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

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

		Royal Courts of Justice Strand, London, WC2A 2LL
		23/02/2011

Mr Justice Edwards-Stuart:

1. This is the judgment on the applications for costs in relation to the Claimant's amendments to its Scott Schedule. More particularly, it covers the following:

(1) The costs of the hearing of the case management conference held on 23 November 2010.

(2) The costs of the Second Defendants application dated 17 November 2010 relating to the form of the Scott Schedule.

(3) The costs of the restored case management conference on 21 January 2011.

(4) The costs relating to the further amendment of the Scott Schedule until its service on 11 February 2011.

2. The brief history leading up to these applications is as follows. The Claimant is the current owner of a large house in Surrey. Extensive works of repair and refurbishment work carried out by a previous owner in relation to which the Second Defendant acted as structural engineers. The First Defendant is an insurer who underwrites a product known as the Premier Guarantee Scheme, which is a form of defects insurance in respect of new or refurbished dwellings. Put very shortly, the scheme covers ingress of water caused by defects in the waterproof envelope of the building for a period of 5 years, and major structural damage to the building for a period of 10 years. The precise details of the scheme do not matter for present purposes, save to note that several defects operating together may give rise to one claim under the policy.
3. The first case management conference was held on 30 July 2010. On that occasion I ordered the Claimant to prepare and serve a Scott Schedule setting out the defects alleged against the First Defendant with a description of each defect alleged forming a separate row, and requiring, amongst other things, the quantum claimed in respect of each alleged defect covered by the various sections of the policy to be identified. The Claimant was also required to prepare and serve a similar Scott Schedule in respect of the defects alleged against the Second Dependent, again requiring the quantum claimed in respect of each defect to be identified.
4. On 10 September 2010 the Claimant served a Scott Schedule in purported compliance with this order. It did not comply. What the Claimant produced was a very impressive spreadsheet, in which the principal sums claimed were cross linked to more detailed breakdowns of those sums. However, the spreadsheet did not identify the sum claimed for the repair of any particular defect. Certain global costs, such as the cost of scaffolding or of re-rendering the exterior of the building, were attributed to almost every defect. In some cases, a relatively minor defect of which the true cost of repair might be a few thousand pounds was the subject of a claim for several hundred thousand pounds because the sums claimed overlapped with the sums claimed for many other defects.
5. This was not satisfactory. Having spent some time trying to understand the Scott Schedule but without succeeding in identifying the unique sum claimed for any particular defect, the Second Defendant issued an application on 17 November 2010 seeking an order that the Claimant should provide a fresh Scott Schedule in accordance with the order of 30 July 2010. The First Defendant, finding itself in a similar situation, supported the application.
6. The application came before me on 23 November 2010. After hearing argument from all three parties, and having had a demonstration in court of the operation of the spreadsheet that constituted the Scott Schedule, I refused permission to the Claimant to rely on the Scott Schedule in the form served. I ordered the Claimant to serve a revised Scott Schedule by 14 January 2011. I indicated in the order that the revised schedule may be based on the existing spreadsheet but that:

(1) It must be reviewed by the expert quantity surveyor retained by the Claimant so that appropriate alterations could be made to it.

(2) It must contain a brief description of the remedial works consequential on the repairs listed in certain columns in the schedule.

(3) It must remove any duplicated items of expense.

(4) It should be verified by a statement of truth.

7. At this hearing the court became aware that the Claimant had not in fact instructed an expert quantity surveyor. It transpired that the Scott Schedule had been prepared by the Claimant's Finance Director largely on the basis of information provided by the contractors who had carried out the work. It was implicit in the order that the Claimant would have to instruct a quantity surveyor forthwith. I had hoped, perhaps somewhat naïvely, that the input of an expert quantity surveyor might go some way to curing the defects of which the Defendants were complaining.
8. I also directed that there should be a further hearing on 21 January 2011 at which the Claimant would have yet another opportunity to apply for permission to rely on the Scott Schedule in its revised form.
9. Since I was concerned that the obvious amount of trouble and effort that had been put into the preparation of the Scott Schedule, albeit in a form that could in practice only be used with the aid of a computer, should not be wasted I did not accede to the Defendants' application that the Scott Schedule as served should be scrapped and that the Claimant should be required, in effect, to start again.
10. Unfortunately, the revised Scott Schedule that was produced at the hearing on 21 January 2011 was almost no improvement on its predecessor. Indeed, very significant global sums were still being claimed for some relatively minor defects. The objective of identifying the unique costs of repair attributable to each defect was not achieved.
11. I therefore withheld permission to rely on the revised Scott Schedule and ordered the Claimant to serve yet another version which was to:

(1) Identify the amount of the remedial costs that were uniquely and discreetly attributable to each defect.

(2) Identify separately those remedial costs that were attributable to more than one defect.

(3) Show these figures in the Notes section of the Scott Schedule.

12. The order went into further detail about certain aspects of the schedule and what it was to show. At the hearing on the 23 November 2010 I reserved the costs of the hearing on that day and of the Second Defendant's application. On 21 January 2011 I again reserved those costs to a further hearing, together with the costs of the hearing of 21 January. The order provided that if the parties could resolve the outstanding matters in dispute prior to the further hearing, I would deal on paper with all questions relating to the costs reserved. Directions were given for the service of written submissions on those costs.
13. Those submissions have now been served and it is in the light of them that I give this judgment.
14. Looking at the matter broadly, the problems with the Scott Schedule have arisen because the Claimant chose to prepare the Scott Schedule without the input of professional advice from someone familiar with the use and preparation of Scott Schedules in construction litigation. I do not wish to denigrate the spreadsheet that was produced by the claimant as a document, but unfortunately it was not prepared in a manner that made it suitable for use in litigation. I have already indicated why this was so.
15. However, I consider that the reaction of the Defendants was not an entirely proportionate one. Perhaps understandably, they sought to attack the Claimant's schedule root and branch, but unfortunately this approach was coupled with limited willingness to try and work with the existing document. With the benefit of hindsight I must confess that it is also the case that the court may not have been as precise as it could have been in spelling out to the Claimant precisely what was required of it. In a specialist court one tends to assume that the parties and their advisers will know what is expected of them.
16. On the other hand, it must be remembered also that it is a claimant's right to present its case as it wishes, within reason. It is not for the defendants to dictate to the claimant how it should plead its case. But that does not absolve a claimant from presenting its case in a manner that enables each defendant to know what case it has to meet and what sums are being claimed against it. Unfortunately, the Scott Schedule in its early forms came nowhere near meeting this requirement.
17. I have concluded that, since the lion's share of the responsibility for what has happened rests with the Claimant, fairness and justice requires that the Claimant must bear a substantial proportion of the costs that have been incurred and wasted by the Defendants in dealing with the Scott Schedule.
18. In my judgment, it would be right for the Claimant to pay 50% of each Defendant's costs of the hearing on 23 November 2010 and of the Second Defendant's application dated 17 November 2010. The Claimant must bear its own costs of the hearing and the application.
19. I consider that, even if the Claimant can be excused to some extent in failing to provide a suitable schedule the first time round, there was no excuse for the Claimant's failure to provide a Scott Schedule in a satisfactory form by the hearing on 21 January 2011. The schedule that was produced for that hearing incorporated very few changes that represented any improvement on the previous version and, in some respects, it was actually worse. My optimism in thinking that the intervention of an expert quantity surveyor might inject some reality into the Claimant's thinking was, unfortunately, entirely misplaced.
20. I therefore conclude that the Claimant must pay all the Defendants' costs in dealing with the revisions to the Scott Schedule between the hearing on 23 November 2010 and the service of the Scott Schedule in its final form, now accepted by the Defendants (albeit with some misgivings and reservations), on 11 February 2011. Further, the Claimant must bear its own costs of revising the schedule.
21. I have been provided with schedules of costs by each of the Defendants in relation to the costs that I have reserved for determination and I have been asked to assess those costs summarily. My assessment is as follows:

The First Defendant

The position in relation to the First Defendant's costs is complicated by the fact that some of the schedules produced include costs wasted from 10 June 2010 up to 30 July 2010 and from 10 September 2010 to 21 January 2011. These are more extensive than the costs reserved that I am assessing. In addition, there is no breakdown of the period of time covered by the claimed fees for experts, so I have had to make a fairly arbitrary assessment of the relevant amount. There also appears to be some overlap in relation to the hearing on 23 November, which I have done my best to remove.

The application of 17 November and the hearing on 23 November 2010
Legal costs	£5,026.00
Legal costs	£6,192.06
Experts fees	£16,000.00
Total (at 50%)	£13,609.13

The costs from 17 November to 11 February 2011
Legal costs	£5,408.00
Legal costs	£3,900.00
Legal costs	£2,329.00
Experts fees	£5,000.00
Grand Total	£30,246.00

I propose to reduce the total of £30,246 by 25% to reflect the likely result on a detailed assessment. Accordingly, I assess the First Defendant's costs at £22,685.

The Second Defendant

The application of 17 November and the hearing on 23 November 2010
Legal costs	£25,027.00
Total (at 50%)	£12,513.00

The costs from 17 November to 11 February 2011
Legal costs	£9,751.50
Legal costs	£4,801.00
Grand Total	£27,066.00

Again, I propose to reduce the total of £27,066 by 25% to reflect the likely result on a detailed assessment. Accordingly, I assess the Second Defendant's costs at £20,300.

22. In the light of the fact that the Claimant is not a substantial enterprise, I do not direct that those costs should be paid now. However, they are to carry interest at 2% from the date of this judgment until date of payment (or set-off against any subsequent order for costs in the Claimant's favour).