STANDARD LIFE ASSURANCE LIMITED v GLEEDS (UK) (a firm) & Ors

On an application to strike out or obtain summary judgment, the court must assume that pleaded facts are true and should not finally determine developing or fact-sensitive issues without the necessary evidence. A claim should be struck out only where it discloses no legally recognisable claim and should receive summary judgment only where it has no realistic prospect of success and there is no other compelling reason for a trial.

In a negligent advice claim concerning construction costs, the assessment of recoverable loss may require a comparison between the claimant’s position absent the transaction and its actual position, including the value of benefits obtained. The precise approach depends on the pleaded case, expert evidence and findings of fact. Where the claimant pleads that no benefit was obtained, the claim is not necessarily bound to fail.

The claimant, an investment fund, brought Part A claims against a quantity surveyor, project manager and development manager for negligent advice concerning the estimated construction cost and procurement of a mixed residential and commercial development. It alleged that, had proper advice been given, it would not have proceeded with the development.

The defendants applied under CPR 3.4(2)(a) and CPR 24.2 to strike out or obtain summary judgment on parts of the pleaded loss claim. They argued that the claimant had failed to account for the value of the completed development and other benefits. The claimant disputed that any credit was required and relied on factual, expert and legal issues concerning causation, valuation and recoverable loss.

The central issue was whether the pleaded claim was legally untenable or had no real prospect of success before those issues had been determined at trial.

1. Application dismissed. The defendants had not established that the pleaded case on recoverable loss had no real prospect of success. The claim was not bound to fail on the pleaded facts.
2. For strike out, the court must assume that the pleaded facts are true. A claim should be struck out where the pleaded facts disclose no legally recognisable claim. The court should not determine a novel point finally where the law is developing and the issue depends on factual findings. It must be certain that the claim is bound to fail.
3. For summary judgment, the court must distinguish a realistic prospect from a fanciful one. It must avoid a mini-trial, consider evidence reasonably expected to be available at trial, and hesitate before making a final decision where fuller factual investigation may affect the outcome. Where all necessary evidence is available and the issue is a short point of law or construction, the court should decide it. The burden remains on the applicant.
4. The defendants’ proposed loss analysis, including a basic comparison between what the claimant paid and the value of what it obtained, was sound in principle and persuasive. However, the reasoning in Nykredit plc v Edward Erdman Limited concerned negligent valuation rather than negligent cost estimation. The approach to a negligent cost estimate claim could involve different factors. The general scope-of-duty principles in Manchester Building Society v Grant Thornton did not determine the basic comparison exercise.
5. Loss in a negligent advice case is highly fact sensitive. The court should not resolve the issue without clear pleadings, expert evidence on competing costs and benefits, and relevant findings of fact. The claimant’s pleaded assertion that no benefit had been derived had to be assumed true for the purposes of the application. If no benefit fell to be brought into account, the claim could not be said to be bound to fail.
6. The claimant was required to plead primary and alternative cases on recoverable loss so that the defendants could respond and the experts and trial had a clear agenda. Amendments and consequential pleadings were ordered according to the timetable in paragraph 40.

Not an appeal. The judgment determined an interlocutory application in the High Court proceedings.