The Complex Art of Appeal

Article for Building Magazine by Greg Richards, Senior Associate, UK Construction & Engineering Group at Pinsent Masons

Construction cases, by their very nature, can be incredibly complex so it is not surprising that applications for permission to appeal are commonplace. Greg Richards of law firm Pinsent Masons delves into the recent case of Yorkshire Water Services Limited v Taylor Woodrow Construction Northern Limited and Others and discovers that in future applications for permission to appeal in highly complicated cases may be just that little bit harder to secure.

In July this year the Court of Appeal handed down judgment on an application by Yorkshire Water for permission to appeal in its case against Taylor Woodrow. The decision provides useful guidance on how the courts will deal with applications for permission to appeal in factually and technically complicated cases, particularly from the Technology and Construction Court ("TCC").

The case concerned the Knostrop Sewage Treatment Works in Leeds.  Yorkshire Water engaged Taylor Woodrow to provide a Sequential Batch Reactor ("SBR") as part of certain improvement works at Knostrop.  Taylor Woodrow in turn engaged process contractors Biwater to provide the plant and Biwater in turn engaged specialist sub-contractor Elga to design, manufacture and supply the SBR.  The plant passed take-over tests in November 1999 but then experienced a period of difficult operation which resulted in Biwater personnel assisting in the operation of the plant throughout most of the year 2000.  The main contract required performance tests but those tests were never undertaken.  The relationship between Yorkshire Water and Biwater eventually broke down and in late 2000 Biwater left the site.  The performance of the plant deteriorated thereafter under the sole operation of Yorkshire Water. 

Yorkshire Water embarked upon expensive remedial works and claimed approximately £12 million from Taylor Woodrow at trial in respect of those remedial works and that claim was passed down the contractual chain.  Taylor Woodrow, Biwater and Elga counterclaimed for outstanding sums, loss and expense, extensions of time and entitlement to a final certificate. While at a broad level much of the case concerned whether the SBR would have passed the performance tests, why it had difficulties in performing during certain periods and Yorkshire Water's entitlement to recover sums under the contract, it is important to understand that the case was an immensely technical and complicated one.  The Court of Appeal described the judgment of Forbes J as "the interlocking pieces of a highly complicated jigsaw" and commented that "Understanding the jargon is an effort in itself."  

Forbes J at first instance dismissed Yorkshire Water's claims and upheld substantially all of Taylor Woodrow, Biwater and Elga's claims. Not surprisingly Yorkshire Water sought permission to appeal the judgment of Forbes J on virtually all of the significant findings of fact and law.  A hearing took place on 20 June 2005 before May, Parker and Gibson LJJ.  Judgment was reserved and the decision was published on 19 July 2005. 

The judgment of the Court of Appeal offers general guidance on appeals in complicated cases, particularly from the TCC.  The Court said that a cynic might take the view that to re-open a highly complicated case on which a very experienced and competent technical judge had taken thirteen months to produce a "masterpiece" of a judgment was a compelling reason in itself why permission to appeal should be refused and concluded by saying that "The cynic would not be far from the mark."

The Court observed that as a general rule the more complicated and technical the facts of a case the harder it should be to obtain permission to appeal because the task of reconsidering the case would become disproportionately time consuming and expensive for the parties and the Court.  The Court also noted that in such cases an appellate court is at the disadvantage of not having heard any of the witnesses, including the experts, give oral evidence.  The Court said that at the extreme, some questions of fact may be so complicated and technical that they should only be investigated in detail by the Court at first instance, provided that the resulting decision is not "palpably incompetent" and made it clear that this applied to all cases and not just to decisions of TCC judges. 

Developing this theme the Court said that an appellant has to establish that a relevant finding of fact is "plainly wrong or that the judge exceeded the generous ambit within which there might be reasonable disagreement about the conclusions drawn from the evidence."

The Court recognised that the case was not without its difficulties in deciding which of the parties was correct and that the Appellant had a different point of view but added that "the judge rejected it, being fully entitled on the evidence to do so".  It is clear then that the fact that another point of view may be available to the trial judge will not without more satisfy the test that there is a real prospect of success on appeal.  The inference from this and other statements in the judgment is that where in a complicated case the judge has to choose between conclusions A and B, and is reasonably entitled on the evidence to come to either conclusion, an appellate court should not interfere with the conclusion of the trial judge.  It is only where the trial judge came to conclusion A, when conclusion B was the only one reasonably open to him or her, that an appellate court should interfere.

This case was clearly regarded by the Court of Appeal as being of the highest complexity and given the quality of the judgment was inappropriate for the grant of permission to appeal.  Permission to appeal was refused and is likely to be refused in similar cases in the future unless the judgment is palpably incompetent.

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