Sheffield Teaching Hospital Foundation Trust v Hadfield Healthcare Partnerships Limited & Ors

On an application for summary judgment, the court must determine whether the claim has a realistic, rather than fanciful, prospect of success without conducting a mini-trial. Where contractual interpretation depends materially on factual and commercial context, and the pleaded case is arguable, the issue should ordinarily proceed to trial.

A concurrent duty of care in tort causing liability for pure economic loss is not automatically excluded by the existence of a construction contract. The court must examine the parties’ relationship, assumption of responsibility, contractual allocation of risk and surrounding circumstances.

For security for costs, the court considers both the claimant company’s likely inability to pay and whether an order is just. A claim will be stifled only where the evidence establishes, on the balance of probabilities, that the claimant cannot provide security or obtain assistance.

The Trust brought a claim against Hadfield, a special purpose vehicle responsible for a PFI hospital development, concerning alleged design, construction and maintenance defects, including fire-safety defects. Hadfield brought Part 20 claims against Kajima, the design and construction contractor, and Veolia, the facilities management provider.

Kajima sought summary judgment or strike out of parts of Hadfield’s claim, including limitation arguments and a claim in negligence for pure economic loss. Veolia sought security for costs under the Civil Procedure Rules 1998.

The central issues were whether Hadfield’s claims were bound to fail on contractual limitation and concurrent duty principles, and whether Hadfield should provide security for Veolia’s costs.

1. Kajima’s application dismissed. Hadfield’s case that the First Standstill Agreement suspended limitation for its claims against Kajima was arguable. The definition of “Dispute” could extend to legal rights connected with the defects even though the Construction Contract was not included in the defined Project Documentation. The factual matrix and the parties’ intentions required fuller evidence, and the claim was not bound to fail.
2. The limitation issues concerning negligence and specific performance could not usefully be determined in isolation. Even if clause 9.7 of the Construction Contract applied, the claims might still fall within the standstill agreement. There was no material saving in deciding the construction issue before trial.
3. The negligence claim was also unsuitable for summary disposal. Robinson v Jones established that a contract does not automatically impose a tortious duty co-extensive with contractual obligations. The court must assess assumption of responsibility, the parties’ relationship, the contractual and factual matrix, and any contractual exclusion or limitation of liability. The complex design-and-build and PFI arrangements gave Hadfield an arguable basis for distinguishing Robinson. The distinction between design and workmanship could also require factual and expert evidence.
4. Hadfield was unable to meet Veolia’s costs immediately, satisfying the threshold under CPR 25.13(2)(c). The court was not satisfied that the claims were simple pass-through claims or that future costs orders were sufficiently predictable.
5. It was just to order security. Hadfield had not shown on the balance of probabilities that security would stifle the claim. The evidence from funders and shareholders was inadequate, and the continuing payment of substantial legal fees was unexplained.
6. Hadfield was ordered to pay £2,603,743 into court by 4 pm on 5 April 2023. Unless security was provided, the Additional Claim against Veolia would be stayed, with liberty to Veolia to apply for judgment.