British Telecommunications Plc v James Thomson and Sons (Engineers) Ltd (Scotland)
| Jurisdiction | Scotland |
| Judgment Date | 13 December 1997 |
| Docket Number | No. 11. |
| Date | 13 December 1997 |
| Court | Court of Session (Inner House - Second Division) |
SECOND DIVISION.
Contract—Building contract—Fire damage to heritable property—Whether subcontractors liable—Whether fair, just and reasonable to impose duty of care—Standard form of Building Contract, Local Authorities Edition with Quantities (1980 edn), cll 20.2, 22C.1, 22.3.1 and 22.3.2
Clause 22.2 of the Standard Form of Building Contract, Local Authorities Edition with Quantities (1980 edn) provides, inter alia, that: “The Contractor shall, subject to clause 20.3 and, where applicable, clause 22C.1, be liable for, and shall indemnify the Employer against, any expense, liability, loss, claim or proceedings in respect of any injury or damage whatsoever to any property real or personal in so far as such injury or damage arises out of or in the course of or by reason of the carrying out of the Works, and to the extent that the same is due to any negligence, breach of statutory duty, omission or default of the contractor, his servants or agents or of any person employed or engaged upon or in connection with the Works or any part thereof, his servants or agents.” Clause 22C.1, narrates,inter alia, that: “The Employer shall take out and maintain a Policy in respect of the existing structures … together with the contents thereof owned by him or for which he is responsible, for the full cost of reinstatement, repair or replacement of loss or damage to one or more of the Specified Perils up to and including the date of issue of the Certificate of Practical Completion or up to and including the date of determination of the employment of the Contractor under clause 22C.4.3 or clause 27 or clause 28 or clause 28A … whichever is the earlier.” By virtue of clause 1.3 the term “Specified Perils” in clause 22C.1 includes “fire”. Clause 22.3.1 provides, inter alia, that the employer, where clause 22C, applies shall insure that the policy referred to in clause 22C.1 and 22C.2 shall either provide for recognition of each subcontractor nominated by the architect the contractor administrator as an insured under the relevant joint names policy or include a waiver by the relevant insurers of any right of subrogation which they may have against any such nominated subcontractor where clause 22C.1 applies, in respect of loss or damage by the Specified Perils to the existing structures together with the contents thereof owned by the employer or for which he is responsible. Clause 22.3.2 provides, inter alia, that: “Except in respect of the policy referred to in clause 22C.1 the provision of clause 22.3.1 in regard to recognition of waiver shall apply to domestic subcontractors.”
In 1989 the pursuers accepted a tender for the execution of works of refurbishment and repair to be carried out on the aerial equipment, housing and roof of the pursuers' building. The tender was from a main contractor who subcontracted certain of the work to the defenders as a domestic subcontractor. While the defenders were carrying out the work under their subcontract, a fire broke out in the roof. Damage was sustained and the pursuers thereafter brought an action of reparation for damages against the defenders in respect of the loss and damage caused by their negligence. The Lord Ordinary (Rodger) held that in the circumstances, it would not be fair, just and reasonable to impose a duty of care on the defenders and, accordingly, dismissed the action. The pursuers reclaimed. Before the Lord Ordinary and the Inner House the pursuers conceded that cases of physical harm had to be approached by considering whether it would be fair, just and reasonable to impose a duty of care in the particular circumstances.
Held (Lord Morison dissenting) (1) that in deciding whether to impose a duty of care, the court had to have regard to the contractual setting derived from the arrangements for which the parties regulated their affairs; (2) that in considering that matter, it was relevant to have regard to the contractual provisions which existed and, although the claim was made at common law for negligence, and not a claim under contract, the contractual arrangement between the parties was part of the relevant circumstances which had to be considered when determining whether it would be fair, just and reasonable to hold that a duty was imposed; (3) that if the subcontractor was aware that the employer had undertaken to insure against the risk of negligence on the part of the subcontractor, then the latter was entitled to assume not merely that he need not himself insure, but that he was not under any duty of care to the employers with regard to any loss or damage caused by that acting; so that (4) the Lord Ordinary had not erred; and reclaiming motion refused.
Opinion (per Lord Morison (dissenting)) (1) that in assessing the significance to the reclaimers' case based on delict of the contractual provisions founded on by the respondents it was essential to avoid confusion between principles which applied in determining rights and obligations arising ex contractu with those which arose ex delicto; (2) that the respondents' submissions and the Lord Ordinary's determination tended to confuse the effect of those contractual provisions so far as bearing on the contractual rights and obligations of parties with their effect on the general obligation to take care; (3) that, in attempting to proceed in accordance with the reclaimers' concession, there was a very strong presumption that on the basis of the principles laid down inDonoghue v. StevensonSC1932 SC (HL) 31, the respondents owed a duty of care towards the reclaimers and that it would be very difficult to displace that presumption by reference to contractual provisions voluntarily entered into and intended to regulate the contractual relationship of parties, not to regulate the relation which gave rise to the duty to take care at common law; and (4) that, although the provision whereby the reclaimers undertook to insure against fire damage, meant that they could not sue the main contractor or his employees in respect of such damage, that provision should not have any substantial effect in an assessment of the respondents' duties at common law; and, accordingly, (5) that it was fair, just and reasonable in the circumstances to hold the case to be governed only by the ordinary considerations of proximity and foreseeability and the reclaiming motion ought to be allowed.
Authorities considered.
British Telecommunications plc brought an action against James Thomson & Sons (Engineers) Limited in respect of the direct physical consequences to the pursuers' property of a fire which they alleged was negligently caused by the defenders or their servants while they were working at the pursuers' premises as subcontractors under a building contract entered into for the refurbishment and repair of part of those premises.
The cause called on procedure roll before the Lord Ordinary (Rodger).
At advising, the Lord Ordinary dismissed the action.
The pursuers reclaimed.
Cases referred to:
Aberdeen Harbour Board v. Heating Enterprises Ltd 1988 SLT 762; 1990 SLT 416
Donoghue v. StevensonSC 1932 SC (HL) 31
Dorset Yacht Co Ltd v. Home OfficeELR [1970] AC 1004
Henderson v. Merrett Syndicates LtdELR [1995] 2 AC 145
Marc Rich & Co AG v. Bishop Rock Marine Co LtdELR[1996] 1 AC 211
Murphy v. Brentwood District CouncilELR [1991] AC 398
Norwich City Council v. HarveyWLR [1989] 1 WLR 828
Ossory Road (Skelmersdale) Ltd v. Balfour Beatty Building Ltd 1993 CILL 882
SSHA v. Wimpey Construction (UK) LtdSC 1986 SC (HL) 57
Textbook referred to:
Keating on Building Contracts (6th edn) pp 607–608
The cause called before the Second Division, comprising the Lord Justice-Clerk (Ross), Lord Morison and Lord Cowie for a hearing in the summar roll.
At advising, on 13 December 1996—
LORD JUSTICE-CLERK (Ross)—This is a reclaiming motion against an interlocutor of the Lord Ordinary dated 7 February 1996 in which he sustained the first plea in law for the defenders and dismissed the action. The action is one in which the pursuers seek damages from the defenders in respect of loss and damage sustained in consequence of alleged fault and negligence on the part of the defenders and the defenders' servants. The claim relates to damage caused to heritable property belonging to the pursuers in Glasgow.
In 1989 the pursuers accepted a tender for the execution of works of refurbishment and repair to be carried out on the aerial equipment housing and roof of the pursuers' building. The tender was from MDW Ltd who were thus the main contractor. MDW Ltd subcontracted certain of the work to the defenders as a domestic subcontractor. While the defenders were carrying out work under its subcontract, a fire broke out in the roof area. As a result the roof area and certain lower floor areas were damaged either directly by the fire or the smoke generated thereby or by water or other damage necessarily done in the course of combating and controlling the fire. In the present action the pursuers seek damages in respect of this loss and damage which they attribute to the defenders' negligence.
At the procedure roll hearing before the Lord Ordinary, counsel for the defenders contended that the action should be dismissed. The contention was that the pursuers' pleadings were irrelevant because in the circumstances the defenders did not owe any duty to the pursuers not to cause damage by fire to the existing structures or their contents. As the Lord Ordinary observes in his opinion, the question at issue between the parties was whether in the circumstances the defenders owed a duty of care to the pursuers.
In his opinion the Lord Ordinary expresses his conclusion as follows: “I have, of course, borne in mind that the present case concerns physical damage due to a fire which is alleged to have started due to the negligence of the defenders or of their employees in the...
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...fairness, justice and reasonableness had been accepted in Scotland in British Telecommunications plc v James Thomson & Sons (Engineers) Ltd 1997 SC 59 at 61-62, 1999 SC (HL) 9 at 12. (3) Counsel considered the circumstances in which delictual duties might be imposed on statutory bodies when......
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