(1) Flanagan & (2) Coles v Greenbanks Ltd (T/A Lazenby Insulation) (Respondent (Part 20 Claimant) Cross (Appellant/Part 20 Defendant)

JurisdictionEngland & Wales
JudgeLady Justice Rafferty,Lady Justice Macur,Lord Justice Maurice Kay
Judgment Date19 December 2013
Neutral Citation[2013] EWCA Civ 1702
Docket NumberCase No: B2/2012/1751(A) & B2/2012/1751
CourtCourt of Appeal (Civil Division)
Date19 December 2013

[2013] EWCA Civ 1702

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM OXFORD COUNTY COURT

His Honour Judge Harris QC

8BE 01296

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Justice Maurice Kay (VICE PRESIDENT COURT OF APPEAL CIVIL)

Lady Justice Rafferty Dbe

and

Lady Justice Macur Dbe

Case No: B2/2012/1751(A) & B2/2012/1751

Between:
(1) Flanagan & (2) Coles
Claimants
and
Greenbanks Limited (T/A Lazenby Insulation)
Respondent (Part 20 Claimant)

and

Cross
Appellant/Part 20 Defendant

Alex Ustych (instructed by Bar Pro Bono Unit) for the Appellant

Jeffrey Jupp (instructed by DFA law LLP) for the Respondent

Lady Justice Rafferty
1

In this appeal Mr Cross challenges the 22 nd June 2012 Order of HHJ Harris QC before whom he was in person.

2

Trading as JK Surveys Mr Cross advertised for the installation of cavity wall insulation ('CWI'). He or his employees attended properties as the 'surveyor', (also referred to as the assessor) to assess suitability and to measure. Mr Cross contracted with the Respondent Lazenby who would later install CWI.

3

In November 2005 Mr Cross's employee Mr Sharp failed to check that two homes were suitable for installation of CWI. In September 2006 Lazenby before installing CWI also failed to check.

4

Mr Cross was joined as a third party in a claim originally brought against Lazenby by Mr Flanagan and Mrs Coles the householder Claimants.

5

The householders and Lazenby settled the original claim. Lazenby served an Additional Claim against Mr Cross which by later amendment pleaded breach of contract and sought an indemnity or contribution under the Civil Liability (Contribution) Act 1978. We gave Mr Cross leave to adduce as new evidence the Terms and Conditions ("T&C") of Lazenby's contract with the householders.

6

The issue for us is whether the Judge were correct to decide there was no break in the chain of causation following Mr Cross's breach of his contract with Lazenby.

The facts

7

In 2005 Mr Cross put a proposition to Mr Ryan, Managing Director of Lazenby. Mr Cross had a surveying business and could deliver customers who wanted CWI if Lazenby could install it. Mr Ryan told Mr Cross he knew nothing about CWI and would need to rely entirely on Mr Cross's expertise to assess properties for suitability. On that footing the business was established. Since nothing was reduced to writing contractual terms were implied.

8

Two of three governing standards for CWI installers are BBA (British Board of Agrement) and CIGA (Cavity Insulation Guarantee Agency). Each offers guidance on inspection standards. Lazenby was a member of each, Mr Cross of none.

9

Article 14.1 of the BBA Certificate reads:

"The installing operative ensures that the property has been correctly surveyed and is suitable for insulation with the product."

10

The CIGA Technician's Guide where relevant reads:

"Once you are satisfied that the property is of suitable cavity wall construction, technicians should carry out the other necessary checks to make sure that the property has been correctly surveyed."

11

On 1 November 2005 John Sharp, an employee and agent of Mr Cross, surveyed neighbouring properties belonging to Mr Flanagan and to Mrs Coles. He recorded measurements on a Site Survey Sheet which in part read "The building has been surveyed and meets the requirements of BBA Certificate…and BBA Technical Schedule" in small font under the signature fields. Neither did, as each had a timber frame.

12

On 18 September 2006 Lazenby installed CWI in each. Lazenby accepts that its employee should have checked for suitability before installing. A 2007 survey revealed the error.

13

On 3 rd September 2008, in the main action, the householders alleged that Lazenby was in breach of contract because, timber-framed, the properties were unsuitable for CWI. Lazenby's T&C, not before HHJ Harris QC, read where relevant:

"a. If we start to install insulation at your property and then find the structure of your building is not suitable for the work we agreed to carry out then we will be allowed to end the contract;

b. We will write and tell you within 7 days of the survey and we will tell you why your building is not suitable."

14

More than once throughout their relationship, for various reasons, Lazenby's installers found a Cross-surveyed property unsuitable for installation. It would tell Mr Cross why and he would refund fees received. Sometimes customers had turned to other installers. On two occasions the installers found a timber frame, did not install, and made a deduction recorded on the invoice, but each post-dated the index events.

15

After trying the Additional Claim the Judge held that Mr Cross had breached an implied contractual term to ascertain suitability for CWI. Though Lazenby should also have checked before installing, its failure did not break the chain of causation and Mr Cross was liable for his breach of contract, the major cause of loss.

16

In the alternative he was liable to Lazenby under the Civil Liability (Contribution) Act 1978, the appropriate contribution 75 per cent.

Developed submissions

17

The law was not in dispute. When an experienced trial judge (as is HHJ Harris QC) has reached a conclusion on the facts this court will be very reluctant to interfere: Biogen Inc v Medeva plc [1997] RPC 1. The Judge heard Mr Ryan, MD of Lazenby, Mr Chippendale a former employee of Mr Cross, Mr Turner an employee of Lazenby, and Mr Sharp the surveyor of the Claimants properties. All were cross-examined.

18

The Judge included in his judgment a lengthy extract from the thorough analysis of the law and of a desirable approach in Borealis AB v Geogas Trading SA [2010] EWHC 2789 (Comm) at § 43 to 47. Gross LJ said:

"43 First, although an evidential burden rests on the defendant insofar as it contends that there was a break in the chain of causation, the legal burden of proof rests throughout on the claimant to prove that the defendant's breach of contract caused its loss.

44 Secondly, in order to comprise a novus actus interveniens, so breaking the chain of causation, the conduct of the claimant "must constitute an event of such impact that it 'obliterates' the wrongdoing…" of the defendant: Clerk & Lindsell on Torts (19th ed.), at para. 2–78. The same test applies in contract. For there to be a break in the chain of causation, the true cause of the loss must be the conduct of the claimant rather than the breach of contract on the part of the defendant; if the breach of contract by the defendant and the claimant's subsequent conduct are concurrent causes, it must be unlikely that the chain of causation will be broken. In circumstances where the defendant's breach of contract remains an effective cause of the loss, at least ordinarily, the chain of causation will not be broken: County Ltd v Girozentrale [1996] 3 All ER 834, at p. 849 b-c, per Beldam LJ and at pp. 857 f-g and 858 b-c, per Hobhouse LJ (as he then was). Other examples can be found in the area of shipping law. Where, in breach of charterparty, charterers order a vessel to proceed to an unsafe port, the conduct of the vessel's master in obeying the order (placed as he well may be, on the horns of a dilemma) will be judged sympathetically, in context and will not lightly be treated as unreasonable: Compania Naviera Maropan v Bowaters (The "Stork") [1955] 2 QB 68. But even negligent navigation following the charterer's order to proceed to an unsafe port will not necessarily break the chain of causation: see, for example, The Polyglory [1977] 2 Lloyd's Rep. 353, at p.366. Conversely, where the negligence of vessel X caused vessel Y to run aground, vessel X was not liable for such damages as were attributable to the subsequent, clearly separate and negligent re-floating of vessel Y: The "Spontaneity" [1962] 1 Lloyd's Rep 460; the negligence of vessel X had ceased to be operative.

45 Thirdly, it is difficult to conceive that anything less than unreasonable conduct on the part of the claimant would be capable of breaking the chain of causation. It is, however, also plain that mere unreasonable conduct on a claimant's part will not necessarily do so — for example where the defendant's breach remains an effective cause of the loss, albeit in combination with the claimant's failure to take reasonable precautions in its own interest: see, for example, County Ltd v Girozentrale, per Beldam LJ ( loc cit). By its nature, reckless conduct by the claimant would or would ordinarily break the chain of causation, though there is no rule of law that only recklessness on the part of the claimant will do so: Lambert v Lewis [1982] AC 225, per Roskill LJ (as he then was) in the Court of Appeal, at p.252; County Ltd v Girozentrale ( supra), per Hobhouse LJ at p. 857, more conveniently discussed below, when dealing with the claimant's knowledge or lack of it.

46 Fourthly, the claimant's state of knowledge at the time of and following the defendant's breach of contract is likely to be a factor of very great significance. For the chain of causation to be broken, the claimant need not have knowledge of the legal niceties of the breach of contract; nor, as it seems to me, will the chain of causation only be broken if the claimant has actual knowledge that a breach of contract has occurred — otherwise there would be a premium on ignorance. However, the more the claimant has actual knowledge of the breach, of the dangerousness of the situation which has thus arisen and of the need to take appropriate remedial measures, the greater the likelihood that the chain of causation will be broken. Conversely, the less the claimant knows...

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1 firm's commentaries
  • Commercial Contracts Bulletin - February 2014
    • United Kingdom
    • Mondaq United Kingdom
    • 3 March 2014
    ...WHO IS... THE WEAKEST LINK? Flanagan and Coles v Greenbanks Limited (t/a Lazenby Insulation) & Cross [2013] EWCA Civ 1702 The Court of Appeal recently used the five key principles detailed in the case of Borealis AB v Geogas Trading SA [2010] EWHC 2789 (Comm) to establish whether there ......
1 books & journal articles
  • CONTRACT DAMAGES AND THE PROMISEE'S ROLE IN ITS OWN LOSS.
    • Australia
    • Melbourne University Law Review Vol. 42 No. 2, April 2019
    • 1 January 2019
    ...J) (failure to take precautions between (unknown) breach and damage not breaking causal connection). (150) Flanagan v Greenbanks Ltd [2013] EWCA Civ 1702, [53] (Macur LJ) (dissenting); but see at [34] (Rafferty LJ) (151) See below n 235. (152) Cf Australian Broadcasting Corporation v Comalc......

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