Midal Cables Ltd v AMEC Foster Wheeler Group Ltd

A preliminary issue should ordinarily concern a question of law decided on agreed or assumed facts. The procedure is unsuitable where deciding the issue requires substantial disputed evidence or would produce a disjointed trial. The court must assess whether the proposed issue is likely to resolve the proceedings, materially reduce the scope or cost of the main trial, or significantly improve settlement prospects. Those benefits must be weighed against delay, duplication, increased costs and the risk of tactical fragmentation. Preliminary issues are therefore a case-management tool requiring a structured and realistic assessment of the evidence and likely duration.

The claimant brought an invoice claim concerning the supply of conductor, while the defendant disputed liability and advanced a substantial counterclaim for delay and prolongation losses. The defendant applied for preliminary determination of issues concerning an earlier agreement and which standard terms governed two supplies.

The application was opposed on the basis that disputed factual issues, including an alleged variation and set-off issues, would remain for trial and that separate determination would increase costs. The court considered the guidance in the TCC Guide and the approach to preliminary issues discussed in Larkfleet Limited v Allison Homes Eastern Ltd and McLoughlin v Jones.

1. Application dismissed. The proposed preliminary issues would not resolve the whole proceedings. Although they might reduce the scope of the litigation, the suggested improvement to settlement prospects was weakened by the parties’ conduct concerning mediation.
2. The TCC Guide identifies three relevant benefits: resolving the whole proceedings or a significant element; significantly reducing the scope and cost of the main trial; or significantly improving the prospect of settlement. The court must consider those benefits as part of the overall case-management decision.
3. Preliminary issues are ordinarily suitable where there is no, or limited, oral evidence. The appropriate questions are usually questions of law decided on agreed or assumed facts. The warnings in McLoughlin v Jones, including Lord Scarman’s description in Tilling v Whiteman of preliminary points as potentially treacherous shortcuts, were applicable.
4. The proposed issues depended on a wide range of disputed facts. Witness evidence would be required, contrary to the suggested one-day timetable. A hearing would require at least two days and might extend to three.
5. Ordering the issues would create a disjointed trial, increase expense and risk making the proceedings more attritional. The court therefore declined to order the preliminary issues sought by the defendant.