CLAIM FOR DAMAGES STRUCK OUT: APPLICATION TO AMEND REFUSED: CLAIMANT FAILED TO USE THEIR LOAF AS CLAIM IS SLICED…

The judgment of Mrs Justice Jefford in The Leicester Bakery (Holdings) Ltd v Ridge And Partners LLP [2020] EWHC 2430 (TCC) shows the necessity of being able to particularise a claim for damages. What it demonstrates is that, in claims for breach of contract,  any claim for damages has to be properly particularised.

THE CASE

The defendants had been engaged as consultants on a building project undertaken by the claimant. The parties parted ways and the defendant terminated the agreement.  After the agreement ended the claimant sought the delivery up of certain documents.  These proceedings were issued for the return of those documents.  Delivery was given by the defendant following an application by the claimant.

THE CLAIMANT’S PLEADED CLAIM FOR DAMAGES

The claim for damages was pleaded in an oblique way.

“The Claimant is currently unable to plead as to what (if any) losses have been suffered as a consequence of the Defendant’s breach of contract and/or breach of fiduciary duty and/or breach of bailment and/or conversion but reserves the right to plead further as to such losses following delivery-up of the Documents and/or disclosure in this action.”

THE DEFENDANT’S APPLICATION TO STRIKE OUT/FOR SUMMARY JUDGMENT

The defendant applied for summary judgment, alternatively to strike out, part of the Particulars of Claim and Reply

THE CLAIMANT’S APPLICATION TO AMEND

The claimant made an application to amend the Particulars to plead a claim for damages.  This claim was put on the basis that the delay in the handing over documents had prejudiced the claimant’s position in relation to an adjudication in respect some of the building works.  The judge found that this was a “wholly new case”.

    1. For ease, I will refer to the draft Amended Particulars of Claim as the Amended Particulars of Claim although permission has not yet been granted to amend.
    2. As I have mentioned, the Amended Particulars of Claim leaves untouched paragraph 10 relating to the staircase adjudication. In fact there are no amendments proposed at all until new and slightly mis-numbered paragraphs 15A to 15G and 16H to 16X (which should obviously be numbered consecutively 15H to 15X) are inserted.
    3. All these paragraphs address causation and loss and damage and what is, in my view, a wholly new case:
(i) Paragraphs 15A to 15C set out that there were delays in the course of the works and that the Contractor sought extensions of time to the dates for Sectional Completion. In support of its application, the Contractor submitted, on or about 11 December 2018, “a critical path report” prepared by Mr Iain Stackhouse. It is said that it was obvious to Mr Stackhouse that any extension of time would deprive the Claimant of the right to claim liquidated damages and would expose the claimant to the risk of having to make payments in respect of extended preliminaries.
(ii) Paragraph 15D pleads that on 15 March 2019, the Contractor commenced an adjudication dealing with delay and extensions of time to the Sectional Completion dates. Paragraph 15E then says that, as a result of the notification of that adjudication, the Claimant wrote to the Defendant “pointing out that the contractor had commenced an adjudication and demanding disclosure of the Documents. The Claimant stated expressly that the Documents were required to deal with the adjudication ….”
(iii) The following paragraphs (15F to 16L) set out the correspondence that followed and the commencement of these proceedings.
(iv) Paragraph 16M alleges that disclosure was given, pursuant to the consent order, on or about 7 May and that that disclosure was “extensive and incomplete”.
(v) Paragraph 16N is then in these terms:

“As a consequence of the failure to disclose documents properly or at all and in a timely fashion in response to the demands made by the Defendant, the Claimant was unable to prepare its evidence to respond to the claims made by the contractor in the March 2019 Adjudication.”

(vi) Paragraph 16O then pleads that as a consequence of the absence of such evidence, the adjudicator gave the extensions of time that he did.
(vii) From paragraph 16Q, the Claimant pleads its case as to loss and damage. The content of paragraphs 16O and 16Q is repeated. It is then said that as a consequence of the extensions of time, the Claimant lost the right to claim liquidated damages of £387,000 in relation to the Main Unit and £292,600 in relation to the Retail Units – a total of £679,600. Further, it is said that the Contractor has submitted a further claim for £500,000 in relation to extended preliminaries “that would not have been necessary but for the Defendant’s unlawful acts”.
(viii) At paragraph 16V, the Claimant claims damages or equitable compensation in a sum of not less than £1,170,600 (which is the total of the sums above).
(ix) At paragraph 16W, the Claimant pleads further or in the alternative, a claim for damages or equitable compensation “for the loss of the chance to succeed in the March 2019 adjudication ….” (my emphasis).
(x) Paragraph 16X the provides:
“The Claimant is currently engaged in an arbitration with the contractor in an attempt to reduce its losses as more particularly set out above. The Claimant will plead further when the result of the arbitration is known.”

STRIKING OUT OR AMENDMENT: WHICH COMES FIRST?

The judge considered the question of which application had to be considered first.  There was no simple answer to this question.
  1. In his skeleton argument, Mr Reid submitted, on behalf of Ridge, that I should hear the summary judgment application first and with no regard to the proposed amendments. Mr Benzie, for Leicester Bakery, in his skeleton argument, submitted the complete opposite. In my view, neither of these rigid approaches would have been appropriate, not least because the summary judgment application was focused on identified paragraphs of the Particulars of Claim. If the amendments were permitted, it might be that some of those paragraphs would then play a different role but, equally, if the amendments were not permitted, it would not necessarily follow that the allegations pleaded in the particular paragraphs would fall away. In other words, these two applications needed to be considered together.
  2. In the event, Mr Reid made his submissions on the application for permission to amend first. His position was firstly that the application was too late and fell at the threshold. Secondly, it was common ground between the parties that an amendment should only be allowed if the applying party has real prospects of success on the matter which is the subject of the amendment and that the test is the same as the test on summary judgment (see SPR North Ltd. v Swiss Post International (UK) Ltd. [2019] EWHC 2004 (Ch) at [5] and the notes to the White Book at paragraph 17.3.6.). Mr Reid’s submission was that the amended claim did not have real prospects of success and that the unamended damages claim was hopeless. Mr Benzie’s argued that the amended claim did have a real prospect of success and that, if permission to amend were allowed, the summary judgment application could not succeed.

CLAIMANT’S APPLICATION TO AMEND REFUSED

The judge refused the claimant’s application to amend its particulars on the grounds that it had no reasonable prospect of success.
  1. Lastly, it is impossible to ignore the fact that the amended claim is sought to be introduced over a year after proceedings were commenced; over a year after the Defendant made plain, and the Claimant agreed, that the claim for damages was founded on an entirely different matter (namely the staircase adjudication); and against the background of the Claimant’s solicitors’ repeated indications that there was nothing left in this action other than making final the interim injunction. In other words, there has been no indication at all that there might be a claim waiting in the wings arising out of the extension of time adjudication and subsequent arbitration, the latter never having being mentioned at all until this application was made.
  2. All these matters must call into question the merits of the Claimant’s case and make it incumbent on the Claimant to provide more than the barest of pleadings. This is not to try the amended claim prematurely or to require evidence to be pleaded. Rather, it emphasises why it cannot be said that there is a coherent legal or factual basis for the claim in the Amended Particulars of Claim and why there is, in fact, just a bare assertion that because the Claimant did not have every document it had requested, it was prejudiced in the adjudication. Mr Benzie emphasised in his submissions that the claim was one framed as one for breach of fiduciary duty but that does obviate the need for a causal link between the breach and any loss and damage.
  3. A further aspect of this paucity of pleading relates to the claim for loss and damage. On the basis that the Claimant has now been able to fully set out its case in the arbitration, the outcome will be that the Contractor is awarded the extensions of time to which it is properly entitled. The amounts that the Claimant cannot then deduct by way of liquidated damages will be the amounts that it is not entitled to deduct. That will have nothing to do with what documents the Defendant may have been obliged to provide or did provide to the Claimant. The same is true in relation to the Contractor’s claim for prolongation costs, assuming that also to be the subject of the arbitration. It would be hopeless to suggest that the alleged failure to comply fully with the Consent Order is causative where that issue has not been raised for over a year and nothing further has been asked for for the purposes of conducting the arbitration. The Amended Particulars of Claim wholly fails to recognise the problems with causation of loss and damage.
  4. Mr Reid pointed out that the Claimant had made a claim for not less than £1,176,600. Mr Reid submitted further that the Claimant had, therefore, pinned its colours to the mast of a claim for not less than that amount so that no lesser claim was open to it. He relies on the fact that the “not less than” wording is repeated twice in the prayer. Although that may be strictly what is claimed, the submission seems to me to give no effect to the draft paragraph 16W, which advances, in the alternative, a claim for loss of a chance, and paragraph 16X, which advertises a revised claim when the outcome of the arbitration is known. But, having said that, neither of these paragraphs gives any indication of what that claim might be. There is no indication of what would have been “success” in the adjudication and, as Mr Reid submitted, in the adjudication, the loss of a chance was the chance to do better which might have reduced the amount payable at that time and avoided some costs of the subsequent arbitration but would not be the amount of the contractor’s contractual entitlement. As I have already said, the outcome of the arbitration should be the actual entitlement of the contractor to time, and perhaps money, and the Claimant’s corresponding entitlement and/or liability.
  5. Mr Benzie submits that there may be some different claim. It may be that there could be some other, as yet unarticulated, claim for interest on monies paid or wasted costs in defending the adjudication or conducting the arbitration – a position referred to briefly in Mr van Gelder’s statement. But that is not sought to be pleaded by amendment and, if it were to be the subject of a future amendment, the particulars of breach and causation would require substantial further amendment to advance such a claim.
  6. In conclusion, in my judgment, the Amended Particulars of Claim does not come close to setting out a case with real prospects of success unless the claim is further elaborated upon very significantly at a later date. That in itself would be a reason to refuse permission to make the amendment but, even if I am wrong about that, I would not allow the amendment for the reasons I address below.

The judge also held that the application to amend was made too late.  Even if she had been persuaded that the amended claim had a real prospect of success she would have refused the application, in the exercise of her discretion.

THE RESULT

The judge struck out/gave summary judgment on the paragraphs that pleaded a claim for damages in relation to the staircase ajudication.