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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Colin Facey Boats Ltd v A Pank & Sons Ltd & Anor [1997] EWCA Civ 1299 (21 March 1997) URL: http://www.bailii.org/ew/cases/EWCA/Civ/1997/1299.html Cite as: [1997] EWCA Civ 1299

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
NORWICH DISTRICT REGISTRY
(His Honour Judge Mellor)

		Royal Courts of Justice Strand London WC2
		21st March 1997

LORD JUSTICE BELDAM: The plaintiffs are the owners of a boat-yard on the River Bure at Horning in Norfolk. On the afternoon of 21st May 1989, whilst the second defendant, Mr Whitmarsh, was completing an electrical installation there, a serious fire occurred which caused damage estimated at just under a quarter of a million pounds.

The fire had its seat in one of the buildings used as an office reception area and also to house a domestic type of hot water boiler. The boiler was controlled by a single-phase electrical supply from a distribution board in the main boat-shed. The second defendant had installed a new miniature circuit-breaker in the boat-shed and had connected the three-phase supply provided by the Eastern Electricity Board to the new circuit-breaker. Whilst he was completing his work, one of the boat-yard's employees asked the second defendant to restore power to a temporary circuit so that a bilge pump could be used. The second defendant made the switch of the main circuit-breaker, which tripped at once. He then made the switch a second time and there was a pop and a flash, clearly indicating a fault. Within a very short time smoke was observed coming from the reception building, which was on fire. The fire brigade was summoned but, before the blaze was extinguished, extensive damage had been done.

The expert electrical engineers whose opinions were sought considered that these facts pointed inexorably to a cause of fire associated with the work which had been carried out by the second defendant. Eventually the plaintiffs were advised that the most probable explanation was that the second defendant had connected the cables supplying the boiler to the three-phase supply in the distribution board. The resulting increase in electrical pressure at the boiler controls was most probably the cause of the fire. There were other errors which had been made in the installation of the electrical work, which was described as of a poor standard, but it is unnecessary to consider them.

The plaintiffs had originally sought help and advice about their electrical installation from the first defendants. Their contracts manager, Mr Houghton, went to the boat-yard on 22nd March 1989 and discussed the installation with Mr Facey, the plaintiffs' managing director. Mr Houghton advised that a new distribution board should be installed, but apparently the first defendants had sufficient work on hand at that time. As a result of their conversation, Mr Houghton contacted the second defendant. He then telephoned Mr Facey and the work went ahead. Mr Facey thought that the second defendant was carrying out the work as a sub-contractor for the first defendants. Mr. Houghton believed that the second defendant was carrying out the work on his own account under a direct contract with the plaintiffs, a view apparently shared by the second defendant. The first defendants accepted that they had recommended the second defendant to carry out the work and that they had undertaken a duty to take reasonable care in making the recommendation.

On 31st July 1990 the plaintiffs issued proceedings in the Norwich District Registry against the first defendants. In February 1993 they joined the second defendant in the proceedings. They claimed damages for breach of contract against the first defendants; alternatively, for a breach of the duty of care in recommending the second defendant. The first defendants denied any contractual relationship with the plaintiffs and that they had failed to exercise reasonable care in recommending the second defendant. The second defendant denied that he had failed to carry out the work with reasonable care and skill.

The action was heard by His Honour Judge Mellor at the Norwich Combined Court Centre on 4th July 1995. He was only asked to decide the issues of liability. On 2nd August he gave judgment for the plaintiffs against both defendants for damages to be assessed. He held that the first defendants had undertaken to carry out the work and that the second defendant was carrying out the work on their behalf. He rejected the plaintiffs' claim that the first defendants had failed to take reasonable care in recommending the second defendant for the work, but found that the cause of the fire was the failure on the part of the second defendant to do the work with reasonable care and skill.

The first defendants now appeal against the judge's finding that they were liable for breach of contract with the plaintiffs. By respondent's notice the plaintiffs appeal against the judge's rejection of their alternative claim based upon the failure of the first defendants to take reasonable care in recommending the second defendant to carry out the work.

The first defendants carry on business as electrical contractors in Norwich. They employ nine trained electricians, who work under a foreman. Mr. Houghton is their contracts manager.

In March 1989 some boat-builders working in the plaintiffs' yard reported to Mr Facey that there was an unusual noise coming from the main electrical distribution board in the plaintiffs' boat-shed. The plaintiffs' usual electrical contractor was not available so, through the Yellow Pages, the plaintiffs contacted the first defendants, an old established company whose display advertisement proclaimed that they were:

"ELECTRICAL CONTRACTORS

DESIGN & INSTALLATION

INDUSTRIAL & COMMERCIAL

DOMESTIC

MAINTENANCE

Approved Contractor"

The first defendants agreed to attend at the boat-yard to examine the electrical installation there.

Mr. Houghton arrived on the afternoon of 22nd March and inspected it. He advised that a new distribution board should be installed, involving substantial rewiring, and that a residual current device should be fitted as a safeguard in case any of the existing wiring in the premises was below standard. So far, the exchanges between Mr Houghton and Mr Facey were not contentious, but thereafter their accounts of the conversation between them diverged to such an extent that they were irreconcilable.

Mr Facey's account was that, after a discussion about the possible cost and the mention of a figure of £1,200, Mr Houghton said that he was very busy. Mr Facey said, "Well, just get it done," and Mr Houghton agreed that he would do so. That was the extent of the conversation according to Mr Facey. Mr Houghton's account, however, was quite different. He agreed that he had given Mr Facey an idea of the price as being between £800 and £1,000, but he said that he was too busy to carry out the work and did not have the labour to undertake it. He said that he knew somebody who had worked for him whom he could recommend. He had in mind the second defendant, although he could not at that time remember his surname. He then asked Mr Facey whether he would like him to get someone to get in touch with that person to do the job. Although he could not remember the exact words, he had probably told Mr Facey that the person he would suggest was someone he could rely on. He probably said that he was a person whom the first defendants had used in the past. According to Mr Houghton, he made it perfectly clear to Mr Facey that the first defendants would not do the job and that he would merely put him in touch with somebody who could. He was confident that he had spelt out that the first defendants would not do the work, and he said that Mr Facey was very grateful. There was no question of the recommended electrician carrying out the work as a subcontractor.

From these two divergent accounts the judge was asked to decide whether there was an enforceable contract between the plaintiffs and the first defendants. As the judge pointed out, neither of the witnesses could reasonably be expected to remember the precise words used after six years. Each of the parties urged the judge to find that in substance the account given, for the plaintiffs by Mr Facey and for the first defendants by Mr Houghton, was the correct one. The judge felt unable to prefer one account to the other and made no express finding as to the words actually used. He had to decide whether Mr Houghton, after giving advice about the installation and the work which needed to be done, had offered to carry out the work, either in the words he used or by the stance he was adopting, and whether Mr Facey had accepted his offer that the first defendants would carry out the work. There is no doubt that Mr Houghton had said that he would recommend a suitable person, having the second defendant in mind, and that he did contact the second defendant, who then telephoned Mr Facey.

The judge found that between the defendants it was clearly understood that the second defendant was to carry out the work on his own account. Although that finding determines Mr Houghton's state of mind when he subsequently spoke to the second defendant and it suggests that Mr Houghton believed that he had not undertaken to carry out the work, as the judge rightly said, it cannot determine whether, from the words used or the conduct of the parties at the time of their discussion, a contract came into existence between the plaintiffs and the first defendants. The judge said that he was not convinced that Mr Houghton had clearly decided to pass on the work to the second defendant at the time he spoke to Mr Facey. He doubted very much whether he had given any conscious consideration to the nature of the contractual relationship he was or was not setting up. Having been called out and, upon inspection, not having found the imminent danger he feared, he had suggested that certain works be carried out and had given what in some quarters, the judge said, is known as a ball-park price, and had indicated that his own labour force was busy but that he had somebody in mind for the work.

The judge said:

"On balance I find myself unable to accept Mr Houghton's claim that he emphasised the urgency of the risks. That emphasis was used as a reason for not having taken on a task which would have been kept `in house' had the labour force not been busy. ... For his part I dismiss as hindsight some of Mr Facey's more extravagant contentions as to the nature of the bodies and persons with whom he was prepared to contract although I have no doubt he would value Pank's reputation and hence their recommendations. His priority was to get the work done. I doubt that he was subjecting the scene to a legal analysis. On the evidence I have heard, not being persuaded by either witness that the contractual position was made as expressly clear as they now contend, I find the following probable:-

(i) That Mr Houghton advised Mr Facey of the nature of the works he regarded as necessary;

(ii) That Mr Facey made it clear that he wished for those works to be done;

(iii) That a figure for price was mentioned. ...

(iv) That Mr Houghton indicated that his workers were busy;

(v) That Mr Houghton indicated that he knew someone who might be available to do the work;

(vi) That Mr Houghton did not identify that person;

(vii) That Mr Houghton indicated that he would get in touch with that person."

That there was no true meeting of those two minds, neither of which was directed primarily at legal technicalities, seems clear. That is not however the question since agreement is to be judged not by what was or may have been in the minds of Mr Facey and Mr Houghton but by what they said or did."

The judge then drew the inference from the seven facts which he had found that the first defendants had agreed to arrange for the work to be carried out by the unidentified person, such agreement being subject to the condition precedent of his availability. On this basis he found that there was a contract between the plaintiffs and the first defendants by which the first defendants had agreed to undertake the work and, accordingly, that the second defendant was carrying out the work of installation as a sub-contractor to the first defendants.

This finding the first defendants challenge, arguing that the inference drawn by the judge was unwarranted by the primary facts he had found, but that, even if it was, it was an insufficient basis on which to decide that there was a contract between the parties. The phrase "the first defendants had agreed to arrange for the work to be carried out subject to the availability of an unidentified person" cannot properly be construed as a firm offer which was accepted by Mr Facey. In truth, the first defendants argue, the judge's finding ought to have been interpreted as meaning that the plaintiffs had failed to establish that there was a contract between them and the first defendants.

Mr Stevenson, for the plaintiffs, argues that the inference drawn by the judge was that Mr Houghton had offered to carry out the work, but subject to the condition that the unidentified electrician would be available. That was an offer capable of being accepted by Mr Facey, and the arrangement ripened into a contract when the second defendant telephoned Mr Facey to say that he would carry out the work. Once Mr Facey had made it clear that he wanted the work done and the discussion about the price had taken place, the presumption was that there was an agreement to do the work unless the first defendants clearly stated that they could not do so.

I would sympathise with the judge in his attempt to construe the legal effect of two irreconcilable accounts of a conversation carried out informally on the banks of the River Bure six years earlier. For my part, I cannot infer from the judge's primary findings of fact that Mr Houghton committed the first defendants to carrying out the works provisionally, conditionally or at all. The fact that Mr Houghton indicated that his workers were busy but that he knew someone who might be available to do the work and that he would get in touch with that person does not lead me to infer that he had offered on the first defendants' behalf to carry out the work and that Mr Facey accepted the offer. I find it impossible to spell out of the judge's primary findings an offer and acceptance leading to a binding agreement between the plaintiffs and the first defendants. Accordingly, I would hold that there was no agreement by the first defendants to do the work and that the second defendant was not their sub-contractor.

The second issue in the case arises on the respondent's notice, challenging the judge's finding that there was no breach of the admitted duty to take reasonable care in recommending the second defendant as a suitable person to carry out the work. It seems to me implicit in the acceptance of such a duty to take reasonable care that, in the circumstances in which the recommendation was made, the plaintiffs would rely upon the first defendants.

The second defendant was not a trained electrician. He had had considerable experience in carrying out electrical repairs and wiring and he carried on business on his own account under the style of:

"DOMESTIC SERVICES

Electrical : Plumbing : 24-Hr Service"

As a young man he had commenced an apprenticeship which would have lasted for five years. After two years he had given up his apprenticeship. He apparently had financial responsibilities which made it necessary for him to obtain work. He had subsequently had some thirty years practical experience, but it would appear that this was mainly in lighting and domestic work, though not entirely.

Mr Houghton had been introduced to the second defendant by a company specialising in the fitting of suspended ceilings, who described him as "a good fellow, who was responsible and reliable and whose work in wiring was neat and conscientious". Mr Houghton had observed the second defendant carrying out one job of a fairly straightforward lighting and domestic type. He had also discussed electrical matters with him, but he had made no enquiry about his qualifications or experience in work of the kind which was necessary at the defendant's boat-yard. In evidence the second defendant said that he had had experience of work in domestic circumstances which involved the three-phase system. But beyond this it is clear from the evidence which Mr Houghton gave before the judge that he had made no enquiry about the second defendant's qualifications or the level of his understanding of the principles of electrical installation practice in an industrial setting.

It is worth commenting (though, as Mr Davies said, it is only one of the factors in the background of this case) that the installation for which Mr Houghton was recommending the second defendant was in a boat-yard, which was a factory or workshop. Work in factories and workshops of an electrical character attracts the provisions of the Electricity Regulations of 1908. Under regulation 28 of those Regulations no person except an authorised person or a competent person acting under his immediate supervision should undertake any work where technical knowledge or experience is required in order adequately to avoid danger. It is also worth commenting that, under the Electricity Regulations 1968, the Competent Persons Exemption Order grants exemption to a person who has completed a course of training designed to impart such knowledge and experience as is necessary to render him competent to undertake any repair, alteration, extension or work where technical knowledge or experience is required in order to avoid danger or to a person who is in the "third or any subsequent year of such a course of training and shall be undertaking work of the kind specified as part of his training".

Mr Houghton was cross-examined to considerable effect by Mr Stevenson about his knowledge of the qualifications of the second defendant. If in fact the second defendant had been a properly qualified electrician, the fact that Mr Houghton had not interrogated him about his qualifications would be beside the point. Equally, the fact that he was not a properly qualified electrician would not of itself establish that Mr Houghton did not, on reasonable grounds, believe that he was suitably qualified for the work for which he was recommending him or was not justified in making his recommendation.

The nature of the work for which Mr Houghton recommended the second defendant can, I think, be gauged from an answer which he gave in his evidence-in-chief. He had been asked whether there was any particular reason why he would not engage the second defendant, Mr Whitmarsh, as a sub-contractor but only put him in touch with Mr Facey with the possibility of his doing the work direct. He said:

"The reason being that if I'd have undertaken the contract through A. Pank and Son I'd have had to have paid a further visit to the boatyard to undertake a survey of the electrical installation to ascertain the size of the breakers, size of the distribution board and all the necessary bits and pieces to go with that. Also, one would have had to have been responsible for the design and recording what work was being done for the future and also the problem when you fit these RCDs, earth leakage trips, one can have problems, i.e. what we call nuisance tripping.

It's only natural that the person who fits the board would undertake and know what circuits he had connected ..."

I consider it quite clear from this that this was not work in any way comparable to simple, straightforward repair or rewiring of a lighting circuit. It required knowledge of the supply to the plaintiffs' boat-yard, which was of the three-phase type, capable of supplying current at medium pressure of 415 volts as well as of supplying a circuit, if correctly connected, at 240 volts, the ordinary domestic pressure.

Mr Stevenson's cross-examination established that Mr Houghton himself had completed a five-year apprenticeship and had acquired further paper qualifications, and that the first defendants employed nine other electricians, who were either electricians or approved electricians, and a foreman. The older electricians were time-served apprentices and graded. The younger obtained qualifications, for example at a technical college or institute or guild, but, at the very least, every one of them was a time-served apprentice. In effect, this was a requirement of any contractor who was a member of the National Inspection Council for Electrical Installation Contractors. Such a contractor would have to undertake only to employ fully qualified electricians. It was put to Mr Houghton that the first defendants could not have employed the second defendant because of his lack of qualifications. Mr Houghton's answer was:

"Um, one could have found out what qualifications he had and then applied to the recognised bodies to get him graded."

He was then asked:

"You had no idea what qualifications he had?"

Mr Houghton answered:

"Other than meeting the man and discussing work and judging from the ... conversations between us I ascertained to a level which I thought he was."

He agreed that he did not know that the second defendant had no qualifications, but he judged him purely on talking to him and seeing him work on one job, which was a lighting job.

The first defendants, in preparation for the trial, had consulted an expert in electrical matters, Mr Bailey, who was particularly critical of the way in which the second defendant had carried out the work. After indicating that the second defendant had very probably triggered the fire when he reinstated the mains supply, he turned to the standard of workmanship of the second defendant and he said:

"It is clear that Mr Whitmarsh's standard of workmanship at the premises left a great deal to be desired. However, I found no evidence to show that Mr Whitmarsh's poor quality workmanship was directly responsible for the fire."

Later he said:

"It is readily apparent that Mr whitmarsh carried out the installation of the new distribution board in isolation without any appreciable understanding of the outgoing circuits connected to it. It might be argued that he was only carrying out a direct replacement for what had already existed. However, in my opinion, Mr Whitmarsh should have taken steps to ensure that all electrical devices connected downstream of the main supply cable were isolated at source to enable them to be switched back `on' in a controlled manner when the mains supply was restored."

It is unnecessary to go further into the criticisms which he made of the second defendant's work. It seems to me that it is encapsulated in the statement that he carried out the installation of the new distribution board in isolation, without any appreciable understanding of the outgoing circuits connected to it.

Although Mr Bailey did not agree with Mr Elliott and Dr Fletcher, the plaintiffs' experts, about the cause of the outbreak of fire, the judge undoubtedly accepted their explanations. It was that the second defendant had connected the cables supplying the boiler controls to the three-phase supply instead of to a single-phase. Current at a pressure of 415 volts had therefore been applied to the boiler controls and this, in the plaintiffs' experts' opinion, would have been sufficient to have caused an outbreak of fire. The judge held that this was clearly negligence on the part of the second defendant; and this was also the view of Mr Bailey, the first defendants' expert, in his report of 10th February 1993. The experts agreed that the work undertaken by the second defendant was relatively complex and required a logical approach to the work, involving a careful initial examination of the existing installation in its entirety, taking notes of the connections of the various circuits and labelling cables appropriately as the old installation was dismantled. He should also have tested the installation before reconnecting the supply and, had he done so properly, his mistake would have become apparent. As previously indicated, there were other mistakes which he had made, but they are immaterial to the issues we have to decide.

In my view it is clear that the second defendant was not sufficiently qualified to carry out the task in the plaintiffs' boat-yard in a manner which would avoid danger. Mr Houghton knew and appreciated the kind of task involved, but he had no previous experience of the second defendant having carried out such a complex task. He took no steps to discover whether the second defendant was properly qualified or competent to do this work when, had he given any thought to the matter, it would have been apparent to him that the work called for an electrician of greater qualifications than the second defendant had; and yet he recommended him.

The judge rejected the plaintiffs' claim on this ground in these terms:

"It has been established in the course of the evidence that the second defendant's lack of formal qualifications was such that the first defendants could not have employed him and remained a member of one of their professional bodies. In his skilful cross-examination of the second defendant Mr Stevenson has demonstrated areas of weakness in his knowledge of theoretical matters. That which is said to have been his error in this particular case has been prayed in aid. On the other hand Mr Davies for the first defendants has urged me to adopt a realistic approach. Even if he is shown to have blundered in this particular case it does not follow that he always blunders. A weakness in theoretical knowledge may be irrelevant at the level of electrical sophistication we are considering provided the artisan is methodical and goes by the book. It is not necessary to understand the reasons that lie behind the book's injunctions to comply with them. Accordingly - although I hesitate somewhat at the question of the first defendants' failure to ascertain that the second defendant had no paper qualifications - I have come to the conclusion that the plaintiff has not, the onus being upon him, proved a breach of the duty of care. In so far as the good faith of the first defendants is concerned there can be no doubts whatsoever since they chose to rely upon the second defendant to perform work for which they were responsible themselves. The decision to use him as a sub-contractor was based upon his reputation as passed on to them by Norwich Suspended Ceilings and what they had seen of his work. That strikes me as a reasonable basis upon which to act. It can hardly be said that the fact that an employee or sub-contractor subsequently proves to be less than acceptable per se shows a lack of care in his selection. I find no evidence of anything in what Mr Houghton knew of this defendant to have made it careless for him to contemplate leaving work of the nature in question to be performed unsupervised by him. It is undesirable for courts to lay down unrealistic standards - compliance with which would involve those who choose to take people on or to recommend people in legalistic and bureaucratic procedures to ensure that their selection or recommendation could be justified."

With this assessment I would profoundly disagree. In my view, if Mr Houghton was going to recommend a contractor to carry out this work, it was his duty, in the exercise of reasonable care, to establish that the person recommended possessed the necessary knowledge and skill to carry out the work competently and without danger. Beyond doubt, Mr Houghton did not do so, and in my view he was negligent.

Accordingly, I would uphold the plaintiffs' arguments on their respondent's notice and I would dismiss the appeal.

LORD JUSTICE OTTON: I agree. I only wish to add a few words by way of emphasis.

In the course of argument Mr Richard Davies QC, for the appellants, expressed anxiety lest the outcome of this appeal might be understood to mean that a person, when recommending another as an independent or sub-contractor, guarantees or warrants the performance of the recommended contractor. To allay that anxiety, and for the avoidance of doubt, this decision should not be so construed. If this were so, it would have dire consequences in the construction industry, where, for example, main contractors frequently nominate (i.e. recommend) sub-contractors. In the absence of a contractual term to that effect, main contractors are not insurers of their nominated sub-contractors' performance at the suit of the employer or other nominated sub-contractors.

This case turns on its particular facts, out of which an admitted duty of care arose. The scope of that duty has been accurately defined by my Lord, Lord Justice Beldam, and in my judgment there was a clear breach, resulting in foreseeable damage.

SIR CHRISTOPHER SLADE: I agree with both judgments and do not think I can usefully add anything of my own.

Order: appeal dismissed; the respondents to have one half of their costs of the appeal.