Kajima Construction Europe (UK) Ltd v Children’s Ark Partnership Ltd [2023]

In Kajima Construction Europe (UK) Ltd v Children’s Ark Partnership Ltd [2023], the Court of Appeal found the first instance Judge had been correct to conclude that a dispute resolution procedure (DRP) in a construction contract had been unenforceable by reason of uncertainty.

 

The Background to the Case

Kajima Construction entered into a construction contract with CAP to design, construct and commission elements of a hospital, in Brighton.

The construction contract provided that no claim could be brought against Kajima after 12 years from the actual completion date. It also contained a DRP providing that all disputes should be referred to a liaison committee.

Following from the tragedy at Grenfell Tower, project fire safety concerns were notified to Kajima, who subsequently agreed to carry out remedial works, but without admission of liability.  Towards the end of an agreed ‘standstill period’ CAP advised that it considered there remained outstanding defects, and sought an extension of the standstill. Kajima declined, so CAP issued proceedings to protect against limitation. CAP subsequently applied for a stay in order to comply (retrospectively) with the contractual DRP, but Kajima applied to strike out the claim on the basis that CAP had not complied with the contractual DRP.

What did the Court Decide?

The Appeal was dismissed. The Court found that the first instance Judge had been right to conclude that the DRP was unenforceable by reason of uncertainty.

Strictly speaking, the Court did not therefore need to consider the further question of the stay. It nevertheless observed that while the first instance Judge had overstated the wide applicability of stays by describing it as a “default remedy” this had not affected the exercise of her discretion and had the Court needed to exercise such discretion it would have come to the same conclusion.

The Court also added that deprivation of a limitation defence “is an important element of the balancing exercise but it cannot alone be decisive”.

The Conclusion to the Case

This case is an important reminder to potential claimants who find themselves caught between a looming limitation deadline and a contractual DRP, that engaging with the DRP in good time is advisable to avoid having to issue costly protective proceedings and subsequently to seek a stay.

This decision nevertheless demonstrates the Court’s robust approach to dealing with DRP clauses that are considered unenforceable.

 

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For more information contact:

David Spires 

Partner

E-mail: DSpires@hklegal.co.uk

 

This article contains information of general interest about current legal issues, but does not provide legal advice. It is prepared for the general information of our clients and other interested parties. This article should not be relied upon in any specific situation without appropriate legal advice. If you require legal advice on any of the issues raised in this article, please contact one of our specialist construction lawyers.

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