England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		Court 11, St. Dunstan's House Fetter Lane, London, EC4
		22nd May 2006

His Honour Judge Peter Coulson QC:

INTRODUCTION

1. This is the first day of the trial in this action. The trial is listed for two weeks. Due to problems with the availability of counsel, the second week will be from the 12^th to the 15^th of June. The difficult procedural history of this case is set out in my judgment on the costs of various interlocutory applications, now reported at [2006] BLR 97. I do not repeat it here. Suffice to say for present purposes that the trial has been adjourned on three previous occasions, each time at the Claimants' instigation. During the last year, the Claimants have instructed four different firms of solicitors.
2. One of the particular difficulties with the Claimants' case has been the pleading of its case on causation and loss. As long ago as 7^th June 2005 I required the Claimants to clarify their case on quantum and on the causation of loss. The amended pleading was, in truth, no real improvement on the original. In my judgment on costs, I expressly referred to "the inadequacies of the Claimants' pleadings".
3. There was a pre-trial review on 24^th April. Because I anticipated that the Claimants' latest solicitors might wish to modify or refine their case, I anticipated that a lengthy period of time may be required for the PTR. I therefore allowed half a day. I was surprised to be told on that occasion that the Claimants had no applications in respect of further pleadings or new evidence. I was told that there might be applications in the future, but that they were not yet ready.
4. In fact, the Claimants' applications in respect of their pleadings and their new evidence were not made until, respectively, the 17^th and the 19^th of May. In the material with which I have been provided, there is no explanation as to why these applications have been made quite so late.

PRINCIPLES

5. In dealing with this disputed application to allow the Claimants to make amendments on the first day of trial I must have regard to a number of competing factors:

(a) the prejudice, if any, suffered by the party seeking to make the amendments if they are disallowed;

(b) the prejudice, if any, suffered by the party who must deal with the amendments if they are allowed; and

(c) whether the public interest in the administration of justice would be significantly affected or harmed if the amendment is allowed: see Cobbold v. Greenwich London Borough, August 9^th 1999, CA unreported.

6. Further, I note the following points from the authorities:

(a) When disputed amendments are to be considered, the balancing act referred to above has to be carried out methodically, and reasons given for the conclusions reached, just as if it was an application for relief from sanctions under CPR Rule 3.9: see the judgment of Clarke LJ in The Law Debenture Trust Corporation (Channel Islands) Ltd. v. Lexington Insurance Company [2001] EWCA Civ 1673.

(b) The court must have regard to proportionality: again see the judgment of Clarke LJ in the Law Debenture Trust case at paragraph 5(3).

(c) The amendment must have some prospect of success: see Civil Procedure Volume 1, paragraph 17.3.6, and the cases cited there.

(d) "Where late amendments are extensive and bound to result in costly diversions from the existing issues in the litigation, one is bound to scrutinise such applications with care to see whether they could and should have been made earlier and whether they can be categorised as 'more of the same' (merely adding an unnecessary and rather luxurious pair of braces to a perfectly adequate belt). It seems to me that the court is bound in such circumstances to be less accommodating and where a viable plea of justification has only emerged at a late stage because, for example, evidence of the claimant's true character has hitherto been genuinely unavailable": see the judgment of Eady J in Cook v. News Group Newspapers Ltd. [2002] EWHC 1070, QB.

(e) "… Issues will not necessarily be permitted to be canvassed, in particular if they are raised late in the day merely because they are, strictly speaking, relevant. The court needs always to keep in mind the overriding principle of doing justice between the parties and the need for proportionality": see pages 6-7 of the judgment of Eady J.).

RELEVANT CONSIDERATIONS

7. In the present case I consider that there are a number of relevant considerations that I should have in mind. They are:

(a) The fact that this case has been adjourned three times. Neither party wants it to be adjourned again. Any amendment, which carries with it the risk that the work necessary to deal with it means that an adjournment would have to be granted, ought not to be allowed.

(b) The Claimants have had a considerable amount of time to comply with the order of 7^th June 2005 and subsequently to revamp their case. They did not do so until last week, and there is no explanation as to why not.

(c) Whilst I am sympathetic to the Claimants' difficulties, manifested for example in their repeated changes of solicitors, I must not forget, when considering the necessary balancing factors, that the case against the Defendants is one of professional negligence and that the Defendants are entitled to have the case they have to meet properly pleaded well in advance of the trial, so that they can make proper preparations.

8. All of that said, my instinct is to allow all amendments that do not cause the Defendant substantial or significant prejudice, in order that the real issues between the parties can be decided. Of course, as I have said, any amendment that would necessitate an adjournment is quite out of the question. I note that this was the general approach to late amendments set out in the judgment of Peter Gibson LJ in Cobbold (above) and referred to at paragraph 17.3.5 of Civil Procedure, Volume 1.

THE PROPOSED AMENDMENTS

9. I deal with the proposed amendments under the following heads:

(a) The new cause of action;

(b) The new background material;

(c) The new allegations of breach of contract and negligence;

(d) The new case on causation;

(e) The new heads of loss.

For the avoidance of doubt, all amendments which have been proposed and which are not dealt with below are allowed.

(a) The New Cause of Action

10. At paragraphs 3A and 3B of the draft Re-Amended Particulars of Claim, the three Claimants allege for the first time that the Defendants owed each of them a duty of care at common law. This is said to be significant because, prior to these amendments, there was only a very small claim alleged by the Third Claimants (the limited company) against the Defendants. Now the whole claim is advanced by the Third Claimants against the Defendants in tort. The Defendants object to this, saying that the allegation is new and only adds to the existing confusion about which, if any, of the Claimants are entitled to relief and, if so, what relief.
11. The new duty of care in tort arises out of matters which have already been pleaded or out of matters which can be derived from the contemporaneous documents. There is essentially nothing new in the material relied on by the Claimants which is said to give rise to this duty. Thus the only new work introduced by this part of the amended pleadings will be the legal submissions from the Defendant, to the extent that they dispute (as I believe they do) the contention that the Third Claimants were owed a duty of care by the Defendant. For that reason therefore I am minded to allow these amendments at 3A and 3B of the draft Re-Amended Particulars of Claim.
12. There is, however, one further point in relation to these amendments. Some time ago, the Defendants sought security for costs against the Third Claimants. That application was allowed only in a modest sum because, of course, at that time the Third Claimants' claim against the Defendants was so small. This amendment changes that. Accordingly it seems to me that, having allowed the amendments at paragraphs 3A and 3B, I must make it plain that the Defendants are entitled to renew their application for security against the Third Claimants as a consequence of the fact that the Third Claimants' claim is now much more extensive.

(b) The New Background Material

13. Much of the material added to the background part of the pleading, that is to say paragraphs 4-33 inclusive of the draft Re-Amended Particulars of Claim, is uncontroversial. One dispute arose at paragraph 6(a) relating to the First Claimant's illness. I made it plain in argument that I do not regard that matter as particularly important. I also consider that it has already been canvassed in the written evidence in any event. In the round, therefore, it seems to me appropriate to allow that re-amendment.

(c) Alleged Breaches of Contract

(i) Non-competitive tender

14. The proposed amendment to paragraph 34(3) alleges that the Eugena tender, which forms the background to the letter of intent, was uncompetitive. This new case supports that allegation by reference to tenders obtained by other consultants, months later. This is an entirely new allegation. If it were permitted it would require further factual evidence, further disclosure (which might be extensive), and very possibly further expert evidence. It would involve a careful comparison between the Eugena tender (and possibly the McAlpine tender too) on the one hand, and the tenders obtained at a much later stage by AWH. It would be impossible for such an amendment to be allowed without an adjournment of this trial. For that reason alone it should be refused.
15. In addition, it is plain that this point only goes to the precise quantification of the Defendants' fees (the construction cost being the starting point for any calculation). The Defendants' fees in this case, because so little of the work was actually carried out, are relatively modest. Therefore it is difficult to see that, even if this allegation were allowed, its worth (in terms of what might be recovered by one side or the other) could be put at a figure higher than about £2,000 or £3,000. It seems to me it would be entirely disproportionate to allow this amendment in order for a debate to take place about £2,000 or £3,000. That is therefore another entirely separate reason why I reject the amendment at paragraph 34(3)
16. The consequence of this is that paragraphs 34B and elements of Appendix C of the proposed re-amendments will also have to be deleted. For the avoidance of doubt I make it plain that it is not open to the Claimants in these proceedings to allege that the Eugena tender was uncompetitive by reference to later tenders that were obtained pursuant to a process in which the Defendant had no involvement at all.

(ii) The Structural Engineer

17. Paragraphs 34(7)(c) and 34(9F) are concerned with the allegation that the letter of intent was inappropriate and premature because there was no structural engineer on board as part of the Claimants' design team at the end of January 2003. That issue, although a new allegation of breach of contract/duty, was canvassed in the written evidence. Indeed I note from his statement that, amongst other things, Mr. Farmer, the Defendant's principal witness of fact, says that he told the First Claimant that a structural engineer was required. I can also see from a study of the relevant correspondence in the first part of 2003 that the issue of the appointment of a structural engineer was manifest at the relevant time. For those reasons I am confident that the Defendant can deal at this trial with the new allegation relating the alleged inadvisability of the letter of intent to the absence of the structural engineer. I therefore allow those two amendments.
18. However, I make it plain that, since there is no pleaded case that the Defendant was responsible for any delays on site by Eugena, and it is not for instance said that any loss and expense otherwise payable to Eugena can be recovered from the Defendant, this allegation cannot be used at some later date to make any such case. The absence of the structural engineer is plainly said to be relevant only to the Claimants' case as to the advisability or otherwise of proceeding by way of a letter of intent. I therefore allow these amendments on that clear understanding.

(iii) Taking Advice

19. Mr. Mort complains that the amendment at paragraph 34(9I) should not be allowed because the suggestion that the Claimants would have taken advice not to start work at the end of January/beginning of February 2003 is at odds with other evidence given by the First Claimant in other litigation and is, put simply, incredible. It seems to me that, whilst there may be something in that point, it is a matter for his final submissions and not for his submissions now. It seems to me that there would be no prejudice in allowing para 34(9I) by way of amendment, and I therefore do so.

(d) Causation

20. I have already decided that paragraph 34B of the proposed Re-Amendment Particulars of Claim, which is all entirely dependent on the allegation that the Eugena tender was uncompetitive, cannot be allowed. It involves matters of complex fact and expert evidence which simply cannot be accommodated in this trial.
21. Mr. Mort objected to paragraph 34F because he said it was still unclear what the Claimants were seeking and on what basis. However, in the round I consider that I should allow the new paragraph 34F. It does not turn on any new evidence, and I accept Miss Packman's submission that it is an attempt to explain the way in which the various claims arise.

(e) Heads of Loss

(i) Costs of AWH

22. I have concluded that I should allow the claim at paragraph 35(1), with the exception of paragraph 35(1)(i)(c) which appears again to rely on the allegedly uncompetitive nature of Eugena's tender. For the reasons that I have already given that new matter is not open to the Claimants. That sentence will therefore have to be deleted.

(ii) Costs of Eugena

23. As it stands, this paragraph is unsatisfactory. The claim for the costs of Eugena's work at paragraph 35(2)(i) is, however, allowed in principle since, amongst other things, it has already been pleaded. This is a better attempt to plead an item which is already in existence. To the extent that this paragraph relies on Appendix C, it will have to be amended because it seeks to make points about the uncompetitiveness of Eugena's tender and that is not permissible. Appendix C was prepared for the litigation between Eugena and the Claimants, and not this case.
24. The bigger problem with this item of loss is the claim for the costs of the Eugena litigation. It seems to me that this claim would involve a consideration of the history of that litigation, an exploration of why the Claimants are fighting it, and what steps the Claimants took to protect their position on costs in that action. As things presently stand the link between the Defendants and the Eugena litigation is not entirely clear. At the moment there is no evidence going to any of these matters. They cannot therefore be heard this week.
25. I am therefore not presently prepared to allow the proposed paragraphs 35(2)(ii) and (iii). However, I am aware that this item of loss has, at least in general terms, been pleaded before. I therefore think that Mr. Mort was entirely right when he indicated that a way of approaching this particular head of claim would be for me to rule against it now, but to say that the Claimants would be entitled to make a further application in relation to this head of loss when their tackle was in order. That seems to me, if I may say so, an extremely sensible approach, particularly given that this item will not turn on expert evidence and because any factual investigation is, I think, likely to be limited.
26. Accordingly, I am of the view that, as presently pleaded, paragraph 35(2)(ii) and (iii) should not be allowed. If the Claimants wish to re-amend that item of claim once they have their detailed evidence of fact and disclosure in order, I would of course consider it. I can make no guarantees that I would allow it, but as presently advised it seems to me that that is something which could be slotted in to be dealt with (both in terms of fact and causation as well as quantification) in the second week of the trial next month.

(iii) Stigma

27. The dispute as to the new paragraph 35(3) is a short one. There is a claim for £25,000 in the present pleadings. That is said to be a premium payable to a contractor for completing the job started by Eugena. Now the £25,000 is said to be due to the stigma attaching to this project and that is alleged to be the Defendant's responsibility, because of the way in which the work started pursuant to the letter of intent. Mr. Mort complains that this is a new pleaded basis for this claim. I consider that he is right about that. However, I believe that the Defendant can properly deal with it, particularly given that Mr. Palos' expert's report sets out in some detail how this alleged stigma is said to have arisen. I therefore consider that the amendments that are sought in relation to paragraph 35(3) should be allowed.

(iv) Delay Claims

28. I allow paragraph 35(4), (i) to (iii) on the express basis that these paragraphs are said to go only to a claim for general damages. Miss Packman made plain that special damages are not claimed in relation to this item of loss and on that basis only I allow those paragraphs. I also allow paragraph 35(4)(iv) and I note that there is no dispute about paragraph 35(4)(v).
29. Paragraph 35(4)(vi) sets out a whole raft of factual matters dealing with the history of the project and the Claimants' financial difficulties from 2004 onwards which, so it is said, explains why the work has not been completed. None of these are matters with which the Defendants have any direct firsthand knowledge. None of these are matters which have been alleged before. They are not contained in the existing evidence. Indeed, other than one very brief passing reference in the short further statement of Mr. Cunningham, they are not even contained in the new evidence. They have not yet been the subject of any disclosure. They have not been considered by the experts.
30. If I allowed paragraph 35(4)(vi) I would be obliged to adjourn the trial. On that ground alone, I cannot allow it. For the avoidance of doubt I do not accept for a moment that the matters set out in that sub-paragraph could be ready for trial during its second week starting on 12^th June. It seems to me that they would involve an adjournment of at least three months. That is simply impossible in this case. Furthermore the difference between this part of the Claimants' application, and the claim for the Eugena litigation costs in paragraph 35(2), is not only that this is a much bigger and more complex factual situation but it is also entirely new. The claim for the Eugena costs at paragraph 35(2) was at least something which had been previously pleaded.
31. Paragraph 35(4)(vii) is said to follow on from paragraph 35(4)(vi), so it follows that if 35(4)(vi) is not allowed then 35(4)(vii) should also not be allowed. But there are two separate reasons why, in my judgment, I could not possibly allow paragraph 35(4)(vii) in any event. First, it purports to set up an entirely new claim for diminution in value by reference to a valuer's report. There is no provision for such valuation evidence in this case. If I allowed this amendment then I would have to give directions as to valuation evidence, disclosure, exchange of reports and the like. Again a lengthy adjournment would automatically be necessitated. It seems to me that I cannot allow that to happen.
32. Secondly, I consider that the claim at paragraph 35(4)(vii) has no realistic prospect of success in any event. The diminution in value is calculated by reference to the value of the house with the works unperformed, and the value of the house when the works have been completed. It seems to me that that is not a diminution in value at all. It is simply the difference between the value of a house before it is the subject of refurbishment, and its value once that refurbishment work has been completed. That difference cannot represent a measure of loss recoverable against the Defendant. Further, it does not seem to me that such a measure of loss could arise due to delay in any event, particularly in circumstances where, as here, it is not said that the Claimants' principal financial difficulties (which have stalled the works) were caused by the Defendant, but were the result of the non-payment of large sums by third parties to the First Claimant. Possibly there may have been some sort of loss of a chance case, but since no such claim is advanced, I do not need to deal with it. It also seems to me that a loss of a chance claim would have been extremely difficult.
33. My decision to disallow paragraph 35(4)(vii), because it involves an entirely new claim with new experts and the like, and because it has no realistic prospect of success, is in itself another reason why I should not allow paragraph 35(4)(vi). Paragraph 35(4)(vi) only exists to set up the loss claimed in 35(4)(vii). Without paragraph 35(4)(vii), the factual matters set out in paragraph 35(4)(vi) have no purpose. That paragraph should therefore not be allowed for that reason as well.
34. For all those reasons I reject the proposed amendments at paragraphs 35(4)(vi) and 35(4)(vii) of the Re-Amended Particulars of Claim.
35. Miss Packman pointed out that the Claimants advanced those two subparagraphs instead of their previously pleaded claim for delay, which was put by reference to liquidated damages. On its face, that was a difficult claim, since no figure for LAD was apparently agreed by the Defendant. She pointed out that if I rejected paragraphs 35(4)(vi) and (vii) then the Claimants would have been treated unfairly because they would have abandoned one claim and then not been permitted to replace it with another. I do not accept that submission. The claims at (vi) and (vii) must be rejected for the reasons which I have given, not least because they would, on any view, necessitate an adjournment. The presently-pleaded claim in respect of liquidated damages is of course still open to the Claimants. If in fact Miss Packman has taken the (sensible) view that this is not a claim that can be pursued, then it seems to me that that is an entirely separate point. It appears to be something which the Claimants, having received sensible advice from Miss Packman, have decided not to pursue. I am, of course, happy to consider the presently existing claim for LAD if the Claimants wish me to, but it does not seem to me that its possible abandonment is something that I can take account of when considering whether or not to allow paragraphs 35(4)(vi) and (vii).
36. That sets out my judgment on the disputed items. As I have said, all the other proposed re-amendments are allowed. The Claimants have permission to make a further limited application to amend (if they want to) in relation solely to the legal costs of the Eugena proceedings.