06/12/2021
Building Design Partnership v Standard Life Assurance Limited [2021] EWCA Civ 1793
The Court of Appeal has confirmed that sampling of variations and/ or defects, and extrapolation of evidence on that basis, is an acceptable means of “corralling evidence” in order to ensure that both trial length and costs are proportionate.
The Facts
Standard Life Assurance Limited (“Standard Life”) engaged Building Design Partnership (“BDP”) as contract administrators/leaders of the design team in connection with the construction of a mixed retail and residential development in Newbury, Berkshire.
Costain were engaged to carry out the construction works, having agreed a contract sum of £77.4m. The final account was £146.6m - almost twice the original contract sum. £50.3 million of the final account paid to Costain was made up of 3,604 variations and associated loss and expense claims.
Standard Life brought a number of claims for professional negligence against BDP and others, including a claim relating to the variations. Standard Life pleaded their case in relation to 167 variations (a percentage of just under 5% of the total 3,604 variations).
Of those 167 variations, Standard Life assessed that the design team were responsible for 122 (i.e. 83.1% of the total). By extension, Standard Life assessed that the design team were responsible for 83.1% of the remaining 3437 variations, which had not been considered in detail. Similarly, Standard Life assessed that BDP were responsible for 81.71% of the total cost of the 122 variations considered, and applied an extrapolation methodology to work out BDP’s total cost liability across the remaining variations.
BDP at first instance sought an order that the extrapolated claims be struck out. The Judge at first instance dismissed the application, on the basis that the position taken by Standard Life was “a genuine and partly successful attempt to treat with professionalism a daunting amount of detail in a manner that is comprehensible, cogent and complete…”
BDP appealed.
Court of Appeal
The Court of Appeal noted that the earlier cases of Amey LG Ltd v Cumbria County Council [2016] EWHC 2856 and Imperial Chemical Industries Limited v Merit Merrell Technology (No 2) [2017] EWHC 1763 are precedent for showing that a Claimant can plead extrapolated claims as a matter of principle, even though in both those cases the claims had not in fact been established at trial.
The Court further found that there had been no abuse of process by the Claimant in taking the approach it had (and therefore no grounds for strike out), and noted that the extrapolated claim was a proportionate way of dealing with the 3437 un-investigated variations and was in line with the spirit and rationale of the Overriding Objective, which encourages parties to adopt a proportionate approach to cases. The Court noted:
“The days of the court requiring parties in detailed commercial and construction cases to plead out everything to the nth degree are over. It is not sensible; it is not cost-effective; it is not proportionate. The parties, with the assistance of the court if they cannot agree, are duty bound to find a way of trying out the principal issues between them in a sensible and proportionate way. Of course, in certain types of construction dispute, it will be necessary to investigate what Lord Dyson once called “the grinding detail” of such claims, but that investigation should only ever be commensurate with the overriding objective. Pleading out every last detail at the outset of the proceedings should not be regarded as the paradigm method of framing such disputes, particularly if there are more proportionate alternatives which still enable the defendant to know the case that it has to meet”.
As the Court was satisfied that BDP knew the case they had to meet, the appeal was dismissed.
Conclusion
The judgment is helpful in confirming that, in cases where there are a significant volume of defects or variations, extrapolation through sampling can be used in principle to bring a claim. This is often a more cost-effective and less time-consuming approach, particularly where defects need to be identified by way of expert evidence.
However, as set out above, the case very much focussed on the principle of extrapolation, and not whether the claim by Standard Life will succeed based on the small sample undertaken.
The Court in Amey LG Ltd v Cumbria County Council [2016] EWHC 2856 noted that confidence in a sample can only be demonstrated mathematically where there has been a statistically genuinely random sampling process, based on “probability sampling”, and that sample size is an important consideration in determining the extent to which wider conclusions can be drawn.
Whether sampling will succeed will therefore vary from case to case and the extent to which Claimants will succeed in establishing a case on that basis is likely to be a question of degree.
If you would like to discuss this topic in more detail, please contact Judith Hopper, Partner, or Charles Harrison, Associate.
