PROVING THINGS 221: THE COURT WILL NOT SPECULATE

In Hirst & Anor v Dunbar & Ors [2022] EWHC 41 (TCC)  Mr Justice Eyre highlighted the need for a claimant to prove losses, and expenditure, the court will not speculate on items relating to expenditure.

 

“In my judgement the deficiencies of the material provided by the Claimants and of the evidence as to the work done mean that any attempt to assess the reasonable value of the Works would come perilously close to speculation”

THE CASE

The claimant brought an action claiming sums allegedly due for construction work done. The claim was for £474,861.  The action failed on the basis of limitation, and the works being outside the contract. However the judge considered what sums would have been awarded.

THE JUDGMENT IN RELATION TO DAMAGES

The judge highlighted the deficiencies in the claimants’ evidence and stated that, if the action had succeeded, a much smaller sum would have been awarded (and that figure arrived at reluctantly).

    1. In the light of my earlier conclusions I will deal only briefly with this question. Although the parties broke this aspect of the dispute down into a number of sub-issues it can be boiled down to the question of what is a reasonable sum in respect of labour and materials for the Works.
    1. Typically the court would approach that question by establishing the work performed and determining in the light of expert evidence the value of that work. The prime difficulty in attempting that exercise here is the absence both of any initial agreed scope of works document and of any final identification of the work which had been performed. That difficulty is compounded by the facts that the Claimants did not start work from scratch but were completing a development which had been started by others and where the houses and flats were partially constructed. Moreover, not all the work on developing the Site was performed by the Claimants even after the start of the Works. It follows that it is not possible with any confidence to identify either what work the Claimants should have done or that which was in fact done let alone to attribute any value to it. There is very considerable force in Mr. Bowdery’s closing submission that “the Claimants only carried out a fraction of the works and the size of that fraction can neither be estimated nor costed.”
    1. Instead of providing the core documents which would normally be relied upon in a case such as this the Claimants have provided a quantity of documents showing expenditure and which are said to be attributable to the Works. Those documents are in a markedly unsatisfactory state with the difficulties of interpretation and correlation compounded by the use of paperwork in respect of companies other than the Second Claimant.
    1. The Claimant’s expert, Ryan Greening, described some of those difficulties in his initial report. Thus at 5.2.3 he said:
“In my opinion I do not consider it possible to provide any alternative assessment based on a notional reasonable value for the following reasons:
a. It is clear that Hirst was not the only contractor working on the site and there is no clear distinction as to the works performed by Hirst and the works performed by others. It is, therefore, practically impossible to differentiate the Hirst works.
b. The scope of works performed is at best loosely defined and evidenced.…
c. There is almost no factual evidence of the works that were required to the houses.… In any event in my opinion pricing the schedule is problematic as there is no evidence of the state and/or condition of the properties prior to Hirst’s commencement and the schedule is so bland in its descriptions that it is simply not possible to determine the works that are actually required in order to price the described items.
d.… There are no doubt other examples which effectively make it impossible to ascertain the scope of the works that was actually undertaken, or the order in which the works were undertaken. In my opinion this means that it is impossible to quantify and rate the works performed.
f. Invariably on completion projects like this there will be an element of reworking of works performed by others either because those works were incorrectly performed, or because the works were performed in the wrong sequence and need to be removed to allow something else to take place. There is limited evidence of the works actually performed and hence identifying the extent of these reworks is practically impossible.”
    1. Faced with those difficulties Mr. Greening approached the valuation exercise by comparing the sums said to have been incurred by the Claimants with the estimated costs set out in the Feasibility Pack. He concluded that the latter provided evidence of the works performed and also of the reasonableness of the sums asserted by the Claimants because those sums were lower than each of the estimated costings set out in the pack.
    1. For the Defendants Simon Hall pointed out that in the documents provided by the Claimants:
“there are no construction drawings, specifications meeting minutes or reports in sufficient detail to provide clarification of the extent, or programming, of the Project Work. The Claimant’s Disclosure Documents are a mix of invoices, delivery notes, timesheets and expense claims.”
    1. Mr. Hall “undertook a thorough review of the invoices, delivery notes and timesheets in an attempt to understand the works and their associated broad timeline”. Having undertaken that exercise he concluded that the only conclusion he could reach as to a reasonable sum in respect of the costs incurred was as to the sum of £99,310.10 as opposed to the figure of £447,773.42 advanced by the Claimants.
    1. The Claimants disclosed further documents and the experts had discussions resulting in a joint statement setting out their separate views.
    1. Mr. Greening came to a revised figure of £474,861 albeit after having expressed, inter alia, the following reservations:
“4.2.10 it would have been preferable for the Claimant to have evidenced its payments by way of accounting records linking the payment to a specific invoice/application. Unfortunately, this information either is not available or has not been provided and hence it is impossible precisely to link a particular payment to a particular invoice and hence a particular claim within the Final Account. A particular issue with the way the information has been presented is there is no evidence of the tax status of each subcontractor so it is not known which would be the subject of tax deductions. It is therefore not possible to know what amount should have been paid to each subcontractor to pay the provided invoices in full.
4.2.17 in my opinion there is simply insufficient evidence available to enable me to untangle the payments and/or set off amounts in order to provide an opinion upon the reasonable value which should be associated with this Project.”
    1. Mr. Hall regarded the further material as unhelpful. He said that the payment evidence provided “[did] not evidence that payment had been made by the Claimants for the Works” and that the material provided clouded matters further. Mr. Hall was very much influenced by the use of paperwork from different companies; by different formulations of the trading style “Thirteen Twenty”; by the difficulty he found in being confident that the reference “1170” actually related to work on the Site by the Second Claimant; and by the difficulty in showing that the Claimants had in fact repaid Hurst Stores and Interiors Ltd for the payments that company had made. As a result he concluded that his previous figure of £99,310 had been overly generous and that there was no sum which could safely be attributed to the Works.
    1. The burden is on the Claimants to establish on the balance of probabilities the reasonable value of labour and materials and it is not for the court to speculate about figures. The approach initially adopted by Mr. Greening of a comparison with the figures in the Feasibility Pack was inevitably at a high level of generality. Moreover, it is not possible to be confident that the exercise was comparing like with like (indeed the better view would appear to be that the work performed by the Claimants represented an unascertainable part of the work to which the estimates in the Feasibility Pack relate). Similarly his more recent assessment appears to involve a substantial acceptance of the Claimants’ figures in circumstances where they do not speak for themselves and where his acceptance of the reasonableness of the figures appears still to be ultimately dependent on the comparison with the figures in the Feasibility Pack. Conversely, Mr. Hall’s conclusion that no figure can safely be attached to the Works was the result of an unduly severe approach to the documentation. I am satisfied that the sundry documents using different company names and different versions of the trading style but making reference to job no 1170 were intended to relate to the Second Claimant and to the Works.
  1. In my judgement the deficiencies of the material provided by the Claimants and of the evidence as to the work done mean that any attempt to assess the reasonable value of the Works would come perilously close to speculation. There is considerable force in the contention that the burden being on them the Claimants have failed to show that any sum would be due and that they are in that regard the authors of their own misfortune by reason of the deficiencies of their paperwork. However, there is no dispute that substantial works were performed by the Claimants at the Site and that fact cannot be disregarded. If I had found that the Claimants were entitled to payment I would have concluded that the only sum which could safely be found to have related to the Works would be the figure of £99,310.10 which Mr. Hall had originally been prepared to accept as having been shown to be so related. With some hesitation I would also have found that on the balance of probabilities the Claimants had shown that such amount represented a reasonable sum for labour and materials expended in the Works but no greater sum would have been awarded.