Epsom College (A Private Company Ltd by Guarantee) v Pierse Contracting Southern Ltd ((in Liquidation), Formerly Biseley Construction Ltd)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Rix,Lord Justice Tomlinson,Sir Mark Waller |
| Judgment Date | 13 December 2011 |
| Neutral Citation | [2011] EWCA Civ 1449 |
| Docket Number | Case No: A1/2011/0289 |
| Court | Court of Appeal (Civil Division) |
| Date | 13 December 2011 |
[2011] EWCA Civ 1449
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION MANCHESTER DISTRICT REGISTRY
HIS HONOUR JUDGE STEPHEN DAVIES
9MA05866
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Rix
Lord Justice Tomlinson
and
Sir Mark Waller
Case No: A1/2011/0289
Mr Roger Mallalieu (instructed by Weightmans LLP) for the Appellant
Dr Mark Friston and Mr Kevin Latham (instructed by Berrymans Lace Mawer LLP) for the Respondent
Hearing dates : Wednesday 9 th November 2011
This is an appeal about costs. It is an unhappy story: although not as unhappy as it might have been had it involved uninsured litigants. This litigation is effectively between two sets of insurers.
The essential issues on this appeal are whether the judge was wrong to give effect to the claimant's Part 36 offers by ordering costs on an indemnity basis and granting enhanced interest rates on judgment sum and costs; but also whether he was wrong even to have given the claimant all of its costs, rather than only 60% of them.
The flooding incident
On 10 April 2006 there was a flooding incident in the dining hall at Epsom College, a school in Epsom, Surrey, the claimant in these proceedings and in this court the respondent. The school blamed contractors who had been working in the dining hall in 2003, namely the defendant (here the appellant) Bisley Construction Limited, now in liquidation and renamed Pierse Contracting Southern Limited (the "contractor"). The claim was in the modest sum of £25,537.72. At trial in January 2011 the school recovered damages of £21,075 (plus interest).
The flood was caused by an escape of water running at pressure through a pipe buried beneath the floor of the dining hall. Dampness had appeared in the carpet and when this was investigated and the carpet and plywood boarding taken up and then a duct cover removed, a jet of water which reached right to the ceiling shot up out of a hole in the top of the pipe. It had always been the school's case that the hole had been caused by a nail (or screw) which had been driven through the duct cover in order to nail it down to wooden battens below but which had been negligently misplaced so as to penetrate the pipe. The nail had made such a tight fit in the hole that for three years there was no, or no apparent, leakage. Then, however, with corrosion and/or movement of the nail, water had started to leak and wet the carpet above. It was the removal of the duct cover which had lifted the nail out of its hole and caused the jet of water. The water was stopped first by a finger and then by tapping another nail into the hole. The incident was witnessed by the school's clerk of works, Mr Bateman, and its foreman of works, Mr Blann. At trial Mr Bateman's evidence was not relied on by the judge because he had said some inconsistent things over the years. But the judge regarded Mr Blann to be a reliable witness.
At trial it was common ground that the leak had been caused by a nail driven into the pipe. However, the contractor said that it had not performed any work to the relevant pipes, that the pipe in question had been there since the dining hall had been built, that it was improbable in any event that a contractor working there would have negligently driven a nail into the pipe, and that the likeliest explanation was therefore that someone else had at some time, whether before or after 2003, driven a nail, not just through the duct cover, but through carpet, plywood and duct cover as a whole. In any event, the school could not prove that it was the contractor which had put the nail through the pipe.
The judge rejected the defence. As I have already said, he accepted the evidence of Mr Blann who said that he had seen the nail in the duct cover itself (which he could not have done if it went through carpet and all). But the credibility which the judge ascribed to that evidence was supported by his findings that the copper piping in question had probably been replaced in 2003, by the contractor, in place of the original iron piping. He was assisted towards that conclusion by a number of factors, such as that the copper piping had a metric and not an imperial measurement, and had been wrapped in Armaflex, an insulating material which was not available when the dining room had been built. And Mr Blann had seen the original iron piping at some time in the early 1990s, when a new radiator had been installed.
At the time of the flood, the relevant section of the pipe, with the replacement nail in it, was photographed and the pipe put away in an envelope in a filing cabinet. Unfortunately, it came to be forgotten where the pipe had been put, and the school thought that it had not been retained. The duct cover with the nail in it was not retained, nor was it photographed. Ultimately the pipe was found, but not until October 2010, when it was immediately disclosed to the contractor. Its expert witness, Mr Stephen Watts, inspected it on 28 October 2010. He realised immediately that his previous opinion, that the likeliest explanation for the pipe's failure was corrosion over its life-time (on the assumption that it went back to the beginning of the dining hall) was impossible: for the pipe showed no signs of corrosion, and the hole in the top of it had clearly been made by a nail or some such intrusion.
No claim form was issued until 30 March 2009, but there was an almost immediate letter of claim dated 22 May 2006 (we have been given its date, but not its contents). On 5 June 2006 Mr Bateman's first witness statement, taken on 19 May and dated 30 May 2006, was served on the contractor. He described how on 10 April that year he had gone with Mr Blann to examine the wetness problem in the dining room, had lifted the floor coverings and the duct cover, how water had shot out of a hole in the top of a 22mm copper pipe serving the radiators, how the hole had been plugged with a nail, and how photographs had been taken of the nail in the pipe and of the damage to the hall. The photographs were attached. Nothing was said as to how the hole in the pipe had been made, nor was reference made to an original nail, but it was pointed out that the contractor had carried out work in the dining hall in August 2003 which had involved works to the heating pipes, and that there had been no work there since. He concluded that "I therefore believe that Bisley Construction are responsible for puncturing the central heating pipe which caused this incident." Other than reference to a hole and the use of the word "puncturing", no mechanism was ascribed to the cause of the hole. No statement was obtained from Mr Blann.
Dr Leek's report
On 7 February 2007 the contractor's insurers' solicitors (henceforward the contractor's solicitors) faxed the school's insurers' solicitors (henceforward the school's solicitors) to request information, such as invoices in respect of the 2003 works (which ought to have been obtainable from the contractor itself) and confirmation that the pipe was still in the school's possession. A reply was sent on 23 March 2007 which said that no paperwork could be located, and (wrongly) that "the damaged copper pipe had been disposed of having retained copy photographic evidence which clearly indicated the nail in the pipework in situ". That was not of course the original nail, but the replacement nail.
On 21 August 2007 the school (ie its insurers) instructed Dr T H Leek to report on the flooding incident. He sought further information from Mr Bateman, who wrote a letter dated 19 October 2007 which stated inter alia that "The nail was in the duct cover and into the pipe…It was when the duct cover was being lifted that the water started escaping under pressure up into the air." That was the first express reference to an original nail.
In the meantime the contractor's solicitors had written on 13 September 2007 to decline liability. They said they were "somewhat incredulous" that the pipe had been disposed of. They pointed out that Mr Bateman nowhere in his statement had referred to the cause of the hole in the pipe, or to seeing any original nail; and that the nail in the photograph was obviously the nail inserted by Mr Bateman himself. From a further letter from the contractor's solicitors, dated 8 November 2007, it is clear that it had become perfectly clear that the school's case was that the hole had been caused by a nail, not being the nail shown in the photographs. The contractor's case, on the other hand, was that there was every likelihood that "the defect was a latent one in the pipe"; and that on the school's case any original nail should have been capable of being seen protruding through the lifted duct cover, and yet Mr Bateman had not referred to it.
On 15 January 2008 Dr Leek spoke to Mr Bateman on the telephone. Dr Leek noted his conversation and appended it to his ultimate report. He recorded that "Mr Bateman did not check for either a specific nail [that punctured the pipe] or a nail hole in the duct cover corresponding to where the hole in the pipe was found."
Dr Leek's report was not completed until 10 September 2008. In it Dr Leek concluded that "the hole in the pipe was made by a nail driven through the timber duct cover, or perhaps a screw", at the time in 2003 when the contractor was working in the dining room renewing pipework. He accepted that the pipe, the duct cover and...
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