Co -Operative Group Ltd v Carillion JM Ltd & Anor

At the Pre-Trial Review in this case, there were two contested applications, an application by the Defendant to amend, which took the bulk of the time, and an application by the Claimant to call an additional expert in the valuation field.

The factual background to these proceedings is that the Claimant is the successor to Cooperative Retail Services Ltd (“CRS”) for whom a supermarket site was developed by Cliveden Estates Ltd (“Cliveden”) in 1996 and 1997. Cliveden engaged John Allen Associates Ltd (“John Allen") as civil and structural engineering consultants for the development and employed the Defendant as the main contractor (by way of a contract under seal) to carry out the requisite works. The Defendant engaged as a sub-contractor Pennine Vibropiling Ltd (“Pennine”) for specialist work known as vibro replacement to stabilise what were considered to be poor ground conditions at the site. The performance specification produced by John Allen identified that the object was to enhance the ground’s "load carrying/settlement characteristics to safely support the ground bearing slabs and foundation loads for the intended structure together with any other loads specified…”. This vibro replacement work involved at least in part the placing of stone columns in the ground in effect to stabilise it and supposedly to provide adequate support for the floor slab to be laid on it. The work was done and practical completion was certified on 3 February 1997 and trading started within a few weeks. The Defendant had entered into a Collateral Warranty dated 23 December 1996 whereby it warranted to CRS that it had exercised and would continue to exercise reasonable skill, care and diligence in the performance of its duties to Cliveden under its building contract with the Defendant. There was also a warranty from John Allen to CRS. It is said by the Claimant that the supermarket floor slab suffered from excessive settlement and in effect that the ground improvement works carried out had been ineffective. It seems to be common ground that settlement at least in places was some 80mm.

Proceedings were issued separately in 2007 by the Claimant not only against the Defendant but also against John Allen. As the proceedings against this Defendant were stayed by consent, the proceedings against John Allen were heard first and the claim was dismissed, albeit that on the first day of that trial Part 20 proceedings against this Defendant and Pennine were compromised. The timetable has been:

The Claimant’s case on breach of duty, as pleaded primarily at Paragraph 18 of the Particulars of Claim, is that the Defendant failed to exercise reasonable skill and care in the performance of the works and was otherwise in breach of contract, there being some 16 sub-paragraphs of particulars of breach. These particulars include failing to check Pennine’s method of executing the vibro replacement work and Pennine’s design and calculations and failing to take adequate steps to ensure that the work carried out by Pennine was properly carried out (including that the diameter of the stone columns was substantially less than that assumed in its design). It complained that the work carried out by the Defendant and Pennine "was incapable of limiting the vertical settlement at the centre of the slab to 30 mm for the differential settlement of 15 mm". There were complaints about the quality of the work carried out by Pennine such as insufficient stone being used, improper formation or placement of the stone columns, inadequate diameter and the like. It is said that the overall settlement was some 80 mm.

The Defence of the Defendant pleaded a number of matters including some of the history before Pennine was employed including the fact that other potential subcontractors were invited to quote including a company called Vibroflotation. Material parts of the pleading for present purposes were:

The Defendant’s case against Pennine in the current proceedings was predicated upon the compromise agreement which it reached with Pennine in March 2009 whereby the latter agreed "to indemnify Carillion and hold Carillion harmless against John Allen’s claim in these proceedings and for any claim which…Co-Op…might bring against Carillion arising out of, or in relation to, the vibro works which are the subject of these proceedings, whether such claim is for damages /or contributions and/or costs or otherwise, save that nothing in this indemnity will make Pennine liable where Pennine’s breach of contract and/or negligence and/or breach of duty is not a cause of the loss in respect of which the claim is made."

Surprisingly, notwithstanding correspondence about it, Pennine and the Defendant were unable to agree in spite of the 2009 compromise agreement between themselves that Pennine should in effect take over the Defence. I do not have to decide whether the stance of either party was wrong or unreasonable. Until they compromised again on 6 February 2014, they each went their own way, for instance each appointing a separate engineer expert. The precise terms of that later compromise have not been disclosed but Pennine has taken over the conduct of the defence of the Defendant and Pennine’s solicitors and Junior Counsel now act for the Defendant albeit joined by Leading Counsel originally retained by the Defendant.

The Defendant issued its application on 3 March 2014 supported by a witness statement from its new solicitor (who previously acted for Pennine). He says that Dr Pugh who was the Defendant’s original expert has relatively recently become ill and would have had to be replaced therefore; I was told that some steps have been taken to involve a Mr Bracegirdle from Dr Pugh’s firm. However, following the compromise between Pennine and the Defendant, it was now proposed that Mr Raison, Pennine’s engineering expert, should replace Dr Pugh. The amendments were being sought in order “to flesh out the Defence to reflect the views of Mr Raison”, the point being made that "many of the proposed amendment would be familiar to the Claimant from the statements of case in the Part 20 proceedings". It is said that the application was being made in good faith.

Perhaps because the application was made just three clear days before the Pre-trial Review, the Defendant did not put in any evidence in response but at the hearing its Counsel did not indicate that it needed an adjournment to do so. Nonetheless, through Counsel, it argued that in particular three particular areas or types of amendment should be refused.

The Court always needs to keep only in mind the Overriding Objective at CPR Part1. So far as the withdrawal of amendments is concerned, there is some authority. CPR Part 14.1(5) states that the "permission or the court is required to amend or withdraw an admission." The Court, therefore, has a discretion in considering whether to allow the withdrawal of admissions. In Sowerby v Charlton [2005] EWHC (Civ) 1610, the Court of Appeal approved a dictum of Mr Justice Sumner in Braybrook v Basildon Thurrock University NHS Trust[2004] EWHC 3352 (7 October 2004) in which that learned Judge said:

I will address the three areas of contested amendment; there were a number of amendments which were not opposed by the Claimant and permission for those is granted by consent subject to the usual costs terms. The three areas were (a) Paragraph 7.3 and paragraphs reliant on the proposed amendment, (b) withdrawn or modified admissions and (c) causation. I will not set out all the arguments but will aim to address them in reaching the conclusions below. The application is made at a relatively late stage of these proceedings with 8-9 working weeks to go to the trial.

Paragraph 7.3 of the draft Amended Defence is as follows (with amendments underlined:

“7.3

The third sentence [of Paragraph 8] is denied. The criteria were that the maximum settlement would be settlement of 30mm at the centre and 15mm at the edge. These criteria were agreed between Mowlem and John Allen as set out in paragraph 5.6 above and following receipt by John Allen of the documents referred to in paragraphs 5.2 to 5.5. In these premises, the criteria were agreed upon the assumptions that:

7.3.1

the floor slab would bear entirely on the ground and without rigid support from underlying pile caps;

7.3.2

the required loadings were inclusive of both live and dead loads.

That this was the basis of Vibroflotation’s tender and specifications was confirmed in the calculations made submitted to John Allen on 26^th of June 1996."

Paragraph 8 of the Particulars of Claim referred to the fact that the Defendant initially appointed Vibroflotation and that they had agreed a relaxation of the specification acceptable to John Allen and the third sentence identified that the "criterion for settlement agreed with Vibroflotation was…a total settlement of 30mm in the centre of the slab with the maximum differential settlement being 15mm." This amendment in effect spawns other amendments including those in Paragraphs 8.2, 14.3, 17.1 and 17.4.

The Defendant had served its witness statement evidence, including statements from Mr Younge in the earlier John Allen proceedings which (briefly) supported the relaxation in the specification pleaded as having been agreed at Paragraph 5.6 of the original Defence (see Paragraph 5(a) above). It did not in any way support the amendment in the draft amendment of Paragraph 7.3, there having been no hint or suggestion that the settlement criteria were agreed upon any expressed or even impliedly understood assumptions. When this was pointed out to Mr Patten QC, he explained that the draft pleading in Paragraph 7.3 was not intended to relate to anything that was expressed or even impliedly understood, saying in effect these must have been the assumptions and that he could further redraw the amendment. I am not prepared to allow this and the related amendments because not only is the wording infelicitous and does not reflect what was intended but also it is wholly unsupported by any evidence. This latter point is of some importance because there is no related application to produce further evidence at trial to support these new supposedly "agreed" "criteria". There is inadequate explanation in any event within the draft amendment as to how what may have been agreed or understood as between the Defendant and Vibroflotation may have been transposed into any agreement or understanding relating to Pennine. Additionally (although a minor point), it is too late to introduce such an amendment because, even if the Defendant does not want to adduce any further evidence, the Claimant might and an obvious witness to call would be people from John Allen who are not currently due to give evidence and might well some 4 years or more after giving evidence in the case against John Allen have greater difficulty in remembering the basis on which one of them said something in a telephone conversation some 17 years ago. This sort of exercise is disruptive at this stage of a case.

The second group of amendments to which objection was made relates to the withdrawal or qualification of admissions. Such proposed amendments are materially as follows:

“16.8

The allegation in paragraph 18(7) is denied. It is admitteddenied that Pennine’s records suggest that it used less stone than it should have done and/or that its columns were deficient for that or any other reason…

16.12

Subject to what is stated at paragraph 16.8 above, the first sentence of paragraph 18(11) is admitted. It is repeated that the size of the stone columns included in Pennine’s calculations was nominal only. Accordingly the fact that the diameter of the stone columns constructed was less than that assumed in those calculations did not make it obvious that the work undertaken would not and could not comply with the contractual settlement limits. The allegation that it should have been obvious to Mowlem that vibro compaction were conducted to their design could not comply with the settlement limits in the Specification is denied (not least because the claimant has misstated those limits. No admissions are made as to what should have been obvious to Pennine.

17.1

It is admitted that the design and/or calculations undertaken by Pennine werewas defective and that had that design and those calculations been carried out with reasonable skill and care Pennine would have realised that the vibro replacement works wereand not capable of achieving a floor that achieved a maximum settlement of 30mm at the centre and 15mm at the edge on the assumptions set out in paragraph 7.3 above.

Store Areas

17.2

It is admitted that in the respects set out below, Pennine’s calculations with regard to the store areas contained some over optimistic and/or wrongly assessed values and errors, which, if corrected and based on the 500 mm diameter columns in fact installed, under a load of 15 kN/m² of the working platform would have resulted in a settlement prediction after vibro replacement of approximately 40 mm. It is further admitted that acting competently Pennine would have alerted Mowlem of this settlement prediction, who in turn would have alerted John Allen.

17.2.1

It is admitted that the stone column diameter used in the calculations was greater than that achieved on site. It is denied that this was negligent. The stone column diameter used in the calculations was nominal only.

17.2.2

In any event, stone column stiffness parameters used in the calculations were extremely conservative…

17.2.3

Pennine’s method for the load split between stone columns and the ground was computed accurately using the Baumann and Bauer calculation method. It is denied that it was negligent of Pennine to use this method…

17.2.4

Whilst it is admitted that the earth pressure coefficients for the soil and column material assume by Pennine in their calculations were incorrectly assessed, it is denied that the settlement reduction factor of 0.6 was of itself unrealistic or negligent…

17.2.7

The soil Mv values adopted by Pennine were in fact reasonable estimates of the average compressibility of the grounds based on the site investigation and laboratory test data available to them at the time…

17.2.8

It is admitted that in their settlement calculations Pennine adopted an inappropriate value for µ of 0.6 by way of a correction factor for the very soft clay...

17.2.9

Pennine’s settlement calculations were basedon Hobbs’ linear dispersion of load spread below the slab…This was optimistic, but not negligent…

17.2.10

It is denied that Pennine was under an obligation to give consideration to secondary consolidation settlement or was negligent in failing to do so…

17.2.11

Whilst it is admitted that Pennine’s calculations did not include an additional allowance for dead loads including the load of the supermarket floor slab, it is denied that Pennine or Mowlem was under a contractual obligation to ensure that they did.

The Warehouse

17.3

It is admitted that Pennine’s calculations with regards to the warehouse contained wrongly assessed values and errors, which, if corrected and based on the 500mm diameter columns in fact installed, under a load of 31.5 kN/m² on the working platform would have resulted in a settlement prediction after vibro replacement of approximately 80 mm. It is further admitted that acting competently Pennine would have alerted Mowlem of this settlement prediction, who in turn would have alerted John Allen.

The Defendant’s case is that Pennine’s calculations drastically underestimated total settlement by employing an unrealistic settlement reduction factor, an unduly optimistic Mv factor (being half measured value), failing to give any consideration to secondary consolidation settlement and adopting a generous allowance for stress reduction with depth.

17.4

It is further admitted that Pennine’s design was not competent by reason of its unrealistic settlement reduction factor and an unduly optimistic Mv factor.

17.4

It is denied that Mowlem should have appreciated that Pennine’s design and/or calculations were was incompetent or that the design parameters of a maximum settlement of 30mm at the centre and 15 mm at the edge on the assumptions set out in paragraph 7.3 above could not be met utilising that design and/or those calculations either in the store areas or in the Warehouse.

17.4.1

Further or alternatively, if the Defendant’s case as to the basis of these criteria set out in paragraph 7.3.1 above fails, it's case is that the criterion that there should be maximum settlement of 15 mm at the edge were in fact met because, in accordance with John Allen’s design, the edges of the floor slab were supported on piles.

Pennine’s workmanship

17.5

Save that it is admitted that its columns were too smallerthan the nominal value shown in its calculations, it is denied not admitted that Pennine’s workmanship was defective. If and in so far as the workmanship was defective it is denied that it was an effective cause of any failure of the vibro compaction works to achieve the design parameters of a maximum settlement of 30 mm at the centre and 15 mm at the edge as those parameters are correctly to be understood, or at all.

19.1

The causes or cracking to the floor slab and excessive slopes to the supermarket floor are a combination of (1) errors in the ground conditions report by LBH Wembley and (2) errors in the foundation design prepared by John Allen and (3) errors in the design undertaken by Pennine. Subject to proof of the extent of the same, it may be that a minor contributory factor was all workmanship by Pennine.”

There can be no doubt that some important original admissions made by the Defendant are withdrawn and others seriously modified and re-written. Although Pennine has, as the result of its settlement with the Defendant, taken over the Defendant’s defence of these proceedings, Pennine must and must be taken to have known at that time that the Defence contained important admissions in effect against the interests of Pennine and that there was at the very least a real risk that, unless permission to amend was given so that such admissions could be withdrawn or seriously modified, it would have to live with the consequences of those admissions. The proceedings to date have been conducted as between Claimant and Defendant on the basisof the currently, un-amended, Defence.

It is a requirement (and an understandable requirement) that an application to withdraw or modify an admission must be with the leave of the court and in practice the application must be made in good faith by the party which is actually making the application. I raised in argument that question in the context of whether this application was being made by the Defendant in good faith in circumstances in which the reality is that Pennine, albeit acting within the authority (I assume) given to it by the currently undisclosed settlement agreement between it and the Defendant, is seeking to run a new case (that is new to the Defendant) which reflects Pennine’s as opposed to the Defendant’s own position. Without understanding or knowing what those terms are, the Court is not apprised of the extent to which the admissions made in the Defence of the Defendant were instrumental in Pennine agreeing to be responsible for defending these proceedings in the Defendant’s shoes and for indemnifying the Defendant. Of course, I accept that in a professional sense both Counsel and solicitors now acting for the Defendant are not in any way acting in bad faith or unprofessionally by making this application. That however is not the issue; the issue is whether this Defendant is acting in good faith by going so substantially against the admissions which it made in its Defence. Such admissions were originally made, as Mr Patten QC accepted, on the express advice of its expert, the respected Dr Pugh; they were considered admissions supported by a Statement of Truth. Mr Patten QC could not confirm whether the Defendant had expressly and specifically approved the wording of the draft amendment. What he frankly accepted was that many of the proposed amendments were sought because they reflected the views of Mr Raison, formerly and until very recently the expert of Pennine, which reflected the defence of Pennine in the third party proceedings against it. What this application in this context looks like is Pennine seeking to alter the Defendant’s Defence but in its, Pennine’s, interests in effect so that Pennine can try to avoid having to indemnify the Defendant under whatever the settlement terms that it (or, given that it is in liquidation, its insurers) reached with the Defendant. A good example is what is stated in Paragraph 19.1 where the clearest pleading now sought to be deleted was that Pennine design errors were a material cause of the cracking; this was a clear case on causation by the Defendant and no good reason is put forward for drastically altering that case other than that the new Pennine broom is being deployed. I am therefore not satisfied that this is an application made by this Defendant in good faith. Again, I am not implying criticism of the Defendant because I doubt that it itself even knows of the precise wording of the amendments.

There are other real objections to these admission withdrawal type amendments:

It is also observable that there has been a mutual failure by the Defendant and Pennine to resolve their differences for many months and indeed up to 2 years before they eventually did in February 2014. It is at the least surprising that, given the compromise agreement reached during the John Allen proceedings in 2009, Pennine was not in the driving seat in which it now finds itself a long time ago. They are the authors of their collective misfortune in the Defendant having made admissions which Pennine would not apparently have made in the Defendant’s shoes and Pennine now in the Defendant’s shoes having to seek to withdraw or change those admissions at the (relatively) 11th hour.

I therefore refuse the application in these respects.

Finally, objection is taken to a new case on causation:

I have no hesitation in refusing permission in respect of the secondary case relating to the warehouse floor slabs. I can not begin to see that this could be established or challenged without factual evidence. It is simply much too late with the trial several months away, the witness statements having already been exchanged and the expert preparation very substantially advanced, to seek to introduce what on the face of the proposed amendment is a new case which can only be challenged by factual evidence; making this sort of change at this late stage is highly disruptive and prejudicial. The secondary case is in any event inadequately pleaded in that no particulars are given of the material facts relied upon to support what appears to be an extremely surprising case which superficially at least appears to involve an unrealistic state of affairs. For instance why should the CRS and Cliveden which was in effect developing this site for CRS have been prepared to agree to a loading less than whatever currently had been agreed and may well be a standard loading for a supermarket such as this and still have been prepared to accept a settlementof 50 mm when 30mm had apparently been previously accepted as a maximum? Simply to make the bland assertion in a late amendment is simply not good enough and the evidence submitted in support of the application does not seek to explain or justify factually this assertion.

As for Paragraph 19.2, reference to the "Defendant’s case as to the basis” of the 30mm criterion is oblique and unclear. The proposed strongly positive case is inadequately particularised in that it is not clear why positively it would not have been possible to design or construct vibro-replacement works so as to produce a serviceable floor. The final proposed sentence is similarly oblique in that it is contradictory of the previous sentence and it does not explain why "unacceptable slopes, differential settlements, damage and distress" would have occurred. Given the lateness of the amendment application in this regard, a much greater degree of explanation is required before any permission might be granted.

It follows from the above that the application to amend in these three respects is refused.

Originally, in March 2013 the Court gave directions permitting experts in the fields of engineering, quantity surveying and accountancy. Before the pre-trial review, there had been only a very belated hint from the Claimant that it would apply for permission to call a valuation expert. This is in one sense surprising because in April 2013 it provided Further and Better Particulars of Damages and Quantum which at Paragraphs 25 to 27 identified a claim entitled "Diminution in Value due to Use of an Uretek Scheme”. This head of claim is put forward apparently on the basis that, when or if the supermarket is sold, the repair (“Uretek”) scheme already adopted will need to be replaced by a piling scheme; the logic which is not particularly spelt out is that the current value of the repaired supermarket is less than it would have been. An attached schedule to these Particulars is a breakdown of what it would cost to provide piled foundations.

The Court was asked to presume that a valuation expert would or could provide an opinion on the value which the supermarket is worth with the Uretek repair and what it would be worth with a piled remedial solution. No draft report was provided but it is at least possible that the pleaded cost of the pile solution would come into the equation albeit that the capital diminution claim will not simply be represented by that cost.

This application is made too late, with the trial due in May 2014. There is a pleaded case which the quantity surveyors can address based on the piling cost. There is no pleading currently from the Claimant as to any other basis: although the claim is headed “Diminution in Value”, it is not actually pleaded by reference to market values and it would have to be. There is thus no pleaded case to be supported by a valuation expert. Mr Dennys QC for the Claimant had to accept that there must simply have been an oversight on the part or on behalf of the Claimant. The logistics involved in first a draft pleading being produced and then valuation experts being retained, meeting to agree a joint statement and producing expert reports are too tight for a case at this stage. Finally, it will add costs to an already expensive set of proceedings.

Therefore this application is rejected.

The Defendant’s application for amendment of the Defence is refused save where it was not challenged. The Claimant’s application to introduce a valuation expert is refused.

Following the hearing but after I had completed the bulk of the work on this judgment, the parties (sensibly) have settled the case. However, I propose to hand down the judgment to provide some guidance on the need for good faith on the part of the party seeking to withdraw or amend admissions in a pleading in circumstances in which another party is standing in the shoes of that amending party following a settlement.