Standard Life Assurance Limited v Gleeds – 1, 2 … skip a few… 99, 100!

The Technology and Construction Court (TCC) has recently offered guidance on the resolution of disputes involving thousands of different instructions/variations (where it is impractical to consider more than a given number).  In this article Giles Tagg and Cameron Grant consider the interesting outcome in the case of Standard Life Assurance Limited v Gleeds (UK) and Others [2020]¹.

The facts

Costain was employed by Standard Life as the main contractor on a £77.4 million mixed retail and residential development in Newbury, Berkshire. Standard Life paid £146.4 million in settlement of Costain’s final account.

Standard Life argued that approximately £38 million of the sum paid to Costain was incurred as a result of negligence on the part of the team carrying out the works. The defendants included the contract administrator, the architects and the structural, mechanical and electrical engineer (“the design team”).

Costain’s primary claim was based on additional work carried out by Costain as a result of 3,600 written and verbal instructions issued by the design team, combined with over 250 delay notices issued by Costain. Together, these nearly doubled the contract period to 246 weeks and caused Costain’s final account to increase by £38 million.

It was obviously impossible for the court to consider all 3,600 instructions on which Standard Life’s claim for reimbursement was based. Standard Life analysed only some of the instructions in detail, and provided full particulars of 122 of these to the defendants, arguing that it would be disproportionate and absurd to require it to plead and prove its case separately in respect of each and every individual component of the claim. Rather, the court’s findings on the representative samples could be extrapolated so as to draw inferences in relation to the remaining instructions. Thus saving significant time and costs.

The defendants argued that the sampling was not appropriate in principle for a claim in professional negligence and that Standard Life had targeted the only the high-value variations in order to maximise their claim. They argued that the claim should be struck-out on the grounds that it was an abuse of process and had no reasonable prospect of success. Alternatively, summary judgment should be given on their defence against it.

The judgment

The court has power to strike out a claim if it determines that there are no reasonable grounds for bringing or defending the claim, or to give summary judgment where a party has no real prospect of succeeding on a claim or defence. The judge in this case dismissed the defendant’s application for strike out and refused summary judgment. He recognised that analysing all 3,600 instructions would be impractical and disproportionate but noted the defendants’ concerns as regards the choice of sample variations selected by Standard Life. He therefore issued directions for the selection of a larger sample agreeable to all parties. His directions allowed the three defendants to select 160 variations to make up the sample.

For balance however, and recognising weaknesses in some of the many claims, the judge ordered Standard Life to name any claims it intended to withdraw.  Predictably, Standard Life removed the weakest of the variations in its claim, in order to prevent a situation whereby the defendants could select those weaker claims as samples.

Comment

The case is interesting in that it allows proof by way of extrapolation by samples in a claim based on a high number of variation orders. Here the case concerned an employer seeking recompense against parties involved in the works. Whether or not such sampling would be permitted in a claim brought by a contractor remains to be seen. Arguably it would be difficult to substantiate a contractor’s claim for loss and expense on the basis of samples extrapolated because of the high level of uniformity required amongst the orders or events in dispute to render them suitable for accurate extrapolation.  Such uniformity is likely to apply in only a few, selected, circumstances and would be more likely in defects claims.

Standard Life provides an expedient and cost effective method of bringing a claim based on a high number of errors by way of sample extrapolation. The court’s decision to give the defendants a key role in the selection of samples is also of interest and is likely to be followed in any future claims.

[1] [2020] EWHC 3419 (TCC)