppel at the same time. In any event it would be preferable for the construction issues to be pleaded out.

 

  1. The Court has a discretion under CPR 8.1(4) to order a claim to continue under Part 7. I invite the parties to consider how this claim should proceed, and to agree an Order addressing consequential matters and directions if appropriate within 14 days of hand-down. If agreement cannot be reached, then short written submissions should be exchanged and lodged within the same timescale. I will then decide any disputed matters on the papers or list the matter for a hearing if the parties request it.