Article: (1) Beattie Passive Norse Limited (2) NPS Property Consultants Limited v Canham Consulting Limited

[2021] EWHC 1116 (TCC); Mr Justice Fraser

Background

Beattie Passive Norse Ltd (BPN) and NPS Property Consultants Ltd (NPS), a shareholder of BPN, appointed Canham Consulting Ltd (Canham), to act as the consulting engineer in designing the foundations of two blocks of terraced housing in Sussex. BPN and NPS brought a professional negligence claim against Canham in respect of an allegedly defective design of the foundations of the two blocks. BPN and NPS sought to recover the costs of demolishing and rebuilding the two blocks along with other consequential losses. The total sum sought was £3.7 million.

During the construction works, Foxdown Engineering Ltd, the groundworks subcontractor, were not provided with the updated revision of drawings issued by Canham. They were provided with and worked from the original Revision A drawings rather than the subsequent Revision B drawings which contained a more robust design for the foundations of the blocks. Further, both Blocks contained significant defects not related to Canham’s design.

Although Canham’s structural engineering expert agreed that certain aspects of Canham’s design of the foundations were negligent, Canham argued that it did not cause the alleged loss suffered by BPN and NPS.

Canham argued that the substructure and superstructure of the Blocks contained defects so significant that it would have had to be demolished notwithstanding any defects related to Canham’s design.  Further, any defects in Canham’s design could have been remediated without demolishing and rebuilding the blocks. In support of Canham’s latter position they cited that remediation works were underway prior to the decision by BPN to demolish the whole block.

Judgment

The judgment in this case is interesting in respect of:

1. The claim by NPS, a shareholder to one of the contracting parties;
2. The extent of the damage caused by the negligent design and the comments on the expert evidence presented; and
3. The Judge’s comments advocating the use of adjudication in certain professional negligence claims.
4. Overall, Mr Justice Fraser described BPN and NPS’s claim as “weak and speculative”.

In terms of NPS’ status in the claim, Mr Justice Fraser held that as a shareholder of BPN, NPS had no contractual relationship with Canham and so NPS’s claim in contract failed.

Further, referring to his own recent judgment in Multiplex Construction Europe Ltd v Bathgate Realisations Civil Engineering Ltd and others [2021] EWHC 590 (TCC), Mr Justice Fraser held that Canham did not owe any duty of care in tort directly to NPS as a shareholder, despite NPS having paid some of Canham’s invoices. Therefore, NPS’s claim was dismissed in its entirety.

In considering the claim brought by BPN, Mr Justice Fraser noted that Canham were negligent to the extent conceded by Canham’s expert. However, Mr Justice Fraser preferred the evidence of Canham and held that the decision to demolish the Blocks was not caused by the negligence of Canham.

Both blocks had “catastrophic” defects that were nothing to do with Canham’s design and the defects that did arise from the Canham’s negligence could have been remediated.

In this regard, the Judge made a number of statements as to why Canham’s expert evidence was preferred including that BPN’s expert had exaggerated the position adopted and had not conceded reasonable points put to him that undermined BPN’s position.

Mr Justice Fraser held that BPN were not entitled to recover the cost of demolishing and rebuilding both blocks from Canham. BPN were only able to recover losses related to the cost of the remedial works to the second block which were commenced but never finished. BPN were awarded £2,000.

In concluding his decision, the Judge stated that the professional negligence adjudication scheme run by the Professional Negligence Bar Association should have been used, given the costs incurred for what was a weak claim with only a £2k recovery from a £3.7m claim

Comment

The Judge’s comments as to why Canham’s expert evidence was preferred should serve as a reminder to experts as to what the Courts expect of them including: dealing with matters within their expertise; giving evidence (written and oral) to assist the Court rather than being an advocate for the party instructing them; and not seeking to introduce new and/or irrelevant issues.

The Judge’s statement that the parties should have followed adjudication was based on his view that such a process would have been a more suitable way for the parties to resolve the dispute due the fact the claim mainly concerned issues of factual causation.

The Professional Negligence Bar Association launched the adjudication scheme for professional negligence disputes in May 2019 after an initial Pilot Scheme. The scheme allows parties to professional negligence disputes to obtain a decision, usually within 56 days and avoid unnecessary recourse to litigation through the Courts.

For claims where the dispute is clear and relates to a discreet issue then this judgment should serve as a reminder to Claimants to consider adjudication as an option. In the Judge’s opinion, having heard the evidence on the issues in dispute, adjudication was suitable for BPN’s claim.

However, there remains concerns as to the appropriate nature of adjudicating all professional negligence claims. Those that involve detailed consideration of expert and/or factual evidence may not be suitable, given the limited time to consider each party’s position and lack of ability to cross-examine.