Reaction Engines Limited & Ors v A&H Construction and Developments PLC & Ors

A preliminary issue should be ordered only where it is likely to reduce the scope of the main trial materially and without creating a risk of inconsistent factual findings. The court should consider the factual and evidential scope of the proposed issue, including matters bearing on the parties’ conduct and the inferences to be drawn from it. A preliminary issue is unsuitable where its determination is likely to expand into matters that will later arise at the full trial. The prospect of reducing the trial is further weakened where the applicant must succeed on several preliminary issues before any substantial saving can be achieved.

The proceedings concerned the contractual effect of an October 2018 practical completion statement relating to construction works. A&H Construction and Developments PLC applied at a costs and case management conference for three preliminary issues: whether practical completion was deemed to have occurred under clause 2.27 of the Design and Build Contract; whether an oral agreement treated the statement as partial possession or sectional completion; and whether A&H was estopped from relying on the statement.

The application was opposed by the defendants and other parties. The central question was whether the proposed issues were suitable for separate determination before the main trial.

1. Application refused. The proposed preliminary issues were not suitable for separate determination.
2. Issue 1 involved a factual dispute about the circumstances in which the October 2018 document was sent and what it was intended to be. The parties’ subsequent conduct, including works continuing through 2019 and 2020, could require evidence about both what occurred and why it occurred. That evidence was likely to involve cross-examination and could overlap substantially with the full trial.
3. The court declined to determine the construction of clause 2.27 on the preliminary-issues application. The contractual clause differed materially from the clause considered in Swansea Stadium Management v Interserve Construction [2018] EWHC 2912 (TCC). In Swansea Stadium, the employer’s opinion was the driver of the contractual mechanism. Here, the clause appeared first to require an objective assessment of practical completion and compliance with other contractual provisions before the statement and deeming provision took effect. The distinction provided no particular support for ordering a preliminary hearing, but did not decide the construction issue.
4. Issues 2 and 3 likewise raised factual questions concerning the continuation of the works and the parties’ conduct. Separating them risked carving out factual matters and producing inconsistent findings.
5. Applying the principles identified in McLoughlin v Grovers [2001] EWCA Civ 743, as applied in Midal Cables Limited v AMEC Foster Wheeler Group Limited [2019] EWHC 1155 (TCC), the proposed hearing risked becoming a treacherous shortcut. A&H also needed to succeed on all three issues for the main trial to be materially reduced.