AXA Insurance (UK) Plc v Cunningham Lindsey United Kingdom

MR JUSTICE AKENHEAD: This is an application by the Defendant for leave to amend its Defence to plead a number of assertions relating to quantum and, more particularly, as to causation. The amendments sought are drafted in a form which could be incorporated in the Defence.

This claim by Axa, the insurance company, relates to alleged professional negligence of loss adjusters, Cunningham Lindsey, in relation to the reinstatement of an old farmhouse in Leicestershire (Orchard Farm, Burbage, near Hinckley). There had been subsidence, for which Axa had accepted liability under a householder's policy. Cunningham Lindsey was retained by Axa to provide services in connection with that reinstatement in 1999 and 2000. The scope of those services is in dispute. There is no issue, however, that the reinstatement did not proceed well; the reasons why, however, are in issue. Suffice it to say, Axa and Cunningham Lindsey parted company in about April 2000.

Axa then retained Cameron Durley Consulting Engineers to investigate, draw up work schedules or lists and supervise or monitor the completion works which took place between about August 2000 and August 2001. Whilst the original sum insured was just over £200,000, and the expectation when Cunningham Lindsey was involved was of a reinstatement cost of something less than £100,000, the eventual cost to Axa is said to have been over 1.5 million. Axa claim that the bulk of this cost is attributable to the negligence of Cunningham Lindsey; this is denied. Recently, at or shortly before the beginning of the trial, Axa sought leave to amend its quantum down to about £1.1 million, with various credits having been given; that was not opposed.

This trial has been fixed for almost a year, an order being made in that regard on 24th October 2006. Orders were then made for the exchange of expert reports. Those orders have been amended from time to time, most recently on 27th July of this year, when it was ordered that civil and structural engineering supplementary reports should be served by 14th September 2007. Axa's civil and structural engineering expert is Mr Kirwin of Cameron Durley, who was also personally, directly and intimately, involved in the completion works, whilst Cunningham Lindsey's expert in all disciplines is Mr Smithurst.

From correspondence put before me from the parties' solicitors, it was agreed that Mr Kirwin's and Mr Smithurst's supplementary reports should be mutually exchanged. Mr Smithurst's was apparently ready by 14th September 2007, whilst Mr Kirwin's was not ready until about 10th October. At about that time, both experts' reports were served, I believe Mr Smithurst being served before Mr Kirwin's. Whilst I have read Mr Kirwin's supplementary report, I have not read Mr Smithurst's because objections are made to its contents in part, there being a suggestion that it includes without prejudice material. I am told that it contains criticisms of Mr Kirwin's involvement in 2000 and 2001.

Mr Kirwin's supplementary report is, in the main, not responsive to earlier exchanged reports. It primarily relates to his examination of files of Glenborough Estates, who were the first contractor who worked under Cunningham Lindsey in 1999, albeit they were replaced in the latter half of that year with other contractors.

So far as I can ascertain, prior to this amendment, there had been no criticisms made by the defendant or their experts of Mr Kirwin. I have been referred by Mr Harvey to paragraphs 8.4 to 8.10 of Mr Smithurst's report of 16th April of this year. I cannot see, however, that there are any criticisms of a professional nature of Mr Kirwin in those paragraphs. They relate more to assertions by Mr Smithurst that, given the instructions which his firm received from Axa, it became inevitable that too much cost was incurred or cost was incurred which was not attributable to any allegations that might be made against Cunningham Lindsey.

I have also been referred to paragraphs 3.8 to 3.11 of the joint statement prepared by Mr Smithurst and Mr Kirwin. Again, I do not see in there any professional criticism of what Mr Kirwin may or may not have done during his period of involvement in 2000 and 2001.

Turning now to the proposed amendments, I am minded to allow the amendments which appear on the first page, except for the allegation at the bottom of the page in (ii) beginning "and/or its own failure to control or limit the work done and the costs of the claim". These amendments relate to assertions either that AXA gave the wrong instruction(s) to Cameron Durley or that Cameron Durley exceeded those instructions; they are not seriously opposed. It seems to me -- and there is not any or much objection to this from the claimant -- these are matters which have been out in the open for a substantial period of time, and I do not see that Axa would have any prejudice in dealing with it, either through Mr Kirwin and/or Axa's other experts or in any other way. I am reluctant to allow the part which I have identified because it is really unparticularised and it does not relate to the instruction(s) which Cameron Durley received, unlike the rest of the proposed amendments on that page.

However, the allegations which are sought to be made on the second and third page of this draft amendment are prefaced with these words:

There then follow some 15 subparagraphs, A to O, in which a number of failures are alleged against Cameron Durley and, indeed, against Axa. Now, save for some of those allegations, I am not prepared to allow leave to amend. It seems to me that the defendant seeks to make a positive case that the chain of causation was broken by a large number of what are said to be Cameron Durley's failures and, indeed, Axa's failures. In these days, since the introduction of the CPR, it has become more important that positive cases on quantum by the defendants are pleaded. In the old days, it might have been satisfactory just simply to say, "Quantum is denied", but it is satisfactory no longer. This is important because there is a line of authority, about which I make no comment, which might suggest that the chain of causation can be broken by the negligence of an expert adviser or designer retained by a claimant who is carrying out remedial or completion works, the costs of which are claimed as damages.

Now, I make no finding as to whether negligence has to be established or not; that is in issue and obviously I will hear argument about that. But certainly the way that these amendments are put would enable the defendant, if they were allowed, to argue that there had been negligence on the part of Cameron Durley in and about their conduct of the completion works which, if established as negligence, might then be sought to be relied upon to break the chain of causation.

The problem here is that, because Mr Kirwin is a witness of fact and also an expert, if these allegations of failure are established or sought to be established, the claimant has not procured the services of another engineering expert. That engineering expert, being independant at least in the sense of having had no involvement in the history, would have been able to comment on what are said to be failures on the part of Cameron Durley to do what it is said that they should have done. Mr Kirwin (who, for better or for worse, is being called also as an expert) would be open to the very real charge that, in dealing with allegations against himself personally, he could not exercise an appropriate degree of independence. I am told by Mr Nicholson, and I accept in general terms, that there is irredeemable prejudice as a result because they have not in fact brought on board such further expert.

Now, it seems to me that that is irredeemable because it is too late now, on Day Three of the trial, for the claimant to bring in an independent engineering expert, not without a massive disruption to and, indeed, inevitable adjournment of, this trial, which I would be most reluctant to allow. Therefore, that seems to represent, in general terms, irredeemable prejudice. Therefore, on that ground, the amendments should be disallowed.

There are, however, three exceptions to that. Three of the allegations relate to various alleged Cameron Durley's failures. They are:

Now, it seems to me that these allegations are ones which, at least coincidentally, arise by way of response to a point made by Mr Kirwin in his supplementary report; that is, his examination of what were in May 2007 the newly released files of Glenborough Estates. There is reference to Pearce, who were the second contractor retained in the latter half of 1999.

It seems to me that Mr Kirwin's supplementary report was late. There may have been good logistic reasons for that lateness, but the fact of the matter is that the relevant documents had been disclosed since May 2007 and it should have been possible, for the sake of good order, for his views about Glenborough Estates' files to have been made known, by one means or another, well before the second week of October in the week before the hearing.

It seems to me only fair to allow the defendant to plead, as it does in subparagraphs (b), (d) and (f), the allegations relating to Glenborough Estates (not Pearce but only Glenborough Estates). The detailed analysis of Glenborough Estates' documents, the product of which only appears in Mr Kirwin's supplementary report, as far as I can ascertain, does mean that the defendant should have an opportunity to make the point that it does in those subparagraphs with regard to Glenborough Estates, and Mr Kirwin would have no difficulty at all in explaining to this court why it either was not necessary for him to look at those files or seek to ascertain the information contained in those files until the time that he did. He is well able to deal with that. There may or may not be good explanations. There may or may not be good arguments or evidence linking any such failures to any established breaches of duty.

That seems to me to represent a reasonable balance to reflect what has happened at a fairly late stage in this case. So, therefore, leave to amend will be granted on everything on the first page, except that last phrase in subparagraph (ii) and on the second page subparagraphs (b), (d) and (f), insofar as they relate to Glenborough Estates.