REUTERS | Yves Herman

Parties can’t adopt a “sit on the fence” approach to quantum

I’ve said before that I like reading Fraser J’s judgments because he has a nice turn of phrase and a penchant for plain talking. This is highlighted in his latest ICI v MMT judgment, where the following caught my eye:

“I do not share the good cheer of Jackson J at such a task.”

He was talking about how, in Multiplex v Cleveland Bridge, Jackson J was asked to value every piece of steel work in Wembley Stadium and had “expressed himself as ready cheerfully to undertake that task”. Fraser J said he was being asked to value over 42,000 metres of pipework installed in a paint manufacturing facility, where a great deal of work had to be redone as the design changed, and where a great deal of work was directly instructed on site. It is perhaps understandable why he didn’t share Jackson J’s good cheer. I’m not sure I would either.

Last time I considered why this piece of litigation “stands as something of an advertisement for adjudication”. Now I’m going to focus on the parties’ use of Scott Schedules.

Imperial Chemical Industries Ltd v Merit Merrell Technology Ltd

Fraser J had arrived at the above comment after comparing the parties’ pipework dispute to the long-running steelwork dispute at Wembley stadium. It seems there are many similarities, not least because in Multiplex, there had been:

“… a number of trials and interlocutory hearings, conducted by parties bitterly contesting each other on everything…  Resolution of a myriad of preliminary issues did not resolve the litigation.”

Jackson J had described that litigation as “a Herculean task, namely slaying of the Hydra”.

I looked this bit up. Hydra was a nine-headed “serpentine water monster” and it was Hercules’ second task (or labour) to kill it (he had to undertake 12 labours in total). I’m sure that both Jackson J and Fraser J are glad they only had to deal with one dispute, even if that dispute must have felt, at times, like they were dealing with one of Hydra’s heads:

“Hercules attacked the many heads of the hydra, but as soon as he smashed one head, two more would burst forth in its place!”

Anyway, back to Scott Schedules (rather than lessons in Greek and Roman mythology).

Using a Scott Schedule

Fraser J sets out some of Jackson J’s observations about the parties’ use of Scott Schedules in Multiplex, particularly the fourth schedule:

  • It was the “source of immense difficulties in this litigation” because it was “not well constructed” and “I suspect that it has not been drafted by either solicitors or counsel”.
  • It “effectively blew this litigation off course” and gave rise to the need for a second preliminary issues trial, followed by a second trip to the Court of Appeal. This meant more pleadings, with replies and further information, and further substantial disclosure.

In ICI v MMT, Fraser J seems to share some of Jackson J’s frustration. Clearly, he had hoped that the dispute would settle after the liability trial:

“Further wasteful and expensive litigation ought to be avoided if possible.”

It didn’t settle. Instead, the quantum hearing went from four to eight days and he got two Scott Schedules to deal with, since the parties couldn’t actually agree on the format and, more importantly, did not have leave to use one (it seems it “had its genesis” in an appendix to the report of ICI’s quantum expert).

Pausing there, I think Fraser J makes a very good point about the use of a Scott Schedule and why it may not always be appropriate. He explains that if an order had been sought at an interlocutory stage, he would have refused because:

“… with the parties at daggers drawn over practically everything, the use of such a document would not be effective in terms of narrowing disputes and enabling a saving of costs. I consider it would be contrary to that.”

Instead, the Scott Schedule gave rise to its own set of sub-issues, which has its own section of the judgment. That, in Fraser J’s opinion, was an “unsatisfactory state of affairs”.

I think Scott Schedules have a place in adjudication, just as much as in litigation or arbitration, and they can be helpful when dealing with disputes where there are a large number of items in dispute, such as variation and valuation disputes and also defects cases.

I certainly use spreadsheets and/or schedules as working documents where there are many items in dispute and will then publish a final schedule as a part of my decision, perhaps omitting the parties’ comments but including mine. It may be that I can categorise the difference or my finding and include a fuller explanation in the body of the decision.

Difficulties sometimes arise if they become unwieldly (because you have multiple columns with rejoinder, surrejoinder, and so on) or if the native copy is not provided. I have seen parties not being prepared to disclose documents to the other side in native format based on “copyright” ownership claims, which demonstrates how parties can get entrenched.

I also agree with something that Jefford J said in Castle Trustee Ltd v Bombay Palace Restaurant Ltd (which came out after ICI v MMT), namely that working your way:

“… item by item, through claims or defects… can be inordinately time-consuming…”

I think the trick is to set out from the outset what format you want the Scott Schedule to take and to ensure the parties comply. However, even if you do that, there is no guarantee that the parties will reach any agreement on the items in dispute and narrow the issues between them. It often feels like that is exactly what the parties want the adjudicator to do. Certainly, we seldom get a “significantly narrowed” list of issues to deal with, as Jefford J suggests the court often gets.

Another advert for adjudication?

Another thought struck me when I looked at Jefford J’s judgment. In late November 2012, the adjudicator decided that Bombay Palace was entitled to some £737,000 as compensation for the closure of its restaurant, and the landlord was entitled to some £595,000 for the cost of the additional works to the restaurant that Bombay had requested during the refurbishment works. That gave Bombay an entitlement to around £142,000.

Several years and (I’m sure) many hundreds of thousands of pounds in legal fees later, Jefford J decided that the closure compensation was valued at £785,000 and its additional works at £409,000. That means a difference of £376,000 to Bombay, so a bit more (£234,000 more) than what the adjudicator had decided five years earlier. I will leave you to decide whether that was a legal fight worth having…

 

 

MCMS Ltd Matt Molloy

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