Procedure — Civil Procedure Rules — Pre-action disclosure of documents — Intended proceedings against builder — Allegations of non-compliance with building regulations — Whether documents relating to building regulations should be disclosed — Whether order amending Supreme Court Act 1981 ultra vires
By an agreement dated 11 December 1997, the
applicant company acquired through P, an agent of the respondent, the freehold
of an estate of some 406 flats from the respondent. By clause 12.2 of the
agreement it was a condition that P would comply with outstanding building
regulation requirements relating to the development of the estate. The
applicant discovered what it considered to be serious defects in the buildings.
The cost of remediation was put at a provisional figure of £500,000. The
applicant applied under CPR 31.16(3) for pre-action disclosure of documents
relating to the application of the building regulations to the development. It
required these documents to make an accurate and complete schedule of defects.
The respondent resisted the application on the grounds that the requirements
for the application of CPR 31.16(3) were not satisfied as it was not likely
that there would be proceedings and none of the purposes in CPR 31.16(3)(d) was
likely to be achieved; it was also contended that Article 5 of the Civil
Procedure (Modification of Enactments) Order 1998, which amended the provisions
of the Supreme Court Act 1981 restricting pre-action disclosure, was ultra
vires.
application was allowed. Article 5 of the Civil Procedure (Modification of
Enactments) Order 1998 was valid. Litigation between the parties was likely.
The requirements of CPR 31.16(3)(a), (b) and (c) were satisfied. This was not a
typical construction defects case; a central feature of the case was to
ascertain what the building control officers required and/or authorised in
relation to the building regulations. The applicant did not have control of the
documents relating to this issue. Disclosure before proceedings would enable
the applicant to prepare a more accurate schedule of defects. An order for
disclosure at this stage was likely to save costs.
The following cases are
referred to in this report.
Finbow v Air
Ministry [1963] 1 WLR 697; [1963] 2 All ER 647
R v Dover
Magistrates’ Court, ex parte Webb unreported 18 March 1998
This was an application
by Burrells Wharf Freeholds Ltd under CPR 31.16 for pre-action disclosure of
documents by the respondent, Galliard Homes Ltd.
Paul Infield (instructed by Fairweather Stephenson
& Co, of Leiston) appeared for the applicant; Michael Stimpson (instructed
by Howard Kennedy) represented the respondent.
Giving judgment, DYSON J said:
Introduction
This is an application for pre-action discovery of
the documents set out in the schedule annexed to the application notice. It is
made under CPR 31.16, which, so far as material, provides:
(1) This rule applies where an application is
made to the court under any Act for disclosure before proceedings have started…
(3) The court may make an order under this rule
only where —
(a) the respondent is likely to be a party to
subsequent proceedings;
(b) the applicant is also likely to be a party to
those proceedings;
(c) if proceedings had started, the respondent’s
duty by way of standard disclosure, set out in rule 31.6, would extend to the
documents or classes of documents of which the applicant seeks disclosure; and
(d) disclosure before proceedings have started is
desirable in order to —
(i) dispose fairly of the anticipated
proceedings;
(ii) assist the dispute to be resolved without
proceedings; or
(iii) save costs.
Before 26 April 1999 the right to make an order
for pre-action disclosure was restricted to actions in which claims were made
in respect of personal injury or death. However, on that date sections 33 and
34 of the Supreme Court Act 1981 were purportedly amended by Article 5 of the
Civil Procedure (Modification of Enactments) Order 1998, SI 1998/2940 (the
order) so as to remove the restriction. On behalf of Galliard Homes Ltd
(Galliard), Mr Michael Stimpson submits that Article 5 of the order is ultra
vires, and that I should declare it to be null and void. I shall deal with
this point first.
Ultra vires
The relevant primary legislation that needs to be
considered is to be found in the Civil Procedure Act 1997, which, so far as
material, provides as follows:
1. Civil Procedure Rules
(1) There are to be rules of court (to be called
‘Civil Procedure Rules’) governing the practice and procedure to be followed in
—
(a) the civil division of the Court of Appeal,
(b) the High Court, and
(c) county courts.
(2) Schedule I (which makes further provision
about the extent of the power to make Civil Procedure Rules) is to have effect…
4. Power to make consequential amendments
(1) The Lord Chancellor may by order amend,
repeal or revoke any enactment to the extent he considers necessary or
desirable in consequence of
(a) section 1 or 2, or
(b) Civil Procedure Rules.
(2) The Lord Chancellor may by order amend,
repeal or revoke any enactment passed or made before the commencement of this
section to the extent he considers necessary or desirable in order to
facilitate the making of Civil Procedure Rules.
(3) Any power to make an order under this section
is exercisable by statutory instrument.
(4) A statutory instrument containing an order
under subsection (1) shall be subject to annulment in pursuance of a resolution
of either House of Parliament.
(5) No order may be made under subsection (2)
unless a draft of it has been laid before and approved by resolution of each
House of Parliament…
8. Disclosure etc of documents before action begun
(1) The Lord Chancellor may by order amend the
provisions of section 33(2) of the Supreme Court Act 1981, or section 52(2) of
the County Courts Act 1984 (power of court to order disclosure etc of documents
where claim may be made in respect of personal injury or death), so as to
extend the provisions —
(a) to circumstances where other claims may be
made, or
(b) generally.
(2) The power to make an order under this section
is exercisable by statutory instrument which shall be subject to annulment in
pursuance of a resolution of either House of Parliament.
So far as material, the order provides as follows:
The Lord Chancellor, in exercise of the powers
conferred on him by section 4(2) of the Civil Procedure Act 1997, hereby makes
the following Order of which a draft has, in accordance with section 4(5) of
that Act, been laid before and approved by resolution of each House of
Parliament —
1. This Order may be cited as the Civil Procedure
(Modification of Enactments) Order 1998 and shall come into force at the same
time as the first Civil Procedure Rules made under section 2 of the Civil
Procedure Act 1997.
2. The amendments set out in this Order shall
have effect…
5. The Supreme Court Act 1981 is amended as
follows —
(a) in section 33 (powers of High Court
exercisable before commencement of action), in subsection (2), omit ‘in which a
claim in respect of personal injuries to a person, or in respect of a person’s
death, is likely to be made,’, and
(b) in section 34 (power of High Court to order
disclosure of documents, inspection of property etc) —
(i) omit subsection (1); and
(ii) in each of subsections (2) and (3), omit ‘to
which this subsection applies’.
Mr Stimpson’s argument is simplicity itself. He
submits that Article 5 of the order should have been made under sections 8(1)
and (2) of the 1997 Act, and not under section 4(2). Section 4 does not cover
the same ground as section 8. The express reference in section 8 to the power
to amend earlier legislation concerning pre‑action disclosure shows that
it was not intended that such a power be conferred by section 4. Moreover,
Article 5 of the order could not reasonably be said to be ‘necessary or
desirable in order to facilitate the making of Civil Procedure Rules’ as
required by section 4(2) of the 1997 Act.
In my judgment, this argument must be rejected for
the two following reasons:
(i) the order was made on 27 November 1998, some
five months before the Civil Practice Rules (CPR) came into force. The Lord
Chancellor wished to include in the new rules a provision that would give the
court the discretion to order pre-action disclosure in all classes of case,
thereby abrogating the rule that restricted such orders to actions involving
claims for damages for personal injury or death. In the absence of an amendment
of sections 33 and 34 of the 1981 Act, that wish would have been thwarted.
Thus, it was necessary to amend those sections of the 1981 Act in order to
facilitate the making of CPR 31.16, so as to ensure that it did apply in all
cases, and not merely in actions for damages for personal injury or death. As
for Mr
Act, that section clearly could not prevent the Lord Chancellor from coming to
the conclusion that it was necessary and/or desirable to amend sections 33 and
34 of the 1981 Act in order to facilitate the making of CPR 31.16. Once he
reached that conclusion (as plainly he must have done), it was open to the Lord
Chancellor to invoke section 4(2) of the 1997 Act. No doubt, he could equally
have made Article 5 of the order pursuant to section 8 of the 1997 Act. There
are situations in which the express inclusion of a power in one provision of an
instrument impliedly excludes that power from another provision. But whether
such implied exclusion is to be imputed to the draftsman must depend on an
examination of the particular instrument in question. There is nothing unusual
in drafting a general provision, and then also (for the avoidance of doubt)
making a specific provision that covers the same ground. In this case, section
4(2) confers the general power. In my view, the generality of its application
is not prejudiced or undermined by the existence of the specific power granted
in section 8.
(ii) Even if there were no power to include
Article 5 in the order pursuant to section 4(2) of the 1997 Act, that would not
avail Mr
section 8 to include Article 5 in the order that he made. Thus, it is common
ground that the substance of Article 5, which is included in the operative part
of the order, was valid and lawful. In my view, if there was a mistaken
reference in the recital to the source of the power to make that part of the
order, it was of no consequence, and could not affect its validity. On this
hypothesis, the situation would be analogous to situations that have been previously
considered by the courts where a public authority or person exercising a public
law power purports to do so by reference to the wrong legislation.
Thus, in Finbow v Air Ministry
[1963] 1 WLR 697 at p709, a minister mistakenly exercised a formal power of
approval of a licence to occupy land under a repealed section of a statute,
instead of its re‑enacted successor. It was argued that this was not an
effective approval, and was therefore a nullity. McNair J held that to hold
that the misdescription of his powers rendered the document a nullity would
defeat the plain intention of the minister. He continued in an explosion of
Latin:
It is, in my judgment, a plain case for the
application of the maxim falsa demonstratio non nocet and of the
principle embodied in the maxim magis valeat quam pereat. There is a
total inconsistency and repugnancy between the Minister’s manifest intention
and the literal effect of the document, and, in my judgment, the former should
prevail.
In R v Dover Magistrates’ Court, ex
parte Webb unreported 18
determined in the Divisional Court (Lord Bingham LCJ and myself) HM Customs
& Excise made an application to forfeit cash under the Criminal Justice
(International Co‑operation) Act 1990, at a time when that Act had been
repealed. The justices made forfeiture orders purportedly under sections 26(1)
and 27 of that Act. The relevant provisions of the 1990 Act were broadly re‑enacted
in the Criminal Justice Act 1993. It was held that, on the footing that the
reference to the provisions of the repealed Act was wrong, the maxim falsa
demonstratio would apply, and the error would not invalidate the justices’
decision. If I may be forgiven for quoting from my judgment, I said the
following:
The fact that failure to refer to section 26 in
the application form would not invalidate the form or the proceedings fortifies
me in my view that the erroneous reference to section 26 in the application in
this case was immaterial to the validity of the application. Nor can I see any
difference in principle between a mistaken reference to the wrong section of an
Act which is still in force. In each case, it can be said that the statutory
provision referred to in the application does not authorise the making of the
application. I do not believe that the law requires that a formalistic and
technical approach be taken in either case. The relevant question is whether,
viewed as a matter of substance, the application is one which is empowered by
the relevant statute.
In the present case, an application for
forfeiture in the substantive terms in which the application of 13 April 1995
was made was authorised by section 43 of the 1994 Act. In my view, Finbow v Air
Ministry [1963] 1 WLR, 697 is a valuable illustration of the maxim falsa
demonstratio non nocet, or to translate, the wrong label does not invalidate.
If it is right, as was held in that case, to save the exercise by a Minister of
a formal power, mistakenly made under a repealed section of a statute instead
of its re-enacted successor, I can see no reason for refusing to save an
application for forfeiture mistakenly made under the repealed section 26,
instead of its re-enacted successor.
Mutatis mutandis,
these observations apply with equal force to the present case. Here, Article 5
of the order would not have been invalidated by a failure to mention in the
recital the statutory power pursuant to which it was made. This shows that the
(assumed) erroneous reference to section 4(2) was immaterial to the validity of
Article 5.
Merits of the application
Estate and the parties
The proposed proceedings relate to an estate known
as Burrells Wharf, West Ferry Road, Isle of Dogs, East London. It comprises 406
flats divided into 11 blocks. The flats are held on long leases. The
development of the estate was started by Kentish Homes Ltd in 1987. Halifax
Building Society appointed receivers in July 1989 when the estate was only part
completed. Halifax carried on with the work, and sold on to Packamist Ltd in
October 1993. Packamist is a subsidiary of Galliard, and it seems not to be in
dispute that at all times Packamist was acting as agent or trustee for
Galliard. By an agreement dated 18
freehold reversion to Burrells Wharf Freeholds Ltd (Burrells). Burrells is a
company owned by about 250 of the lessees of the flats. Clause 12.2 of the
conditions of contract provided that, following completion, Packamist would:
comply with outstanding building regulation
requirements relating to development of the Property by the sellers to the
satisfaction of the local building control authority.
The defects
Burrells discovered what it considered to be
serious defects in the buildings comprising the estate. In particular, its
surveyor, Mr Easton of Easton Bevins, has expressed the opinion that the estate
suffers from serious breaches of the building regulations in relation to
resistance to the spread of fire. Regulations B2 and B3 have been identified as
being of particular relevance. They provide, inter alia:
Internal fire spread (surfaces)
B2. In order to inhibit the spread of fire within
the building, surfaces of materials used on walls and ceilings —
(a) shall offer adequate resistance to the spread
of flame over their surfaces; and
(b) shall have, if ignited, a rate of heat
release which is reasonable in the circumstances.
Internal fire spread (structure)
B3.– (1) The building shall be so constructed
that, in the event of fire, its stability will be maintained for a reasonable
period.
(2) The building, or the building as extended,
shall be sub-divided into compartments where this is necessary to inhibit the
spread of fire within the building.
(3) Concealed spaces in the structure or fabric
of the building, or the building as extended, shall be sealed and sub-divided
where this is necessary to inhibit the unseen spread of fire and smoke.
(4) A wall common to two or more buildings shall
offer adequate resistance to the spread of fire and smoke.
The application
On 24 May 1999 Mr Easton swore an affidavit in
which he stated that there were wide ranging and serious breaches of the
building regulations. He gave a provisional figure of £500,000 for the cost of
remedial work, but said that the final figure might be very much more. In
carrying out his investigations, he said that he needed to establish what the
developers intended to build, what the relevant building control authority
allowed the developers to build, what other technical requirements may have
applied and what was actually built. To assist him in this exercise, he needed
to see various documents. As it was explained to me in argument by Mr Paul
Infield, of particular importance are documents that show what was required or
allowed by the building control authorities. This is because the interpretation
of Regulations B2 and B3 involves a considerable element of judgment and
subjectivity on the part of the building control officers. Note, for example,
the reference to ‘adequate’ (B2(a)) and ‘reasonable’ (B2(b)), and ‘for a
reasonable period’ (B3(1)), ‘where this is necessary’ (B3(2) and (3))
‘adequate’ (B3(4)). Thus, says Mr Easton, in determining whether there was a
breach of the building regulations, it is necessary to know how these
fire-related requirements were interpreted by the building control officers.
Mr Easton has made considerable efforts to examine
the relevant documents that are in the possession of the local authority, Tower
Hamlets. It is on the basis of his examination of those documents that he has
compiled the schedule of documents in respect of which this application for
pre-action disclosure is made. But he has not been permitted by Tower Hamlets
to take copies of the documents that he has seen, and the local authority are
currently denying him access to the documents altogether. Mr Easton has deposed
that, without the relevant documents, the exercise of attempting to compile an
accurate schedule of defects will be more costly than if he has the documents.
He says that, if the documents are available, his firm’s costs will be between
£75,000 and £100,000 plus VAT, but that the figure could well rise to £150,000
plus VAT if he has to reconstruct the intended layout and design without the
benefit of the documents. Moreover, without the documents, the schedule will
almost certainly be less accurate than it would be if Mr Easton has the
documents. This is because without the documents he will have to make his own
assessment of what the building control officers are likely to have required or
authorised for the purposes of satisfying Regulations B2 and B3.
On behalf of Burrells, Mr Infield submits that all
the criteria stated in CPR 31.16(3) are satisfied. Thus, both Burrells and
Galliard are likely to be party to subsequent proceedings. If proceedings had
started, Galliard’s duty by way of standard disclosure, set out in r 31.6,
would extend to the documents or classes of documents of which Burrells now
seeks disclosure. Finally, disclosure is desirable before proceedings have
started in order to dispose fairly of the anticipated proceedings, assist the
dispute to be resolved without proceedings, and/or to save costs.
Mr Stimpson resists the application on the
following grounds. First, he submits that it is not likely that there will be
proceedings at all. Galliard has always made it clear that, once a fully
particularised schedule of defects has been served, it will give it careful
consideration and meet its legal liabilities without the need for litigation.
Second, none of the purposes stated in CPR 31.16(3)(d) is likely to be achieved
by ordering disclosure now. The documents are not required to enable Burrells
to produce an accurate and complete schedule of defects. Its technical advisers
are currently engaged on a thorough examination of every flat in the
development, and they know which regulations were applicable at the time of
construction. The only possible area of difficulty for them may be local
authority relaxations, but that is an insufficient reason for ordering
pre-action disclosure. It follows, submits Mr Stimpson, that to order
disclosure of the documents now would not be likely to assist the dispute to be
resolved without proceedings, or save costs. In a nutshell, he argues that
Burrells should serve a schedule of defects as soon as possible; if proceedings
ensue, Burrells can amend the schedule following disclosure of documents by
Galliard in the usual way.
I do not share Mr Stimpson’s optimism that
proceedings are unlikely. The hostility that this application has generated
bodes ill for the future resolution of this dispute. I am told that Galliard
has incurred legal costs in excess of £20,000 in meeting this application
alone. This is hardly a good example of the brave new world of co-operation and
more affordable litigation that was supposed to have been ushered in by the
Woolf reforms. The correspondence between the solicitors makes depressing
reading. I am satisfied that, as matters currently stand, litigation between
these two parties is likely. Quite apart from other issues, it seems that there
is an issue as to whether, upon the true construction of the conditions of
contract, Galliard is liable for defects in work that had been carried out
before the date of the contract. That issue alone would make proceedings
likely. But more generally, my strong impression from a brief perusal of the
many documents that have been placed before me is that, unless there is a
change of attitude between these parties and their legal advisers, litigation
is highly likely, if not inevitable.
Before I deal with the question of whether all or
any of the criteria stated in CPR 31.16(3)(d) are satisfied, I ought to make a
few preliminary observations. Although in his skeleton argument
Mr
sought would be the subject of standard disclosure as defined by CPR 31.6, he
did not address any argument to me on the point. As I understand it, his case
is not that the documents (if they are or have been
not be ordered to be disclosed before proceedings. Nor is it contended that it
would be oppressive, difficult or disproportionate to give disclosure now. When
I asked Mr Stimpson why objection was taken to the disclosure that is sought,
he said that his client was opposing the application on grounds of principle.
In the light of my conclusion that the
requirements of CPR 31.16(3)(a)(b) and (c) are satisfied, the only issue is
whether disclosure is desirable in order to achieve one or more of the
objectives stated in subpara (d). Mr
the mill’ construction dispute, and that if pre-action disclosure were to be
ordered in this case, it would be ordered in most construction cases, and it is
plainly intended that such an order should be made only in exceptional cases. I
do not find his reference to ‘exceptional cases’ helpful. The rule clearly
spells out the circumstances in which pre-action disclosure may be ordered. The
court has a discretion whether or not to make such an order, and it may only be
exercised if it is desirable in order to achieve one or more of the purposes
stated in CPR 31.16(3)(d). Whether it is desirable to order disclosure in order
to achieve one or more of those purposes will depend on an assessment of the
facts of the case. That assessment will sometimes have to be made on the basis
of a limited appreciation of the likely issues in the case, but where that
occurs (as in the present case) the court must do its best on the available
material.
I have been persuaded that this is a case in which
I should order the disclosure that has been sought, and order it now. I do not
regard this as a ‘run of the mill’ case. It is unusual in that the allegations
are predominantly, if not exclusively, made on the basis of breaches of
building regulations. This is not a typical construction defects case, where
the allegations are of breaches of the terms of a specification or of implied
terms of a construction contract to carry out work in a proper manner using materials
of good quality that are fit for their purpose. A central feature of this case
will be to ascertain what the building control officers required and/or
authorised for the purposes of meeting the standards specified in the building
regulations. Burrells does not have control of documents that would show what
the building control officers did require and/or authorise, particularly in
relation to the building regulations that apply to fire.
Disclosure of these documents before proceedings
would enable Burrells to prepare a more accurate schedule of defects than is
now possible. It is impossible at this stage to say how much more accuracy will
be achievable with the documents than without them. Having regard to the nature
of the allegations that Burrells seeks to make, however, I am satisfied that
the documents are likely to enable Burrells to produce a schedule that is
significantly more accurate than would otherwise be possible. That is certainly
the view of Mr
Galliard it is said that Mr Easton should produce the best schedule that he can
at the present time, and, if necessary, amend it after disclosure has been
given later in the proceedings. In my view, it would be far better to give
Burrells the material it needs to prepare an accurate schedule now, so as to
avoid, as far as possible, future amendments. Amendments cause delay and
generate costs.
I would allow this application on the grounds that
it is desirable to do so in order to achieve each of the purposes identified in
CPR 31.16(3)(d). If the schedule of defects is based on an accurate statement
of what the building control officers required or authorised, it is more likely
to lead to the fair disposal of the proceedings than if the schedule is founded
on a mistaken understanding of how the authority interpreted the relevant
building regulations at the time when the work was carried out. For the same
reason, an accurate schedule is more likely to assist the parties to resolve
the dispute without proceedings. In answer to a question from me, Mr Infield
said that, once Burrells has sent the completed schedule to Galliard, it would
be willing to consider some form of alternative dispute resolution. Finally, an
order for disclosure at this stage is likely to save costs. I have already
referred to the costs implications as regards Mr Easton’s fees of denying
disclosure before proceedings. But, additionally, it seems to me that to order
disclosure now is likely to achieve a saving of costs more generally. A more
accurate schedule will enhance the possibility of avoiding litigation
altogether, or achieving an earlier settlement than would otherwise be
possible. It would also reduce the likelihood of the need to amend the
schedule.
Conclusion
In the result, this application succeeds. I wish
to emphasise that this judgment should not be construed as indicating a relaxed
approach to applications for pre‑action disclosure. An application will
fail unless the requirements of CPR 31.16 are satisfied. For the reasons that I
have given, on the facts of this case, they are.
Since I have heard no argument directed to any of
the individual documents of which disclosure is sought, I shall order
disclosure of all the documents listed in the schedule attached to the
application notice.
As a postscript, I would add that, in my view,
this application did not raise issues of great complexity. They certainly did
not justify the voluminous affidavits and prolix correspondence that have been
generated by the parties. CPR 1.3 provides that the parties are required to
help the court to further the overriding objective. The overriding objective of
enabling the court to deal with a case justly includes, so far as practicable,
saving expense, and dealing with the case in ways that are proportionate, inter
alia, to the complexity of the issues: CPR 1.1(2)(b) and (c)(iii). These
important principles have clearly been overlooked in the present case.
Application allowed.
