BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just Β£1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!
 |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | |
England and Wales High Court (Technology and Construction Court) Decisions |
||
|
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Co-Operative Group Ltd v Birse Developments Ltd & Ors [2014] EWHC 530 (TCC) (28 February 2014) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2014/530.html Cite as: [2014] PNLR 21, [2014] BLR 359, 153 Con LR 103, [2014] EWHC 530 (TCC) |
||
[New search] [Printable RTF version] [Help]
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Strand, London, WC2A 2LL |
||
B e f o r e :
____________________
| Co-operative Group Limited |
Claimant |
|
- and |
||
| Birse Developments Limited (in Liquidation) |
Defendant |
|
- and |
||
| Stuarts Industrial Flooring Limited (In Administration) |
Third Party |
|
- and |
||
| Jubb & Partners (a firm) |
Fourth Party |
|
- and |
||
| Geofirma Soils Engineering Limited |
Fifth Party |
____________________
Katie Powell (instructed by Reynolds Porter Chamberlain LLP) for STUARTS
Benjamin Pilling (instructed by Beale and Co) for JUBB
Dorι Green (instructed by Kennedys Law LLP) for GEOFIRMA
Hearing dates: 18 & 19 February 2014
____________________
Crown Copyright ©
Mr Justice Stuart-Smith:
Introduction
Issue 1:
a) Whether Birse's causes of action in the tort of negligence against Jubb are time barred by virtue of section 2 of the Limitation Act 1980;
b) Whether or not the action brought by Birse against Geofirma in the tort of negligence is time barred by virtue of section 2 of the Limitation Act 1980.
Issue 2:
a) Whether the attempt to assign the benefit of Jubb's warranty to Co-op, without seeking or obtaining Jubb's consent, gave rise to a trust of the benefit of that warranty in favour of Co-op.[1]
a. Issue 1: Birse's causes of action in tort against Jubb and Geofirma are time barred by virtue of section 2 of the Limitation Act 1980;
b. Issue 2: the attempt to assign the benefit of Jubb's warranty to Co-op, without seeking or obtaining Jubb's consent, did not give rise to a trust of the benefit of that warranty in favour of Co-op.
| Paragraphs | |
| Introduction | 1-6 |
| The Factual Background | 7 |
| Birse's Pleaded Case | 8-15 |
| The case against Jubb | 9 |
| The case against Stuarts | 11 |
| The case against Geofirma | 13 |
| Issue 1: Limitation in Tort | 16-60 |
| The principles to be applied | 16 |
| Birse's submissions | 41 |
| "The damaged asset rule" | 44 |
| "The package of rights rule" | 48 |
| Ascertainment at trial | 56 |
| Notification | 57 |
| Lack of knowledge | 58 |
| Incremental steps | 58 |
| Issue 2: The Assignment to Co-op | 61-92 |
| The principles to be applied | 65 |
| Application of these principles to the facts of this case | 89 |
The Factual Background
Birse's Pleaded Case
The Case against Jubb
a. It is clear from Clause 2 of the Appointment and elsewhere that Jubb was expressly made aware of the requirements of Birse's main contract, at least to the extent that they were being sub-contracted to Jubb;
b. The scope of Jubb's duty is identified at paragraphs 24.1, 25 and 59. The duty is alleged to have been concurrent and co-extensive with the implied contractual duty in the performance of its express obligations under the Appointment to exercise the care and skill reasonably to be expected of civil and structural consulting engineers possessing the experience and expertise appropriate to perform those obligations in connection with the Development. It is alleged (and for the purposes of these preliminary issues assumed) that the scope of Jubb's duty of care included the protection of Birse from economic loss. Birse alleges that the damage on which its claim in tort is founded is the financial damage it suffers "in satisfying any liability to the Claimant which it may be held to have as a result of Jubb's negligence";
c. The central importance of Birse's liability to the Claimant is emphasised by the allegation that breaches by Jubb "will have caused the defects which the Claimant alleges and placed [Birse] in breach of its obligations to the Claimant": see [45]. In the same way, each pleaded breach of duty by Jubb alleges that it constitutes "a breach of Jubb's duty of care at common law, and will in turn have placed [Birse] in breach of clauses [x,y,z] of [Birse's main contract] and of clauses [a,b,c] of [Birse's] Warranty": see [45.1, 45.2, 45.2B, 45.3, 45.4, 45.5, 45.6, 45.7, 45.7B, 45.8A, 45.11, 45.13];
d. Birse claims that it will have suffered loss in the event that it is held liable to the Claimant; and it claims damages in respect of such loss which are equivalent to an indemnity against all sums which it is held liable to pay to the Claimant and against its own expenditure for the purposes of defending the claim brought by the Claimant: see [46];
e. It alleges that the "relevant damage" is "contingent upon the Defendant's liability to the Claimant" and that because that liability has not yet been ascertained time has not yet started to run. In the alternative, it alleges that time began to run when the Claimant's claim against Birse was first made, which it says was in June 2010: see [59.2].
The Case against Stuarts
The Case against Geofirma
a. Birse pleads that Geofirma's breaches of its duty of care "will in turn have placed Birse in breach of the terms of the main building contract and Birse's warranty", which is the formulation adopted in the Jubb pleading;
b. Birse pleads that "the scope of the duty of care owed by Geofirma to Birse (to exercise reasonable skill and care in performing the design and carrying out the works which it was contractually engaged by Birse to execute so as to avoid causing Birse to suffer economic loss) is such as to enable Birse to recover from Geofirma as damages any reasonably incurred losses which it is liable to pay CGL." The use of the phrase "such as to enable Birse to recover" is derived from the Judgment of Akenhead J in How Engineering Services Ltd v Southern Insulation (Medway) Limited [2010] EWHC 1878 (TCC) at [32];
c. As to limitation, Birse pleads that "the damage in respect of which Birse brings this action, and which was caused by Geofirma's breach of its duty of care at common law, is Birse's financial damage in satisfying any liability which it may be held to have to CGL in respect of the Hardstanding Claim. That damage is contingent upon Birse's liability to CGL and was suffered, at the earliest, when CGL made its claim against Birse." This is similar to paragraph 59.2 of the Jubb pleading.
Issue 1: Are Birse's causes of action in the tort of negligence against its sub-contractors time barred by virtue of section 2 of the Limitation Act 1980?
The Principles to be Applied
"giving advice or information was fully aware of the nature of the transaction which the plaintiff had in contemplation, knew that the advice or information would be communicated to him directly or indirectly and knew that it was very likely that the plaintiff would rely on that advice or information in deciding whether or not to engage in the transaction in contemplation."
"In the present case, there is no dispute that the duty was owed to the lenders. The real question in this case is the kind of loss in respect of which the duty was owed.
How is the scope of the duty determined? In the case of a statutory duty, the question is answered by deducing the purpose of the duty from the language and context of the statute: Gorris v. Scott (1874) L.R. 9 Ex. 125 . In the case of tort, it will similarly depend upon the purpose of the rule imposing the duty. Most of the judgments in the Caparo case are occupied in examining the Companies Act 1985 to ascertain the purpose of the auditor's duty to take care that the statutory accounts comply with the Act. In the case of an implied contractual duty, the nature and extent of the liability is defined by the term which the law implies. As in the case of any implied term, the process is one of construction of the agreement as a whole in its commercial setting. The contractual duty to provide a valuation and the known purpose of that valuation compel the conclusion that the contract includes a duty of care. The scope of the duty, in the sense of the consequences for which the valuer is responsible, is that which the law regards as best giving effect to the express obligations assumed by the valuer: neither cutting them down so that the lender obtains less than he was reasonably entitled to expect, nor extending them so as to impose on the valuer a liability greater than he could reasonably have thought he was undertaking."
"In the tort of negligence C must establish five elements: that the claim relates to a form of actionable damage; duty; breach; historical involvement of the tortious conduct in C suffering actionable damage; and the scope of liability for consequences, the analytical step traditionally known as "remoteness" of damage in the Commonwealth and as "proximate cause" in the United States.
Logically the first of these elements to be addressed is that the complaint refers to a type of harm that is actionable in this tort. Other elements of the tort such as duty, breach and cause-in-fact as well as the limitation issue are dependent on what types of interference have been allowed to form the gist of the action. "Damage" is the gist of the action in negligence. But not all types of interference with a person's interests are accepted by the law as actionable damage in this tort. For example, though mere annoyance by noise is actionable in nuisance it is not actionable in negligence. The list of types of harm that are accepted as actionable is not closed. For example, Hedley Byrne & Co Ltd v Heller & Partners Ltd is widely taken to be the case that added pure economic loss to that list for the tort of negligence. The argument advanced by C in Hotson v East Berks AHA was that this list should be expanded to include the loss of a chance to avoid a particular outcome. This "reformulation of actionable damage" is one of five principal forms of the "loss-of-a-chance" argument that have arisen in case law.
In relation to the duty of care, the case law reveals a diverse range of concerns regarded as relevant to the issue of whether a duty should be recognised. Some concerns are of general application, such as the concern with indeterminacy of liability. Some are only rarely raised by the facts, such as the concern that the law should not positively encourage abortion. Moreover, a concern may weigh in favour of the recognition of a duty in one case and weigh against such recognition in another.
The formulation of the duty, which group of defendants owes which group of persons a duty, can have a profound effect on the focus of the cause-in-fact issue, especially where the allegedly tortious conduct is nonfeasance. Suppose a parent fails to feed his or her baby who then dies from starvation. If the parent is viewed merely as a citizen, the parent's conduct is identical to that of the rest of society. But viewed against a comparator group of parents and those in loco parentis, the parent's conduct is exceptional. By restricting the duty of affirmative action in these cases to this comparator group the law ensures that the cause-in-fact issue is focused on the specific conduct raising concern.
The duty of care should not be framed as being a duty only with respect to particular kinds of consequence. This "scope of the duty" or "scope of the risk " approach which asks "what kind of harm was it the defendant's duty to guard against" at best conflates inquiries that it is clearer to keep separate and at worst encourages circular reasoning. It is preferable to keep "duty" as the issue that considers general concerns relating to whether the obligation of care should be recognised between the parties and without regard to the consequences of breach in the particular case. Where it is owed, the "scope of the duty" is simply to act reasonably in the circumstances. The breach analysis considers what reasonableness entails in the circumstances. Cause-in-fact provides the link between the breach and C suffering actionable damage. Finally, "scope of liability" then considers which of the stream of consequences of the tort that happened on this particular occasion should be judged to be within the scope of D's liability."
"Just as the terms and policy of the rule imposing liability may enlarge the consequences for which one is liable, beyond those of the standard criteria, so it may restrict them. A good example is liability for negligent misstatement, where liability is imposed because the defendant has expressly or impliedly undertaken to use reasonable care in providing some information. If he is negligent, what are the consequences for which he should be liable? Should the damages be the extent to which the claimant is worse off than he would have been if he had acted upon information which was correct? Or should they be all the consequences of the claimant not having received the correct information? There may not at first sight seem to be much of a difference, but it emerges in the cases about the liability of valuers who negligently overvalue land offered to their clients as security for a loan. If one asks: what has the lender lost by lending on a valuation which was too high, the answer is the difference between the security he thought he was getting and the security he actually got. If one asks: what were the consequences of his being given the wrong information, it may turn out that if he had known the true value, would for some reason not have lent at all. In that case, the loss is whatever loss the lender has suffered from having made a loan. It will include losses due to a fall in the property market which the lender would have suffered even if he had lent on the correct valuation. It seemed to the House of Lords unfair to make the valuer liable for the fall in the property market. So the consequences for which the valuer could be liable were more restrictively defined. He was to be liable only for the consequences of the lender having had too little security. He was not to be liable for all the consequences of the lender having lent.
In the South Australia case, I said that such a restriction followed from the scope of the duty of care in that particular case. Other judges have also spoken about the scope of the duty. Professor Jane Stapleton has pointed out that the language is inappropriate. The scope of the duty of care is to take reasonable care to get the valuation right. It has nothing to do with the extent of the consequences for which the valuer is liable. When one considers what causal relationship is required, one is really speaking about extent of the liability and not about the scope of the duty. Professor Stapleton is right. I shall try to mend my language in future. But I will say this. There is a close link between the nature of the duty and the extent of liability for breach of that duty. In the pollution case[3], liability extended to the acts of third parties because the nature of the duty was strict. In the valuer's case, liability was confined to the consequences of the client having too little security because the valuer had not been asked to advise on whether the client should lend. The valuation was to be only one factor which the client would take into account in making his own decision about whether to lend."[4]
"I add only the cautionary reminder that the loss must be relevant loss. To constitute actual damage for the purpose of constituting a tort, the loss sustained must be loss falling within the measure of damage applicable to the wrong in question"
"Mr. Stuart-Smith contends, on behalf of the defendants, that when she signed the mortgage deed she suffered actual damage. By entering into a burdensome bond or contract or mortgage she sustained immediate economic loss; her valuable freehold became encumbered with a charge and its value to her was diminished because she had merely the equity of redemption, varying in value at the whim of her son's creditors; she could not sell the land without discharging the mortgage; she could not prevent her son from borrowing on the security of her mortgage to the extent of the full value of the land; she could have sued the defendants in February 1973 for an indemnity or for damages on the basis of the diminished value of the land or the amount of the outstanding debt to the mortgagor."
"What is meant by actual damage? Mr. Stuart-Smith says that it is any detriment, liability or loss capable of assessment in money terms and it includes liabilities which may arise on a contingency, particularly a contingency over which the plaintiff has no control; things like loss of earning capacity, loss of a chance or bargain, loss of profit, losses incurred from onerous provisions or covenants in leases. They are all illustrations of a kind of loss which is meant by "actual" damage." [Emphasis added]
"because there was an immediate reduction in the value of her equity and a contingent liability contingent, it is true, but nevertheless a liability to repay the principal and interest on demand and that that was capable of assessment in money terms."
"30 In my opinion, therefore, the question must be decided on principle. A contingent liability is not as such damage until the contingency occurs. The existence of a contingent liability may depress the value of other property, as in Forster v Outred & Co [1982] 1 WLR 86 , or it may mean that a party to a bilateral transaction has received less than he should have done, or is worse off than if he had not entered into the transaction (according to which is the appropriate measure of damages in the circumstances). But, standing alone as in this case, the contingency is not damage.
31 The majority of the Court of Appeal appear to have decided the case on the basis that the Law Society did not enter into any transaction giving rise to the contingent liability. It did nothing and the contingent liability was created by the misappropriations and the previous existence of the compensation fund and the rules which governed its administration. No doubt in most cases in which a party incurs a contingent liability as a result of entering into a transaction, that liability will result in damage for the reasons already discussed in relation to bilateral transactions. But I would prefer to put my decision on the simple basis that the possibility of an obligation to pay money in the future is not in itself damage."
"In all these cases the claimant has as a result of professional negligence suffered a diminution (sometimes immediately quantifiable, often not yet quantifiable) in the value of an existing asset of his, or has been disappointed (as against what he was entitled to expect) in an asset which he acquires, whether it is a house, a business arrangement, an insurance policy, or a claim for damages. Your Lordships have not, I think, been shown any case in which the imposition on a claimant of a purely personal and wholly contingent liability, unsecured by a charge on any of the claimant's assets, has been treated as actual loss. That would have been the position if the claimant in the Forster case had given a personal covenant guaranteeing her son's debts (which she seems not to have done-she paid them simply to prevent enforcement of the security on her farm) and if she had not given any security over any of her own assets."
a. "Cases, like that of Mrs Forster, where a contingent liability is incurred but it does not crystallise into an actual liability until a future date but where damage occurs for the purposes of the commencement of the limitation period at the time when the transaction is entered into so that time starts running from that time. I will call this "the damaged asset rule"": see [30]; and
b. Cases where "there was a bilateral transaction under which the claimant should have received certain benefits but owing to the negligence of his professional adviser did not do so. I will refer to this situation as "the package of rights rule". There is no reason in principle why this line of authority should not apply where what the claimant by virtue of the bilateral transaction places himself under a contingent liability": see [31].
"In my judgment, the damaged asset rule and the package of rights rule are best regarded not as a series of independent qualifications on the basic rule in the Sephton case that the assumption of a "contingent liability" does not cause the limitation period to start to run, but as different cases in which the courts have tried to express a central idea. That idea has to be found by seeking the ultimate ratio in the Sephton case, that is, a ratio which expresses the reason for the decision on which, despite the differences in expression, all the members of the House in that case were agreed. As I see it, the concept on which all the members of the House agreed was that there had to be measurable loss before time began to be run, that is to say, loss which is additional to the incurring of a purely contingent liability. In my judgment, for this purpose, rights of contribution or subrogation must be ignored because those rights arise by operation of law, unless excluded by agreement or statute. If they were taken into account, they would undermine the basic rule which is clearly established in [Sephton] that a pure contingent liability is not damage.
In my judgment, the central idea in the Sephton case is that there has to be loss additional to that resulting from the incurring of a purely contingent liability."
"If Southern had been materially in breach of this tortious duty, I would have decided that the claim for damages against Southern was not barred by limitation. One needs to have regard, in the context of a duty of care, such as this, which permits the recovery of economic loss, to determine when the relevant loss arises. By relevant loss I mean "loss falling within the measure of damage applicable to the wrong in question" (per Lord Nicholls in Nykredit v Edward Erdman Ltd [1997] 1 WLR 1627 at 1603F). In this case the relevant loss arises from the claim made by Linklaters against How (and McAlpine) and accordingly the earliest at which the relevant loss can be said to have been incurred was the time when the claim was first intimated (March 2007). In one sense, the date when a claim is intimated can be thought to be a haphazard date because theoretically the claim in a case like this could have been raised in, say 2006, when the corrosion problem was discovered, or even earlier if by chance a maintenance person had discovered it then. However, the duty of care was intended to guard How against the financial loss directly flowing from the breach of duty in question and the reality is that How would not in practice or in fact have incurred that loss prior to the time that the claim was intimated. Of course, How was liable in breach of contract as from the date, if not before, that it handed over its work (including any carelessly executed insulation work) but the tortious duty of care arose to protect it from the economic consequences of Southern's breach of duty which would not arise and indeed did not arise until much later. In forming this view I have also had regard to the House of Lords case of [Sephton]http://login.westlaw.co.uk/maf/wluk/app/document?src=doc&linktype=ref&context=122&crumb-action=replace&docguid=I6F9E1950E43611DA8FC2A0F0355337E9."
Birse's Submissions
"The Damaged Asset Rule"
"The Package of Rights Rule"
"From these authorities it can be seen that the cause of action can accrue and the plaintiff have suffered damage once he has acted upon the relevant advice "to his detriment" and failed to get that to which he was entitled. He is less well off than he would have been if the defendant had not been negligent. Applying this to the present case, the plaintiffs paid their renewal premium without getting in return a binding contract of indemnity from the insurance company. They had acted to their detriment: they did not get that to which they were entitled. The fact that how serious the consequences of the negligence would be depended upon subsequent events and contingencies does not alter this; such considerations go to the quantification of the plaintiffs' loss not to whether or not they have suffered loss. The risk of loss existed from the outset and in the absence of better evidence would have to be evaluated and assessed as a risk and damages awarded accordingly.
The plaintiffs suffered loss as soon as they received an insurance contract which was not binding upon the insurers. The subsequent events, the question whether or not the insurers would thereafter avoid the policy and with what consequences, went only to the quantification of loss not to the identification of the first moment at which a plaintiff suffered loss and the tort became actionable."
"The solicitors' breach of duty in 1978 was remediable by the plaintiff, but that was only possible after he became aware that there had been a breach of duty. Apart from any other consideration, to treat the plaintiff's ability to remedy the breach himself without the concurrence of his former wife as a ground of distinction between this case and cases such as Baker v. Ollard would be to disregard the unlikelihood in practice of the plaintiff ever being in a position to remedy the breach. Once the solicitors closed their file, it was unlikely that failure (b) [the failure to register the caution] would come to the notice of the plaintiff or the defendants, until the house was sold and it was too late. That, on the pleaded facts, is exactly what happened. The first the plaintiff knew was his one-sixth share was not properly protected was after it had gone beyond recall. So his ability to remedy the breach before the house was sold was a matter of more theoretical interest than practical importance.
In considering whether damage was suffered in 1978 one can test the matter by considering what would have happened if in, say 1980 the plaintiff had learned of his solicitors' default and brought an action for damages. Of course, he would have been entitled at least to recover from the defendants the cost incurred in going to other solicitors for advice on what should be done and for their assistance in lodging the appropriate caution. The cost would have been modest, but not negligible."
And at 513 Mustill LJ said:
"The transaction caused the plaintiff to exchange his valid legal estate for an equitable interest in the proceeds of sale which was dependent on the goodwill and solvency of the wife unless and until protected by a formal declaration of trust and the lodging of a caution. The failure to see that these steps were taken promptly meant that the plaintiff was actually and not just potentially worse off than if the solicitors had performed their task competently. The sale in 1986 simply meant that the breach and its consequences were unremediable. As Nicholls L.J. has pointed out, the solicitors' negligence had two different aspects: the wife's participation in a formal instrument, and the failure to protect the interest by a caution, but I respectfully agree with his view that this characteristic forms no ground for distinguishing Baker v. Ollard and Moore v. Ferrier which are binding on this court."
Ascertainment at Trial
Notification
Lack of Knowledge
Incremental Steps
Issue 2: Did the attempts to assign the benefit of the sub-contractors' warranties to Co-op, without seeking or obtaining the sub-contractors' consent, give rise to a trust of the benefit of those warranties in favour of Co-op?
"The benefit of this agreement may be assigned on two occasions only without the consent of the Consultant. The benefit of this agreement may not be assigned further without the prior written consent of the Consultant, which consent shall not be unreasonably withheld or delayed."
The Principles to be Applied
" a prohibition on assignment normally only invalidates the assignment as against the other party to the contract so as to prevent a transfer of the chose in action: in the absence of the clearest words it cannot operate to invalidate the contract as between the assignor and assignee and even then it may be ineffective on the grounds of public policy.";
This is not contentious and it has not been argued that the attempted assignments in the present case are ineffective as between the assignor (Woolworths) and assignee (Co-op).
" [Don King, Frank Warren or Sports Network Limited] (as appropriate) shall hold all promotional and management agreements relating to the business of the partnership to the benefit of the partnership absolutely without separate compensation therefor."
"The essential task in construction is to deduce, if this is possible, from the two agreements construed as a whole against their commercial background the commercial purpose which the businessmen and entities who were parties to them must as a matter of business common sense have intended to achieve by entering into them; and if such intent can fairly be deduced and if this is necessary to effectuate that intent, the court may have to require what may appear to be errors or inadequacies in the choice of language to yield to that intention and be understood as saying what (in the light of that purpose) that language must reasonably be understood to have been intended to mean."
"The applicable principles emerging from the authorities in a field still undeveloped are as follows. (1) It is not possible (save pursuant to statutory authority) without a novation to transfer the burden of a contract to a third party. (3) The only assignment in respect of a contract which is legally possible is an assignment of the benefit of the contract (i.e. the rights thereby created) or some benefit (e.g. the profits) derived by the assignor from the contract. The distinction is between the assignment of rights under the contract and of what is referred to as "the fruits." A provision for the assignment of a contract is to be construed as the assignment of the benefit of the contract: see Linden Gardens Trust Ltd. v. Lenesta Sludge Disposals Ltd. [1994] 1 AC 85, 103. (5) The contract may expressly or impliedly permit assignment of rights not otherwise so assignable: see Devefi Pty. Ltd. v. Mateffy Pearl Nagy Pty. Ltd. [1993] R.P.C. 493, 503. The contract may likewise prohibit assignment of rights otherwise prima facie assignable. Such contractual provisions are legally effective. The purpose of the non-assignment clause is the genuine commercial interest of a party of ensuring that contractual relations are only with the person he has selected as the other party to the contract and no one else. This is particularly important in areas such as building contracts which are "pregnant with disputes:" see the Linden Gardens case [1994] 1 AC 85, 107, 108. Such a clause avoids the possibility of a third party being enabled to raise issues of set-off not available to the other contracting party. (7) A declaration of trust in favour of a third party of the benefit of obligations or the profits obtained from a contract is different in character from an assignment of the benefit of the contract to that third party: see the Devefi case [1993] R.P.C. 493, 505. Whether the contract contains a provision prohibiting such a declaration of trust must be determined as a matter of construction of the contract. Such a limitation upon the freedom of the party is not lightly to be inferred and a clause prohibiting assignments is prima facie restricted to assignments of the benefit of the obligation and does not extend to declarations of trust of the benefit."
"I accordingly hold that the clear intent of the parties manifested in the first and second agreements was that the [promotion and management] agreements should be held by the partnership or by the partners for the benefit of the partnership absolutely, and that this intent should be given fullest possible effect. The agreements have accordingly at all times been held by the partners as trustees for the partnership. Accordingly the ordinary equitable principles apply (including the rule in Keech v. Sandford (1726) Sel.Cas.Ch. 61) and the partnership assets include all renewal and replacement agreements obtained by any partner during the partnership and over the period between dissolution and the completion of winding up."
"I agree with the judge that In re Turcan, 40 Ch.D. 5, 10 shows clearly that the court will protect the interests of those contractually entitled to have the benefit of an inalienable asset before the fruits of the asset have been realised. In that case, as the House of Lords considered in Linden Gardens Trust Ltd. v. Lenesta Sludge Disposals Ltd. [1994] 1 AC 85, 106, the court gave effect to the intention of the parties by means of a declaration of trust."
"There can be no doubt that it was the intention of the parties as demonstrated by clause 6.1 of the first agreement that the full benefit of the management and promotion agreements should be partnership property. Given the terms of clause 6.1 of the first agreement and the legal inability of Mr. Warren to assign the benefit of the agreements to the partners jointly a trust was the only way the evident intention of the partners could be achieved. For the reasons I have given earlier, the fact that the benefit of the agreements could not be sold and were otherwise unassignable is no reason to refuse to recognise the trust which was necessary to give effect to the manifest intention of the partners." [Emphasis added]
"87 The fact that a prohibition on assignment between A and B cannot allow a third party, C, as A's purported assignee, to bring a direct contractual claim against B is not in dispute. It was held in Linden Gardens to be the consequence of the contractual prohibition. As Lord Browne-Wilkinson said (at 108F):
'Therefore the existing authorities establish that an attempted assignment of contractual rights in breach of a contractual prohibition is ineffective to transfer such contractual rights. I regard the law as being satisfactorily settled in that sense. If the law were otherwise, it would defeat the legitimate commercial reason for inserting the contractual prohibition, viz. to ensure that the original parties to the contract are not brought into direct contractual relations with third parties.'
88 The ineffectiveness of the assignment in breach of a prohibition on assignment is understandable. It is not merely a matter of contract but of property. Although the would-be assignor has legal title to property in the form of a chose in action, he lacks the power, because of the terms on which the property is held, to transfer that property so as to entitle the transferee to exercise those contractual rights himself against the other party to the contract. However, he does not lack the power to render himself a trustee in equity of the property concerned. He would only do that if the prohibition on assignment extended as far as prohibiting a declaration of trust."
"In these circumstances, I feel entitled to deal with issue 8(b) relatively briefly. The judge thought that if the commission in respect of the DSCC contract had not been assignable even in the absence of an express prohibition, then it would have been irrelevant that it had been expressly assigned by TTF to Explora. He rejected Mr Purle's submission that the ineffective assignment would have taken effect as a trust in favour of Explora (para 98). I would merely say that I do not see why such a trust would not take effect: see Linden Gardens at 108D, Don King at 320A/B, Chitty at 19045. Therefore, if there is any commission still due under the 1995 agency agreement which falls within the assignment under the CSA agreement, TTF holds that in trust for Explora"
a. The interpretation of contracts is the ascertainment of the meaning which the contract would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract[5];
b. The Court's enquiry will start and usually finish, by asking what is the ordinary meaning of the words used[6]. Individual words or phrases in a contract should be interpreted in the context of the contract as a whole;
c. The background knowledge and surrounding circumstances which it is legitimate to take into account include anything which would have been reasonably available to the parties which would have affected the way in which the language of the contract would have been understood by the a reasonable man; but the law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent[7];
d. In a commercial contract, it is right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, and the market in which the parties are operating[8].
"An express trust is created by the actual intention of the person in whom the property is vested, . The intention may be apparent from the express use of the words "trust" in the relevant instrument or gathered by inference from words or conduct.
No particular form of expression is necessary for the creation of a trust if, on the whole, it can be gathered that a trust was intended. It is unnecessary for the settlor to use the word "trust": the court construes the substance and effect of the words used, against the background of any relevant surrounding circumstances. Indeed, the settlor need not even understand that his words or conduct have created a trust if they have this effect on their proper legal construction." (Snell on Equity, 32nd Edition, 21-019, 22-013)
"The first question which arises is whether or not the debtor was a trustee for his wife and daughter of the benefit of the undertaking given by the English company in their favour. An examination of the decided cases does, it is true, show that the courts have on occasions adopted what may be called a liberal view on questions of this character, but in the present case I cannot find in the contract anything to justify the conclusion that a trust was intended. It is not legitimate to import into the contract the idea of a trust when the parties have given no indication that such was their intention. To interpret this contract as creating a trust would, in my judgment, be to disregard the dividing line between the case of a trust and the simple case of a contract made between two persons for the benefit of a third."
"It now remains to consider the question whether, and if so to what extent, the principles of equity affect the position of the parties. It was argued by Mr. Denning that one effect of the agreement of September 20, 1940, was that a trust was thereby created, and that the debtor constituted himself trustee for Mrs. Schebsman of the benefit of the covenant under which payments were to be made to her. Uthwatt J. rejected this contention, and the argument has not satisfied me that he was wrong. It is true that, by the use possibly of unguarded language, a person may create a trust, as Monsieur Jourdain talked prose, without knowing it, but unless an intention to create a trust is clearly to be collected from the language used and the circumstances of the case, I think that the court ought not to be astute to discover indications of such an intention."
Application of these Principles to the Facts of this Case
1. Birse was engaged as a contractor by Kingspark Developments Ltd ("Kingspark") to design and build a large warehouse near Rugby. Birse and Kingspark entered into a written building contract dated 20 February 1998. The express terms of the building contract include those pleaded at paragraphs 12, 13 and 14 of the Claimant's Particulars of Claim.
2. Birse in turn engaged Jubb to provide structural engineering services in connection with the project. These included both design services and inspection services. Birse and Jubb entered into a retainer dated 30 March 1998. The express terms of Jubb's retainer include those pleaded at paragraph 23 of the Defendant's Particulars of Claim against Jubb. In or about January 1998, Birse engaged Geofirma by way of sub-contract to undertake soil stabilisation works in relation to the external and warehousing areas of the site. Geofirma's works were completed and handed over by or about July 1998.
3. Kingspark entered into an agreement for lease dated 20 February 1998 in respect of the development with Co-operative Retail Services Ltd ("CRS"). Subsequently by a lease dated 5 October 1998 CRS leased the completed development to CRS. Both Birse and Jubb executed deeds of warranty in favour of CRS. The warranties are at [C1/0.1 and C1/1]. Birse's warranty to CRS was executed on 11 June 1998. Jubb's deed of warranty was executed on 25 August 1998 [C1/1].
4. Clause 7.1 of Jubb's warranty provided:
"The benefit of this agreement may be assigned on two occasions only without the consent of the Consultant. The benefit of this agreement may not be assigned further without the prior written consent of the Consultant, which consent shall not be unreasonably withheld or delayed."
5. Practical Completion was certified on 18 September 1998.
6. On 25 March 2000 CRS passed a special resolution to transfer its engagements to the Claimant ("Co-op"). The effect of that resolution inter alia was to transfer the benefit of Jubb's warranty to Co-op. It is common ground between Jubb and Birse that this transfer is to be regarded as an assignment for the purposes of clause 7.1 of Jubb's warranty.
7. On 31 January 2001 Co-op (who was now lessee of the development by virtue of the transfer mentioned above) executed a deed of assignment under which it assigned its leasehold interest in the property to Woolworth plc ("Woolworth").
8. On 21 March 2001 Co-op executed a further deed of assignment in favour of Woolworth [C1/9]. Under that deed of assignment Co-op "assigns absolutely to [Woolworth] all such right title or interest as the Assignor may have in the Contracts". The "Contracts" included Jubb's warranty.
9. Following Woolworth's collapse in 2008, the Co-op took an overriding lease of the development pursuant to section 19 of the Landlord and Tenant Act 1995. It also took a surrender of the lease from Woolworth pursuant to a Deed of Surrender dated 23 June 2010.
10. Pursuant to a separate Deed of Assignment, dated 23 June 2010 [C1/271] Woolworth purported to assign the benefit of a number of warranties to the Co-op, including Jubb's warranty. Jubb's consent to this assignment was neither sought nor given.
11. By 2004 some physical damage had occurred at the development which resulted in the following letters being written:
11.1. A letter written by Olswang on behalf of Woolworth to Birse dated 6 July 2004 [C1/14].
11.2. A letter written by Olswang on behalf of Woolworth to Birse dated 4 August 2004 [C1/32].
11.3. A letter of claim written by Olswang on behalf of Woolworth dated 16 August 2007 [C1/44].
11.4. A letter of claim written by Davies Arnold Cooper on behalf of Co-op to Birse dated 2 June 2010 [C1/248].
12. Proceedings were commenced on 14 September 2010 by Co-op against three defendants: Birse, Stuarts Industrial Flooring Ltd ("Stuarts") and Jubb. However the Co-op subsequently discontinued its claims against Stuarts and Jubb.
13. The proceedings were stayed to allow the parties to comply with the Pre-Action Protocol. Once the stay was lifted, Birse served Claim Forms (which had been issued on 29 December 2011) on both Stuarts and Jubb naming them as additional parties.
14. Birse subsequently commenced proceedings against Geofirma on 8 March 2013. Those proceedings were served on 28 June 2013.
As between Birse and Jubb it is common ground that any tortious claim against Jubb is time-barred if the cause of action accrued on or before 11 August 2004; and that any cause of action for breach of contract is time-barred in respect of a breach which occurred on or before 11 August 1998.
15. Birse accepts that its contractual claim against Geofirma is time-barred and its claim is therefore advanced in tort only. As between Birse and Geofirma it is common ground that any tortious claim against Geofirma is time-barred if the cause of action accrued on or before 8 March 2007.
2. As appears from its Amended Defence in the main action, the Defendant denies that it is liable to the Claimant upon its claim. If, contrary to its defence in the main action, the Defendant is found liable to the Claimant in respect of the Hardstanding Claim and/or in respect of the Drainage Claim and/or in respect of the Warehouse Slab Claim, the Defendant claims from the Fourth Party damages equivalent to an indemnity in respect of all sums (whether damages, interest or costs) which the Defendant is held liable to pay to the Claimant and/or contribution equivalent to an indemnity pursuant to section 1 of the Civil Liability (Contribution) Act 1978.
D. THE DEFENDANT'S OBLIGATIONS TO THE CLAIMANT
15. The Defendant provided to CRS a collateral warranty ("the Warranty") dated 11 June 1998. The express terms of the Warranty included the following:
4.1 The Contractor warrants that:
4.1.1 it has performed and will continue to perform diligently its obligations under the Contract;
4.1.2 it has carried out and completed and will carry out and complete the Works in a timely and workmanlike manner using good, up to date building practices and good quality materials;
4.1.3 in carrying out and completing the design for the Works, it has exercised and will continue to exercise all the reasonable skill, care and attention to be expected of a competent and qualified architect or, as the case may be, other appropriate competent and qualified professional designer experienced in carrying out and completing the design for works of a similar nature, value, complexity and timescale to the Works... .
16. The benefit of the Warranty was transferred from CRS to the Claimant by the statutory transfer of engagements .
17. The express terms of the Building Contract included the following:
18.
19. Further, the Employer's Requirements which formed part of the Building Contract contained the Specification, which provided as follows:
2.00 SUBSTRUCTURE
2.02 GEOTECHNICAL REPORT
2.06 CONCRETE WORK
2.08 GROUND FLOOR SLAB
5.00 EXTERNAL WORKS
5.01 SERVICE YARD AREA
20. The Claimant contends that the following were terms necessarily implied into the Building Contract:
20.1
20.2
20.3
21. The Defendant contends, rather, that the following were implied terms of the Building Contract:
21.1
21.2
E. JUBB'S OBLIGATIONS TO THE DEFENDANT
22. By the letter of appointment dated 30 March 1998 ("the Appointment"), Jubb was appointed to provide the Engineering Services on the terms and conditions set out in the Appointment. The Appointment was executed as a deed by Jubb.
23. Jubb's express obligations under the Appointment included the following:
1. In carrying out the Consultant Engineering Services set out in this Letter of Appointment, you undertake that:
1.1 You have exercised and will continue to exercise the reasonable skill, care and diligence in the design of those elements of the Development which are your responsibility under this Letter of Appointment or part thereof or services ancillary thereto and in all of the services and duties performed or to be undertaken by you under this Letter of Appointment to be expected of a properly qualified and competent Consulting Engineers experienced in carrying out services for projects of a similar size, scope and complexity to the Development or part thereof or services ancillary thereto and in all of the services and duties performed or to be undertaken by you under this Letter of Appointment in relation to the Development.
1.2
2. The Consultant Engineering Services to be provided by you are detailed as follows:
2.1
2.2 You will prepare yourself the design for the following elements of the Development:
1.
2.
3.
4.
5. Precast concrete floors and stairs (Check details/calculations)
6. Internal insitu floor construction (Check details/calculations)
7. External insitu concrete floor construction
8. External works and levels
9.
10. Foul and storm water drainage
11.
12.
2.3
2.4
2.5 Preparation of specification detail and all other input and liaison with us and our other consultants and subcontractors.
2.6
2.7 Carry out regular inspections at intervals appropriate to the stage of construction of the Development of the works to satisfy yourselves that the Development is being carried out in accordance with the drawings and specification and in a reasonably workmanlike manner.
2.8 Ensure, as far as is possible, the issue, without delay, of all necessary drawings or amplification of detail to enable the works to be completed in accordance with the approved plans, specifications, agreed programme and contract documents.
...
24. There were implied terms of the Appointment that:
24.1 in the performance of its express obligations under the Appointment, Jubb would exercise the care and skill reasonably to be expected of civil and structural consulting engineers possessing the experience and expertise appropriate to perform those obligations in connection with the Development;
25. Further, Jubb owed to the Defendant a duty of care at common law which was concurrent and co-extensive with the implied contractual duty of care set out at Paragraph 24.1 above.
26. As an incident of the duty of care at common law referred to at Paragraph 25 above or otherwise, Jubb owed to the Defendant an obligation properly to review its design(s) for the Development in the event that it was or ought reasonably to have been aware of matters which any reasonably competent civil and structural engineer would regard as good reason to review its design(s).
J. THE CLAIMS AGAINST JUBB
44. in the event and to the extent that the Claimant's claim is not statute-barred and the Claimant establishes that the Defendant is liable as alleged in respect of loss consequent upon defects in the hardstanding and/or in the drainage system and/or in the warehouse slab which were caused in the manner alleged by the Claimant, the Defendant will contend as follows against Jubb:
(a) Damages for breach of the Appointment and/or for negligence
45. The Defendant's liability to the Claimant will have been caused by Jubb's breaches of its obligations to the Defendant. Jubb will have been in breach of its express and/or implied obligations under the Appointment and/or negligent in all or any of the respects set out below. Such breach by Jubb will have caused the defects in the hardstanding and/or in the drainage system and/or in the warehouse slab which the Claimant alleges and placed the Defendant in breach of its obligations to the Claimant.
The Hardstanding
45.1 Jubb failed, prior to construction and during the construction, to identify and/or advise of the failure to use reinforced concrete in the design and/or construction of the slab, called for by the Specification included within the Employer's Requirements and therefore included within the Building Contract (which was provided to Jubb and/or was documentation of which Jubb had notice). This was a breach of clauses 1.1, 1.2, 2.2, 2.3, 2.5, 2.7, 2.8 and/or 2.11 of the Appointment and/or a breach of the implied terms set out at Paragraph 24 above and/or a breach of Jubb's duty of care at common law, and will in turn have placed the Defendant in breach of the Building Contract and of clauses 4.1.1, 4.1.2 and/or 4.1.3 of the Warranty.
45.2 Jubb failed, prior to construction and as a matter of routine earthworks testing during construction, to identify and/or advise that the ground improvement works failed to comply with section 2.02 of the Specification included within the Employer's Requirements . This was a breach of clauses 1.1, 1.2, 2.2, 2.3, 2.5, 2.6, 2.7, 2.8 and/or 2.11 of the Appointment and/or a breach of the implied terms set out at Paragraph 24 above and/or a breach of Jubb's duty of care at common law, and will in turn have placed the Defendant in breach of the Building Contract and of clauses 4.1.1, 4.1.2 and/or 4.1.3 of the Warranty.
45.2A Jubb failed to design the earthworks so as to avoid the defects identified below and/or failed to detect during its inspections of the earthworks that the works were inadequately designed (insofar as they were designed by others) and/or defectively constructed in those respects and/or failed to advise the Defendant of the same and/or to revise its design accordingly:
(a)
(b)
45.2B In the respects identified at Paragraph 45.2A above, Jubb will have been in breach of clauses 1.1, 2.1, 2.2, 2.3, 2.5, 2.7, 2.8 and/or 2.11 of the Appointment and/or a breach of the implied terms set out at Paragraph 24 above and/or a breach of Jubb's duty of care at common law, and will in turn have placed the Defendant in breach of clauses 2.1, 2.5.1.1.1, 2.5.1.1.2, 2.5.1.1.3, 2.5.1.2 and/or 2.5.2 of the Building Contract and of clauses 4.1.1, 4.1.2 and/or 4.1.3 of the Warranty.
45.3 Jubb failed, prior to or during construction, to identify and/or advise that the concrete used in the construction of the slab was inadequate and/or unsuitable and that this was a failure to comply with section 5.01 of the Specification within the Employer's Requirements . This was a breach of clauses 1.1, 1.2, 2.2, 2.3, 2.5, 2.6, 2.7, 2.8 and/or 2.11 of the Appointment and/or a breach of the implied terms set out at Paragraph 24 above and/or a breach of Jubb's duty of care at common law, and will in turn have placed the Defendant in breach of the Building Contract and of clauses 4.1.1, 4.1.2 and/or 4.1.3 of the Warranty.
45.4 If the design or construction of the hardstanding was defective in any of the respects set out at Paragraph 35 above, Jubb would have appreciated the same upon competent inspection of the external hardstanding and Jubb ought to have reviewed (but failed properly to review) its design for the hardstanding at that stage so as to identify, advise the Defendant of and correct those defects. Jubb's failure to do so will have been in breach of clauses 1.1, 1.2, 2.2, 2.3, 2.5, 2.7, 2.8 and/or 2.11 of the Appointment and/or a breach of the implied terms set out at Paragraph 24 above and/or a breach of Jubb's duty of care at common law, and will in turn have placed the Defendant in breach of the Building Contract and of clauses 4.1.1, 4.1.2 and/or 4.1.3 of the Warranty.
The Drainage Systems
45.5 Jubb was responsible for, or failed to identify and/or advise the Defendant of what the Claimant alleges to have been clear inadequacies and/or errors in the design and/or proposed or actual construction in that the channel drainage system did not comply with section 5.01 of the Specification within the Employer's Requirements in that it was not fit for purpose and has collapsed. This was a breach of clauses 1.1, 1.2, 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 2.10 and/or 2.11 of the Appointment and/or a breach of the implied terms set out at Paragraph 24 above and/or a breach of Jubb's duty of care at common law, and will in turn have placed the Defendant in breach of clauses 2.1, 2.5.1.2 and/or 2.5.2 of the Building Contract and of clauses 4.1.1, 4.1.2 and/or 4.1.3 of the Warranty.
45.6 Jubb was responsible for, or failed to identify and/or advise of, poor and/or inadequate design and/or installation of the surface water drainage system and/or of those matters that are alleged by the Claimant (in the Amended Particulars of Claim and in the Claimant's Part 18 Response) to evidence poor workmanship in that:
(a) Reinforcement was allowed to be placed continuously over movement joints rather than leaving the movement joints without reinforcement, which in turn has led to cracking and subsequent collapse of parts of the slab into the drainage channel.
(b)
(c)
(d)
Each of the matters identified at sub-paragraphs (a) to (d) above was a breach of clauses 1.1, 1.2, 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 2.10 and/or 2.11 of the Appointment and of Jubb's duty of care at common law, and will in turn have placed the Defendant in breach of clauses 2.1, 2.5.1.2 and/or 2.5.2 of the Building Contract and of clauses 4.1.1, 4.1.2 and/or 4.1.3 of the Warranty.
45.7 Jubb did not design a separate storm water drainage system, but ran the syphonic roof drains into the sides of the Decathlon II drain, with no seal specified. In these respects, Jubb was in breach of clauses 1.1, 1.2, 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 2.10 and/or 2.11 of the Appointment and/or a breach of the implied terms set out at Paragraph 24 above and/or of Jubb's duty of care at common law, and will in turn have placed the Defendant in breach of clauses 2.1, 2.5.1.2 and/or 2.5.2 of the Building Contract and of clauses 4.1.1, 4.1.2 and/or 4.1.3 of the Warranty.
45.7A Further, Jubb was responsible for, or failed to identify and/or advise of, poor and/or inadequate design of the surface water drainage system and/or poor workmanship in the construction of that system in that:
(a)
(b)
(c)
45.7B In the respects identified above, Jubb will have been in breach of clauses 1.1, 1.2, 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.8 and/or 2.11 of the Appointment and/or a breach of the implied terms set out at Paragraph 24 above and/or a breach of Jubb's duty of care at common law, and will in turn have placed the Defendant in breach of clauses 2.1, 2.5.1.1.1, 2.5.1.1.2, 2.5.1.1.3, 2.5.1.2 and/or 2.5.2 of the Building Contract and of clauses 4.1.1, 4.1.2 and/or 4.1.3 of the Warranty.
45.8 Further, Jubb was responsible for, or failed to identify and/or advise of, defective design and/or installation of the land drain at the north of the property in that:
(a)
(b)
(c)
(d)
(e)
45.8A In all or any of the respects identified in Paragraph 45.8 above, Jubb will have been in breach of clauses 1.1, 1.2, 2.2, 2.3, 2.4, 2.5, 2.6, 2.7 and/or 2.8 and/or 2.11 of the Appointment and/or a breach of the implied terms set out at Paragraph 24 above and/or of Jubb's duty of care at common law, and will in turn have placed the Defendant in breach of clauses 2.1, 2.5.1.2 and/or 2.5.2 of the Building Contract and of clauses 4.1.1, 4.1.2 and/or 4.1.3 of the Warranty.
The Warehouse slab
45.9 Jubb was responsible for and/or failed to identify and/or advise the Defendant of what the Claimant alleges (at Paragraphs 33 and 33B-C of its Amended Particulars of Claim) to have been clear inadequacies and/or errors in the design and/or proposed or actual construction of the Warehouse slab and/or in respect of the preparation and/improvement of the ground underneath the slab and/or a failure to adhere to the Employer's Requirements:
(a)
(b)
(c) In that the slabs in Warehouses 1 and 2 did not comply with Section 2.08 of the Specification
(d)
(e)
(f)
(g) In that it failed to prepare and/or to ensure that Stuarts prepared the design of the Warehouse slab such that the slab was of sufficient thickness as required by sections 2.06 and 2.08 of the Specification within the Employer's Requirements.
(h)
45.10 Without prejudice to the generality of the allegation at Paragraph 45.9 above, if the Claimant establishes that the slab was of insufficient thickness because of poor sub-base level control in that the sub-base surface level was too high, this will have been caused by Jubb's failure:
(a)
(b)
(c)
(d) to advise the Defendant and/or Stuarts that a survey of the finished floor level was required so as to check that the Warehouse slab was within the tolerance to datum required for compliance with the Employer's Requirements.
45.11 In the respects identified at Paragraphs 45.9 and/or 45.10 above, Jubb will have been in breach of clauses 1.1, 2.2, 2.3, 2.5, 2.7, 2.8 and/or 2.11 of the Appointment and/or a breach of the implied terms set out at Paragraph 24 above and/or a breach of Jubb's duty of care at common law, and will in turn have placed the Defendant in breach of clauses 2.1, 2.5.1.1.1, 2.5.1.1.2, 2.5.1.1.3, 2.5.1.2 and/or 2.5.2 of the Building Contract and of clauses 4.1.1, 4.1.2 and/or 4.1.3 of the Warranty.
45.12 Jubb failed to provide, or to take steps to see that Stuarts provided, to the Defendant any detailed calculations, design philosophy document or other reasoning which adequately explained and/or justified the design and construction of the Warehouse slab. This was a breach of clauses 2.10 and/or 2.11 of the Appointment and/or a breach of the implied terms set out at Paragraph 24 above and/or a breach of Jubb's duty of care at common law, and the absence of such design information has exposed the Defendant to the Claimant's claim.
45.13 Further, Jubb failed to carry out any or any sufficient and/or adequate inspections of Stuarts' works in order to ensure that Stuarts' works were being carried out in accordance with the drawings and specification and in a good and workmanlike manner. If Jubb had undertaken competent inspections, Jubb should have observed the various defects admitted by the Defendant in its Amended Defence (referred to at Paragraph 42 above) and, insofar as they are proved, the further defects alleged at Paragraph 33 of the Claimant's Amended Particulars of Claim and referred to at Paragraphs 40 and 41 above. In that event, Jubb would or should have advised the Defendant and Stuarts of the same and suggested and/or requested remedial proposals. This was a breach of clauses 1.1, 2.2, 2.7, 2.10 and/or 2.11 of the Appointment and/or a breach of the implied terms set out at Paragraph 24 above and/or a breach of Jubb's duty of care at common law, and will in turn have placed the Defendant in breach of clauses 2.1, 2.5.1.2 and/or 2.5.2 of the Building Contract and of clauses 4.1.1, 4.1.2 and/or 4.1.3 of the Warranty.
46. Accordingly, in the event that the Defendant is held liable to the Claimant on the Hardstanding Claim and/or on the Drainage Claim and/or on the Warehouse Slab Claim, the Defendant will have suffered loss by reason of breach of duty on the part of Jubb. The Defendant is entitled to and claims damages in respect of such loss which are equivalent to an indemnity against all sums which it is held liable to pay to the Claimant (whether as damages, interest or costs) and against its own expenditure for the purposes of defending those Claims.
Tort
59. As to the Defendant's claim in tort:
59.1 The scope of the duty of care which Jubb owed to the Defendant included the protection of the Defendant from economic loss.
59.2 The damage on which the Defendant's claim in tort is founded is the financial damage which it has suffered and will suffer in satisfying any liability to the Claimant which it may be held to have as a result of Jubb's negligence. The relevant damage is therefore contingent upon the Defendant's liability to the Claimant, which has yet to be ascertained. Alternatively, damage accrued, at the very earliest, when the Claimant made its claim against the Defendant. The Claimant's claim against the Defendant was first made by letter dated 1 June 2010. The claim in tort is within time.
Note 1 Issue 2 does not apply to Geofirma. All three subcontractors participated in the hearing and will be bound by the result.
[Back] Note 2 Rothwell v Chemical & Insulating Co Ltd and anr [2008] 1 AC 281 at [7] [Back] Note 3 Environment Agency v Empress Cars (Abertillery) [1999] 2 AC 22 [Back] Note 4 Hoffmann Causation (2005) LQR 592 [Back] Note 5 ICS Ltd v West Bromwich BS (HL) [1998] 1 WLR 896, 912H per Lord Hoffmann [Back] Note 6 Charter Re v Fagan [1997] AC 313, 348B-C per Lord Mustill [Back] Note 7 See ICS at 912H-913B, Chartbrook v Persimmon [2009] 1 AC 1101 at [38- 42] [Back] Note 8 Reardon Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989 at 995 per Lord Wilberforce [Back]
