Co-Operative Retail Services Ltd (Claimants) Taylor Young Partnership Hoare Lea & Partners (A Firm)(Defendants/Appllants) Carillion Construction Ltd (formerly Tarmac Construction (Contracts) Ltd, Wimpey Construction UK Ltd) and Another (Third Parties/Respondents) Genergy Plc (formerly Dale Power Systems Plc) (Fourth Party) Flue-Stox Engineering Ltd (Fifth Party)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BROOKE,Lord Justice Robert Walker,Lord Justice Peter Gibson |
| Judgment Date | 04 July 2000 |
| Judgment citation (vLex) | [2000] EWCA Civ J0704-3 |
| Court | Court of Appeal (Civil Division) |
| Date | 04 July 2000 |
| Docket Number | Case No: QBENF 2000/0242/A2, QBENF 2000/0243/A2, PTA 2000/5943/A2, PTA 2000/5951/A2 |
[2000] EWCA Civ J0704-3
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE TECHNOLOGY AND
CONSTRUCTION COURT
(HH Judge Wilcox)
Lord Justice Peter Gibson
Lord Justice Brooke and
Lord Justice Robert Walker
Case No: QBENF 2000/0242/A2, QBENF 2000/0243/A2, PTA 2000/5943/A2, PTA 2000/5951/A2
Representatives
John Slater QC & Julian Horne (instructed by Kennedys for the First Appellants and Hill Dickinson for the Second Appellants)
Andrew Bartlett QC & Kim Franklin (instructed by Berrymans Lace Mawer for the First Respondents)
Jonathan Acton Davis QC & Simon Henderson (instructed by James Chapman & Co for the Second Respondents)
Timothy Lamb QC (instructed by Bannisters for the Claimants)
Geoffrey Brown (instructed by Badhams Thompson for the Fourth Party)
This appeal arises out of the trial in the Technology and Construction Court by Judge Wilcox on 21st December 1999 of a preliminary issue in an action brought by the claimants Co-operative Retail Services Ltd ("CRS") against their former professional advisers in connection with a fire that took place on 16th March 1995 at a site in Lancashire which was in the course of construction as CRS's new headquarters. The two defendants in the action, who are the appellants in this appeal, are CRS's architects, Taylor Young Partnership Ltd ("TYP") and their mechanical and electrical engineers Hoare Lea and Partners ("HLP"). The respondents to the appeal are the main contractors and the electrical subcontractors, who were joined as third parties in the action. I will call the main contractors "Wimpey" and the electrical sub-contractors "Hall". Although nobody has suggested that CRS was in any way to blame for what occurred, following the judgment on 21st December 1999 the defendants sought to put forward a revised case based on allegations of contributory negligence which I will explain in due course. On 15th March 2000 the judge refused to permit them to amend their defence in this regard, and the defendants also apply for permission to appeal against this ruling.
The preliminary issue was decided on the following assumed facts:
(1) In April 1993 CRS engaged Wimpey to build a new office headquarters building on a site owned by CRS in Rochdale. The form of the main contract ("the main contract") was JCT 80 private with quantities with amendments 1–2 and 4–11 (File B Tab 51).
(2) TYP and HLP were part of the professional team engaged in the project, TYP being appointed as Architect and HLP being appointed as Mechanical and Electrical Engineers.
(3) Hall were the electrical sub-contractors for the building's generator system. The form of sub-contract ("the sub-contract") was DOM/ 1 1980 Edition with amendments 1–3 and 5–9 (File B Tab 55). Hall entered into a warranty with CRS and Wimpey dated 11th October 1993.
(4) The requirements of Clause 22A of the main contract were met by a joint names policy with CGU ("the joint names insurance"), which insured Wimpey, CRS and Hall (File B Tab 52).
(5) On 16th March 1995, after the intended completion date but before Practical Completion, a fire occurred at the site when the generator was being commissioned. The building was extensively damaged.
(6) CRS allege that the fire resulted from negligence or breach of contract on the part of both TYP and HLP. The losses claimed by CRS fall into three categories:
(i) the cost of reinstatement works ("Schedule 1 losses" —File A Tab 3)
(ii) the cost of associated professional fees ("Schedule 2 losses" —File A Tab 4)
(iii) losses consequential on the delay to the project ("Schedule 3 losses —File A Tab 5).
(7) In their turn, TYP and HLP have alleged that the fire was the result of breaches of the main contract by Wimpey and breaches of warranty by Hall.
(8) The fire was covered by the joint names policy so that the joint names insurance covered the cost of the reinstatement works and the related professional fees. Accordingly the Schedule 1 and Schedule 2 losses were borne by the joint names insurers, the CGU.
(9) The Schedule 3 losses were borne by a different insurer, who insured CRS for consequential losses.
(10) The contractual date for completion was 26.12.94. During the course of the works TYP issued extensions of time up to 18.9.95. TYP certified Practical Completion of the works on 26.2.96 and on 21.11.97 issued a certificate of non-completion pursuant to clause 24 of the main contract. Wimpey paid liquidated damages to CRS for the period 18.9.95 to 26.2.96, that is 23 weeks. Accordingly, the whole of the time from the original contractual completion date to the date of Practical Completion is accounted for either by the grant of an extension of time or the deduction of liquidated damages.
The statement of assumed facts ended in these terms:
(11) Assumptions
It should be assumed (for present purposes only) that the allegations can be proved and that the fire therefore resulted to a greater or lesser extent from breaches of obligation on the part of each and all of TYP, HLP, Wimpey and Hall.
(12) Issues
On the assumed facts and having regard to the provisions of the main contract, the sub-contract, the joint names insurance and the Civil Liability (Contribution) Act 1978, are:
(i) Wimpey and/or
(ii) Hall
liable to make contribution to HLP and TYP in respect of:
(a) Schedule 1 of the Statement of Claim (cost of remedial works)?
(b) Schedule 2 of the Statement of Claim (cost of professional fees)?
(c) Schedule 3 of the Statement of Claim (consequential losses)?
The judge set out his conclusions at the end of his judgment under appeal in the following terms:
(1) Wimpey and Hall have never been liable in respect of any damage arising out of the fire, neither could such liability be established.
(2) The answers to the three questions are:
(i) No.
(ii) No.
(iii) No.
It was common ground that CRS's insurers, acting through rights of subrogation, could not pursue in CRS's name an action against Wimpey or Hall, since they were insured against the same risk under the same insurance policy. This is the effect of the judgment of Lloyd J in Petrofina (UK) Ltd v Magnaload Ltd [1984] 1 QB 127. He considered that the claim would be barred by circuity of action since those defendants would simply pass the claim on to the insurers who had caused the action to be brought in the first place. I will consider this reasoning later in this judgment but, as I have said, nobody questioned the existence of the principle.
The defendants say, however, that the existence of this principle is not effective to prevent them from claiming contribution against Wimpey and/or Hall pursuant to Section 1(1) of Civil Liability (Contribution) Act 1978 ("the 1978 Act."). Wimpey and Hall successfully resisted this contention before the judge on two grounds. The first was that they said that the application of the Petrofina principle meant that they were not "other persons liable in respect of the same damage" within the meaning of that section. The second, which arose quite apart from the Petrofina principle, was that they had a complete defence as a matter of contract to any claim CRS might bring against them, and for this reason they were once again not "other persons liable in respect of the same damage" within the meaning of Section 1(1) of the Act.
In order to understand the issues that arise on this appeal it is necessary first to say something about the contractual position as between CRS (the building owner), Wimpey (the main contractor), and Hall, who were the domestic sub-contractors responsible for the design and installation of the electrical works which formed the site of the fire. I would comment at this stage, however, that the agreed assumptions on which this preliminary issue was tried set the case off on the wrong foot because by Assumption 11 they assumed a breach of obligation by Wimpey and Hall in spite of the presence of a contractual framework involving the institution of a joint names all risks insurance policy and of a contract which precluded the need for any investigation into the existence, or otherwise, of legally enforceable duties in the event of a fire during the course of the works.
The main contract between CRS and Wimpey was an "inclusive price" "new-build" contract in the form described in Assumption 1. Clause 2(1) set out Wimpey's obligations in unambiguous terms:
"The Contractor shall upon and subject to the Conditions carry out and complete the Works in compliance with the Contract Documents …"
Clauses 20 and 21 are concerned with injury to persons and to property other than the Works (see clause 20.3.1), and with Wimpey's obligation to take out and maintain appropriate insurance in respect of claims arising out of its liability as identified in clause 20. Clause 20.2 is concerned with Wimpey's liability to indemnify CRS in broad terms for injury or damage to property (other than the Works) caused by its negligence, breach of statutory duty, omission or default. In this regard its wording is different from its predecessor, whose effect was considered by this court in Surrey Heath BC v Lovell...
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