Children's Ark Partnerships Limited v Kajima Construction Europe (UK) Limited & Anor.

A contractual dispute resolution clause may create a condition precedent to litigation without ousting the court’s jurisdiction. To be enforceable, however, the procedure must impose clear and certain obligations, capable of objective assessment without further agreement. Where the procedure is unenforceable, non-compliance does not justify a stay, refusal to exercise jurisdiction or strike out. Even where an enforceable condition precedent exists, a stay is ordinarily the appropriate remedy. Setting aside a claim form is exceptional, particularly where proceedings were issued to protect limitation and the claimant could identify the substance of its cause of action. An inability to quantify the full loss at issue is not, by itself, an abuse of process.

The claimant issued proceedings against a contractor and its parent guarantor concerning alleged design and construction defects at a hospital. The claim was issued shortly before the expiry of a limitation period extended by standstill agreements. The defendants applied under CPR 11(1) to challenge jurisdiction or the exercise of jurisdiction, alternatively under CPR 3.4(2)(a) and (b) to strike out the claim for lack of reasonable grounds or abuse of process.

The defendants relied on a contractual dispute resolution procedure requiring disputes first to be referred to a Liaison Committee. The central questions were whether that procedure was a condition precedent to litigation, whether it was enforceable and complied with, and what relief should follow if proceedings had been issued prematurely.

1. Condition precedent. The dispute resolution provisions, construed together, required disputes first to be referred to the Liaison Committee and therefore were intended to operate as a condition precedent to commencing court proceedings. It was unnecessary for the contract to use those exact words, but the language had to make the restriction on commencing proceedings clear.
2. Enforceability. The procedure was not sufficiently clear or certain. It did not define the process to be followed, the participation required of Kajima, the role of the Trust, how a CAP–Kajima dispute was to be referred, the effect of a Liaison Committee decision on Kajima, or when the process was exhausted. It therefore could not create a legally effective precondition to litigation.
3. Jurisdiction. A mandatory ADR provision does not deprive the court of jurisdiction. A condition precedent may engage CPR 11(1)(b), concerning whether the court should exercise its jurisdiction, but CPR 11(1)(a) was not engaged. The usual remedy under CPR 11(6) would be a stay, rather than setting aside the claim form.
4. Compliance and discretion. The earlier Liaison Committee meetings did not amount to referral of the dispute for resolution. Assuming enforceability, however, the court would have declined to set aside the claim form. CAP acted reasonably in issuing proceedings to protect limitation, while the upstream claim and quantum remained unresolved. At most, the proceedings would have been stayed to permit compliance with the ADR process.
5. Strike out and abuse. The claim disclosed reasonable grounds. It was not analogous to Nomura v Granada, because CAP could identify the alleged defects and the substance of its contractual and tortious claims. Lack of final quantum or certainty that an upstream claim would be made did not constitute abuse. A serious abuse allegation should be made in sufficient time to allow responsive evidence.
6. The defendants’ application was dismissed.