Beattie Passive Norse Ltd & Anr v Canham Consulting Ltd (3)

[2021] EWHC 1414 (TCC)

In Issue 251, we looked at Mr Justice Fraser’s comments on the expert evidence in this case. The Judge also had to consider one or two issues relating to costs. The pleaded value of the claim was £3.7 million, and the claimants made a in the sum of £1.7 million. In contrast, Canham made a Part 36 offer, on 21 December 2020, offering to pay the claimants £50,000 plus costs of certain elements of the claimants’ claim. The final award of damages was only £2,000, which meant that the Part 36 offer would ordinarily entitle Canham to be paid its costs from the last date of acceptance, namely 11 January 2021, with the claimants entitled to their costs up to that point. However, Canham sought an order for all of its costs from the start, to be assessed on the indemnity basis. This was for a number of reasons, including the criticisms of the structural engineering expert.  

The claimants relied upon what was said to be an unreasonable refusal on the part of Canham to mediate at any time prior to early 2021, when a mediation was eventually held. There was also criticism of the type of mediation used, which was the only type in which Canham would agree to participate. As a starting point, Mr Justice Fraser commented that:

“It is crystal clear that there must be something that takes the case out of the norm for indemnity costs to be awarded.” 

He also said that:

“The claim was essentially speculative and opportunistic. It has been advanced at great length and by the assertion of a plethora of causes of action, all of which have been maintained to the last possible moment, no doubt upon instructions ... 

The litigation has been gargantuan in scope, involving a five-month trial and 373 trial bundles. But it was based on no sound foundation in fact or law and it has met with a resounding, indeed catastrophic, defeat. The fact that it has done so arises in large measure as a result of facts and matters which were known to the Wempens before the case started.”

Mr Justice Fraser agreed that an unreasonable refusal to engage in mediation can justify a departure from what would otherwise be the ordinary costs consequences in any proceedings. However, here, it was necessary to consider the state of play of the proceedings when Canham was pressing for a mediation to take place. In particular, there was an issue where the defence expressly raised the point that the foundations were not constructed to the design that Canham produced. Mr Justice Fraser had noted in his judgment that the Particulars of Claim had “entirely omitted this important fact.” Further, Canham had said in reply to a Request for Information in March 2020 that the foundations were: “constructed in accordance with the Defendant’s design, as far as the details in the design could be discerned.”

The Judge said that this answer was: “completely factually inaccurate. This is a more polite way of saying directly untrue.” From that point in time, the claimants were advancing a plainly untruthful case on a major and central point in the litigation. There was simply no excuse for this. In those circumstances:

“The refusal by Canham during 2020 to engage in mediation was not unreasonable in all the circumstances of the case. This refusal came at a time when the claimants were advancing, and continued to advance, a factually untruthful case.”

The type of mediation adopted in 2021 was “blind bidding”. The Judge described it as “a cheaper method” but one involving a mediator. In all the circumstances of the case, the Judge was: “reluctant to impose a qualitative analysis upon different types of mediation,” especially as he did not consider that Canham’s position was unreasonable in relation to when it was prepared to mediate.

Although the Judge did not consider that the conduct of the claimants’ expert was such, that would have itself justified an award of indemnity costs, he went on to discuss what he termed as a “worrying trend generally which seems to be developing in terms of failures by experts generally in litigation complying with their duties.” Practice Direction 35 makes the position very clear:

“2.1 Expert evidence should be the independent product of the expert uninfluenced by the pressures of litigation.

2.2 Experts should assist the court by providing objective, unbiased opinions on matters within their expertise, and should not assume the role of an advocate.”

A clear warning for all experts and those who instruct them.

The Judge concluded that this claim: 

“was wholly opportunistic. It was unjustified and extremely thin, at least so far as the quantum case was concerned. That quantum case was entirely far-fetched, and wholly irreconcilable with the contemporaneous documents.”

Considering all of the factors in the case, the Judge decided to make no order as to costs, in either party’s favour, up to the date of the service of the Further Information on 13 March 2020; thereafter, Canham recovered all of its costs on an indemnity basis. From that point on, the claimants conducted the litigation on a wholly false factual basis, something that must have been known to their directors. 

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