Greenwich Millennium Village Ltd v Essex Services Group Plc (formerly known as Essex Electrical Group Ltd) (1st Defendant) Hoare Lea (A Firm)(2nd Defendant and 5th Party) Hs Environmental Services Ltd ((in Administration)) (3rd Party) W T Partnership Ltd (4th Party) D G Robson Mechanical Services Ltd (6th Party)

JurisdictionEngland & Wales
CourtQueen's Bench Division (Technology and Construction Court)
JudgeThe Hon. Mr Justice Coulson
Judgment Date11 April 2014
Neutral Citation[2014] EWHC 1099 (TCC)
Date11 April 2014
Docket NumberCase No: HT-12116

[2014] EWHC 1099 (TCC)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

TECHNOLOGY AND CONSTRUCTION COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

The Honourable Mr. Justice Coulson

Case No: HT-12116

Between:
Greenwich Millennium Village Limited
Claimant
and
Essex Services Group Plc (formerly known as Essex Electrical Group Limited)
1st Defendant

and

Hoare Lea (a firm)
2nd Defendant and 5th Party

and

Hs Environmental Services Limited (in administration)
3rd Party

and

W T Partnership Limited
4th Party

and

D G Robson Mechanical Services Limited
6th Party

Mr Piers Stansfield QC (instructed by Greenwoods) for GMVL, the Claimant

Miss Fiona Sinclair QC (instructed by Kennedys) for Essex, the 1 st Defendant

Mr Alexander Hickey (instructed by Berrymans Lace Mawer) for Hoare Lea, the 2 nd Defendant and 5 th Party

Mr Simon Hargreaves QC and Mr Karim Ghaly (instructed by Clyde & Co) for HSE, the 3 rd Party

Mr Roger ter Haar QC and Mr Alexander Macpherson (instructed by Fox Hartley) for Robson, the 6 th Party

Hearing dates: 4, 5 and 6 March 2014

The Hon. Mr Justice Coulson
1

INTRODUCTION

1

In the Main Judgment handed down on 25 October 2013 ( [2013] EWHC 3059 (TCC)), I upheld the claim by the claimant ("GMVL") against the two defendants, Essex and HL, arising out of the flooding of a block of flats on the Greenwich Peninsula. There were two effective causes of the flooding: the closed Isolation Valve ("IV") and the installation of a Non-Return Valve ("NRV"). These were both matters of workmanship. Essex were liable as the specialist M & E sub-contractor responsible for design and workmanship. HL were liable principally because of their supervisory role, a liability which I found to have been exacerbated by their design responsibility for this relatively novel water system ("BMCWS").

2

The claim was passed on by Essex to its sub-sub-contractor, HSE, and in turn by HSE to the mechanical sub-sub-sub-contractor, Robson. HSE had a design obligation as well as a workmanship obligation. Robson were only responsible for workmanship, although, as noted, that was where the fundamental failings occurred. Quantum was agreed at £4.75 million, together with interest at agreed rates pursuant to Section 35A of the Senior Courts Act.

3

Although the parties are broadly agreed about the orders to be made arising out of the Main Judgment, that agreement does not extend to the costs issues. Indeed, there are something like two dozen separate issues on costs arising between the parties. That in turn necessitated a costs hearing which took three full days, involved six lever arch files of documents concerned with costs alone, and led the parties to prepare two files of authorities containing over fifty reported cases. In Fox v Foundation Piling Limited [2011] EWCA Civ. 790, [2011] 6 Costs LR 961, Jackson LJ referred to the recent trend of "numerous first instance hearings in which the only issue is costs". It might be said that this case is a paradigm example of that unhappy development.

4

The myriad issues that the parties required the court to address in this Costs Judgment have necessitated a study of the steps taken pursuant to the pre-action protocol; an analysis of the conduct of the litigation and, in particular, the preparations for trial, including the preparation of the trial bundles; a consideration of whether or not Part 36 offers and offers made 'without prejudice save as to costs' should or could have been accepted and, because they were not, whether or not the refusal to accept them was unreasonable and/or broke the chain of causation; a consideration of what the Main Judgment actually decided, and what that Judgment could have decided if other events had intervened; an analysis of which parties might, if they had conducted themselves differently, not have been present at the trial at all; a close study of CPR 36.14, 44.3, 44.5 and 52.7; an analysis of the extent (if at all) to which claims for costs arising under a contractual indemnity equate to an entitlement to indemnity costs; a consideration of the financial positions of both Robson and HSE, said to be relevant to Robson's application for a stay of execution; and a consideration of whether or not Essex was entitled to an order pursuant to Section 51 of the Senior Courts Act requiring other parties to make direct payments to GMVL in satisfaction of Essex's liability for GMVL's costs. Other lesser issues arose along the way. It was a relatively daunting task for a judge who had thought, perhaps naively, that he had decided the principal issues between the parties in October last year.

5

There is one essential ingredient of almost all these costs issues which needs to be stated at the outset. That concerns the position of Robson. Robson were responsible for the two critical workmanship failures which caused this flooding. That is despite the fact that, at the trial, they took every possible point in defence of their position, whilst at the same time making no concessions of any kind. They made no attempts to settle the claim brought directly against them by HSE, much less endeavour to stop the avalanche of costs being incurred further up the line. As Mr Hargreaves QC put it during his oral submissions on behalf of HSE: "Robson lost this litigation. They denied all things at all times, and made no offer of any money and lost…it doesn't really come as any great surprise that the consequences of that, in multi-party litigation, are quite severe."

6

There can be no doubt that the consequences for Robson are severe. They have paid out £3.5 million odd of the £5 million insurance cover which, they say, is the maximum cover available to them (although inevitably there is a dispute about that, too). They say that, if they had to find more than £1.5 million by way of costs (i.e. the balance of the insurance monies), they would almost certainly go bankrupt. Accordingly, the vast majority of the disputes on costs arise out of points raised by Robson which can generally be summarised in this way: although they have lost and accept that they are liable for the costs of the Part 20 proceedings brought against them by HSE, Robson maintain that they are not liable for the costs incurred back up the contractual chain and, instead, they argue that those costs were incurred because of flawed litigation decisions made by other parties which were nothing to do with them. This stance has had the effect that, although many of the proposed costs orders are agreed between the parties at the top end of the contractual chain, it is Robson (who may ultimately be liable to pay for them) who say that such orders should not be agreed. It is this stance (which is obviously critical to Robson) which lies at the heart of this Costs Judgment and, I am afraid, makes it so long.

2

ORDERS CONSEQUENTIAL ON MAIN JUDGMENT

7

The parties are agreed that, in broad terms, the following orders arise from the Main Judgment:

(a) GMVL has judgment on its claims against Essex and HL.

(b) Essex and HL are jointly and severally liable to GMVL for damages and statutory interest in the sum of £4,985,686.85, in respect of the Core 2 leak.

(c) In addition, Essex is further liable to GMVL for damages and statutory interest in the sum of £433,537.99 in respect of the Core 3 leak.

(d) Essex has judgment on its CPR Part 20 claim against HSE. HSE is liable to indemnify Essex in respect of Essex's liability to GMVL for damages, costs and interest.

(e) Essex has judgment on its CPR Part 20 claim against HL. HL is liable to make a contribution of 40% in respect of Essex's liability to GMVL in respect of the Core 2 leak, amounting to £1,994,274.74 in respect of damages and statutory interest.

(f) HL has judgment on its CPR Part 20 claim against Essex. Essex is liable to make a contribution of 60% in respect of HL's liability to GMVL in respect of the Core 2 leak, amounting to £2,991,412.11 in respect of damages and statutory interest.

(g) HSE has judgment on its CPR Part 20 claim against Robson. Robson is liable to indemnify HSE in respect of HSE's liability to Essex for damages, costs and interest.

8

However, under those broad heads, there are a myriad of disputes between the parties relating to precisely how those claims for costs are to be assessed, and what they should include and what they should exclude. I deal with those starting at Section 4 below. First, however, I say a word about the Costs Management Orders in this case.

3

THE COSTS MANAGEMENT ORDERS

9

This case was case-managed by Ramsey J. The costs budgeting pilot scheme, which was being run in the TCC amongst other courts, operated in respect of this case. The parties are agreed that the costs management orders ("CMOs") which he made are relevant to the disputes before me because it is the amount in those CMOs which ought to form the basis for the interim payments as to costs which are sought.

10

I set out below a table showing the costs management orders which were made and, where they are known, the actual costs incurred by the parties:

Party

Approved Budget at CMC on 26 October 2012 [1/1/4]

Approved increase at PTR on 5 June 2013 [1/4/16]

Increased Costs Budget

Actual Costs

GMV

£1,992,746.97 [ 1/6/19]

£160,000

£2,152,746.97 [ 1/7/28]

£2,177,266.10 [ 1A/20/371]

Essex

£1,386,216.77 [ 1/8/37]

£15,000

£1,401,216.77 [ 1/9/63]

£1,346,351.45 [ 1A/22/387D]

Hoare Lea

£852,711.70 [ 1/10/81]

None

n/a

Unknown

HSE

£1,375,252.90 [ 1/9/72]

£81,500

£1,456,752.90 [ 1/9/77]

£1,610,649.86 [ 1A/24/395]

Robson

£1,074,623.53 [ 1/11/90]

£205,938.86

£1,280,562.39 [ 1/11/99]

Unknown

11

It will be seen that, where the actual costs are known, the figures are very similar to the CMOs made by Ramsey J. It should also be noted that the bulk of the difference...

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