Standard Life Assurance Ltd v Gleeds (UK) (A Firm)
| Jurisdiction | England & Wales |
| Judge | Mrs Justice O'Farrell DBE,Mrs Justice O'Farrell |
| Judgment Date | 27 May 2022 |
| Neutral Citation | [2022] EWHC 1310 (TCC) |
| Docket Number | Case No: HT-2019-000306 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2022] EWHC 1310 (TCC)
Mrs Justice O'Farrell DBE
Case No: HT-2019-000306
Case No: HT-2020-000022
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
Royal Courts of Justice
Rolls Building
Fetter Lane, London, EC4Y 1NL
Jonathan Selby QC & Tom Owen (instructed by Mayer Brown International) for the Claimant
Claire Packman QC & Martyn Naylor (instructed by Clyde & Co LLP) for the First Defendant
Patrick Lawrence QC, Marion Smith QC and Nicholas Higgs (instructed by DAC Beachcroft LLP) for the Second Defendant
Graeme McPherson QC & Ian McDonald (instructed by Kennedys LLP) for the Third Defendant
Hearing dates: 25 th and 26 th May 2022
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
“ This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be Friday 27 th May 2022 at 10:30am”
The matter before the Court is the application by the Second Defendant, supported by the First and Third Defendants, to strike out parts of the claim, and/or for summary judgment in respect of those parts, on the basis that the Statements of Case disclose no reasonable grounds for bringing those parts of the claim and they have no real prospect of success.
Background facts
This claim arises out of a mixed residential and commercial development at Parkway, Newbury, West Berkshire. The Claimant (“Standard Life”) is an investment fund which procured the development project. The First Defendant (“Gleeds”) was the quantity surveyor and cost consultant, the Second Defendant (“Buro 4”) was the project manager and the Third Defendant (“Shearer”) was the development manager in respect of the project.
The building contract with Costain was entered into on 26 August 2008. At the time of the building contract, the estimated outturn construction cost was £85 million approximately. The written order to commence the works was issued on 16 September 2008. On 11 April 2013 practical completion of the retail units was achieved and on 15 July 2013 practical completion of the residential units was achieved.
The final construction cost in respect of the development was £146 million approximately, substantially in excess of the estimated cost.
Proceedings
On 28 August 2019 Standard Life commenced proceedings against Shearer and on 31 January 2020 proceedings were commenced against the other Defendants. The claims were consolidated by order dated 21 July 2020. The claim was originally in three parts: Part A, Part B and Part C.
The application relates to the Part A Claim. Part A concerns a claim for negligent advice and performance as to the estimated construction cost and the procurement and terms of the building contract entered into with Costain. Standard Life's case is that Gleeds and Shearer, without any dissent from Buro 4, negligently advised that estimated outturn construction costs were £85 million approximately, whereas they should have advised an estimate of approximately £105 million. Further, the procurement strategy advised by Gleeds and Buro 4, and supported by Shearer, resulted in a high risk building contract, with a substantial proportion of provisional sum items.
Standard Life's case is that, had it been advised and warned of the true risks involved in the procurement and terms of the building contract, and the true likely outturn construction cost, it would have abandoned the development, would not have entered into the building contract and not issued the written order to commence the works. The claim is for damages in the sum of £20,141,515.00 plus interest, calculated as the difference between what it alleges ought to have been advised as the outturn construction cost plus construction contingency less what was advised.
Liability and quantum are disputed by the Defendants. In particular, it is contended that the quantum claim should exclude losses caused by other factors and which could not reasonably have been foreseen, and should give credit for the benefits Standard Life has derived from the development.
The Part B claim has been compromised.
Part C concerns a claim against Buro 4 for negligent advice in respect of an agreement dated 25 January 2008 with Marks and Spencer plc concerning land subject to a compulsory purchase order. Standard Life's case is that Buro 4 failed to provide adequate advice as to the scope of the enabling works for which Standard Life was liable, preventing it from enforcing its compulsory purchase powers and resulting in additional costs. The claim is for damages in the sum of £11,514,911.67 plus interest.
Liability and quantum on the Part C claim are disputed.
On 21 July 2020 the trial was fixed for 3 October 2022 with an estimate of 12 weeks. Following a strike out application and appeal in respect of the Part B claim, resulting in delays to the conclusion of pleadings, at a CMC held on 17 and 19 February 2021, the trial date was vacated and re-fixed for 3 October 2023.
The application
On 25 February 2022, Buro 4 issued an application, seeking an order that:
i) Paragraphs 86 and 87 and Annex 7 of the Particulars of Claim;
ii) Paragraph 2(9)(b) of the Reply to the First Defendant's Defence;
iii) Paragraph 2(11) of the Reply to the Second Defendant's Defence; and
iv) Paragraph 38(3) of the Reply to the Third Defendant's Defence
be struck out pursuant to CPR 3.4(2)(a) or (b) and/or summary judgment be given on those parts of the claim pursuant to CPR 24.2 on the grounds that (i) they disclose no reasonable grounds for bringing the claim; and/or (ii) the Claimant has no real prospect of succeeding on those parts of the claim.
The application is supported by the second witness statement of Olugbenga Dansu, solicitor of DAC Beachcroft LLP, dated 24 February 2022.
The application is opposed by Standard Life and reliance is placed on the fourth witness statement of Jonathan Stone, solicitor of Mayer Brown International LLP, dated 17 May 2022.
The material pleadings
Standard Life pleads the losses which it alleges it suffered as a result of the Defendants' negligent advice in its Particulars of Claim as follows:
“8. Standard Life's Part A losses are particularised in Section G and Annex 7. Standard Life limits its Part A claim to £20,141,515 or such other sum the court shall determine. Namely: the difference between what ought to have been advised for outturn construction costs plus construction contingency (£105,872,515) less what was advised in fact (£85,731,000). This is an ‘information case’ for which the First to Third Defendants are jointly and severally liable for the consequences of their advice being wrong or their failure to advise as they ought.
…
86. Standard Life claims from the First to Third Defendants, jointly and severally, its losses on the Development from August 2008 to date. These losses are £128,417,518 or such other sum as the Court shall determine.
87. See Annex 7 for further particulars of the losses.
88. Standard Life limits its Part A claims to £20,141,515. Paragraph 8 is repeated.”
Annex 7 of the Particulars of Claim states:
“1. But for the breach of the Part A Defendants' obligations, Standard Life would not have proceeded with the Development. Standard Life would not have entered into the Building Contract on 26 August 2008. It would not have executed the Written Order to Commence Works on 16 September 2008.
2. Standard Life's losses are calculated by way of a basic comparison between:
(1) the position Standard Life would have been in had it not proceeded with the Development; and
(2) its actual position.
3. Standard Life's actual position is that it incurred £146,419,486 of construction costs.
4. The calculation of the position Standard Life would have been in had it decided not to proceed with the Development is set out below.
(1) Standard Life would not have incurred £146,419,486 in construction costs.
(2) Deducted from this figure are costs incurred by Standard Life for which the Part A Defendants were not responsible:
(a) the cost of Standard Life introducing John Lewis as an anchor tenant (£8,698,287);
(b) the cost of tenant variations (£2,423,681); and
(3) A further deduction is made to allow for certain irrecoverable sums incurred by Standard Life prior to August 2008. Prior to August 2008, Standard Life incurred total expenditure of approximately £15,000,000. Standard Life estimates that, of this sum, it would have been able to recover approximately £8,120,000 in proceeds from sale of land. The loss of the aborted Development would, therefore, have been approximately £6,880,000.
(4) Standard Life would not have incurred a loss elsewhere with the construction costs which would not in fact have been expended on the Development.
5. The basic comparison, therefore, is £146,419,486 less sums for which the Part A Defendants would not have been responsible in any event (£11,121,968) less irrecoverable costs of £6,880,000. That totals £128,417,518, or such other sum as the Court may find.
6. Standard Life limits its Part A claim, as pleaded in paragraph 8 of the POC. That is £20,141,515 or such other sum as the Court may find, calculated as follows:
(1) the sum which ought to have been advised for outturn construction costs – £100,591,463 (as calculated in Annex 6); plus
(2) the sum which ought to have been allowed for construction contingency at 5.25% –...
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