Orange Personal Communications Services Ltd v Hoare Lea

Mr Justice Akenhead had to consider the approach to take when faced with an application to stay proceedings in order for the Pre Action Protocol for Construction & Engineering Disputes ("the Protocol") to be followed. He decided that the correct approach to take was a pragmatic one.

The dispute arose following a flood at works carried out at the Bristol Data Centre. Kier had been engaged to carry out the fit out works, including the provision of an air conditioning system. Haden Young were responsible for that air conditioning system. Orange issued proceedings against both in relation to the flood. Kier and Haden Young said that they were not to blame for flood, which was, they said, due to failings by Orange and/or its design team. Hoare Lea had been retained in relation to the design of the M&E works. As it was nearly six years after the flood and fearing a possible limitation defence, Orange issued separate proceedings on 15 August 2007 against Hoare Lea. In the first action, a trial date was fixed for October 2008. The directions made provision for ADR in April.

In December 2007, Orange served Particulars of Claim on Hoare Lea. Orange did not actually consider that Hoare Lea had anything to do with the flood. Orange's approach was a belt and braces one, being contingent upon the argument put forward by Kier and Haden Young succeeding. If that happened, Orange intended to assert its claim against Hoare Lea. Hoare Lea then issued an application that the claim be stayed because Orange had not followed the Protocol. Orange responded by offering to provide any particular information which Hoare Lea said they might require. As the Judge noted, that offer was not taken up. The Judge reminded the parties that the purpose of the Protocol is to encourage the exchange of earlier and full information about respective legal claims to enable parties to avoid litigation where possible. Having considered the authorities, Mr Justice Akenhead made the following general observations:

"(a) The overriding objective (in CPR Part 1) is concerned with saving expense, proportionality, expedition and fairness... This objective whilst concerned with justice justifies a pragmatic approach by the Court to achieve the objective...

(c) The Court should avoid the slavish application of individual rules, practice directions or Protocols if such application undermines the overriding objective.

(d) Anecdotal information about the effectiveness of the Pre- Action Protocol process in the TCC is mixed. It is recognised as being effective both in settling disputes before they even arrive in the Court and narrowing issues but also as being costly on occasion and enabling parties to delay matters without taking matters very much further forward.

(e) Whilst the norm must be that parties to litigation do comply with the Protocol requirements, the Court must ultimately look at non-compliances in a pragmatic and commercially realistic way. Non-compliances can always be compensated by way of costs orders."

Accordingly, having considered the situation as a whole, the Judge dismissed the application. He did not consider that the protocol process would be sufficiently productive to justify a stay because:

  1. Hoare Lea already had the relevant pleadings from the earlier action. Therefore there had already been an exchange of information;
  2. Bilateral discussions between Hoare Lea and Orange would not narrow issues significantly because Orange's published primary case was not against Hoare Lea;
  3. A settlement was much more likely if all parties participated in the ADR planned for the spring. A timetable could be set up now to enable that to happen. This chance might be lost if there was a stay;
  4. Little in terms of time or costs will be saved by embarking upon the protocol process. That said, the Judge reserved any application for additional costs for the future.

Finally, the Judge noted that although Orange had not complied with the Protocol, that failure had not been "contumelious or Machiavellian". The Judge also dealt with the question of the costs of this application. The Judge was concerned about the failings of Orange and thought that Orange could have told Hoare Lea about the potential claim earlier. There were also delays by Orange in relation to the procedural elements of this application. Accordingly, the Judge was of the view that Orange should pay their own costs and one third of the costs of Hoare Lea. This reflected the likely increase in Hoare Lea's costs occasioned by Orange's procedural failings.