PROVING THINGS 211: PROVING DAMAGES AND CAUSATION: CLAIM £3 MILLION GET £2,000: “A WEAK AND SPECULATIVE CLAIM”

We have already looked once at the judgment of Mr Justice Fraser in Beattie Passive Norse Ltd & Anor v Canham Consulting Ltd [2021] EWHC 1116 (TCC). However given that the claimants were seeking in excess of £3 million and recovered £2,000 there was clearly a major failure to prove damages and this judgment requires a second look. Evidence was missing from the claimants’ witness statements which were said to be “extraordinarily light on significant detail.”

“I consider that this was a weak and speculative claim brought by the claimants. NPS and BPN knew, when it brought this claim, that the foundations as constructed by Foxdown were not the foundations as designed by Canham. This is because that information had been communicated to directors of each of those companies in 2016. Canham put this point firmly in issue in its Defence, and rather than respond to it correctly – even though this was in the knowledge of the claimants – that paragraph of the Defence was said by the claimants in the Reply to be “inadequately particularised”. The claimants therefore attempted to avoid the point. Accordingly, the matter proceeded, and eventually this trial was necessary.”

THE CASE

The claimants and defendant were involved in a construction project. The claimants issued proceeding alleging that breaches of duty by the defendant led to a need for two buildings to be demolished.  The defendant stated that the demolition had nothing to do with any breach of duty it may have committed.  The judge found that there was no causal link between the decision to demolish and any actions by the defendant.  Damages of £2,000 were awarded for a minor degree of remedial work that did happen.

WHEN YOU HAVE PROBLEMS WITH YOUR OWN WITNESSES DON’T, JUST DON’T, DO THIS

The claimants’ response to the shortcomings in their evidence, clearly demonstrated in cross-examination, was – to say the least – extraordinary.

1. 1. The second day on 4 March 2021 saw the oral evidence of fact from Mr Evans of Canham. On 5 March 2021, a non-sitting day, a letter was sent from the claimants’ solicitors directly to the court, addressed to me as the trial judge. In that letter, there was a lengthy explanation to the court addressing certain points that had been made by Mr Higgins in his earlier cross-examination of Mr Hersey and Mr Gawthorpe, together with argument in respect of those points. Some further disclosure was given by the claimants arising out of cross-examination on 3 March 2021, together with submissions based on a contemporaneous email that was produced. This document seemed to be part submission, part quasi-evidence, and part explanation.

1. 1. Such a letter should not have been sent to the court. It was necessary to explain to the parties that I intended simply to ignore it, save and in so far as its contents may be repeated in closing submissions. There is no procedural place for sending such material directly to the trial judge during a trial itself in this way, attempting to meet or explain away evidential points made in cross-examination (which in procedural terms leads to evidence, namely the answers of witnesses to those questions) by way of a letter to the judge. Trials are conducted in open court. Open justice is a very important principle. Evidence is what is contained in witness statements, attested to by a witness, and either agreed by the parties or spoken orally in the witness box. Submissions are usually made at the beginning and the end of trials, and sometimes during the evidence, depending upon events. They are not, and cannot sensibly be, made uninvited directly in writing to the judge in letter form during the trial itself in the way adopted in this case. No further evidence of fact was adduced by the claimants after the day when Mr Hersey and Mr Gawthorpe were cross-examined. There was no additional evidence adduced by the claimants to correct what had been said. There were no exceptional circumstances that would have justified giving permission to allow this after Mr Evans of Canham had given his evidence, but whether there were or not, no application was made to call further factual evidence. For what it is worth, it is difficult to see what could have justified such an application in any event.

1. I make the following observation. It may have been the case, after Mr Evans of Canham had been cross-examined, that either Mr Hersey and/or Mr Gawthorpe came to the conclusion that they wished their own evidence had been different, or more comprehensive. I do not know if that is what transpired or not, but if that were the case, it might explain the letter sent to the court to which I have referred at [20] above. Given the conclusions that I draw about the evidence of each of those gentlemen, that is, at the least, a realistic possibility. In some cases, a skilled cross-examiner (which Mr Higgins undoubtedly is) may elicit evidence during a trial that a party had not expected would emerge at all. To use a phrase from Lewison LJ in FAGE UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5 “the trial is not a dress rehearsal. It is the first and last night of the show.” Given the central issues in this trial of causation and the decision to demolish, each of Mr Hersey and Mr Gawthorpe may, after their cross-examination, have wished that they had properly and more fully dealt with these central issues in their evidence. That regret, however, does not justify sending a letter such as this to the trial judge.

THE SHORTCOMINGS IN THE CLAIMANTS’ EVIDENCE

That there were difficulties with the claimants’ evidence was clear from the outset of the case.

“… the evidence of fact upon which both claimant companies relied was that given by Mr Hersey and Mr Gawthorpe. Their witness statements – which as is well known, stand as their evidence in chief – were extraordinarily light on significant detail. I deal further with their evidence in Part D below.”

THE JUDGE’S ASSESSMENT OF THE WITNESSES

The judgment’s assessment of the witnesses, in particular the absence, of key evidence is telling.

1. 1. In advance of hearing any evidence from actual witnesses, all that the court has available to it is the written witness statements from those individuals whom each party intends to call. Sometimes not all the intended witnesses of fact are called, and in those circumstances, if one has pre-read the witness statements (which has almost invariably taken place) the judge will simply put out of his or her mind the contents of any statements of witnesses who are not called (unless that evidence is agreed). This occurred in this case, and not all the witnesses who had served statements were called at the trial. I shall therefore only deal with the witnesses who were, in fact, called at the trial by either party.

1. 1. Mr Hersey is the Chief Operating Officer (Consulting) of Norse Group Ltd (“Norse Group”). That company is not a claimant. Norse is the sole shareholder and parent of NPS, the second claimant, and a joint shareholder of BPN, the first claimant. Mr Hersey explained that he had been told by the Norse finance department that all of the invoices issued by Canham were paid either by NPS “through the Norse bank account” or from the NPS bank account. He also stated in his witness statement (although he did not provide the source of this knowledge) that “up to June 2015 there was only one bank account for Norse and all subsidiary companies” (emphasis added). This is an odd state of affairs, given limited companies are distinct and separate legal entities. Even on Mr Hersey’s own evidence, some of the invoices were paid through the Norse bank account, and not from the bank account of NPS. I do not know, and it was not explained, why this collection of different companies should have organised their business affairs in this way. However, in my judgment it does not matter. It reinforces (if reinforcement were necessary) that the fact that NPS paid Canham’s invoices does not impact upon the conclusion that Canham did not owe NPS a duty of care. The initial invoices were addressed to BPN and it is accepted that Canham and BPN had a contractual arrangement.

1. 1. On the important question of why, and how, Foxdown had come to construct the foundations to a design other than that contained in Revision B of the drawings in 2014, Mr Hersey proved himself remarkably lacking in any curiosity or interest whatsoever. Emails either sent, or copied, to him at the time in 2015 and 2016 showed that this must have been because Foxdown was not given the Revision B drawings. The earlier Revision A drawings, stamped received and issued for construction to Foxdown, are crucial evidence on what is an obvious and central point. Any claim for damages for negligent design ought, one would have thought, to have at least considered whether that allegedly negligent design was the one actually constructed. Yet even though Mr Hersey was told that Foxdown had constructed to the Revision A design (rather than the more robust Revision B design), he seemed somewhat unconcerned and/or disinterested. This lack of concern and disinterest was both at the time in 2015/2016, and when he prepared his witness statement, and also when he was giving evidence from the witness box in court. I doubt that it came as a surprise to him that the reason this had happened was because Foxdown had the earlier Revision A drawings issued to it for construction. Indeed, he must have known that this was the reason. Given the demolition of Blocks A and B led to further expenditure on the construction project measured in millions of pounds, one would have expected far more from Mr Hersey in this respect in terms of investigating, dealing with, and providing, at least some (or, indeed, any) cogent evidence about how this came to occur. The Revision B design of the foundations prepared by Canham was simply not the design of the foundations that were in fact constructed by Foxdown. However, there was no such evidence from Mr Hersey at all. Even when he was asked about it, his answers were extremely limited.

1. 1. Mr Hersey had failed even to ask Mr Ron Beattie, a co-director of his, how it was that Foxdown (under the contractual relationship it had with Beattie Construction, another company of which Mr Beattie was a director) had come to construct the foundations to the design contained on the Revision A drawings, and not to the Revision B design. The foundations on Revision B were far more substantial, and had very different dimensions. Mr Hersey also could not say whether anyone else had asked Mr Beattie about this either. His actual answer was:

“Personally, I didn’t [ask Mr Beattie]. I honestly cannot recall whether anybody else in our organisation may or may not have tried.”

1. 1. This behaviour is inexplicable, in the correct meaning of that word. I deal with this further in Part G of this judgment, dealing with causation and the decision to demolish.

1. 1. Another point of considerable note is his failure to address, in any meaningful respect, in his witness statement the fact that Beattie Construction was replaced as the contractor. All that was said by Mr Hersey in his witness statement was: “at this point in time, the main contractor’s (Beattie Passive Construction Ltd (“BPC”)) employment had been terminated and, in BPC’s place, RG Carter Ltd were carrying out the works”. That is, in my judgment, an inadequate way to deal with such a major incident on any construction project, but particularly so here where one of the claimant companies, and the main contractor having their engagement terminated, shared a director, and where the contemporaneous documents showed that the works performed by Beattie Construction were so defective. These are telling omissions in the claimants’ evidence of fact. Anyone with any experience of the construction industry would readily accept that terminating the employment of the main contractor on a project is a rather significant event. It is particularly significant if the work that main contractor had performed, prior to termination, proved to be so substantially defective. Giving that topic all of one limited sentence is, again, inexplicable.

1. 1. I was not particularly impressed with Mr Hersey as a witness. He retreated behind advice given to him (and/or to NPS) by Birketts Solicitors at an extraordinarily early stage in his cross-examination. Such advice is, of course, privileged, and Mr Higgins quite properly did not seek to explore it, but when the decision to demolish – which is such an obviously central part of the claim against Canham – was being considered, far more is required (both in law, and evidentially) than that this was done after advice was taken from solicitors. The burden is upon the claimants (or BPN, given I have found that there is no proper basis for any claim by NPS) to demonstrate that demolition was caused by the breaches of duty on the part of Canham, and also that it was reasonable. In my judgment, Mr Hersey failed to achieve either of these essential evidential building blocks of the case.

1. 1. Indeed, I was left with the impression that Mr Hersey was being extremely careful with his answers in some areas, in order to avoid any answers that could expose him to uncomfortable further questioning. However, he did make one important concession in respect of Block B. This was that the decision to demolish it was not due to failures in respect of its foundations. This was accepted by Mr Hersey in his oral evidence concerning Block B:

Q. So just so we are absolutely clear, nothing in relation to the substructure then — once those investigations had concluded, there were no issues with the substructure which necessitated the demolition of block B because the pads were fine, the dowels had been retrospectively fitted or were being retrospectively fitted when the decision was taken?

A. Yes.

1. 1. This is also consistent with the expert opinion of Mr Owain Evans (the defendant’s structural engineering expert) in respect of the localised remedial works that were commenced, which he considered would have cured the problems with the Block B foundations, namely the retro-fitting of dowels. These connected the beams and the pads. They had been missed from the design by Canham (on both the Revision A and Revision B drawings), but this could be remedied by post-construction installation. These remedial works were actually underway at Block B when the decision to demolish it was taken. This expert evidence by Mr Owain Evans is substantiated by the answer given by Mr Hersey above.

1. 1. Another point not in the claimants’ favour was that Mr Hersey accepted there were serious flaws with Block B not connected with the foundations, although this acceptance was not entirely forthcoming when he was first asked about it.

Q. Mr Hersey, having established that there were no problems with the foundation to Block B, you mentioned after you were describing to his Lordship the other problems on Block B that it was structurally moving, was it not?

A. Yes.

Q. That was the superstructure moving and just so that we are clear you are not suggesting and have never suggested that that movement had anything to do with the foundations, are you?

A. I think from my perspective I was just relying on our consultant engineers’ advice as to what the issue was.

Q. But nobody has suggested to you that the movement in the superstructure, which necessitated Block B’s demolition, had anything to do with the foundations?

A. Not directly, no.

Q. Or indirectly?

A. No. The only thing I would say is that in my mind I was keen to exhaust what parts of the structure or the superstructure or the substructure to make sure that we fully understood what may be the contributory factors to the movement myself.

MR JUSTICE FRASER: Having done that, would you like to put your question again?

MR HIGGINS: Yes. (To the witness): Having done that, you were quite happy that none of those issues were related to the foundations?

A. That’s correct.

1. 1. This shows that these other serious problems were nothing to do with any breaches on the part of Canham. Again, this is consistent with the evidence of Mr Owain Evans, which was that although there were defects with the foundations of Block B caused by negligence on the part of Canham, these defects were not particularly serious and did not of themselves justify demolition.

1. 1. The second witness of fact for the claimants was Mr Gawthorpe. He is a director of BPN. In his witness statement he had said that he agreed with Mr Hersey and sought to supplement and not repeat the issues that he had dealt with. Perhaps that was seen as justifying a witness statement containing an extraordinary lack of detail, which is what his written evidence constituted. He had included but a single sentence explaining that Beattie Construction’s engagement had been terminated. All that he had said in his statement was:

“On 27 August 2015, BPN served a notice on the Contractor terminating its employment under the Building Contract. This letter was sent from me, as director of BPN”.

1. 1. Nothing was provided in his statement either about the reasons for this termination of Beattie Construction, or the very widespread incidence of construction defects that could not possibly be laid at the door of Canham. Nothing was stated in respect of the assertion by Canham (which had been clearly pleaded in the Defence) that Foxdown had not constructed the foundations as designed, either. Where causation is so fundamentally in issue, this is somewhat surprising.

1. 1. Again, as with Mr Hersey, a heading was included in the statement that asked “What informed the Claimants’ decision to demolish Blocks A and B, what additional issues, workmanship or otherwise, were encountered in the construction of the blocks, and did they contribute to the decision to demolish?” (emphasis added). However, the emphasised phrase in that heading/question was a subject then almost completely avoided by Mr Gawthorpe in his witness statement. He entirely omitted any reference to the defects present in the construction that must have been the responsibility of Beattie Construction, and which were certainly not the responsibility of Canham. These were widespread, as shown in a great many of the contemporaneous documents.

1. 1. There was therefore no reference in the text of the statement itself either to the lack of adequate quality of the works performed by Beattie Construction, or even the pleaded averment in paragraph 31(2) of the Reply that Beattie Construction had itself suspended its works prior the termination. Due to the clause in the JCT contract relied upon by Beattie Construction, that suspension was probably due to non-payment. The reasons for that non-payment were not addressed in any evidence from the claimant at all.

1. 1. Mr Gawthorpe also deployed a technique in answering questions in cross-examination which was to rely upon the fact that, as he put it, he “couldn’t categorically say”. Of course, some allowance has to be made for people being cross-examined, who have given an oath or affirmation to tell the truth, the whole truth and nothing but the truth, and who may not be fully comfortable in the unusual setting of a court room. However, even making those allowances, I consider that Mr Gawthorpe was using this device to avoid answering uncomfortable questions.

1. 1. The closing part of his cross-examination was as follows. Having put to Mr Gawthorpe the very considerable list of construction defects that were undoubtedly the fault of Beattie Construction, and nothing to do with the foundations, Mr Higgins turned to the issue of Foxdown constructing the foundations to the earlier, superseded design in Revision A which had been issued to it, rather than the later Revision B drawings with quite different depths and dimensions.

Q. And so when you learned on 18^th April 2016 that in addition to this catalogue of errors somebody had failed to send Foxdown the correct construction drawings, you knew perfectly well who was to blame for that, did you not?

A. No.

Q. That is why you did not have to make any enquiries and you did not have to email anybody, did not have to instruct Birketts, for example, did not have to make any enquiries of anybody other than Ron Beattie because you knew that Ron Beattie, who was responsible for this catalogue of errors, was the obvious person who, in addition to everything else, had dropped the ball over the drawings being issued to Foxdown, was he not?

A. Are you suggesting that Canham Consulting hadn’t issued the drawings to Foxdown direct and they were issuing them through somebody else?

Q. That is exactly what I am suggesting. It is a matter of record that, as one would expect, Canham issued drawings to Ron Beattie and Benedict Binns, who were both of Beattie Passive, were they not?

A. Yes.

Q. Yes. And so you knew as early as this, April 2016, that, in fact, the reason these pads had been constructed so shallowly had absolutely nothing to do with anybody misinterpreting Canham’s drawings. You knew, did you not, that the whole thing was because Ron Beattie and Benedict Binns had failed to issue Foxdown with the right drawings in the first place?

A. I can’t categorically say.

Q. So when it is suggested in this court on your behalf, Mr Gawthorpe, as it has been, that that is the reason why these foundations were built so poorly, that it was because somebody was misunderstanding Canham’s correct drawings, you knew that the real reason is that Foxdown were not using the right drawings, did you not?

A. I can’t categorically say that.

Q. Well, I am suggesting to you that that is the case, but whether you can categorically say it or not, it strikes me, if I may say so, as a rather surprising answer. Are you denying that you did not know that that was the real reason why these pads had been constructed so shallowly and, if so, why did you not know that?

A. Can you repeat that question?

Q. Are you suggesting that you did not know at this stage that the real reason these pads had been constructed so shallowly was that Foxdown had issued the wrong drawings?

A. Have we got — I would need to look back and to look at the drawing issues from Canhams, because there were a couple of revisions of these, weren’t there?

Q. Two.

A. Yes, that’s right, so I’m not sure in my mind of where the dates are for Revision A and Revision B. So that’s why I don’t feel as though I can comfortably say what you want me to say.

1. 1. That was the end of the cross-examination. Because it was such an important point, I asked Mr Gawthorpe what he knew about what drawings or information had been provided to Foxdown. He said:

“To be honest, I don’t know exactly what was provided to Foxdown directly myself. I would only be able to maybe look at the drawing register.”

1. 1. This shows a remarkable lack of interest on his part concerning any of the evidential features, or basis, of causation in the claim brought by BPN against Canham. Mr Gawthorpe’s response to Mr Higgins above where he asked counsel “are you suggesting that Canham Consulting hadn’t issued the drawings to Foxdown direct and they were issuing them through somebody else?” also shows a lack of awareness of how construction projects are ordinarily administered. Canham were engaged by BPN, and issued their drawings both to the architect (also engaged by BPN) and to BPN itself. It was not Canham’s responsibility either to issue information to Foxdown, or to supervise Foxdown’s work in constructing the foundations to the design prepared by Canham. Mr Gawthorpe’s evidence (and indeed the whole way the case is framed against Canham) seems to assume that because Canham designed the foundations, they were strictly responsible for everything to do with the foundations, including how they were constructed by Foxdown, and (where, as here, when constructed to the earlier superseded version of the design) the consequences of that.

1. 1. I find that Foxdown constructed the foundations to the earlier, superseded design in the Revision A drawings, and not to the design as it was intended by Canham to be constructed which was contained in Revision B. The reason for Foxdown doing so was because Beattie Construction (and/or the architect) did not forward to Foxdown the Revision B drawings, and instead issued Foxdown the Revision A versions which were stated to be “for construction”. There is nothing in the documents to suggest that Foxdown were at fault in terms of constructing to the Revision A version. Foxdown did what it was instructed to do. This was clear from the contemporaneous documents, and also from the factual evidence of Mr Hersey and Mr Gawthorpe.

1. 1. I also find that in 2016, after Beattie Construction’s contractual involvement in the project had been terminated by the letter from BPN (sent by Mr Gawthorpe), BPN were notified of a range of problems with the structures of both Blocks A and B. The overwhelming majority of these defects were structural and construction defects that could not have been, and were not, the fault of Canham. BPN was also notified by RG Carter, amongst others, that the wrong, earlier version of the design for the foundations had been used for construction by Foxdown. In an email of 18 April 2016 from RG Carter this was made clear. This email states:

“Please see the attached from Foxdown, sent last week.

We noticed on site on Friday with Rowland Smith from Carter that these are not the latest revisions of these drawings but are the ones issued to Foxdown for construction“.

(emphasis added)

1. 1. This email was forwarded on, with another email, by the architect on the same date. The addressee was Mr Evans of Canham, but both Mr Hersey and Mr Gawthorpe were copied in to it. Both Mr Hersey and Mr Gawthorpe have therefore known since April 2016 that Foxdown used the wrong drawings to construct the foundations. The forwarded email stated:

“Nigel

You need to be aware that pad foundations do not appear to have been constructed in accordance with your latest drawings 610 Rev.B…..”

1. 1. From that date, both Mr Hersey and Mr Gawthorpe clearly knew, on the face of the contemporaneous documents themselves, that Foxdown had constructed the foundations of both Blocks A and B to the earlier, superseded design in the Revision A drawings, and not to the design contained in the Revision B drawings prepared by Canham and sent to Beattie Construction. Notwithstanding this, the Particulars of Claim that were served entirely omitted this important fact. The point was then clearly raised in paragraph 11.9 of the Defence, which stated the following:

“The Defendant will say that its foundation design would have been perfectly adequate for the loads and bearing pressures applied, had all the foundations been constructed in accordance with that design. As the Claimants well knew, they were not”.

1. • This important point in the Defence was neither denied nor admitted by the claimants. Instead, the Reply at paragraph 17 stated:

“The allegations made in paragraph 11.9 are unparticularised…..”

1. 1. I consider the failure by each of the claimants, of whom both Mr Hersey and Mr Gawthorpe are directors respectively, to admit the point raised in paragraph 11.9 of the Defence to be somewhat marked. Each of them must bear responsibility for that. The clear assertion is made that the foundations were not constructed as designed by Canham. That point was actually known by each of those directors, based on what they had been told in emails in 2016 into which they were copied, to be true. Yet it was swerved in the Reply, which stated that it was “unparticularised”. It plainly should have been admitted. Other than that, Mr Gawthorpe’s evidence suffered from the same lack of depth as that of Mr Hersey, and I find it was unreliable. I could not rely upon the factual evidence generally adduced by the claimants to any appreciable respect.