High Court judge accuses housing association and housebuilder of wasting court time with satellite litigation

Mr Justice Kerr has criticised Clarion Housing Association and housebuilder Crest Nicholson Operations for wasting the time of the Technology and Construction Court with satellite litigation.

In Clarion Housing Association Ltd v Crest Nicholson Operations Ltd [2023] EWHC 620 (TCC) the judge said that the applications before him “raise no point relevant to the merits of the dispute. This is satellite litigation in its purest form.”

Crest Nicholson had applied for relief from sanctions for the late filing of the acknowledgement of service; and had under Part 11 of the Civil Procedure Rules  disputed the jurisdiction of the court - or invited it to decline jurisdiction - for failure to serve a claim form and particulars of claim.

Clarion sought an order that the particulars of claim were served in time and alternatively an extension of time for service.

The two sides had in October 2018 entered into three building contracts for Crest Nicholson to design and build 132 homes near Bury St Edmunds.

In January 2022, Clarion complained of alleged electrical defects and a contractual time limit to issue proceedings was due to expire the following month.

Clarion’s solicitors sought in a letter dated 2 February to agree with Crest Nicholson an extension of the deadline for issue of proceedings which was to expire on 11 February, but there was no response.

Clarion issued a claim alleging defective performance and seeking more than £200,000. Crest Nicholson said in May that year that the claim had not been served.

The parties eventually agreed a stay until 11 December 2022 so that rectification work could be considered or carried out.

In October 2022 Clarion told Crest Nicholson 11 December was approaching and that unless the remedial works could be completed or agreement could be reached it would instruct counsel.

The court heard a complex account of the contents of phone conversations between the two companies, the misdelivery of a legal bundle to the wrong Crest Nicholson office and other exchanges that failed to resolve the dispute.

Kerr J said: “If the claim had proceeded in a normal way, I would not have regarded [Crest Nicholson’s] default as significant or serious. The period of delay, a week, would normally have indicated that the defendant was remiss and lax but nothing worse. The period of delay included part of the festive season.

“[But Crest Nicholson’s] reason for the delay of a week is unconvincing.” He said an official of the firm “had at least the means of knowledge, if not actual knowledge, of the contents of the claim form and particulars of claim on 9 December 2022 and good reason to expect service of the same on that date.

“I would characterise the main reason for the delay as the failure of [the official] and [in-house counsel] between them to organise legal representation before rather than after Christmas.”

He added: “I am not impressed with the defendant's attempts to pin the blame on the claimant for failing to nominate the correct company.

“The first place where [the official] and [in-house counsel] should have been expecting to receive the served hard copy documents was the address of the defendant's registered office. They made no enquiry and allowed the parcel to pass between group premises while the period for filing the acknowledgement of service expired.”

Kerr J said Crest Nicholson was “inviting the court to apply a double standard, asking the court to excuse [its] default so that it can then ask the court to condemn [Clarion’s] default. I am not willing to do that.”

He said Crest Nicholson’s application under Part 11 “cannot be advanced because there is no valid acknowledgement of service”.

Kerr J said: “My starting point is that it was blindingly obvious to the court when reading into this case that the just outcome had to be that the claim should proceed on its merits and this episode, with respect to the parties, has been a waste of their time and the court's and need not have happened.”

He said Clarion should have either an inter partes document to prove the oral agreement on which it relied, or it should have applied to the court for directions.

“It did neither. It was not adequate to rely on what could easily turn out to be, and has turned out to be, one person's word against another's or differing interpretations of a conversation between non-lawyers,” he said.

Turning to Crest Nicholson, the judge said: “It should not have allowed the case to remain unattended to between 9 December 2022 and 4 January 2023. That was asking for trouble. And it should not have contested that there was good service of the claim form and particulars of claim on 9 December 2022, stay or no stay.”

Mark Smulian