MW High Tech Projects UK Limited v Outotec (USA) Inc & Ors

A contractual restriction requiring prior consent for assignment may, on its proper construction, apply equally to successive assignments by a permitted assignee. A purported re-assignment made without that consent is ineffective against the other contracting party.

A parent company guarantee covering duties and obligations arising under or in connection with a subcontract does not permit the original contractor to recover breach-of-contract damages after assigning the relevant contractual rights and failing validly to re-acquire them. The same guarantee may, however, cover misrepresentation claims sufficiently connected with the subcontract.

Henderson abuse is a broad, merits-based assessment. Failure to comply with case-management guidance is relevant but not conclusive. Strike-out requires abuse, oppression or unjust harassment in all the circumstances.

MW brought proceedings against Outotec and its parent, Metso, concerning an energy-from-waste project. The claim comprised misrepresentation allegations said to have induced entry into the subcontract and breach-of-contract claims concerning defective and delayed plant.

MW had previously assigned the subcontract to the project employer, EWH, as required by the main contract. Following settlement of earlier proceedings, EWH purported to re-assign the subcontract benefits to MW, but without Outotec’s prior consent. The defendants sought strike out or summary judgment, relying on the assignment restriction, the terms of the parent company guarantee, and abuse of process.

The issues included whether the re-assignment was effective, whether the guarantee preserved claims against Metso, and whether the new misrepresentation proceedings should have been brought in the earlier litigation.

1. Re-assignment. Clause 9.1 of the subcontract required Outotec’s prior consent to the re-assignment by EWH to MW. Read with the definition of “Contractor”, the restriction applied to permitted assignees and successive assignments. The conditional benefit principle also led to that conclusion. The re-assignment was therefore ineffective as against Outotec, and the breach-of-contract claims against Outotec were summarily dismissed.
2. Metso guarantee. Clauses 2.1 and 3.1 of the parent company guarantee concerned Outotec’s duties and obligations to MW under or in connection with the subcontract. Following the assignment, MW could no longer enforce those contractual obligations against Outotec. Clause 8.1 made the relevant limitations and defences available to Metso, so the breach-of-contract claims could not proceed against Metso either. Clauses 8.2.1 and 8.2.8 did not enlarge the fundamental scope of the guarantee.
3. The misrepresentation claims arose “in connection with” the subcontract. The wording of the guarantee, the subcontract’s treatment of tortious liability, and Ashville Investments Ltd v Elmer Contractors Ltd supported that construction. MW could therefore pursue the misrepresentation claim against Metso even if the claim against Outotec were struck out as abusive.
4. Applying Johnson v Gore Wood & Co, Dexter v Vlieland-Boddy and Aldi Stores Limited v WSP Group plc, abuse required a broad merits-based assessment of all the circumstances. MW could and should have raised or notified the misrepresentation claim during the earlier proceedings, and its failure to comply with the Aldi guidance weighed against it. It was not decisive. There was no substantial overlap with the issues previously tried, no collateral attack or dishonesty, and Outotec and Metso would in any event face related claims concerning other projects.
5. The misrepresentation claim was accordingly not an abuse against either defendant. Had the contractual claims survived the re-assignment issue, pursuing them would also not have been abusive. MW was directed to review and clarify any defects allegations relied upon only in support of the misrepresentation case.