Co-operative Group Ltd v Birse Developments Ltd ((in Liquidation)) Stuarts Industrial Flooring Ltd ((in Administration)) (Third Party) Jubb & Partners (A Firm)(Fourth Party) Geofirma Soils Engineering Ltd (Fifth Party)

JurisdictionEngland & Wales
CourtQueen's Bench Division (Technology and Construction Court)
JudgeThe Honourable Mr Justice Stuart-Smith,Mr Justice Stuart-Smith
Judgment Date28 February 2014
Neutral Citation[2014] EWHC 530 (TCC)
Docket NumberCase No: HT-13-204 and HT-13-69
Date28 February 2014

[2014] EWHC 530 (TCC)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

TECHNOLOGY AND CONSTRUCTION COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

The Honourable Mr Justice Stuart-Smith

Case No: HT-13-204 and HT-13-69

Between:
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

Michael Soole Q.C. and Richard Liddell (instructed by Clyde and Co LLP) for BIRSE

Katie Powell (instructed by Reynolds Porter Chamberlain LLP) for STUARTS

Benjamin Pilling (instructed by Beale and Co) for JUBB

Doré Green (instructed by Kennedys Law LLP) for GEOFIRMA

Hearing dates: 18 & 19 February 2014

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

The Honourable Mr Justice Stuart-Smith Mr Justice Stuart-Smith

Introduction

1

The Defendant ["Birse"] was the design and build main contractor for the construction of a large warehouse near Rugby, which has generated two actions now running concurrently. Birse's subcontractors included the Third and Fourth Parties in action HT-13-204 ["Stuarts" – specialist industrial flooring subcontractor; and "Jubb" – engineering consultancy services] and the Defendant in action HT-13-69 ["Geofirma" – specialist geotechnical design, engineering and contractor services]. The litigation arises because defects are said to have developed in the external hardstanding, the drainage system and the floor slab as a consequence of inadequate design or construction. The Co-Operative Group Ltd ["Co-op"] is the long leaseholder of the premises and is the Claimant in action HT-13-204. Birse is the Defendant in that action and the Claimant in action HT-13-69. The structure of the two actions and the reasons why it has come about that there are two actions are not material for present purposes.

2

Co-op commenced proceedings on 14 September 2010, about 12 years after practical completion. Limitation is one of the many issues between the parties.

3

In addition to the main contract and various sub-contracts (of which more later), collateral warranties were given to the original leaseholder ["CRS"] by Birse, Stuarts and Jubb. The Stuarts and Jubb warranties provided that they could be assigned twice without the consent of the warrantor but that thereafter they could only be assigned with consent, which was not to be unreasonably refused. As appears in more detail later, there have been three agreements to assign the warranties and consent was not obtained for the third assignment, which was intended to assign them to Co-op.

4

On application being made by Jubb and Geofirma, the Court directed that preliminary issues should be tried and gave Stuarts and Co-op permission to make submissions at the trial of those issues. In the event, Stuarts made submissions while Co-op maintained a watching brief. The preliminary issues that were directed to be tried were:

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

5

For the reasons set out below, I decide the preliminary issues as follows:

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.

6

This judgment follows the following course:

The Factual Background

Paragraphs

Introduction

1–6

The Factual Background

7

Birse's Pleaded Case

The case against Jubb

The case against Stuarts

The case against Geofirma

8–15

9

11

13

Issue 1: Limitation in Tort

The principles to be applied

Birse's submissions

"The damaged asset rule"

"The package of rights rule"

Ascertainment at trial

Notification

Lack of knowledge

Incremental steps

16–60

16

41

44

48

56

57

58

59

Issue 2: The Assignment to Co-op

The principles to be applied

Application of these principles to the facts of this case

61–92

65

89

7

No provision was made for facts to be agreed in advance of the hearing, but the parties have now agreed the assumed facts set out in Annexe A for the purposes of this hearing.

Birse's Pleaded Case

8

Birse pleads its case in tort against Stuarts, Jubb and Geofirma in the same form, which is conventional in rehearsing the nature of Co-op's claim against Birse and Birse's denial of liability to Co-op and then making the claim over in the event that its denial of liability fails.

The Case against Jubb

9

The material parts extracted from the Re-amended Particulars of Birse's Additional Claim Against Jubb are set out in Annexe B.

10

I highlight the following features of the pleaded 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

11

The particular allegations of breach giving rise to a claim for damages against Stuarts are different but in substantially the same form as the pleaded allegations against Jubb. In paragraph 38 of its Re-amended Particulars of Claim against Stuarts Birse alleges that Stuarts' breaches "will have caused the defects … which are alleged by the Claimant and will have placed [Birse] in breach of its obligations to the Claimant under [Birse's] Warranty." The particulars of breach under paragraph 38 do not use the formula "and will in turn have placed [Birse] in breach of clauses [x,y,z] of [Birse's main contract]", but in respect of each allegation Birse pleads that the matters complained of "was in turn a breach of clauses [a,b,c] of the Building contract and/or of the implied terms set out [above] and hence … a breach of Stuarts' duty of care at common law." Birse's claim for damages is identical in form to the claim at paragraph 46 of the Jubb pleading. There is no paragraph on the scope of Stuarts' duty equivalent to paragraph 59 of the Jubb pleading.

12

It was not suggested that minor differences in Birse's pleadings make any difference to the overall position and I am unable to detect any difference in substance in the case being advanced on the two pleadings.

The Case against Geofirma

13

The pleading against Geofirma is in substantially the same form as that against Stuarts.

14

The following points may be noted:

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...

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