Carillion JM Ltd v PHI Group Ltd

This is an application by the Defendant ("PHI") for permission to amend its Defence in order to make certain admissions as to liability and to make allegations of contributory negligence against the Claimant ("Carillion") and to bring in a new party, Robert West Consulting ("Robert West"), by way of Part 20 proceedings in order to seek contribution or indemnity against Carillion’s claim against PHI. At the conclusion of the hearing I gave my decisions on these applications with reasons to follow. This judgment contains those reasons.

Carillion and PHI went through the pre-action protocol procedure during late 2007 and mid 2008. Carillion’s claim was served on 27 April 2009 and PHI served its Defence and Counterclaim on 30 June 2009. Disclosure took place in September 2009 (although PHI had already been provided with a copy of Robert West's appointment on 26 June 2009), and copies of documents from Carillion’s disclosure were provided to PHI during October 2009. There was a meeting between the parties’ experts on liability on 21 October 2009.

At this stage the trial was fixed for January 2010, but at a hearing on 17 November 2009 PHI applied to have the trial date put back because it said it could not be ready for a trial in January 2010. The reasons given for this application were slippage of the timetable, the existence of further monitoring of the relevant groundworks and the need to have a window for mediation.

PHI’s application was successful and the trial date was adjourned to 26 April 2010 (it has since been put back slightly, with the agreement of the parties, to 4 May 2010). At the hearing of that application, which was before Ramsey J, PHI gave no indication that it was considering joining Robert West to the proceedings.

The hearing came before me because Carillion restored the CMC at short notice upon being told that PHI was proposing to seek permission to amend its Defence and to join Robert West. The position taken by the parties at today’s hearing was that Carillion and Robert West both opposed the application in so far as it involved a joint hearing of Carillion’s claim against PHI with PHI’s claim against Robert West. The application to join Robert West as a party was not opposed in itself. The reason for the opposition was that Robert West could not be ready for a trial in 2 months time, as all parties accepted, so that a joint hearing of the two claims would inevitably involve vacating the present trial date.

So far as PHI’s application to amend its Defence was concerned, Carillion realistically did not oppose the application save in relation to one paragraph, namely paragraph 61A.

I take the following outline of the facts from the submissions served on behalf of PHI. PHI was engaged by Carillion as a subcontractor to design and construct soil stabilisation works, including soil nailing, in connection with the construction of a light maintenance railway depot and associated facilities at Wembley. The employer was M40 Trains. Carillion provided PHI with site investigation reports and design parameters as a basis for the design of the soil nailing. The design parameters were prepared by Robert West, the civil engineers engaged by Carillion, who were further responsible for reviewing and approving PHI’s design and thereafter obtaining the necessary approval to that design from M40 Trains.

There were failures to the soil nailed wall in January 2005 and October 2005. Carillion alleges that there were further failures in November/December 2006. PHI contends that it was not negligent in relation to the preparation of the original design, but it now accepts that following the failures in January 2005 there was evidence of pre-existing slip surfaces and that its design should have been revised accordingly. When it prepared its original design it made it clear that it had not considered the possibility of the existence of slip surfaces.

PHI contends that Robert West also owed duties to Carillion in relation to these works, was in breach of those duties and is therefore liable to Carillion for the failures that occurred. If PHI is also liable to Carillion, then it contends that it has a claim for contribution or indemnity against Robert West.

PHI told the court that its change of position, both in relation to liability and in relation to the claim against Robert West, came about as a result of internal discussions with its expert during October, November and December 2009. As a result, PHI's solicitors wrote a pre-action protocol letter to Robert West on 23 December 2009. It gave no indication at that stage that it also wished to amend its Defence although, in relation to that part of the application, in her submissions for the hearing today Ms Krista Lee, who appeared for PHI, said that PHI's “revised position was formed during October-December 2009 as a result of disclosure and discussions and investigations arising out of the experts meeting on 21 October 2009". She submitted that there had not been any undue delay between that decision and the making of the application on 4 March 2010 because PHI required adequate time for the consideration of these admissions with its legal advisers, expert and insurers.

In relation to the application to join Robert West, it was said on behalf of PHI that it delayed making its application to join Robert West as a party in order to allow the pre-action protocol procedure to take place. In fact, Robert West did not respond promptly to the protocol letter and did not in fact serve a response until 8 March 2010, by which time PHI had already issued its application.

There has been no clear explanation as to why PHI left it so long before making the application to join Robert West. The suggestion that it was in order to allow the protocol procedure to take place is undermined by its solicitors’ letter of 3 February 2010, in which they wrote:

In the context of the relatively imminent trial date one would expect "shortly" to refer to a period measured in days, rather than weeks. There was no suggestion in that letter, or in any other correspondence that I have seen, that PHI intended to put off the issue of its application to join Robert West until the pre-action protocol procedure had been completed. In the light of the fact that the trial was then fixed for late April (or possibly early May) 2010, any such suggestion would have been most ill advised.

PHI says that Robert West took an unduly long time to produce its response and that, when it came, consisted of not much more than a bare denial. PHI is of course correct to say that the pre-action protocol procedure should be followed wherever it is possible to do so. However, as Jackson J (as he then was) pointed out in Alfred McAlpine v SIAC Construction [2005] EWHC 3139 (TCC), the language of the protocol suggested that it was directed to parties who were about to embark on litigation, and not to a situation where at the time of the protocol procedure one or other of the parties was working within the constraints of a timetable imposed by the court (see paragraph 36).

In a witness statement dated 4 March 2010 made in support of the application Miss Helen Jenkins, a solicitor with Fishburns who has the day to day conduct of the case behalf of PHI, said nothing about the reason for the delay between the decision to take proceedings against Robert West, which she says was made in the latter part of December 2009 (resulting in the pre-action protocol letter dated 23 December 2009), and the issue of the application on 4 March 2010. As I have mentioned, Ms Lee submitted that it was because PHI required adequate time for the consideration of these admissions with its legal advisers, expert and insurers.

In my judgment, this submission simply does not hold water. PHI had already concluded, after discussions with its expert and its solicitors, that a claim should be made against Robert West and this culminated in the writing of the pre-action protocol letter to Robert West on 23 December 2009. It may well be that when the pre-action protocol letter was written instructions to join Robert West had not been received from PHI’s insurers, but even if that is so it should not have taken 2½ months for insurers to give the necessary instructions – they should probably have been given in days, and certainly within no more than a couple of weeks.

Ms Lee said also that there were several other things going on within PHI’s camp during this period but that she could not elaborate further because those matters were privileged.

It seems to me that the criticisms made on behalf of Carillion and Robert West about the lack of any proper explanation for the delay in making this application are fully justified. Mr Peter Fraser QC, who appeared on behalf of Carillion, referred me to a passage in the judgment of Rix LJ in Borealis AB v Stargas Ltd [2002] EWCA Civ 757 in which he said, at paragraph 51:

As Mr Fraser submitted, those observations could almost have been written for this case. They demonstrate the importance of a cogent and candid explanation in circumstances such as this. Failing such an explanation, the party seeking the indulgence of the court is likely to get fairly short shrift.

Both Ms Lee and Mr Fraser made submissions based on the facts of that case, but I consider that they are so far removed from the facts of this case that little assistance, if any, can be derived from them. It is perhaps sufficient to say that the Court of Appeal upheld a decision by Moore-Bick J not to grant an application made at a late stage (4 months before the trial) to join a foreign party to litigation in circumstances where that joinder would lead to an adjournment of the trial date.

CPR 20.9(2) sets out matters relevant to the question of whether an additional claim should be heard separately from the main claim. The matters to which the court may have regard include: (a) the connection between the additional claim and the claim made by the claimant against the defendant (b) whether the additional claimant (in this case PHI) is seeking substantially the same remedy which some other party is claiming from him; and (c) whether the additional claimant wants the court to decide any question connected with the subject-matter of the proceedings ... not only between existing parties but also between existing parties and a person not already a party.

There is no doubt that in this case any consideration of those factors points very strongly to the proposed Part 20 claim against Robert West being heard together with the main claim by Carillion against PHI. However, against that must be set the fact that a combined hearing cannot take place without adjourning the trial. As I have already noted, the trial date has already been put back once.

In Alfred McAlpine v SIAC Jackson J made the following observations at paragraph 41 of his judgment:

Usually in a case such as this one the court would not hesitate to order both claims to be heard together unless there were compelling reasons for not doing so. In this case the reason for not doing so is the undisputed fact that Robert West cannot be expected to be ready for trial by early May 2010 so that the only way in which all matters can be dealt with at one hearing is by adjourning the trial yet again.

If I thought that PHI had done everything that it reasonably could to join Robert West to the proceedings at the earliest practicable moment, then the balance of fairness might favour an adjournment of the trial. However, PHI has given no satisfactory explanation for the delay of about 2 months between early January and early March 2010. If the application to join Robert West had been made in early or mid January, Robert West might have had difficulty persuading the court that it could not be ready for a trial in early May (it appears to accept that it could probably be ready for a trial by about 4 months time). Whilst I accept that the pre-action protocol has to be followed if possible, I can see no reason why in the circumstances of this case, and particularly the very tight timetable to trial, the pre-action protocol could not have been carried out in tandem with the application for joinder.

If there is injustice to PHI in being deprived of the opportunity of having all of the issues tried at the same time, it has only itself to blame for that injustice. Accordingly, I consider that this is one of those rare cases where the court should consider directing that the Part 20 claim be heard and determined after the principal claim. However, when doing so it is both appropriate and necessary for the court to take such steps as it can to reduce or eliminate any potential for injustice or unfairness. If such steps can be taken, then it would be appropriate for the two parts of the proceedings to be heard separately.

The most compelling reason put forward by Ms Lee for having all the issues decided at the same time is the risk of inconsistent findings of fact or, perhaps more accurately, evidence at one hearing conflicting with evidence given at the other. She gave, as an example, the situation in which Carillion asserts at the first hearing that it relied on Robert West to give any appropriate advice and that no relevant advice was given, whereas in the second hearing Robert West asserts that it gave relevant advice but that Carillion ignored it.

The issues in this case are highly technical and will involve complex questions of soil mechanics. I consider it inherently unlikely that any advice given (or other step taken) in a case such as this will not have been documented and so it will be important that the documents provided by all parties are available at both hearings. Further, if allegations of the sort suggested by Ms Lee were to be made by Robert West, one would expect to find them pleaded when it serves its defence to PHI’s claim. Accordingly, that defence should be available prior to the hearing of Carillion’s claim against PHI.

Mr Ben Patten QC, who appeared for Robert West, indicated that his clients would be able to give disclosure within 4 weeks from today (in fact it was proposed that it would be on a rolling basis, with a first tranche being given in 2 weeks time). He told the court also that his clients would be able to serve a full defence to PHI’s claim by 16 April 2010 - that is about 3 weeks before start of the the trial as currently listed.

It seems to me that if Robert West is ordered to provide disclosure well before the date of the trial and, in addition, to serve its defence a reasonable time before the trial, PHI will be given substantial protection against the risk of inconsistent findings of fact. A further necessary precaution is for the same judge to hear both parts of the proceedings.

Taking all these factors into account I have concluded that fairness requires the claim against Robert West to be heard and determined separately from the hearing of Carillion’s claim against PHI. I consider that there would be greater injustice to Carillion by adjourning this trial yet again than the injustice to PHI if the claim against Robert West is heard separately. Even if the situation was evenly balanced or there was doubt about it, since it is PHI’s conduct that has brought about the present difficulties it is right that PHI, not Carillion or Robert West, should bear the attendant risks.

Accordingly, I allow PHI's application to join Robert West as a Part 20 defendant but only on the terms that I have already indicated. If it should happen that Robert West's defence raises matters that do give rise to a justified apprehension of there being inconsistent findings of fact, then the matter will have to be raised and considered at the PTR.

With the exception of one point, this application was not opposed by Mr Fraser. He realistically accepted that amendments are nearly always allowed, if that is what is required to enable the real issues between the parties to be determined, unless there is some real potential for injustice which cannot be compensated by an appropriate order in relation to costs. Although he rightly contends that this application is made inexcusably late, it is not suggested that Carillion cannot deal with the proposed amendments.

The only amendment to which Mr Fraser objects is paragraph 61A. This reads as follows:

Mr Fraser submits that whilst this plea may be legitimate as a matter of principle, it is not in an acceptable form because it does not have any figures attached to it. In response to this Ms Lee at first submitted that PHI could not formulate its allegation under this head until the final scope of the current remediable scheme was known because such a scheme was what should have been adopted in the first place.

I do not consider that that is a valid response to Mr Fraser's objection. It is most unlikely that, if all the site investigations had been properly carried out and if a properly designed scheme had been adopted from the outset, that that scheme would be the same as the solution now being proposed. As Mr Fraser put it, the knowledge base in 2010 is bound to be different from the knowledge base in 2005. I think that Ms Lee felt constrained to accept this, but she submitted nevertheless that she ought to be given permission to amend in the form proposed and thereafter to provide appropriate further information when it was available.

I do not consider this to be a satisfactory solution. A pleading should contain facts: the mere assertion of a principle such as betterment does not tell the opposing party what case it has to meet. It seems to me axiomatic that a party should not be given permission to amend unless the amendment is properly and fully formulated. The later the stage at which an amendment is put forward, the more strictly this rule should be observed.

I made it clear at the conclusion of the hearing, and I say it again in this judgment, that the refusal of permission in relation to paragraph 61A does not mean that the point cannot be raised by PHI hereafter. If and when a properly formulated amendment is put forward, Ms Lee can make another application. If that is opposed, then the application will have to be judged on its merits.

Carillion and PHI are to prepare and agree, if possible, any required revisions to the existing directions in the principal claim that are necessary to give effect to this judgment or to rectify any slippage in the timetable to date. PHI and Robert West are to agree directions for the conduct of the Part 20 claim. Subject to any further application by the parties the date of the hearing of the Part 20 claim will be fixed at the hearing of the Pre-Trial Review on 26 March 2010. It will be heard by the judge who hears the principal claim.

I direct also that there is to be a PTR in the principal claim on 23 April 2010. Robert West is to be represented at that PTR. It is, of course, essential that Robert West's Defence will have been served before that hearing.

PHI is to pay Carillion’s and Robert West's costs of this application, which in the case of Carillion I have already assessed in the sum of £10,500.

PHI is to pay also Carillion’s costs of and occasioned by the amendments, including any costs thrown away.

If agreement on any of these matters cannot be reached, or if there are any other matters, I will resolve them on the basis of written submissions (if such are necessary).