Building Design Partnership Ltd v Standard Life Assurance Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Coulson,Lord Justice Birss,Lady Justice Macur |
| Judgment Date | 29 November 2021 |
| Neutral Citation | [2021] EWCA Civ 1793 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A1/2021/0371 |
[2021] EWCA Civ 1793
Lady Justice Macur
Lord Justice Coulson
and
Lord Justice Birss
Case No: A1/2021/0371
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
MR JUSTICE KERR
Royal Courts of Justice
Strand, London, WC2A 2LL
Vincent Moran QC & William Webb (instructed by Vinson & Elkins RLLP) for the Appellant
Jonathan Selby QC & Callum Monro Morrison (instructed by Mayer Brown International LLP) for the Respondent
Hearing Dates: 12 & 13 October 2021
Judgment Approved
INTRODUCTION
The use of sampling and extrapolation is not uncommon in the Business and Property Courts (particularly the TCC) as a way of corralling evidence and keeping trials within proportionate limits. The essential proposition is that, if the sampled allegations are found, on the balance of probabilities, to be properly representative of the pool of allegations as a whole, then a detailed investigation into the sample can be extrapolated into a result in respect of the pool.
The issue here is whether, as a matter of principle, a claimant can go one step further and plead its original statement of case on an extrapolated basis, without pleading a detailed case on each of the allegations in the pool. What the claimant (“Standard Life”) sought to do in Part B of its claim was to make a series of specific allegations against the defendant (“BDP”) arising out of a detailed investigation of 167 variations, and then extrapolate the results of that investigation across the remaining 3,437 variations, without investigating, much less pleading out, a detailed case in relation to those remaining variations.
BDP sought to strike out that part of the claim and/or obtain reverse summary judgment against Standard Life on the basis that such a pleading was an abuse of process and/or disclosed no reasonable grounds for bringing such a claim. By a judgment dated 15 December 2020, Kerr J (“the judge”) refused to strike out the claim or give summary judgment. Instead he made various case management orders which are referred to in greater detail below. BDP seek to appeal against that decision.
It should be noted that, partly as a result of the judge's orders, Standard Life's case has now changed significantly, and the proportion of the Part B claim made up of the extrapolated claim has been significantly reduced. Although I refer below to that changed case, where relevant, the next Section of this judgment primarily focuses on the original statement of case, since that gave rise to both BDP's application and the judgment against which they seek to appeal.
THE FACTUAL BACKGROUND AND THE PLEADED CASE
The underlying claims concern a mixed retail and residential development in Newbury, Berkshire (“the project”). Standard Life were the developers and employers. They engaged Costain Ltd to carry out the building works. The contract price was £77.4m, although just over half of this comprised provisional sums. 1 BDP were the contract administrators and leaders of the “design team”. Although there are pleaded claims against the other two members of the design team, namely Sutton Griffin Architects and Cundall Johnston & Partners LLP (both of whom joined in with BDP's strike out application and the early stages of this appeal), BDP were the only appellants who appeared before this court.
Standard Life eventually paid £146.4m to settle Costain's final account. That was almost exactly twice the contract sum. Standard Life blame BDP for the bulk of what
they consider to be an unjustified and avoidable overspend. These proceedings address Standard Life's claims against BDP and others arising out of the overspend on the projectPart A of the claim, said to be worth about £20m, is concerned with the procurement of the building contract itself. Part C of the claim, said to be worth £11.5m, concerns Standard Life's separate claim against Buro Four Project Services Limited in relation to a contract between Standard Life and their tenant, Marks and Spencer PLC, concerned with a distinct part of the project. BDP's application to strike out did not concern Part A, and Part C does not relate to them in any event. Hence, we are only concerned with Part B of Standard Life's claim.
Part B concerns variations and loss and expense. Of the final account sum paid to Costain, £50.3 million was made up of: a) £28.4m paid in relation to variations to the building contract; and b) £21.9m paid in relation to Costain's claims for loss and expense due to delay and disruption caused by these variations. I note that there are two kinds of variation in play: Contract Administrator Instructions (“CAIs”) and Confirmations of Verbal Instructions (“CVIs”). BDP signed the CAIs and approved the CVIs for payment. The bulk of the £28.4m paid in respect of variations relates to CAIs.
I turn to the detail of Standard Life's pleadings in respect of both variations and loss and expense. Since the judge correctly observed that an analysis of the pleadings “is not for the faint hearted”, it is perhaps wiser to summarise the effect of the pleadings, rather than embarking on a detailed analysis of its constituent parts.
What I shall call “the Detailed Claim” against BDP can be usefully described as having three limbs. Limb one is based on an analysis of 167 variations, out of a total of 3,604. Out of that 167 variations, 122 have been particularised and pleaded as giving rise to a claim in professional negligence against the design team. Those claims are for late, inadequate, inaccurate, incomplete and uncoordinated design information. The 122 variations arise under four of the elements of the work on the project, namely the residential fit-out, secondary steelwork, cladding and roofing. BDP's portion of this claim comes to around £3m. Limb two is a claim against the design team for around £6.1m of loss and expense incurred by Standard Life as a consequence of their breaches. Once combined with limb three (Standard Life's claim against the design team for lost rent and professional fees), the Detailed Claim gives rise to a direct claim of around £13m in damages against BDP alone. All three limbs of the Detailed Claim are pleaded in a traditional manner. So far, so standard.
The total value of the 167 variations analysed is £3.7m. What I shall call “the Extrapolated Claim” has two interlinked elements and operates in this way. In the first element Standard Life allege that, on their analysis of the 167 variations, the design team were culpably responsible for 83.1% of them. So Standard Life extrapolate that percentage across the remaining 3,437 variations which they have not investigated, and pursue a further claim of £23.6 million (83.1% x £28.4 million) against the design team in respect of the remaining variations. Standard Life then apply a similar analysis to calculate what each member of the design team is individually responsible for. It worked out that BDP was responsible for approximately £3m (81.71%) of the £3.7m which made up the Detailed Claim. Thus, it claims against BDP £19.3m, being 81.71% of the £23.6m claimed against the design team as a whole.
In essence, Standard Life say that, in circumstances where:
• BDP's personnel worked on all the significant aspects of the project, performing the same basic functions;
• The underlying causes of the additional cost which have been investigated appear, again and again, to be the provision of late/inadequate/inaccurate/incomplete/uncoordinated information by BDP;
• BDP have not provided any positive case to suggest any other cause of the additional cost. It cannot be Costain's responsibility, because otherwise BDP would not have approved the additional payments to them;
• It would be disproportionate to analyse each of the remaining 3,437 variations in the same way as the 167;
they can extrapolate their analysis of the 167 variations which make up the Detailed Claim across all the other (unexamined) variations, so as to give rise to the Extrapolated Claim. That is the inference which they ask the court to draw.
Standard Life apply the same methodology in relation to the second element of the Extrapolated Claim, namely the loss and expense claim. They worked out that, of the £21.9m it paid to Costain on account of loss and expense, the design team was responsible for approximately £10.7m. After stripping out the £6.1m which had been claimed against BDP in the Detailed Claim, a sum in the region of £4.6m was left. Standard Life then adopted the same approach towards apportionment between the members of the design team: i.e. they claim £3.7m odd (or 81.71% of the £4.6m) from BDP.
Thus the Extrapolated Claim gives rise to a total damages claim against BDP of over £20m, bringing the full amount of the claim against BDP to around £33m. It is the Extrapolated Claim to which BDP now object.
The primary pleading before the judge was the draft amended particulars of claim, dated 26 October 2020. It is not a model of clarity. However, Standard Life advertise the Extrapolated Claim early on at paragraphs 8–13, which I have reproduced at Appendix A.
Schedules 1–4 plead in detail the claims against BDP arising out of the 122 variations, spread over residential fit-out (schedule 1), structural steelwork (schedule 2), cladding (schedule 3), and roofing (schedule 4). The core allegations against BDP underpinning the detailed claim are that the design information was late and/or inadequate and/or inaccurate and/or incomplete and/or uncoordinated, as well as over-certification. Those allegations are divided into categories A-E and each are identified, sometimes in...
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