Decoma (UK) Ltd v Haden Drysys International Ltd

Permission to appeal may be granted where proposed contractual-construction grounds are genuinely arguable, even though the court does not finally determine their merits. An appeal is not necessarily academic because the contract has been terminated, a payment into court accepted, or other claims settled. Practical force may remain through a substantial surviving claim or interpretation issues concerning contractual rights after termination. Proportionality does not ordinarily prevent permission where a substantial sum remains in issue, even if only one claim survives. A costs-only appeal may warrant a different result.

The claimant sought permission to appeal from a judgment of Judge Coulson in the Technology and Construction Court dated 27 July 2005. The judge had determined preliminary issues concerning a Turnkey Waterborne Paintline agreement, struck out claims in several respects, and refused permission to appeal.

The proposed appeal concerned the timing of claims under Articles 11.1 and 11.3, and the application of liability caps in Article 12.4. After the first-instance judgment, a payment into court was accepted, all but one claim was settled, and the agreement was terminated. The central question was whether the proposed grounds remained arguable and whether the appeal had retained sufficient practical force.

The application for permission to appeal was allowed. The Court of Appeal did not determine the contractual merits.

1. The proposed grounds raised an arguable case. The first sentence of Article 11.1 contained no express temporal limitation comparable to that in its second sentence. Article 16.12, which had not been put before the first-instance judge on this issue, might assist the argument. The court stressed that it was not concluding that Judge Coulson's careful decision was wrong.
2. There was also an arguable construction of Article 12.4. It was not straightforward whether the reference to damages covered a claim under Article 11.3. There was commercial force in the argument that Article 11.3 required the contractor to remedy defects rather than allowing it to avoid remedial work because its cost exceeded the contractual cap. The closing sentence of Article 12.4 might not extend the meaning of damages in the earlier part of the article.
3. Subsequent events did not clearly make the appeal academic. Although a payment into court had been accepted, all but one claim had settled, and the agreement had been determined, the remaining claim under paragraph 33.3 of the points of claim was substantial, exceeding $9 million. Article 16.12 referred expressly to Article 11.1 surviving termination, and there was an arguable question whether Article 11.3 also survived where it had already been invoked.
4. Proportionality did not justify refusing permission merely because only one of several claims remained. The court indicated, more tentatively, that a different view might have been taken if the appeal concerned costs alone.

1. Court of Appeal (Civil Division): on 14 November 2005, allowed the application for permission to appeal.
2. High Court, Technology and Construction Court: Judge Coulson determined preliminary contractual issues on 27 July 2005, struck out claims in several respects, and refused permission to appeal.