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Multiplex Construction (UK) Limited v Cleveland Bridge UK Limited
3 October 2008
"The final result of this litigation is such that (when costs
are taken into account) neither party has gained any significant
financial benefit." HH Mr Justice Jackson
The results of the long running dispute between Multiplex
Construction (UK) Limited (Multiplex) and Cleveland Bridge UK
Limited (Cleveland) are finally in! HH Mr Justice Jackson handed
down a 226 page judgement on 29 September 2008. The bottom line is
that Cleveland is to pay Multiplex circa £6m in damages. But with
the costs of the litigation amounting to circa £14m since the
preliminary issue hearings in 2006 (the costs of photocopying alone
approaching £1m) they have far exceeded the sums seriously in
dispute between the parties. So, with the disproportionate balance
between damages recovered and legal costs incurred, could and
should the parties have prevented the dispute running to final
trial?
To recap on the history, Multiplex is the main contractor who
constructed the new stadium at Wembley. Cleveland was the steelwork
subcontractor. The two companies never appeared to see eye to eye
and their relationship came to an end with an acrimonious split in
August 2004. Litigation followed soon after. Multiplex’s ensuing
claim for damages arising out of alleged defects and repudiation of
contract and Cleveland’s cross claim for sums due for work done and
materials supplied were consolidated into one action at the end of
2004.
At a Case Management Conference on 5 December 2005, the Judge
had what he described as a “constructive discussion” with leading
counsel as to how the disputes might most economically be resolved.
Nine preliminary issues were formulated (latterly increased to 11),
the answers to which it was hoped and expected would enable the
parties to resolve their differences.
In his judgement of the preliminary issues in 2006, HH Mr
Justice Jackson made it clear in an address to the parties
that:
"with the assistance of this court's decision on the
[preliminary issues], it may now be possible for both parties to
arrive at an overall settlement of their disputes, either through
negotiation or else with the help of a mediator, who is unconnected
with this court".
He went on to strongly recommend settlement to the parties in
order to save costs and management time. He gave the clear message
that although the court would determine any remaining issues that
the parties wished to litigate, the court was encouraging the
parties to enter into a sensible commercial settlement.
Whilst stopping short or requiring the parties to settle the
dispute instead of going to trial (to do so may be a breach of
Article 6 of the European Convention of Human Rights: the Right to
a Fair Trial), the message from the court to the parties to settle
the dispute could hardly have been stronger. Regardless, the
parties proceeded to serve pleadings, witness statements and
evidence in readiness for the main trial, due to start in March
2008; aside from a failed attempt at mediation along the way, it
was full steam ahead.
The Judge, seemingly unimpressed with the parties’ behaviour
commented that:
“Whilst the parties were battling out the 11 preliminary issues
at all levels, their enthusiasm for the main fray never wavered.
All thoughts of reaching a sensible settlement after resolution of
the preliminary issues…were seemingly jettisoned…both parties have
brushed aside repeated judicial observations on the wisdom of
settling this particular litigation”
The matter indeed proceeded to a lengthy three month trial (and
it could have been considerably longer had much of the evidence not
been left to the Judge’s private reading). Judgment was made in
favour of Multiplex in the sum of £6,154,246.79 in respect of
overpayments previously handed down by Multiplex to Cleveland,
damages for breach of contract and interest. Such was the Judge’s
strength of feeling that the parties could and should have reached
a sensible settlement rather than proceeding to trial, he thought
fit to include an unusual section in his judgement entitled “The
Lesson to be Drawn from this Litigation”. Unsurprisingly, the
“lesson” does not relate to the issues in dispute between the
parties, but is a commentary emphasising the role of the court in
assisting parties to resolve disputes at proportionate costs before
trial. Rather succinctly, the Judge remarked:
"The lesson for the future which may be
drawn from this litigation is that parties would be well advised to
use the dispute resolution service offered by the Technology and
Construction Court in a more conventional and commercial manner
than has been adopted in this case. Once the court has decided
questions of principle, the parties can save themselves and their
shareholders many millions of pounds by instructing their advisers
to agree reasonable figures for quantum, if necessary with the
assistance of a mediator unconnected with the court. If one party
is not prepared to negotiate then the other. party can protect its
position by making a timely and realistic offer under Part 36. The
court's decision on preliminary issues should be used by both
parties as a basis for sensible discussion or at least as a basis
for sensible assessment."
Parties to litigation would do well to remember that the modern
day court’s approach to disputes is to encourage commercial
settlement in a number of ways including: setting pre-action
requirements, using active case management and the provision of and
judicial recommendation towards an alternative dispute resolution.
To resolve matters sensibly, parties should consider using the
court to decide disputed questions of principle to enable them to
then sort out the financial consequences themselves. Such an
approach often leads to the resolution of multi-million pound
disputes at proportionate cost, and enables the parties to focus
their efforts and funds on their real business.
With Cleveland indicating they are keen to lodge an appeal and
liability for the circa £14m million litigation costs still to be
carved up, it will be interesting to see if the parties heed this
advice going forward.
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