Standard Life Assurance Ltd v Gleeds (UK) (A Firm)

JurisdictionEngland & Wales
CourtQueen's Bench Division (Technology and Construction Court)
JudgeMr Justice Kerr
Judgment Date15 December 2020
Neutral Citation[2020] EWHC 3419 (TCC)
Docket NumberCase Nos: HT-2019-000306; HT-2020-000022
Date15 December 2020

[2020] EWHC 3419 (TCC)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS

OF ENGLAND AND WALES

TECHNOLOGY AND CONSTRUCTION COURT (QBD)

Rolls Building

Fetter Lane,

London, EC4Y 1NL

Before:

Mr Justice Kerr

Case Nos: HT-2019-000306; HT-2020-000022

Between:
Standard Life Assurance Limited
Claimant
and
(1) Gleeds (UK) (a firm)
(2) Buro Four Project Services Limited
(3) Shearer Property Associates Limited
(4) Building Design Partnership Limited
(5) Carter Jonas LLP
(6) Cundall Johnston & Partners LLP
Defendants

Jonathan Selby QC and Callum Monro Morrison (instructed by Mayer Brown International LLP) for the Claimant

Vincent Moran QC and William Webb (instructed by Vinson & Elkins RLLP) for the Fourth Defendant

Joanna Smith QC and Michael Wheater (instructed by BLM LLP) for the Fifth Defendant

Piers Stansfield QC (instructed by CMS Cameron McKenna Nabarro Olswang LLP) for the Sixth Defendant

Hearing dates: 11 and 12 November 2020

Approved Judgment

I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Mr Justice Kerr Mr Justice Kerr

Introduction

1

There are before me three defendants' applications to strike out certain parts of a claim, or for summary judgment dismissing those parts of that claim. The claim is brought by the claimant ( Standard Life) against (among others) the fourth, fifth and sixth defendants (respectively, BDP, SGA (Sutton Griffin Architects, the relevant predecessor of the fifth defendant) and Cundall). The three applications to strike out or dismiss parts of the claim were brought on 31 July 2020 by each of BDP, SGA and Cundall.

2

All amounts of money stated below are approximations except where otherwise indicated. Standard Life's claim arises from these defendants' involvement in a building contract ( the building contract) in which the main contractor was Costain Limited ( Costain). The building contract was for a mixed retail and residential development in Newbury, Berkshire. The contract price was £77.4 million, though £39.9 million of that price comprised provisional sums.

3

Standard Life's pleaded case is that it paid £146.4 million to settle Costain's final account in June 2014. That amount included £50.3 million made up as follows: £28.4 million in respect of variations to the building contract, of which £25.8 million arose from contract administrator instructions ( CAIs) and £2.6 million from confirmations of verbal instructions ( CVIs); and £21.9 million in respect of contractor's loss and expense arising from delay and disruption.

4

The essence of the complaint against Standard Life is that much of the quantum of its £38.1 million claim for damages against these defendants for alleged professional negligence is calculated by impermissible extrapolation from an analysis of a relatively small part of their work. The defendants say Standard Life has failed to plead a case against them supporting any award of damages in respect of all but £12.9 million of the £38.1 million claimed.

5

They contend, in short, that the claim for the balance of £25.2 million is an abuse of process, has no reasonable prospect of success and is unsupported by a pleading disclosing a reasonable cause of action. That part of the claim should therefore, they contend, be struck out or, alternatively, summary judgment in favour of these defendants should be given on their defence against it.

6

Standard Life contends that its plea of negligence against these defendants is good in law and fact; that the extrapolation method used to calculate its losses is valid and permissible; that it would be disproportionate and absurd to require it to plead and prove its case separately in respect of each and every individual component of the claim; that these defendants know the case they have to meet; and that it is open to Standard Life to quantify its claim for loss and expense by advancing a “global” claim recognised on good authority.

Facts

7

The claim against these defendants is “Part B” of Standard Life's overall claim, also comprising Parts A and C. Part A (in which £20 million is claimed) arises from performance of the first to third defendants in connection with procurement of the building contract. Part C (a claim of £11.5 million) concerns the second defendant's performance regarding a contract between Standard Life and Marks & Spencer plc relating to a part of the site subject to a compulsory purchase order. A case management conference for all three parts of the action is listed for 17 February 2021. A 12-week trial of the whole action is listed in late 2022.

8

The building works comprised Blocks A-H which would become shops, with an underground car park. A further separate block called “M&S” would house a Marks & Spencer store. Blocks A-G would also include 184 dwellings. BDP was the contract administrator, architect and lead consultant for the development. SGA was also engaged as an architect in the development or parts of it (not including Block F) until February 2010, when its functions were taken over by BDP. Cundall was the structural, mechanical and electrical engineer.

9

Collectively, these three defendants are referred to in the documents as the Design Team. Under the terms of their respective appointments which were eventually put into writing, they had varying obligations to report and provide relevant information to Standard Life. BDP's obligations as contract administrator and lead consultant were the most extensive and included obligations to provide monthly reports and, broadly, to report on progress of the works including cost increases and delays.

10

The building contract was concluded on 26 August 2008. Works started the following month. In February 2010, SGA's retainer was terminated. Standard Life's case, strongly disputed by these defendants, is that they carried out their work negligently, resulting in Standard Life having to pay to Costain substantially more money than it would otherwise have had to pay. In oral argument, Mr Jonathan Selby QC, for Standard Life, used phrases such as “shambolic” and “all at sea” to describe their performance.

11

These alleged breaches of duty are described in more detail in the statement of Mr Jonathan Stone, Standard Life's solicitor, who produced contemporary documents showing Standard Life's expressions of dissatisfaction with the performance of the Design Team, especially BDP. Mr Selby showed me, for example, minutes of a meeting with BDP on 16 November 2010, a report from the second defendant project manager ( Buro Four) dated 17 December 2010 and a detailed letter to BDP of 17 May 2011.

12

In these documents, Standard Life and Buro Four did indeed reproach BDP and the Design Team with many perceived shortcomings. For example, the letter of 17 May 2011 included the following:

“Change Control

Despite our attempts to have a managed change control process, BDP continue to make design changes with significant cost impact with little or no regard to their cost and minimal back checking to the cost plan allowances.

The drafting of CAI'S has and continues to be a significant concern. Instructions issued are inadequately detailed, vague and leave SLI exposed to risk. Other members of the team have had to continually check and in some instances draft CAI's on behalf of BDP.”

13

Practical completion of the whole of the works was certified in June 2013. On 16 June 2014, Standard Life concluded a settlement agreement with Costain. It included a provision whereby Costain agreed to assist Standard Life with any disputes against third parties by giving Standard Life access to Costain's resources; but any request for such assistance had to be made within a reasonable time and in any case not later than 31 December 2014.

14

In July 2014, Buro Four carried out an analysis – subsequently relied on in Standard Life's pleaded case — of the work of the Design Team. It consisted of a five page spreadsheet itemising certain high value CVIs and CAIs and classifying them as arising from a “design team issue” or a “client issue”.

15

There was a “comments” column but in the majority of cases Buro Four had inserted in that column the words “[n]o comment without reviewing drawing history”. According to Buro Four's analysis, of the 100 or so CVIs and CAIs considered, representing an estimated total net additional cost to Standard Life of £14.6 million, 49 per cent had arisen because of a “design team issue”, 10 per cent from a “client issue” and 41 per cent were “unclassified”.

Procedural History

16

This litigation started some five years later on 28 August 2019 when Standard Life issued its claim. I need not set out in detail how its case was originally pleaded on 31 January 2020, since it now relies on draft amended particulars of claim. Some of the amendments are opposed, while others are amendments to the very paragraphs these defendants seek to strike out; but it was agreed that I should approach the defendants' applications de bene esse by reference to the draft amended particulars of claim, to which I am coming shortly.

17

It is sufficient to state that the original particulars of claim relied on extrapolation from a small selected sample of CAIs and CVIs analysed by Standard Life; the same method later used in the draft amended particulars. Before any draft amendment, a joint request for further information was served by these defendants on 9 April 2020. Standard Life responded to that request on 7 May 2020.

18

The defendants asked for particulars of the alleged negligent performance said to have caused “the balance of 87% of all variations that this aspect of the...

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