NEW EXPERT EVIDENCE “BEYOND” THE 11th HOUR NOT ALLOWED: DENTON APPLIED IN THE TCC
In DPM Property Services Ltd v Emerson Crane Hire Ltd  EWHC 3092 (TCC) Mr Justice Coulson overturned a decision giving a counterclaiming defendant permission to rely upon an expert report on quantum shortly before trial. The case is an example of a party failing to quantify their claim properly during the course of an action and then attempting to adduce new expert evidence shortly before trial.
“…the respondent has been repeatedly at fault, as the judge’s costs orders show. It has deliberately avoided making any amendments to the counterclaim or the Scott Schedule, and compounded that error by delaying in providing a new quantum report until well beyond the eleventh hour. In those circumstances, the overriding objective requires this court to protect the appellant from irredeemable prejudice.”
The claimant was claiming the balance of work done for the defendant. The defendant counter-claimed for defects. The counterclaim was largely unparticularised and arose from a dated quotation.
The action is set for trial in January 2018 with a time estimate of five days. The trial has been fixed for some time and had already been adjourned twice.
THE ORDERS APPEALED FROM
In October 2017 a judge allowed the defendant to rely upon parts of a new liability expert report and a new quantum report on damages. That report gave a figure of £332,671.36 in damages, however the judge restricted the counterclaim to £160,175 plus vat. The claimant appealed against the order giving permission for the defendant to rely upon new expert evidence.
THE ROUTE OF APPEAL
The route of appeal is to a High Court Judge. The appeal was from the TCC list in the Central London County Court and the appeal was listed in the TCC.
Mr Justice Coulson reviewed the legal principles involved.
- It is trite law that a party applying for permission to appeal to overturn a case management decision must cross a high threshold. In Abdulle v Commissioner of Police of the Metropolis (Practice Note)  EWCA Civ 1260, the Court of Appeal reaffirmed that it would not lightly interfere with case management decisions of lower courts. This approach is perhaps summarised best by Lewison LJ in Broughton v Kop Football (Caymen) Limited  EWCA Civ 1743 at paragraph 51:
“Case management decisions are discretionary decisions. They often involve an attempt to find the least worst solution where parties have diametrically opposed interests. The discretion involved is entrusted to the first instance judge. An appellate court does not exercise the discretion for itself. It can interfere with the exercise of the discretion by a first instance judge where he has misdirected himself in law, has failed to take relevant factors into account, has taken into account irrelevant factors or has come to a decision that is plainly wrong in the sense of being outside the generous ambit where reasonable decision makers may disagree. So the question is not whether we would have made the same decisions as the judge. The question is whether the judge’s decision was wrong in the sense that I have explained.”
- Of course, that passage presupposes that there is a clear decision by the lower court, including a record of the matters relied on by the judge in reaching the decision in question. As I have explained, in relation to the respondent’s application to rely on Mr Woods’ new report, that is not the case here. Accordingly, it is much more difficult for me to be sure that, at the PTR, the judge took into account all the relevant factors when arriving at his decision.
- I take the issue of delay first. Although it is raised as part of ground 2 of the appeal, and both counsel have dealt with it as such, I consider that it arises at the outset of this application and that everything else follows from it.
- At the hearing of the appeal, Mr De Gregorio fairly accepted that the respondent has provided no good reason for their failure to adduce Mr Woods’ new report much earlier in the year. However, he maintained that the judge took the delay and the lack of any explanation into account when reaching that conclusion, so it was not a matter that could give rise to an appeal. He also said that delay and the absence of justification for it should not be seen as an overriding factor. I reject both submissions.
- As to whether or not the judge took the point into account, there is no reasoned decision from the judge, so it cannot be said for sure that the judge took the delay and the lack of explanation into account when making the order he did. If anything, the evidence suggests that he did not. After all, the judge ruled that those parts of Mr Harding’s report to which the appellant objected were to be deleted. That was solely because of the delay and the absence of any good reason for it. On the face of it, precisely the same factors applied to Mr Woods’ new report, and it should have been ruled out for the same reasons.
- As a result of the absence of a ruling by the judge, it is therefore necessary for me to consider afresh the issue of delay.
- It is only necessary to consider the principles from Mitchell v News Group  EWCA Civ 1537 and Denton v TH White  EWCA Civ 906, to conclude that the delay in the provision of Mr Woods’ new report was critical. Mr De Gregorio properly accepted that he could not bring himself within those principles. Applying the three stage test in Denton, for example, I consider, in respect of the first stage, that the failure to provide a report for almost 10 months after the hearing in January 2017, and to seek permission to rely on it only at the PTR, was a serious and significant failure. That was particularly so since the judge had decided not to order the amendment of the earlier reports on costs grounds. That order presupposed that there would be no further reports, so it was incumbent upon the respondent, if it wanted to try and salvage something from its failure in January by putting in a new report, to provide such a report within weeks.
- The second stage is easy. Mr De Gregorio accepts that there is no reason at all for the delay, whether good, bad or indifferent.
- As to the third stage, it was not just and reasonable, in all the circumstances of the case, to allow the respondent to rely on the late report of Mr Woods. I consider that the appellant would be significantly disadvantaged if it was required to deal, in a matter of weeks, with issues which the respondent’s expert took almost 10 months to formulate.
- Mr Oram complained that the judge had allowed the respondent to advance new figures, and expected the appellant to meet that new case, even though the time remaining before the trial was very short and the time available during the hearing itself was very limited. Indeed, Mr Oram went as far as to say that the appellant would have been better off acceding to the respondent’s application in January 2017, because then, at least, the appellant would have had proper time to get to grips with the new case. There is much force in both those submission.
For these reasons, therefore, I consider that the judge failed to take into account the question of delay. Having considered that matter afresh, I conclude that the delay of almost 10 months, and the absence of any reason for it, leads to the inevitable result that the appellant’s application to exclude Mr Woods’ report of September 2017 should have been allowed.
5. GROUND 1.2: THE DEBARRING ORDER
- The appellant’s first argument before me, just as it was before the judge, is that the debarring order meant that the counterclaim in respect of Freshwater Road was limited to £46,923, namely the only items in the Scott Schedule that were not marked as being “TBC”. Essentially, Mr Oram argued that the debarring order of January 2017 froze the respondent’s counterclaim in that sum.
- I am bound to note at the outset that this is not what the judge said he intended to do. During the argument in October 2017, when referring to the debarring order, he said:
“Well, I really can’t remember quite what was going through my head when I made the finding, but I am sure it wasn’t to make an order which prohibited the defendant from running any pleaded Scott Schedule item simply because it hadn’t been quantified.”
Of course, the fact that the relevant wording was that of the appellant, and not that of the judge, may explain this disjunct.
- The order is set out at paragraph 13 above. Mr Oram said that the part in brackets clearly related to quantum just as much as alleged defects. Mr De Gregorio said that the debarring order prevented any additional defects from being added to the counterclaim, but it did not prevent the respondent from providing amended figures for the defects already set out there.
- It is unfortunate that the parties are now arguing over the order as if it were a Deed; it is also unfortunate that each party’s interpretation is so extreme. On the one hand, it could be said that, if the appellant had wanted the judge to order that all items in the Scott Schedule which were marked “TBC” were effectively struck out (which is what they say the order means) they could have sought such an order in January 2017. On the other hand, the respondent knew that, having lost the arguments in January, it had no clear case on quantum at all unless it took prompt steps to resolve the difficulties.
- Against that background, in my view, the appellant’s interpretation is to be preferred. The respondent’s construction does not give proper weight to the part in brackets and the express reference to “cost of remedial work”.
- But let us assume that I was wrong about that, and the respondent was entitled to provide later cost figures for the items in the Scott Schedule. That still does not help the respondent, because it has never attempted to amend the Scott Schedule. Moreover, even on the respondent’s interpretation, any new information as to cost figures would have had to have been provided in accordance with the CPR and, as set out in the preceding section, the respondent wholly failed to do that.
- For these reasons, I consider that ground 1.2 of the appeal has been made out.
6. GROUND 1.1: LOSSES HAD BEEN PARTICULARISED ALREADY
- The appellant’s related complaint is that, although the transcript suggests that the judge considered that the losses identified in the new report from Mr Woods had already been particularised, he was wrong to do so. Again, the absence of a ruling has hampered the full analysis of this complaint.
- There are, I think, two particular points to make. First, as I have demonstrated, the only pleaded figures for the Freshwater Road counterclaim are the lump sum of £160,175 and the Scott Schedule figure of £46,000 odd. No other losses have been pleaded or particularised, and any contrary view would therefore have been wrong.
- Secondly, it is right that, in an attempt to persuade Mr Oram that what the respondent wanted to do was better than what it wanted earlier in the year, the judge said to him (transcript page 28, line 32) “you should be expecting a claim for £506,000”. As Mr Oram endeavoured to point out (but the interruptions meant that he was not fully able to do so) that was wrong; the judge had ruled out the £506,000 claim in January 2017 and nothing had been offered in its place until Mr Woods’ new report.
- There is a wider point. The judge refused to allow the respondent to rely on Mr Woods’ original report in January 2017, when the losses would have been increased to over half a million pounds, but did allow the respondent to do exactly that in October 2017, just two months before trial, when the losses would have been increased to £330,000 odd. In my view, no consistency of approach can be discerned from those decisions: if the respondent could not rely on new material a year before trial, it should not have been allowed to do so just two months before trial.
- It follows, therefore, that I also accept ground 1.1 of the appellant’s notice.
7. GROUND 2: THE SO-CALLED CAP
- Mr Oram complained that the judge was wrong to regard the figure in the counterclaim of £160,175 plus VAT as a cap. He said that it was no such thing, and that the difficulty with the judge’s existing order was that, even though the amount capable of being recovered would be limited to that figure, the appellant still has to deal with entirely new figures extending up to £332,000 odd in a 5 day trial that had not been fixed on that basis.
- Of course, I accept at the outset that the judge’s decision to identify this as some form of cap on the counterclaim was designed to assist the appellant: he was making it plain that, in all the circumstances that had occurred, it would be wrong and unfair for the appellant to face a counterclaim in excess of the originally pleaded figure. But I think Mr Oram is right to say that, whilst that was obviously helpful to some extent, it does create its own difficulties for the appellant. On the basis of the judge’s order, the appellant has to address at the last minute a variety of new figures, all as set out in Mr Woods’ new report. The cap would not affect preparation and trial time; it would not mean that each of those new figures would not have to be analysed and answered. The so-called cap would only come into play at the time of the judgment, and only if the counterclaim was otherwise in excess of that figure.
- In my view, the judge was wrong to regard the figure in the original counterclaim as a cap. It is not uncommon for an originally pleaded sum to be exceeded, either by way of a subsequent Scott Schedule or by way of expert discussions: see paragraph 23 of the judgment of the Master of the Rolls in Loveridge v Healey  EWCA Civ 173. Sometimes pleading points will not be taken; if they are, a timely amendment will almost always be allowed.
- Thus it is rather old-fashioned and artificial to talk about a cap in a case of this sort, where there is a later pleading (the Scott Schedule) which addresses quantum. That is particularly so when, as here, the so-called cap figure is entirely arbitrary.
- Accordingly, for what it is worth, I accept ground 2 of the appeal. As explained above, it was really the delay issue which emerged from this part of the appeal which troubled me the most, which is why I have dealt with it at the outset in Section 4 above.
- For the reasons set out in Section 4 above, I consider that the judge did not take into account the critical issue of delay. If he had done so, he would have refused to allow the respondent to rely on the new report of Mr Woods, just as he refused to allow the respondent to rely on any parts of Mr Harding’s report to which the appellant objected.
- For the reasons set out in Section 5 above, I consider that the appellant was right to regard the debarring order as extending to quantum as well as the defects themselves. But even if the respondent’s interpretation was right, the order still meant that they could only change the figures pleaded in the Scott Schedule if they made an application to do so in accordance with the CPR. They never did.
- For the reasons set out in Section 6 above, I consider that, having refused the respondent’s attempt to rely on a report from Mr Woods that went way beyond the Scott Schedule in January 2017, the judge should have adopted precisely the same approach at the PTR in October 2017. There is an inconsistency of approach between the two decisions which I consider to be wrong in principle or a serious procedural irregularity.
- For the reasons set out in Section 7 above, I consider that the judge was wrong in principle to regard the lump sum figure in the original counterclaim as a cap.
- I therefore give the appellant permission to appeal, and I allow the appeal against paragraphs 2 and 3 of the judge’s order dated 25 October 2017. The respondent does not have permission to rely on the new report of Mr Woods dated September 2017.
- In answer to a question from the court, Mr De Gregorio said that such a ruling might spell the end of the Freshwater Road counterclaim. I am unable to form a view about that, although I acknowledge that my ruling is adverse to the respondent’s overall position in the trial. However, I consider that this reflects the overall merits. The appellant has never been at fault. It has made repeated efforts to pin the respondent down on the details of the counterclaim. That that case is still so muddled cannot be blamed on the appellant; it won all the interlocutory battles up to the PTR.
- On the other hand, the respondent has been repeatedly at fault, as the judge’s costs orders show. It has deliberately avoided making any amendments to the counterclaim or the Scott Schedule, and compounded that error by delaying in providing a new quantum report until well beyond the eleventh hour. In those circumstances, the overriding objective requires this court to protect the appellant from irredeemable prejudice.”