Building Design Partnership Ltd v Standard Life Assurance Ltd: Extrapolated Claims – an Abuse of Process?

Standard Life Assurance Ltd (SLA) the developer of a mixed-use retail and residential development, brought a claim against Building Design Partnership (BDP) who acted as the contract administrator and leader of the design team. The claim was for damages for negligence and breach of contract, specifically in relation to 3,604 variations for which BDP were primarily responsible.

The novel element of this claim is found in the method by which SLA chose to plead its claim at the outset. It pleaded the claim on an extrapolated basis. A ‘sample’ was formed of 167 variations that underwent detailed investigation. The findings of this detail investigation were then extrapolated and applied to the remaining 3,437 variations which remained un-investigated and did not have a detailed case pleaded in relation to them. Based on the detailed investigation of the sample, SLA contended that 83.1% of the remaining 3,437 variations gave rise to negligence and breach of contract on behalf of BDP as the variations were plagued with inaccuracy, incompleteness, lateness, uncoordinated design and over-certification.

In December 2020 BDP applied to have the case struck out under CPR 3.4 (2)(a) and (b) on the basis that it was an abuse of process and disclosed no reasonable grounds for bringing a claim. The application was dismissed by Kerr J. BDP appealed the decision to the Court of Appeal.

The appeal was dismissed and Lord Justice Coulson gave the leading judgment.

Sampling and extrapolation in the TCC

The court rejected SLA’s argument that the sheer number of variations amounted to negligence in itself, however confirmed the suitability of extrapolation in a claim such as this.

The court stated that in an ‘appropriate claim’ a claimant can plead its original Statement of Case on an extrapolated basis, without pleading a detailed case on each of the allegations in the wider pool. An ‘appropriate claim’ will be one whereby:

1. The sample appropriately represents the larger pool. In this claim Lord Justice Coulson noted that there was a ‘discernible nexus’ between the detailed claim and the extrapolated claim, which bolstered SLA’s ability to plead their claim on an extrapolated basis at the outset and;
2. Pleading the claim on an extrapolated basis furthers proportionality, and consequently the overriding objective. SLA were successful in their argument that commencing an investigation and detailed pleading of the remaining 3,437 variations at the outset would have been disproportionate by way of incurring unnecessary costs. It was estimated that the pleadings and schedules relating to the remaining 3,437 variations would have filled over 60 lever arch files and the cost of preparing such would have far eclipsed the sums at stake in the action itself.

It was found that using extrapolation may indeed make the claim more difficult to establish at trial however such is part of the costs saving trade off that must be made by all claimants, between ‘saving costs by doing things which, if money were no object, it might have done, and maintaining a realistic prospect of ultimate success’. Lord Justice Coulson also commented that had SLA pleaded all the variations at the outset they may have faced allegations from BDP that the frontloading of costs applied commercial pressure upon them to settle, or at the very least BDP would have protested the cost budgeting regime ‘long and loud’ at the first CMC. In the words of the judge, BDP could not have it both ways.

Lord Justice Coulson stated that particularly within the TCC, the use of sampling and extrapolation is particularly common place and provides a useful method of ‘corralling evidence and keeping trials within proportionate limits’. It was found that there was nothing particularly special or novel about professional negligence claims which meant that the ability to issue proceedings on an extrapolated basis should be restricted.

Extrapolated claims as an abuse of process

A ‘critical issue’ in question when deciding whether an extrapolated claim is an abuse of process, as alleged by BDP, is whether the respondent/defendant is able to properly understand the claim made against it. The Court rejected BDP’s argument that the extrapolated claim was an abuse of process as SLA’s pleadings were in no way ‘vague or incoherent’ as alleged. The Court found that whilst BDP ‘may not like [the claim advanced by SLA]…there can be no doubt that they understand how it is advanced’, and thus BDP were fully aware of the claim they had to meet. Indeed, when assessing whether BDP was able to understand the claim made against it, Lord Justice Coulson gave heed to BDP’s position as leaders of the design team, and the fact that they benefitted from knowing a great deal about the individual variations. The judge noted that due to their role within the project they will have known far more about the variations than SLA.

Wider effect on Pleadings in Commercial Disputes

This case provides interesting commentary on the development of pleading commercial disputes more widely.

The court ‘profoundly disagreed’ the BDP’s assumption that ‘the optimal mode of presentation’ of one’s case within the TCC is one where ‘every last detail is pleaded out extensively on all sides’ and that ‘anything less is somehow an inferior short-cut’ which has the potential to ‘risk potential injustice for all defendants’.

Lord Justice Coulson stated that ‘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. […] Pleading out every last detail at the outset of the proceedings should not be regarded as the paradigm method of framing such disputes.’ It was stated that what Lord Dyson calls an investigation into the “the grinding detail” of pleadings will sometimes be necessary, however such will not be embarked upon if there is a more proportionate alternative which still allows the defendant to fully understand the claim it has to meet, presumably such as extrapolation.

Following this case, we may see a wider use of extrapolation in cases concerning multiple variations. This is of course subject to claimants evidencing that they are using extrapolation for the purposes of proportionality, and that their sample can, on the balance of probabilities be deemed to be properly representative of the wider pool.

Similarly, whilst the courts will continue to reject a minimalist or lazy approach to pleadings, claimants may now be subject to less stringent standard of detail, as this judgement makes clear that a deep dive into the minutia of every fact and issue is not the preferred method of framing a dispute in certain cases.  Claimants must still be aware however of their duty to ensure the defendant properly understands the claim against it, if it wishes to avoid allegations of abuse of process. Therefore claimants should continue to plead their cases in a manner which reflects the factual and legal complexity of the claim, and language which could be viewed as vague or incoherent should be avoided at all costs.