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Litigation Lessons: “Weak and speculative” £3.7m professional negligence claimants awarded just £2K

A recent case of Beattie Passive Norse Ltd Anor v Canham Consulting Ltd highlights the importance of causation and repercussions of providing an inaccurate value of a claim.

The recent case of Beattie Passive Norse Ltd and another v Canham Consulting Ltd [2021] EWHC 1116 (TCC) concerned a claimant in a building dispute who sought £3.7m in damages only to be awarded £2,000 at trial and hit with a costs bill of at least £500,000.

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The Facts

The claimant, Beattie (“BPN”) and their shareholder, NPS Property Consulting Ltd (“NPS”) brought a construction claim for professional negligence and breach of contract against structural engineers Canham Consulting in respect of alleged defective designs of two blocks of terraced housing in Sussex. BPN and NPS sought to recover the costs of demolishing and rebuilding the two blocks along with other consequential losses, arguing that this led to a total loss of £3.7milllion.

During the construction works, Canham employed Foxdown Engineering Ltd as a groundworks subcontractor and were given the outdated revision (Revision A) of the foundation designs from BNP rather than the update construction drawings (Revision B) issued by Canham, which contained a more robust design for the foundation of the blocks.

Instead of remediating the defects underlined in Canham’s design, both building blocks were subsequently demolished, which in turn occurred to further expenditure on the construction project, incurring millions of pounds.

Although Canham acknowledged certain aspects of the design was flawed and had fallen below the expectations of a reasonable competent engineer, Canham argued that structure of the blocks contained defects so significant that it would have had to be demolished notwithstanding any negligent defects outlined in their design. In addition, these defects in Canham’s design could have been remediated without demolishing the blocks. In supporting this latter positon, Canham even cited that remediation works were underway prior to BPN’s decision to demolish the entire block.

The court later heard that Canham made two Part 36 offers, to which both were declined. The first offer proposed in December 2020 had offered a remedy of £50,000 including other costs, with the latter offer proposed a month later of £110,000.

Following the award of damages, the defendant would typically have been entitled to be paid its costs directly from the part 36 offer acceptance date. However, Canham argued further that the claim had been pursued and ignored a key causation issue, on expert evidence that would have been criticised in the substantive judgment and resulted in a ‘derisory’ damages award.

The Judgment

The court further heard that the defendant had received a ‘completely factually inaccurate’ response to a request for information, stating that the claim from this point on was advanced through a ‘plainly untruthful case’ on a key point in the litigation. During the costs hearing, Beattie had sought to argue that Canham’s refusal to engage in mediation during last year was deemed unreasonable. However, the court rejected this on the grounds that the claimants were continuing to advance an untruthful case.  

On that basis, the judge, Justice Fraser described BPN and NPS’s claim as “weak and speculative” and ruled that the causation between Canham’s designs and the costs incurred to demolish both blocks could therefore not be linked. Mr Justice Fraser found that BPN’s structural expert had exaggerated the evidence in support of the claimant’s allegations. The judge also held that it was ‘plainly unreasonable’ for the claimants not to have accepted the first part 36 offer.

In concluding his judgement, the Judge emphasised an alternative adjudication scheme should have been used, given the costs incurred for what was a “weak” claim with only £2,000 recovery from a £3.7m claim. It was held that the claimants were not entitled to recover the loss of demolishing and rebuilding both blocks from Canham, but instead, was able to recover £2,000 related to the cost of remedial works to the second block which were commenced but never finished.

Download the Judgment

What Does This Case Highlight?

The judgment from this case serves a clear reminder of the importance of presenting factual evidence in demonstrating causation, even when there is an admission in respect of breach of contract and professional negligence. In a similar judgment in County Ltd v Girozentrale Securities [1996] 3 All ER 834, the judge considered whether various unforeseeable events combined with the breach ultimately caused the loss. Therefore, it is important to note that if the claim does not arise directly from the defendant’s wrongdoing but instead had occurred through another event, the claimant is unable to recover in respect to that independent event.

In this case, the parties should have followed adjudication based on the view that such a process would have been deemed a more suitable method for the parties to resolve the dispute of the claim, primarily concerning issues of factual causation.

For claims where the dispute is clear and relates to a discreet issue, this case outlines to claimants to consider adjudication as an option.

Do I have a claim against a professional?

Professional negligence occurs where a property professional fails to perform his responsibilities to the required standard. A professional negligence claim brought by the professional’s client may be based on one or more of the following:

  • Breach of a contractual term (express or implied).
  • Breach of duty of care owed in the tort of negligence.
  • Breach of fiduciary duty.
  • Breach of statutory duty.

Where a duty is owed in contract or tort, you must establish that there has been a breach of that duty. You must show that the professional did not comply with the requisite standard owed. Broadly speaking, negligence is established if the professional has made an error which no reasonable member of his profession, operating in similar circumstances, would have made. Where such errors cause a financial loss, claims can be pursued against the relevant financial adviser.

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LIMITATION ACT 1980 – WARNING

The Limitation Act 1980 sets out strict statutory deadlines within which you must bring litigation claims. Your legal rights will become irreversibly time-barred if you fail to take legal action (or defend a claim on time). Therefore, you should seek specific legal advice about your legal dispute at the very first opportunity so that you understand the time you have left. Failure to take advice or delay in taking action can be fatal to your prospects of success.