Substantial "Disputes of fact" and CPR 8 Proceedings

ISG Jackson (ISG) referred a dispute over an extension of time under a JCT 98 Local Authority with Quantities form of contract for the construction of two schools with Forest Heath District Council (FHDC) to adjudication. Completion was due on 19 June 2007. At one of the design meetings in December 2005, the engineers WSP proposed that a three-coat paint finish be applied to the steelwork over the pool. ISG said that it would prefer the steelwork to be pre-finished. There was an action on ISG to discuss the implications of the pre-finished steelwork with the subcontractors, and find out if this option would have any effect on lead times. WSP issued ISG with steelwork drawings for the purpose of undertaking this task.

By January 2006, ISG reminded that the need to place an order for the steelwork was becoming urgent, and had to be done by 3 February 2006 so that the works could commence on site on 28 February. WSP produced a specification, which included the painting of the steelwork using either option.

The discovery of asbestos and contamination caused substantial delay, which the adjudicator later assessed as being 26.6 weeks. ISG issued an Information Required Schedule, which, amongst other things, set the date for the final design for the subcontract order at 1 August 2006, so that work could commence on site on 25 October.

ISG selected Four Bay Structures Ltd. (FBS) to be the steelwork subcontractor. The notes of a site meeting recorded that, because of the delays, FBS had requested approval to purchase the required steelwork so as to avoid likely future cost increases. FHDC responded that it was satisfied with this arrangement in principle, and told ISG to go ahead with an action date of 18 October 2006. In the notes of the same meeting, WSP stated that the secondary steelwork drawings had been issued in September, and were currently being reviewed by the architect. ISG alleged that it was about this time that a decision was made to change from site painting to pre-finished steelwork.

The Parties then fell out over whether the design information had been late. In its referral ISG claimed an extension of time of 29 weeks in respect of delays to the Pool works and Birdcage Scaffold delays. FHDC maintained that the steelwork design had not changed after 1 July 2006 apart from it acquiescing to ISG’s request to substitute Leigh Paints. FHDC argued that ISG’s Information Required Schedule confirmed that it had all the necessary information, and it had not asked for the colour of the top coat of the paintwork. Even if Revision A of the specification had been issued to ISG on 29 August 2006, and not July 2006 as FHDC was claiming, more than five weeks had passed before ISG had asked WSP for an instruction permitting them to use Leighs Paints. WSP has responded quickly to this, and ISG had made no complaint at the time.

In his decision, the Adjudicator found that the net delay to the Pool Hall and the likely delay to the completion date was 24 weeks and three days. He concluded that this delay had been caused by the later design information, and that this had been FHDC’s responsibility. Consequently, the delays caused were a relevant event. FHDC commenced Part 8 proceedings, seeking a declaration that the decision to paint the steelwork on site had been taken in October 2006 and was not because of the late finalisation of the steelwork design.

ISG responded that there were substantial factual issues, and, therefore, Part 8 proceedings were inappropriate.

CPR rule 8.1(2)(a) states that a Claimant may use Part 8 procedure where “he seeks the court’s decision on a question which is unlikely to involve a substantial dispute of fact.” If there are substantial disputes of fact, then the relevant proceedings are Part 7 proceedings.

The court does retain a discretion where the claim is for a declaration. In exercising that discretion, the court must take into account the justice to each of the parties, and whether there are any special circumstances which would justify the grant of such a declaration or otherwise.

In the present case, the declaration essentially sought a determination of why ISG decided to change from the pre-finished steelwork to painting the steelwork on site. FHDC’s argument was that it could not have been because of late design information because ISG had the steelwork design by 1 August 2006. On the evidence, there was a dispute about whether the design information had been late, and the effect of this on ISG. This was not dealt with in the documents, apart from the witness statement of the site manager, which had not been tested in cross examination. A proper determination of the issue would require disclosure of documents. A declaration on the entitlement to an extension of time would be uncertain, and would not lead to a final determination of the parties’ dispute. This was not a case where there was no substantial dispute of fact or where that dispute of fact could be determined by a short hearing without disclosure. Upon further investigation, the factual issue would be likely to widen further. Part 8 proceedings were not appropriate to the present case.

(Forest Heath District Council v ISG Jackson Ltd.; 22 February 2010 [2010] EWHC 322 (TCC))

Author: Ann Glacki

Date: March 2010

Commentary by Scott Milner

A Part 8 claim form will normally be used where there is no substantial dispute of fact. Often it is used to resolve a preliminary issue before adjudication, such as the situation where the dispute turns on the construction of the coontract or the interpretation of statute. Alternatively, post adjudication e.g., claims challenging the jurisdiction of an adjudicator or the validity of his decision are sometimes brought under Part 8. In those cases the relevant primary facts are often not in dispute. Part 8 claims will generally be disposed of on written evidence and oral submissions.

It can be seen in the above case that the primary facts (i.e the cause of delay) were in dispute.

The further guidance provided by this case is that if witnesses need to be examined and evidence needs to be disclosed in order to properly determine an issue then a Part 7 claim will need to be used and not Part 8.

For more information, please contact Scott Milner by telephone 0114 2180668 or by email scott.milner@alway-associates.co.uk

Scott Milner

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