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England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Millharbour Management Ltd & Ors v Weston Homes Ltd & Anor  EWHC 661 (TCC) (22 March 2011)
Cite as:  3 All ER 1027,  EWHC 661 (TCC)
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QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Strand, London, WC2A 2LL
B e f o r e :
| (1) MILLHARBOUR MANAGEMENT LIMITED
(2) SWAN HOUSING ASSOCIATION LIMITED
(3) JONATHAN LAMB
(4) ELZBIETA URSZULA TRUCHAN
And 76 other Claimants
|- and -
|(1) WESTON HOMES LIMITED
(2) WESTON HOMES (41 MILLHARBOUR) LIMITED
David Friedman QC and James Leabeater (instructed by MacFarlanes) for the Defendants
Hearing date: 11 March 2011
Crown Copyright ©
Mr Justice Akenhead:
"Where more than one person has the same interest in a claim-
(a) the claim may be begun; or
(b) the court may order that the claim be continued,
by or against one or more of the persons who have the same interest as representatives of any other persons who have that interest.".
There are numerous possible circumstances in which in construction related work recourse might be had to the idea of representative proceedings.
"5.10 Permit the Landlord and [MML]…to enter and examine the condition of the Property and thereupon the Landlord or [MML] may serve upon the Tenant notice in writing specifying any repairs necessary to be done and for which the Tenant is directly responsible…
5.11 Permit the Landlord and the Company…at reasonable times on reasonable notice to enter the Property and the Estate or any part thereof to repair alter or amend any part of the Property or the Estate and to make repair maintain rebuild…all…pipes…party structures or other conveniences and services common to any part of the Estate…or serving or used for the Estate…"
"4. To maintain and keep in good repair and to renew and replace as appropriate the external walls structure…of the Building any Pipes used in common by the tenant and any tenant of a Private Dwelling…or the Social Housing Area, the External Common Parts the Private Common Parts…
17. To provide maintain install in or about the Estate any other service or facility as the Company in its absolute discretion considers desirable for the comfort and convenience of the tenants of the Estate…
22. To take all reasonable steps to abate any nuisance affecting the Buildings or the Estate…"
The lease with Swan contains similar, although not identical, provisions.
(a) Excessive heat in corridors: it is alleged that the corridors and landings are excessively hot and stuffy, the heat coming from pipes which run hot water around the buildings from central boiler plants to every flat; it is alleged that mechanical cooling is the solution.
(b) Excessive heat inside flats: this is a related problem. The hot water pipes terminate within each flat in a heater cupboard where heat exchangers heat the water for hot water at taps and the central heating. It is said that the requisite insulation was not provided either in the cupboards or in voids where the pipes run around flats. Nearby cold water pipes are affected by the heat of these pipes.
(c) Hot water system in Swan's flats: there is said to be inadequate temperature control and only a limited amount of the designed flow of hot water is reaching the flats.
(d) Balconies: 260 flats have timber balconies the bearers for many of which are said to be rotting.
(e) Noise insulation: it is said that the flats do not comply with Building Regulations in respect of the lack of resistance to the passage of sound from one dwelling to another.
(f) Basement plant room: what is said to be "very high humidity" arises in one such plant room by reason of various alleged deficiencies.
Several of these are said to give rise to health risks, in particular to the risk of Legionella. It is asserted that these defects affect the enjoyment of the residents and give rise to conditions which are not fit for staff to work in.
"The First Claimant [MML] claims as a representative party under CPR Part 19.7 for the owners of flats at 41 Millharbour, Isle of Dogs, London E14. ("the development") against all Defendants for breaches of the Defective Premises Act 1972 ("the Act") in relation to the construction of the development, which comprises 352 flats and common parts. It also claims against the Second Defendant both in such capacity and in a direct capacity for breaches of contracts for the sale and purchase of flats in the development regarding the defects left therein (including within flats) after its purported completion, relying upon the Contracts (Rights of Third Parties) Act 1999. The Second and further Claimants, in so far as they have been original purchasers or lessees of the flats in the development claim against the Second Defendant for breach of contract in respect of defects affecting them, and they all claim against all Defendants for breaches of the Act. Defects relate to the provision of hot and cold water and heating to the flats, and a balcony is, the windows and ventilation, skirting boards and sound insulation deficiencies."
Correspondence continued over the next two months between solicitors for the parties. By this stage, unsurprisingly, a number of the leaseholders were original purchasers but others were second or third purchasers.
"Elzbieta Urszula Truchan [the original third-named Claimant] claims to be a representative claimant under CPR Part 19.6 on behalf of all owners of all flats at 41 Millharbour in so far as those owners are not at any time also claimants named herein."
"That pursuant to CPR 19.6 (1) (b) this action, in so far as it concerns claims for damages relating to the cost of remedial works organised by the First Claimant, and to be charged to leaseholders through service charges, may be continued by,
a. Jan Hills, the 43rd Claimant as representative on behalf of all private leaseholders owners of flat at 41 Millharbour, not being currently Claimants, who entered into a contract of purchase with the Second Defendant;
b. Elzbieta Urszula Truchan, the Fourth Claimant, as representative on behalf of all private leaseholders owners of flat at 41 Millharbour, not being currently Claimants, who did not enter into a contract of purchase with a Defendant."
This application was amended on 24 February 2011 to include for two representative Claimants.
The Law and Practice
"In considering whether a representative action is maintainable, you have to consider what is common to the class, not what differentiates the cases of individual members…The old rule in the Court of Chancery was very simple and perfectly well understood. Under the old practice the Court required the presence of all parties interested in the matter in suit, in order that the final end might be made of the controversy. But when the parties were so numerous that you never could "come at justice", to use an expression in one of the older cases, if everybody interested was made a party, the rule was not allowed to stand in the way. It was originally a rule of convenience: for the sake of convenience it was relaxed. Given a common interest and a common grievance, a representative suit was in order if the relief sought was in its nature beneficial to all whom the plaintiff proposed to represent…One parishioner would sue on behalf of himself and all the other parishioners to establish a modus in lieu of tithes…All the growers have the same rights. They all rely on one and the same Act of Parliament as their common charter…"
My Lords, it would be highly improper at this stage of the proceedings to say anything which might prejudge the construction of the Act. That is a matter for the hearing. But…I will venture to make one or two general observations. It was said that the growers are so fluctuating and indefinite a body that it is impossible to tell who is or who is not a grower, especially in these modern times when there are such improved facilities for carriage of goods. I cannot say that I am much impressed with that difficulty. It seems to me that the description of the persons apparently intended to be favoured by the Act is sufficient for all practical purposes. It may be difficult or impossible to compile a catalogue of growers. But there cannot, I think, be much difficulty in determining whether a particular person who claims a preferential right to a vacant stand in the market is a grower or not."
"15. In Aberconway v Whetnall (1918) 87 LJ Ch 524 Lord Aberconway and two others sought to recover on behalf of themselves and all other subscribers to a fund for the benefit of the defendant the amounts they had collectively subscribed on the grounds that they were induced to do so by misrepresentation. Eve J considered (p.526) that insofar as the claim was made in a representative capacity it was misconceived because it could not be said that:
"...the donors to the fund have a common interest and a common grievance when the very existence of the grievance depends on facts which may differ in each individual case."
16. Similarly in Smith v Cardiff Corporation (No.1)  1 QB 210 the claim insofar as it purported to be representative was struck out. The plaintiffs were tenants of the corporation and challenged a scheme of the latter for increasing the rent of its council housing as ultra vires. They claimed to sue on behalf of themselves and all other tenants of the Corporation. But the scheme they sought to challenge provided for differential rents taking into consideration the financial circumstances of individual tenants. Of some 13,000 tenants the rents of only 8,000 would be increased. The representative claim was struck out on the ground that the class of corporation tenant did not have a common interest or grievance and the relief sought was not in its nature beneficial to all members of the class which the plaintiffs claimed to represent.
19. Prudential Assurance Co Ltd v Newman Industries Ltd  Ch 229 concerned the approval by the members of Newman Industries Ltd in general meeting of an acquisition by Newman of the assets of another company in which its directors were substantially interested. The shareholders' approval was given on the basis of a circular. The action was commenced against the directors by the Prudential as a minority shareholders' action alleging that the circular was tricky and misleading. It sought damages for conspiracy. For reasons it is not necessary to describe the Prudential then sought to amend its writ and statement of claim so as to claim damages on behalf of itself and "on behalf of all the shareholders of [Newman] on July 29, 1975, who, like the plaintiff, have suffered damage and are entitled to damages". Vinelott J considered a number the cases cited to him, including Aberconway and observed that:
"These cases, in my judgment, establish two propositions. First, no order will be made in favour of a representative plaintiff if the order might in any circumstances have the effect of conferring on a member of the class represented a right which he could not have claimed in a separate action or of barring a defence which the defendant could have raised in such proceedings. Secondly, no order will be made in favour of a representative plaintiff unless there is some element common to the claims of all members of the class which he purports to represent."
20. Vinelott J rejected the submission that in no circumstances could there be a representative action on behalf of a class each of whom had a separate cause of action in damages for tort. In that context he observed (p.255):
"The second condition is that there must be an "interest" shared by all members of the class. In relation to a representative action in which it is claimed that every member of the class has a separate cause of action in tort, this condition requires, as I see it, that there must be a common ingredient in the cause of action of each member of the class. In the present case that requirement is clearly satisfied."
21. Vinelott J then considered whether, as a matter of discretion, to permit the amendment sought. In relation to its form he said (p.256):
"As drafted the order which the plaintiff seeks in its representative capacity is for a declaration that the plaintiff in its personal capacity as a shareholder in Newman Industries and on behalf of itself and all other shareholders in Newman Industries who like the plaintiff have suffered damage is entitled to damages against the defendants, Bartlett and Laughton, for conspiracy. The practical effect of such a declaration would, it seems to me, be no greater and no less than the effect of declarations, first, that the circular was tricky and misleading; secondly, that the individual defendants conspired to procure its circulation in order to procure the passing of the relevant resolution; and thirdly, that in so doing they conspired either to injure the plaintiff and the other shareholders at that date or to commit an unlawful act, or to induce a breach by the first defendant company of its contractual duty to the shareholders. It would, I think, be better that those declarations, which constitute the common element of any claim by any member of the class for damages for conspiracy, should be so spelt out. Further, I can see no reason for defining the class of shareholders of the first defendant company at July 29, 1975, as being those "who like the plaintiff have suffered damage and are entitled to damages." The words I have cited appear to me to be unnecessary and undesirable. The members of the class who share a common interest in obtaining the declarations I have outlined are shareholders other than the second and fourth defendants as at July 29. A person coming within that class will be entitled to rely on the declarations as res judicata, but will still have to establish damage in a separate action."
23. In Irish Shipping Ltd v Commercial Union Assurance Co Ltd  2 QB 206 the relevant class were the 77 underwriters each of whom had entered into separate insurances but on the same terms including one which obliged that underwriter to abide by any judgment obtained by the insured against the lead underwriter. The Court of Appeal considered that the principle of Duke of Bedford applied notwithstanding that some of the represented class might not know of the proceedings or might have an individual defence. The procedure and its effect were described by Purchas LJ (p.238) in these terms:
"Although the judgment is to be binding upon those comprised in the class represented, protection is given to members of the class sued who may have been improperly joined in the class or who may have individual grounds of defence, since the judgment cannot be enforced until the plaintiff has complied with the requirements of Ord. 15, r. 12(3), (4) and (5). (3) However, the effect of rule 12(5) is merely to protect the member of the class sued from having the judgment enforced against him. The judgment is still valid for other purposes such as a counterclaim or other process in which that person may wish to rely upon allegations which will be denied to him by the findings of the judgment, the issues being res judicata for such purposes. It will be seen that there is nothing in the wording of the rule itself which would restrict the wide ambit in which the rule should operate, in line with the old Chancery practice; but there are now built-in safeguards to protect a member of the class who may have particular defences or may be able to distance himself from the class in other respects. This accords with the concept, as I see it, of the old rule, namely a broad rule of procedural convenience to be exercised with a wide but carefully used discretion."
30. The starting point must be the rule itself. The essential pre-conditions for its operation are evident from the opening words "where more than one person has the same interest in a claim the claim may be begun...". The first pre-condition is that there should be more than one person who satisfies the remaining preconditions. There is no limit to the number of persons in the class to be represented. Presumably it cannot be so large as to constitute the enforcement of public rights by persons who have not sustained special damage; that is the prerogative of the Attorney-General. But the mere fact that in this case the relevant class is both numerous and geographically widely spread is not of itself an objection to a representative action. Nevertheless the more extensive the class the more clearly should the other pre-conditions be satisfied.
31. The second pre-condition is that those persons have the relevant interest at the time the claim is begun. The rule appears to me to be specific in that respect. It must follow that the submission of counsel for the claimants that the identity of interest need only exist at the time that judgment is given must be rejected. No doubt it is necessary, given the terms of sub-paragraph (4) of rule 19.6, that it exists then but the opening words of sub-paragraph (1) shows that it must exist when the claim is begun as well. Accordingly, identity of interest at the time of judgment in the action would be a necessary condition for seeking to enforce it but would not be sufficient identity at the time the claim was issued.
32. So the essential question is whether the class the claimants seek to represent had the same interest in the claim as the claimants when the claim was issued on 18th September 2008. The phraseology is the same as that used in the rules under consideration in each of the reported cases to which I have referred. I can see no reason why the words 'the same interest' should not be interpreted in the same way. That was the view of Andrew Smith J in National Bank of Greece and of me in Independiente.
33. It follows that the principles enunciated by Lord Macnaghten in the Duke of Bedford are to be applied. On that basis the claimants and the class they seek to represent must all have "a common interest and a common grievance" and "the relief sought [must] in its nature [be] beneficial to all" of them. If those conditions are satisfied it matters not that the class of person represented may fluctuate."
"63. This does not mean that the membership of the group must remain constant and closed throughout. It may indeed fluctuate. It does not have to be possible to compile a complete list when the litigation begins as to who is in the class or group represented. The problem in this case is not with changing membership. It is a prior question how to determine whether or not a person is a member of the represented class at all. Judgment in the action for a declaration would have to be obtained before it could be said of any person that they would qualify as someone entitled to damages against BA. The proceedings could not accurately be described or regarded as a representative action until the question of liability had been tried and a judgment on liability given. It defies logic and common sense to treat as representative an action, if the issue of liability to the claimants sought to be represented would have to be decided before it could be known whether or not a person was a member of the represented class bound by the judgment.
64. A second difficulty is that the members of the represented class do not have the same interest in recovering damages for breach of competition law if a defence is available in answer to the claims of some of them, but not to the claims of others: for example, if BA could successfully run a particular defence against those who had passed on the inflated price, but not against others. If there is liability to some customers and not to others they have different interests, not the same interest, in the action.
65. In brief, the essential point is that the requirement of identity of interest of the members of the represented class for the proper constitution of the action means that it must be representative at every stage, not just at the end point of judgment. If represented persons are to be bound by a judgment that judgment must have been obtained in proceedings that were properly constituted as a representative action before the judgment was obtained. In this case a judgment on liability has to be obtained before it is known whether the interests of the persons whom the claimants seek to represent are the same. It cannot be right in principle that the case on liability has to be tried and decided before it can be known who is bound by the judgment. Nor can it be right that, with Micawberish optimism, Emerald can embark on and continue proceedings in the hope that in due course it may turn out that its claims are representative of persons with the same interest."
(1) To enable a party to claim, or be claimed against, in a representative capacity for other parties, that party must have the same interest in the claim in question as those who are to be represented. That is a threshold point which must be established by reference to the facts so far as it is possible to ascertain the facts at the time when the court considers the representative capacity of any party. It is legitimate to proceed by reference to the proposed or actual pleadings to ascertain at least what the facts are assumed to be.
(2) It must be possible at any stage during the proceedings to ascertain whether any given person qualifies for membership of the represented class of persons as having the same interest as the party which seeks to represent them.
(3) The question of whether and the extent to which parties have the same interest can only be answered by reference to the facts of the particular case, albeit that it will be necessary to determine, amongst other things, whether the representing party and the represented parties in effect have the same cause of action or liability as the case may be, subject of course to the relevant facts ultimately being found.
(4) As in the Duke of Bedford case, it will be inappropriate, before the final judgement on the issues resolved in relation to the represented parties, for the Court to decide the issues or, indeed, to indicate in some obiter way what the answer may well be. That is simply because the Court will not have heard full argument and will only have unchallenged written evidence before it at that stage.
(5) Once it is clear that there is the same interest, the Court has a discretion whether to allow the relevant party to act or to continue to act in a representative capacity. Indeed, the Court retains a discretion even at and after the judgement to direct that a judgement is not binding or is not to be enforced. Thus, it is conceivable that, if in the judgement findings of fact or other law are such that it emerges that one or more of the represented persons does not have the same interest, the judge could well direct that the judgement is not to be enforced against them.
(6) The overriding objective must always play an important part in the exercise of the discretion. Thus the saving of cost and time to the parties, and indeed to the court, must be factors in appropriate cases to take into account.
(7) Limitation defences could be a factor to take into account depending obviously on when the representative character is sought to be imposed. In general, however, it would be open to a defendant to run a limitation defence in relation to represented parties who were not actual parties to the litigation. If such a defence was established against certain persons, it would be a wholly exceptional case in which the judge allowed the judgement to be enforced by a person who had not been a party to the claim and against whom the limitation defence had been established.
"(1) A person taking on work for or in connection with the provision of a dwelling (whether the dwelling is provided by the erection or by the conversion or enlargement of a building) owes a duty—
(a) if the dwelling is provided to the order of any person, to that person; and
(b) without prejudice to paragraph (a) above, to every person who acquires an interest (whether legal or equitable) in the dwelling;
to see that the work which he takes on is done in a workmanlike or, as the case may be, professional manner, with proper materials and so that as regards that work the dwelling will be fit for habitation when completed."
Similarly, if the failure to provide insulation to hot water pipes breaches this duty, there will be a cause of action against one or other of the Defendants assuming that either can be considered to be a person who took on work relating to the provision of a dwelling in this case.