Professional Negligence Claim Survives Partial Strike-Out Despite Procedural Deficiencies | Limited Relief From Sanctions Granted

CARRINGTON V AMERICAN INTERNATIONAL GROUP UK LIMITED [2025] EWHC 1010 (TCC)

In Carrington v American International Group UK Limited [2025] EWHC 1010 (TCC) the claimant sought substantial damages of approximately £800,800 against the defendant for alleged deficiencies in construction design and contract administration. The court considered multiple procedural and substantive costs issues, including the claimant’s repeated failures to properly particularise her claim. HHJ Stephen Davies granted relief from sanctions, allowing the primary claim to proceed, while striking out an alternative claim for inadequate pleading. The court ordered the claimant to pay the defendant’s costs of amendments and previous hearings pursuant to paragraph 2 of the 11/10/24 order. The judge noted the defendant would retain the opportunity to seek recovery of costs incurred due to the claimant obtaining relief from sanctions. Importantly, the court emphasised that any further significant non-compliance would have severe cost consequences, reflecting the substantial judicial time and resources expended in managing the proceedings. The ruling permits the case to proceed to trial with a revised pleading, subject to the claimant making specified amendments within 14 days and potential cost penalties.

In the circumstances, whilst the background of delay and previous failure to do so and to comply is extremely unsatisfactory and, in particular in relation to the second non-compliance, worthy of strong condemnation, in my judgment it is plain that on an application of the overriding objective the amendments ought to be allowed so that the case can be determined on the merits at trial. It is worth noting, as Mr Newman has emphasised, that the case is heavily documented in terms of contemporaneous documentation and, thus, there is relatively little scope for heavily contested evidence on key issues which cannot fairly be determined by reference to such documentation and to the expert evidence, which has already been obtained by both parties in relation to the key issue of liability and where there are contemporaneous reports in relation to the nature, extent and valuation of the work done and the remaining and remedial works alleged by the Claimant.

Citations

Keating on Construction Contracts (12th edition) Establishes that a claimant may recover losses flowing from an inability to fund/remediate construction defects, provided these losses are clearly pleaded and causally linked to breaches of duty by a construction professional. Lendlease Construction (Europe) Ltd v Aecom Ltd [2023] EWHC 2620 (TCC) Confirmed that a designer engaged to supervise or inspect construction works has a continuing duty to review design information if circumstances arise necessitating or prudently requiring such review. New Islington and Hackney Housing Association Ltd v Pollard Thomas and Edwards Ltd [2001] BLR 74 (TCC) Held that a designer with a supervision or inspection role is under a general obligation to review their design during construction until it has been completed, subject always to the terms of the contract. Oxford Architects Partnership v Cheltenham Ladies College [2006] EWHC 3156 (TCC) Clarified that a failure to review a design during construction constitutes a separate cause of action from a failure to provide a proper design initially, with each accruing at different times. Bolitho v City and Hackney Health Authority [1998] AC 232 (HL) Confirmed that in evaluating causation, a defendant cannot escape liability by asserting they would have acted incompetently even if they had performed their duties; causation is judged by what competent conduct required. Coudert Brothers v Normans Bay Ltd [2003] EWCA Civ 215 Established that a defendant cannot rely on a hypothetical further breach postulated to have occurred to defeat causation; damages must be assessed assuming proper professional conduct. Fairchild v Glenhaven Funeral Services Ltd [2002] UKHL 22, [2003] 1 AC 32 Recognised that causation in law involves evaluative judgment, not mere scientific analysis, particularly where multiple potential causes of damage exist. Chappel v Hart [1999] HCA 55; (1998) 195 CLR 232 Affirmed that courts may approach causation flexibly, holding defendants responsible where their actions materially contributed to harm, even in complex causal scenarios. Department of National Heritage v Steensen Varming Mulcahy (1998) 60 Con LR 31 (TCC) Applied a practical causation test in construction claims, requiring that a breach must materially contribute to the loss, assessed by the standards of the construction industry rather than strict philosophical logic. Marcan Shipping (London) Ltd v Kefalas [2007] EWCA Civ 463 Confirmed that courts may grant relief from sanctions without a formal application in exceptional circumstances where justice so requires. Denton v TH White Ltd [2014] EWCA Civ 906 Set out the three-stage test for granting relief from sanctions: assessing seriousness and significance, reasons for the default, and all the circumstances with particular regard to efficient conduct of litigation and compliance with court orders.

Track allocation housing disrepair CPR 46.13 settlement sum costs restriction SCCO

MRO fee markup cap 25% detailed assessment personal injury Senior Courts Costs Office

Security for costs refused CPR 25.27 very high probability success excessive estimate King's Bench

IPEC scale costs transfer Patents Court PD 30 para 9.2 costs caps Court of Appeal

Costs budget variation CPR 3.15A promptness significant development unfair prejudice Chancery Division

Costs budgeting inter partes proportionality high hourly rates AI disclosure Patents Court CPR 3E

Beneficiary personal liability section 71(3) Solicitors Act 1974 indemnity costs VAT self-supply SCCO

Summary assessment indemnity costs unless order payment on account disclosure default Chancery Division

Provisional assessment set aside CPR 3.1(7) points of dispute filing duty PD 47 para 14.3 SCCO

Fixed recoverable costs police claims CPR 26.9(10)(e) intentional tort exemption

Key Points

Where a party’s failure to comply substantially with an unless order results in a strike-out sanction, the defaulting party must apply for and obtain relief from sanctions; otherwise, the default takes automatic effect. [122, 124]
Relief from sanctions may be granted without a formal application, but only in exceptional circumstances, and the court must assess the seriousness and significance of the breach, the reason for the breach, and all the circumstances of the case, applying the Denton three-stage approach. [126–130]
Even where a breach is serious and significant with no good reason, relief from sanctions may be granted if striking out the whole claim would be disproportionate, particularly where the non-compliant aspect of the pleading can be severed without prejudicing the fair conduct of the litigation. [135–137]
Prior costs sanctions imposed for earlier breaches may be taken into account when considering whether further sanctions are proportionate under CPR 3.9, but they do not override the need to consider the overriding objective and the interests of justice. [139]
A party obtaining relief from sanctions may still be liable for the costs occasioned by its breach, and the opposing party may seek costs to reflect the impact of the non-compliance and the subsequent need for additional applications or hearings. [140]

“In my judgment it would in all the circumstances be disproportionate to strike out a claim, which has now been properly pleaded and which has survived a heavily contested strike-out / summary judgment application, only because the Claimant also pleaded a non-compliant claim which is now the subject of strike out. I accept that the Claimant may count herself lucky in this respect. However, I am entitled and do have regard to the fact that the Claimant is a private individual in poor health and of modest means who, if she is right, has suffered badly due to the breach of Godfrey, as the construction professional on whom she placed reliance. Whilst I must also counter-balance Mr Godfrey's own age, he is not the subject of any direct claim which will, if valid, be met by insurers alone. It must also be noted that the Architects Registration Board did conduct an investigation into the Claimant's complaints against Mr Godfrey and, in a detailed decision made on 9 June 2020, concluded that there was a case to answer in relation to many of them, including those relevant to this claim. As I understand it, the only reason these disciplinary proceedings did not proceed further was due to Mr Godfrey's retirement from practice.”

Key Findings In The Case

The Claimant’s Amended Particulars of Claim substantially complied with the requirements set out in the unless order dated 11 October 2024, except in respect of the pleaded case on alleged failure to inspect and certify, which remained fundamentally non-compliant and was struck out [122].
Relief from sanctions was granted to the Claimant in respect of the partial non-compliance with the unless order, despite the seriousness and significance of the breach and the absence of good reason, because striking out the entire claim would have been disproportionate given the severable nature of the compliant and non-compliant parts [135–137].
The allegation that the Defendant owed, and breached, a duty to review the construction information during the build was found to have a real prospect of success; the Judge rejected the submission that a duty to review could only arise where full design information had initially been provided [72–80].
The Judge held that causation in professional negligence cases, such as the alleged failure to review construction information here, is to be assessed by what the Defendant ought to have done (not what they would have done), and that the Claimant’s pleaded case on causation therefore had a real prospect of success [82–90].
The Judge struck out the Claimant’s pleaded alternative claim based on alleged failure to inspect and certify, holding that the claim as framed did not properly plead a causative link between the alleged breaches and the pleaded losses and therefore had no real prospect of success [106–112].

"Although the Claimant may be criticised for not having made an application for relief from sanctions, this factor is in my judgment offset by the fact that this point has, as I have said, assumed far greater importance in the course of the hearing than it did before, especially in the absence of any application for an order for judgment pursuant to the unless order from the Defendant and, perhaps more substantially, the absence of this as a specified standalone basis for saying that the unless order has come into effect regardless of the other matters relied upon. It may also be observed that where there is a contested hearing in a case such as this, where the complainant is applying for separate relief as well as alleging that the defaulting party is in breach of an unless order for unparticularised reasons, it is rather difficult for the defaulting party to do any more than make an application saying that if and to the extent that they are in breach they seek relief from sanctions."

Background

Since before 2010, the Claimant, Miss Michele Carrington, has been the owner of a house at 46 Thatcher Avenue, Torquay, Devon. The house is a two-storey dwelling located adjacent to the sea overlooking Torbay. Over the years, Carrington has experienced significant medical conditions, rendering her largely housebound, although she has been able to live independently with the assistance of a full-time live-in carer.

In 2010, Carrington retained Mr Godfrey, an architect, surveyor, and contract administrator, operating through two companies: Godfrey Partnership Limited (GPL) and Godfreys Architects and Surveyors Limited (GAS). Though GAS had dissolved by the time proceedings were initiated, GPL was dissolved thereafter. Initially, GPL was the First Defendant, with American International Group UK Limited (AIG) sued as the professional indemnity insurer of GAS under the Third Parties (Rights against Insurers) Act 2010. Following GPL’s dissolution, AIG became the sole Defendant.

In 2010, Carrington accepted a proposal from Godfrey to provide professional services to extend and refurbish her property. The agreed services encompassed full architectural, surveying, and contract administration over the entire project life (RIBA stages A to L). Under a JCT Minor Works contract (JCT MWC), Ease Development Services Limited (Ease) was appointed for a contract sum of £231,425.21 plus VAT. The works began in May 2012, but multiple issues ensued, leading to Godfrey’s cessation of services and Ease’s termination of the contract in mid-2013. The Claimant contends that very little work was done and that what was done was defective, necessitating substantial remediation which she could not afford.

The claim was filed in November 2022 and has encountered significant procedural challenges, largely due to Carrington’s failure to plead her case with sufficient specificity and detail concerning breaches of duty, causation, and limitation defenses. Despite multiple amendments, strike-out applications, and directions for adequate particulars, the Defendant persisted that Carrington had not met the required standard in her pleadings.

Costs Issues Before the Court

The court was tasked with determining whether the amended particulars of claim served by Carrington complied with the court’s previous orders and whether those amendments allowed the case to progress or justified a strike-out application. The Defendant’s strike-out or summary judgment application was premised on Carrington’s alleged failure to articulate a coherent and viable claim, especially in the context of causation and the limitation periods applicable to the alleged breaches.

Additionally, costs issues encompassed previous orders that required Carrington to bear the costs of amendments due to her procedural deficiencies. Specific attention was also needed to assess whether the incurred costs justified relief from sanctions against Carrington, considering the history of non-compliance and delays attributable to her re-drafted pleadings.

The Parties’ Positions

Claimant’s Position: Carrington maintained that Godfrey’s professional negligence in failing to provide adequate construction information, inspect, and review works during the build period, caused extensive damage and financial loss. She submitted that despite procedural deficiencies in earlier pleadings, her current amended particulars clarified these claims sufficiently to proceed to trial. Carrington also sought relief from sanctions for any remaining deficiencies, emphasizing her health, financial status, and the severity of the alleged professional breaches.

Defendant’s Position: AIG argued that the amended particulars still failed to meet the detailed pleading standards required. They contended that Carrington’s case lacked coherence, particularly regarding causation, and reiterated that many of her claims remained statute-barred. AIG further highlighted that, as a matter of procedural rigor and fairness, Carrington should face the strike-out sanction for failing to substantively comply with the court’s unless orders.

The Court’s Decision

The court recognised that, barring the exception relating to the claim for inspection duties, the amended particulars newly served by Carrington presented a substantially compliant case. The court determined that there was a failure to provide a detailed, quantifiable link between breaches of duty concerning inspection and the resultant financial impact, necessitating a partial strike-out of those components.

While acknowledging that Carrington’s pleadings suffered from historical deficiencies, the court applied the three-stage test from Denton v TH White Ltd. It found that while the breaches were serious and without good reason, striking out the entire claim would be disproportionate compared to rectifying specific non-compliant aspects. The court decided that the breaches related to the inspection duties should be struck out, but Carrington’s detailed claims related to review duties were sufficiently coherent to proceed to trial.

On costs, the court noted Carrington’s previous penalties in costs for earlier amendments and confirmed those liabilities. However, noting the complexity of the professional negligence issues and the documented nature of evidence supporting her core claim (post September 2012 breaches), the court granted relief from the broader strike-out sanction. Consequently, Carrington was ordered to serve a final set of amended particulars to correct minor identified errors and eliminate the non-compliant inspection-related claim within fourteen days.

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