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

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

		Rolls House, 7 Rolls Buildings, London EC4A 1NL
		17th April 2015

1. MR JUSTICE AKENHEAD: The background to the two applications before the court is that the claimant, who is a company which provides professional engineering services, was retained by the defendant, which was a property development company engaged in seeking to develop the site of Brompton Road, Barnstaple, Devon, and so the background on the pleadings at least is that in about April 2010 the defendant obtained a quotation from the claimant for the provision of various services, including flood risk, transport and ecology assessments for the development.
2. It seems to be common ground on the pleadings that the claimant was retained to provide not only those services but also various other additional or related services thereafter and over the course of the next two or more years the claimant provided a variety of services for and in connection with this proposed development for the defendant. There is an issue on the pleadings as to the precise terms which were to apply, but that probably matters not as such.
3. Again, it is common ground on the pleadings that the claimant submitted invoices, some of which were paid in part, some of which were not paid, and thus it is that in May 2014 the claimant issued proceedings against the defendant seeking for recovery of the unpaid parts of the various invoices submitted as well for fees said to be due contingently upon the planning application which was anticipated to follow being successful, or indeed unsuccessful. The fee, if the planning application was unsuccessful, was going to be £9,000, and, if it was successful, £50,000.
4. The Particulars of Claim set out in apparently reasonable detail the claimant's various claims and from paragraph 12 to 16 is a claim relating to invoice number 3035731 in which it is said that against a total VAT free invoice amount for £42,587.43 there remained £11,104.92 inclusive of VAT due. In paragraphs 16 to 19 there is a claim relating to invoice number 3056177, which relates to a sum of £3,480 invoiced in respect of an additional fee for additional services. Paragraphs 20 to 22 relate to a claim which was the subject of an invoice number 3060510 which relates to a number of different services provided on the basis of what are said to be agreed sums. None of those sums invoiced, totalling £17,830 including VAT, were said to have been paid. There then follow from paragraphs 23 to 26 a claim relating to two further invoices numbered 3070176 and 3070654, which relate to additional services said to have been provided by the claimant but which are not pleaded as having been the subject matter of specifically agreed sums, so they seem to be a claim for what might be called reasonable fees for services provided. It is clear, however, and indeed the pleading makes it clear, that these were not invoiced until some considerable time after the services were provided and a reason was given for this.
5. The total of those claims pleaded at paragraph 24 is £59,755.89 and there is a further sum claimed in respect of another invoice which brings the total to £78,350.52. Those sums, taken together with the earlier sums I have referred to, bring the total claim inclusive of VAT to £110,767.44, and, on top of that invoiced claim said to be outstanding, there is a declaration sought that it will become entitled to payment of the contingent fees,, depending on whether the planning application was unsuccessful or successful, as the case may be.
6. A defence and counterclaim was filed at a time when the defendant was instructing solicitors and it is of some interest that when one comes to the first three invoiced claims they are effectively admitted, albeit that the admissions are followed by relatively bland denials that the sums claimed are due or payable, but the basic claims of the first three invoices are admitted. There is a more detailed pleading in respect of the remaining invoiced claims, namely those numbered 3070176 and 3070654, on the basis that it is said that large elements of those claims were related to the contingent fee claimed, in that if, for instance, the planning application was successful the claimant would become entitled to £50,000 and that £50,000 would cover large elements at least of these two invoiced claims, and so in respect of those two latter invoiced claims there is apparently at least on the pleading an arguable defence.
7. However, moving onto the counterclaim, the counterclaim is a claim for professional negligence and it relates primarily to the claimant's efforts to produce a traffic assessment and traffic model and a highway scheme, and at paragraph 36 the professional negligence is pleaded as this:

"The claimant failed to produce a highway scheme which was compliant with part 4 of the National Planning Policy Framework Policy TR Devon County Structure Plan and Policy PRA6 North Devon Local Plan resulting in Devon County Council recommending refusal of planning permission".

What are said to be particulars are then given:

"1. The claimant's design of the traffic light control highway junction to serve the development site from Brompton Road would result in a 12 to 19 per cent increase in the directional weekday flow.

2. The highway solution proposed by the claimant was assessed to contribute an additional five to seven per cent traffic flow to the southbound A361 bridge and the mitigation which was suggested by the claimant for it sufficient.

3. The proposed signalised junction was over-complex.

4. The arrangements to accommodate residential properties opposite the junction would result in the residents having to negotiate additional traffic claims and more complicated entry and exit arrangements."

8. The loss said to flow from this, pleaded in paragraph 37, essentially relates to fees said to have been paid or which might otherwise be payable to the claimant, so there are no separate losses claimed other than fees either paid or otherwise payable to the claimant, which essentially are the subject matter of the claim.
9. The reply and defence to counterclaim challenges the defence and the defence to counterclaim refers to the fact that the counterclaim was the first notification from the defendant of any allegation of negligence and that the allegations contained within paragraph 36 are "vague and unparticularised". In particular, it refers to "the National Planning Policy Framework …without any particulars as to how it is said that the said documents were not complied with". Further points are made about that.
10. A case management conference was held on 17 October 2014 before Edwards-Stuart J which counsel for parties attended. Case management information sheets were provided by both parties with the defendant indicating that it intended to call at the trial, as far as it knew at that stage, three named witnesses, Messrs Church, Hinds and Temple, and possibly others to be confirmed. It referred to the fact that an expert planning consultant was going to be relied on but the name of the expert was to be confirmed. Edward-Stuart J's order was formally issued on 20 October 2014. It allowed the parties some time to attempt to settle the claim. Obviously that has not been successful. Trial was listed on 11 May 2015 for four days and disclosure was to take place by 28 November 2014, witness statements to be served by 16 January 2015 and provisions were made to allow the parties to call expert witnesses relating to traffic management and planning applications with the experts to hold without prejudice discussions by 27 February 2015 , a joint statement to be produce by 6 March and expert reports to be served on or by 20 March 2015.
11. That order was varied on 21 January, at least in part of the request of the defendant, to enable it to file witness statements on or by 16 February 2015. Witness statements were served by the parties on or by 16 February, including the only one served by the defendant, namely a witness statement of Mr Church. Although Mr Church in that witness statement deals with professional fees in general and makes the point that terms and conditions were not formally agreed by various stages, it does not appear that specific challenges are being made to the invoice claims as such, certainly in respect of the first three invoices referred to in the pleadings.
12. As for the counterclaim, it explains a little bit the background to the complaints, referring for instance in paragraph 23 to Devon County Council recommending refusal of planning on the basis that the model prepared by the claimant was contrary to part 4 of the National Planning Policy Framework, policy TR10, for Devon County Structure Planning Policy TRA6 of the North Devon Local Plan and a little detail is given there about what, if anything, was wrong with the traffic proposals produced, but paragraph 31 says:

"Essentially the failing of the claimant to provide a TA/traffic model that was acceptable to the LPA and DCC together with such mitigation as was necessary to negate the impact of our planning application of the highways network sufficient to address DCC's requirement was a significant setback to the planning application being granted."

13. Unsurprisingly, there is no attempt by Mr Church to explain why that might amount to professional negligence on the part of the claimant, albeit it is clear that he is saying that it was, from his standpoint at least, wrong on the part of the claimant.
14. The pre-trial review was fixed for 27 March 2015 and on 25 March, possibly earlier, the claimant served its pre-trial review questionnaire, as is the usual practice. I am not aware that there were any complaints about the particularity with which document was prepared. By this stage, however, the defendant and their solicitors had parted company. The reasons for that are not clear but, given what has been said since they parted company in March 2015, it is likely to have been a financial disagreement between the solicitors and their client.
15. The defendant did not attend the pre-trial review but sent an email to seek to address an application that had been issued before the pre-trial review on 23 March 2015 by the claimant. That was essentially an application for summary judgment in relation to the first three invoiced claims which earlier in this judgment I referred to in the pleading together with interest totalling some £41,000 as well an application to strike out the counterclaim on the basis that there were no real prospects of succeeding on the counterclaim. That was supported by a detailed witness statement of Mr Mallard of the claimant's solicitor.
16. The email to Mr Mallard which was shown to the court on 27 March says this in relation to the strike out application. This is from a Mr Hinds:

"As you know, we do not intend attending the pre-trial review tomorrow and we are concerned in view of the very short time available that you are making this application at such short notice. I do not have sufficient time to consider your application on behalf of the defendant for my limited understanding of the court rules and understand that usually 14 days' notice should be given prior to any hearing of an application for summary judgment. I am therefore not in a position to comment. In the time available upon your application we are asking the court to defer it for at least 14 days whilst I consider the position on behalf of the defendant."

17. Stuart-Smith J heard the claimant on 27 March 2015 and the defendant did not attend. Stuart-Smith J ordered that the summary judgment and strike out application dated 23 March should be adjourned and re-listed to be heard on 17 April along with the adjourned pre-trial review but ordered that the defendant by 4pm on 2 April 2015 file and serve a completed pre-trial review questionnaire, failing which the defence and counterclaim should stand struck out without any further order. He also ordered that the defendant must file and serve any evidence that it relied upon in response to the claimant's application dated 23 March by 4pm on 6 April 2015, failing which it would be debarred from relying upon any evidence at the hearing of the claimant's application. The costs of that application were reserved.
18. On 2 April, arguably some minutes late, Mr Hinds, a director of the defendant, served by email a document headed "Listing Questionnaire Pre-trial Checklist". It confirmed that the defendant had not complied with directions already given. So far as expert evidence was concerned, it said that a date for compliance with the expert evidence orders was "TBC," to be confirmed. In answer to the point made on this form, "I believe that additional directions are necessary if the forthcoming trial takes place," the "yes" box has been ticked, but no indication was given as to what further orders or directions were being sought.
19. In answer to the question "how many witnesses, including yourself, will be giving evidence on your behalf," the answer was "TBC". No other part of the form was filled in other than signatures at the end and other than in relation to the question about the experts. The "no" was ticked to the question "has there been discussion between experts?" and, so far as trial is concerned, "has the estimate of the time needed for trial changed?" the "no" box was ticked. That was accompanied by a letter which went to the court on 2 April from Mr Hinds which says this:

"I enclose a questionnaire but I am afraid there is very little I can do to advance the position at the moment given that the company's financial position is under review and its ability therefore to participate properly in these proceedings is now in question. I envisage, however, following further advice, that I will be in a position to clarify the position to both the court and the claimant in this action by the time of the hearing of the claimant's application on 17 April 2015. For this reason I am not able to make further comment as regards further directions and the dates of compliance. I do not wish the court to think I am being destructive. I am not, but I am having to wait further discussions and deliberations within the company before I can confirm the position going forward."

20. In the light of that, the claimant issued a further applicationon 8 April 2015, saying that:

"The claimant seeking the order, the claimant applies under CPR 3.5 for judgment for the claimant for costs to be entered on the claim and the counterclaim following the automatic striking out of the defence and counterclaim as a result of the defendant's failure to comply with the unless order at paragraph 2 of the order of Stuart-Smith J dated 27 March 2015. The claimant relies upon the third witness statement of Benjamin Mallard dated 8 April in support of the application."

21. There is little doubt on the evidence that the court has that this was served by email on 8 April and the hard copy was served and signed for by the defendant on 9 April 2015. Yesterday the court received a witness statement from Mr Hinds which seeks to explain that he received the application and related documentation on 10 April and the hard copy on 13 April. It is possible that he himself did not see the documents until the dates which he has indicated but it appears that they were served on the defendant before then, and he says at paragraph 6 of his statement, having asked the court to bear in mind that the defendant is a litigant in person and supplementing the information provided on the pre-trial questionnaire, as follows:

"(a) The company is unable to fund commission of expert evidence and so no expert evidence is intended to be filed by or on behalf of the defendant. I will leave the implications of that to the court within the context of the counterclaim and accordingly I do not seek any further directions in that regard;

(b) The only potential witness for the claimant is Mr Church. The claimant is well aware of this because his witness statement has been served. The defendant does not have any other witnesses available who are likely to give evidence at trial;

(c) I made the position clear as above within the context of experts. The defendant is not in a position unfortunately to commission expert evidence."

It is unnecessary to refer to the rest of this statement in any detail.

22. I propose to deal first of all with the application for summary judgment and the counterclaim. Dealing first with the counterclaim, it seems to me that for the defendant to establish its claim on the counterclaim it would need expert evidence from a planning or traffic control consultant. It has indicated that it is not intending, possibly for financial reasons, to call such an expert. In any event, the defendant has not taken any steps to comply with the orders relating to the involvement of experts and therefore it would in any event now be debarred in effect from relying on any such expert evidence. For that reason alone it would be proper therefore to strike out the counterclaim on the basis that it is a claim which, in the circumstances and without such evidence, cannot in practice succeed.
23. There is a second reason for striking it out, which is, notwithstanding clear observations both in the reply and defence to counterclaim but also in correspondence from the claimant's solicitors, the pleading about negligence is extremely thin. Whilst it has pleaded alleged deficiencies in the highway solutions promoted, or said to have been promoted, by the claimant, it makes no real attempt and it provides no real particularity as to the basis of a claim for professional negligence. It is axiomatic that simply because a professional person gets something wrong – it being disputed in this case that the claimant did get it wrong – does not mean to say that the professional person is liable in negligence. It is necessary to show with some particularity in the pleading why a professional person is professionally negligent, and I do not consider that the pleading in its current form at paragraph 36 of the counterclaim provides anything like the requisite level of particularity. That might, of course, have been cured if, to some extent, an expert report had been filed by the defendant which identified why the expert was saying that it was professionally negligent.
24. So for those two grounds the claimant's application to strike out the counterclaim must succeed.
25. I move on then to the application for summary judgment in respect of the first three invoices addressed between paragraphs 12 and 22 of the particulars of claim. As already indicated, in effect the sums invoiced are admitted and they are certainly not challenged with any degree of particularity. The challenges, for instance, at paragraph 16 relating to invoice 3035731, have effectively admitted works which have been instructed by the defendant. Paragraph 16 of the particulars of claim is simply denied. Paragraph 18 of the defence and counterclaim says paragraph 15 is admitted – that relates what sums have been paid against the invoices – but then just says paragraph 16 is denied. That denial is only comprehensible, if comprehensible at all, on the basis that it is in some way subject to some sort of set-off represented by the counterclaim. But, as the counterclaim has been, as I have indicated, struck out, that is really, and remains, an inadequate plea.
26. So it seems to me that, for the summary judgment application for the invoices numbered 3035731, 3056177 and 3060510, there is no answer or arguable defence in relation to those invoiced claims, so the claimant's application for summary judgment against those three invoices is a good application, which I allow.
27. I then move onto the later application relating to the application for judgment for the claimant. Of course, the summary judgment application already gives judgment to the claimant for the first three invoices so far as unpaid but does not give judgment for the rest of the claim. Essentially what is said is that the defendant has not complied in substance with the unless order made by Stuart-Smith J on 27 March 2015 because the pre-trial review listing questionnaire filed by it does not in substance comply with the order. I agree it does not in substance comply with the order. That is evident from Mr Hinds' belated witness statement which confirms that he could, at the very least, have provided rather more information. In fact, it could be said, although I do not imply any dishonesty of course on the part of Mr Hinds, although he signed the listing questionnaire, there is no indication there that in fact no expert evidence would be called, and in fact there is an indication, if anything, that a decision remained to be made about it, because, so far as expert evidence was concerned, this was to be "confirmed". It was made clear, in effect, that additional directions were necessary, which could be thought to be misleading if it was never intending to call any expert. Again, I do not begin to suggest that that was dishonest on the part of Mr Hinds but that it was misleading at least until he clarified the position in a witness statement of yesterday is clear.
28. So far as witnesses are concerned, it is true that the only witness statement that the defendant had served was that of Mr Church, but he remained to confirm whether even Mr Church was to be called and that is still not clear, with three or four weeks to go until the trial. It seems that Mr Church worked for a company related to the defendant, but in his late witness statement Mr Hinds still talks of Mr Church as being a potential witness, which suggests that there has been no decision as to whether to call him or not.
29. I am going to proceed on the basis that this listing questionnaire was, or should be, considered as having been served on time, but it does seem to me that the order in substance has not been complied with. For instance, if a listing questionnaire or a pre-trial review questionnaire had been filed which contained nothing, with no box ticked, that would be non-compliance. It seems to me that that which he lodged, although various boxes were ticked, contains little or no substantive information to assist the court and more could and should have been provided.
30. Is this an important non-compliance? I am of the view that it is important. Pre-trial reviews in the TCC are important occasions at which the court makes final decisions about the trial. For instance, the question as to whether or not there are experts or going to be experts, or whether there are going to be applications to vary directions relating to experts, needs to be decided at the pre-trial review. There is often only a few weeks between the pre-trial review and the trial, as here, and the court needs to be informed as to what the position is. Similarly with witnesses, the court needs to be informed how many witnesses are going to be called by each side and the substance of what they are going to address.
31. One of the reasons is for listing purposes. This trial is listed for four days. If there is to be no expert called by the defendant then it is obviously going to last less than four days and would have to be listed for less. Similarly, if there was only going to be at most one witness from the defendant, then again that would be a reason for reducing the period, and even if I was to make the assumption that only Mr Church was to be called by the defendant and one witness, primarily at least, for the claimant, this is a case which would be listed for one day or possibly one-and-a-half days and that would then free up two or three days for the court to deploy for other litigants in other cases, so it is not just a minor procedural non-compliance.
32. It would therefore follow that the sanction of automatic striking out of the defence has happened because there has been substantive non-compliance. What concerns me, however, is because Mr Hinds and the defendant are not legally represented they between them may be unaware of the need to apply for a relief from sanctions. Although Mr Hinds' witness statement has been drafted with some articulation and one might think that he has been getting some legal or legal-type advice that would enable him to draft it in the form that he has done, there is no application which I can readily infer for relief from the sanction which the court has imposed.
33. I think that the appropriate thing to do here is to give the claimant judgment for the remainder of its claim; i.e. that which is not being dealt with by the summary judgment striking out order, but give the defendant a fairly short opportunity to apply for relief from sanctions if it is so advised. It does seem to me therefore there should be judgment for the claimant on the claim. It is unnecessary for there to be judgment on the counterclaim because I have struck out the counterclaim also on the other application, and it is only on those parts of the claim that have not been the subject matter of the summary judgment application. There will be, necessarily, orders for costs on both applications in favour of the claimant, and it will be a condition of the permission to apply for relief from sanctions that a substantial payment on account of those costs be provided.
34. It seems to me that it is unfair for the claimant to be kept to a trial in the circumstances which have arisen, where they have effectively got judgment, and in those circumstances, if the defendant wants to apply for relief from sanctions, then it should pay towards the costs of and occasioned by them doing so. Of course, if the application is successful, trial directions will have to be given again for trial. I would necessarily have to adjourn the trial, which is due in a very short period of time, so that will have the advantage to the claimant of it not having to incur further costs in relation to trial preparation, and in fairness to the defendant, because the defendant is given the chance if it really wants to, to seek relief from sanctions which has come into play.
35. Mr Hinds has chosen not to put before the court any detail of the financial difficulties which the defendant is said to face. It would be wrong to speculate as to what they may be, other than Mr Hinds has indicated that there are financial difficulties which they are facing and it is clear that the defendant is considering its position. It is possible that it might be insolvent; it is possible that it might be seeking arrangements with its other creditors; it might be seeking to transfer assets of one sort or another, lawfully or otherwise; one simply knows not. But in circumstances in which the defendant is explaining its position by reference to its financial difficulty it would have been helpful if the defendant had spelt out exactly what was going on. It has chosen not to, and that has not helped their position, so I will make the orders accordingly.
36. Any application to set aside the judgment on the claim of 8 April application should be made within 14 days after service of the order and on the condition that for any such application and any application for relief from sanctions costs shall be paid by the defendant to the claimant within 14 days.
37. I will order that each of the summary costs assessments is for the full amount. I should make it clear that both appear to be modest and reasonable. Suffice it to say, I have seen in many cases fee statements much higher than this for applications such as this, and, whilst I do not want to encourage anyone to increase, they seem to be modest and reasonable; so on the summary judgment and strike out application I will summarily assess the full amounts as on the 8 April application £3,772.50, and what I would propose to do is to order that the conditional order I have indicated about an application to set aside and/or seek relief from sanctions should relate to £10,000. The reason I am saying that is not simply because that is an approximate total of those two bills, although it is a bit less; it is related to the fact that it has been necessary to adjourn the trial or to vacate the trial date, and even if the defendant was to apply, and even if the defendant was successful, it seems to me that there is no practical way in which the trial date should be maintained, and so the consequences in particular of a late application for relief from sanctions would have been seriously to disrupt the trial which would otherwise have taken place and which it is clear that the claimant could just about have accommodated in spite of the failings of the defendant.
38. There has been put before me statement of costs which I am told exclude the costs on occasion by the two applications with which I have been concerned. Given the judgment I have given, given the effect that the claimant has been wholly successful on claim and counterclaim, through the route of one or the other applications it is right the claimant should have its costs. There was a without prejudice costs offer on 2 July by which the claimant undertook to offer to accept substantially less than was being claimed. That effectively has proved an effective offer because the claimant on my judgments will recover substantially more than they offered.
39. Therefore from 2 July onwards costs should be on an indemnity basis with the consequences that follow before they should be on the standard basis. I have been provided with three bills which are exclusive of the application costs and they total about £77,000. I am not going to make a summary assessment; I think that is a stage too far, but it does seem to me that this is a case in which an interim payment on account of costs should be ordered and I propose, following cases such as Marsabit Registered Trustees v Technotrade Pavilion Ltd [2014] eKLR and the like, to order that £45,000 be payable on account within 14 days.