Lloyds Bank Plc v McBains Cooper

JurisdictionEngland & Wales
JudgeSir Antony Edwards-Stuart
Judgment Date18 January 2017
Neutral Citation[2017] EWHC 30 (TCC)
Docket NumberCase No: HT-2013-000032
CourtQueen's Bench Division (Technology and Construction Court)
Date18 January 2017

[2017] EWHC 30 (TCC)




Royal Courts of Justice

Strand, London, WC2A 2LL


Sir Antony Edwards-Stuart

Case No: HT-2013-000032

Lloyds Bank Plc
McBains Cooper

Lord Marks QC and Mr Luke Wygas (instructed by Clarke Willmott LLP) for the Claimant

Mr Sean Brannigan QC and Mr Thomas Crangle (instructed by Triton Global Ltd) for the Defendant

Hearing date: 19 th December 2016

Sir Antony Edwards-Stuart



This is a judgment on costs following two judgments which dealt with, respectively, liability and damages. Those judgments were formally handed down on 2 October 2015 and 6 October 2016.


The claim arose out of a loan by the claimant Bank for the development of a former bingo hall for use as an evangelical church. The Defendant, McBains Cooper, was engaged as the Bank's project monitor, and was retained to give initial advice in relation to the feasibility of the project and thereafter to monitor the progress of the work. Under the terms of the facility the borrower was to fund the development by way of monthly drawdowns. McBains Cooper was engaged to check the monthly applications and to satisfy itself that they were justified and in accordance with the facility and then recommend whether or not the amount claimed should be paid. If McBains Cooper recommended that the drawdown be authorised, the sum claimed was then paid by the Bank without further enquiry or question.


Following the first judgment I gave a "Provisional indication as to damages" dated 27 October 2015, in which I set out my tentative conclusions on damages because I had been unable to reach any firm conclusions on the basis of the evidence before the court at the trial.


There were two particular difficulties. First, the figures put forward by the Bank were virtually incomprehensible and quite incapable of reconciliation with those put forward by McBains Cooper. Second, there was no agreement as to the valuation of the building being developed, which formed a major part of the Bank's security, at the appropriate date, which I found to be April 2009. However, there was some indication that the valuation experts might be prepared to agree that value in the sum of £800,000, which was the figure that I took when expressing my tentative conclusions on quantum.


However, the Bank was not prepared to agree the value at £800,000 and wanted to call its valuation expert to give evidence (the valuation experts not having given evidence at the trial). For various reasons, mainly concerning availability, this hearing did not take place until 2 February 2016. Unfortunately, the delays did not end there because shortly after that hearing other commitments intervened (in particular, I began a very substantial trial, which did not conclude until early June 2016). As a result, I was not able to issue my second judgment in this case until early August 2016, when it was circulated in draft. There was again a problem in finding a date suitable to both parties on which they could address me as to costs, and so this did not take place until 19 December 2016. Whilst these delays are very unsatisfactory, they were not the result of any want of prosecution of the case by either party. Fortunately, I do not consider that they have added significantly to the overall costs of the litigation.


The claim made by the Bank was for a little over £1.8 million. However, in July 2013 it recovered £288,323 following the decision of an adjudicator. It therefore gave credit for that sum, reducing the net claim to about £1.55 million. The Bank's final recovery was £127,115 (excluding interest), after giving credit for the amount recovered in the adjudication. It was £415,439 before deducting that recovery.


Depending on how one looks at it, therefore, the Bank recovered a little under 25% of its total loss, or 8% of its net claim. McBains Cooper unsurprisingly deployed the latter figure. However, in my view that is not the correct approach because at all times McBains Cooper denied liability for any sum and had in fact brought separate proceedings to recover the £288,000 odd paid pursuant to the adjudicator's decision. That said, I suspect that the real battle was as to whether the Bank would do better than its recovery in the adjudication: in the event it did so but, as the figures show, not by much.


As before, the Bank was represented by Lord Marks QC and Mr Luke Wygas, instructed by Clarke Willmott, and McBains Cooper was represented by Mr Sean Brannigan QC and Mr Thomas Crangle, instructed by Robin Simon LLP (later Triton Global Ltd).

The rival positions


The parties could hardly be further apart. Lord Marks submits that the Bank, as the successful party, should have its costs on the standard basis to 31 January 2014, 21 days after its offer of 10 January 2014, and then on the indemnity basis thereafter. In addition, the Bank seeks a payment on account of those costs.


The position of McBains Cooper, by contrast, was that it was successful on a number of discrete issues and so justice requires the court to make issues-based costs orders. Mr Brannigan submitted that this ought to result in McBains Cooper being a net payee in terms of costs in spite of being the "unsuccessful party". Alternatively, he submitted that at its lowest (from his client's point of view) there should be no order for costs.

The events leading up to the litigation


This is a case which has an unsatisfactory history and where the conduct of each party has, on occasions, not been to its credit.


The events which gave rise to the dispute took place between 2006 and April 2009, when the Bank terminated the facility, although the development property was not in fact sold until January 2011.


In September 2011 the Bank's solicitors wrote to McBains Cooper asking for copies of its "original file of papers". At that stage, as was made clear, no claim was being made against McBains Cooper. That did not happen until January 2012, when the Bank's solicitors wrote a letter before action to McBains Cooper dated 16 January 2012. In that letter they made allegations of negligent conduct by McBains Cooper in relation to three aspects of the performance of its retainer. These were put as follows:

"1 You incorrectly advised the Bank, in your Initial Report dated May 2007 that, the development cost was £2,540,059 whereas this figure merely accounted for the construction cost.

2 Your monthly reports between 28 September 2007 and April 2009 were inaccurate with regard to the sufficiency of the funds remaining in the loan facility, the progress of the project and the variations to the development.

3 You failed to notify the bank that funds from the facility were used to discharge the cost of works which were carried out on the 3 rd floor and which were outside the terms of the facility.

As a consequence of your negligence, our client has made payments which would otherwise not have been made and has suffered a loss as a result."


The loss claimed was the full amount paid out by the Bank less the sums recovered from realising the security. There was no allegation that McBains Cooper had not made monthly site visits as required by its retainer, although the Bank's solicitors did ask for a number of further documents including, " Timesheets and records of attendances at site together with the site notes".


The Bank's pre-action protocol letter was dated 22 November 2012. In this letter allegations of negligence were put as follows:

"3 As project monitoring surveyors, [McBains Cooper] did not provide reliable appraisal advice to the Bank, particularly in relation to the development risks and costs.

4 The advice contained in [McBains Cooper's] monthly monitoring reports was inaccurate with regard to the sufficiency of the funds remaining in the loan facility, the progress of the works and the variations to the project.

5 [McBains Cooper] made errors in measuring and valuing the works performed by the contractor. It ought to have identified works which were outside the scope of the development loan facility and deducted the cost of these works from the valuations made on a monthly basis."


The letter went on to make detailed allegations of breaches of duty by McBains Cooper: although these included the allegation that McBains Cooper failed to carry out independent valuations of the works carried out on the project, there was no allegation that work properly carried out was overvalued or that defective work was valued as if it had been sound. In particular, there was no allegation of a failure to carry out monthly visits to the site. The Bank's claim was summarised as being one for negligence which " resulted in the Bank lending money, which it would otherwise not have lent". To use the now discredited terminology, it was said that this was a "no transaction" case.


The letter in response from the solicitors acting from McBains Cooper was dated 18 March 2013. It was very detailed and ran to 23 pages. It concluded by asserting that the performance of its retainer by McBains Cooper had caused no loss to the Bank and by insisting that the Bank withdraw its claim.


On 17 May 2013 the Bank's solicitors confirmed receipt of McBains Cooper's protocol letter of response and indicated that the Bank intended to pursue the claim through the courts (if not settled) and invited McBains Cooper to extend the limitation period for the Bank's claim in contract to 16 December 2013 (this followed two earlier "standstill agreements"). By an e-mail dated 23 May 2013 the Bank's solicitors chased McBains Cooper's solicitors for a response about the request for the proposed extension of the limitation period.


Just over a week later, on 31 May 2013, the Bank's solicitors,...

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2 books & journal articles
  • Litigation
    • United Kingdom
    • Construction Law. Volume III - Third Edition
    • 13 April 2020
    ...Urvasco SA v Carey Value Added SL [2013] EWHC 1732 (Comm) at [34]–[42], per Blair J; Lloyds Bank Plc v McBains Cooper Consulting Ltd [2017] EWHC 30 (TCC) at [74]–[75], per Sir Antony Edwards-Stuart (appeal allowed in part, on unrelated grounds: [2018] EWCA Civ 452). See also Laing O’Rourke ......
  • Table of cases
    • United Kingdom
    • Construction Law. Volume I - Third Edition
    • 13 April 2020
    ...Bank Plc v McBains Cooper Consulting Ltd [2016] EWHC 2045 (TCC) I.1.50, II.13.59 Lloyds Bank Plc v McBains Cooper Consulting Ltd [2017] EWHC 30 (TCC) III.26.262 Lloyds Bank Plc v McBains Cooper Consulting Ltd [2018] EWCA Civ 452 II.10.193 Lloyds Bank plc v Waterhouse [1993] 2 FLR 97 I.2.175......

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