John F Hunt Demolition Ltd v ASME Engineering Ltd

JurisdictionEngland & Wales
JudgeHis Honour Judge Peter Coulson QC
Judgment Date27 June 2007
Neutral Citation[2007] EWHC 1507 (TCC)
Docket NumberClaim No: HT 07 27
CourtQueen's Bench Division (Technology and Construction Court)
Date27 June 2007
Between
John F Hunt Demolition Limited
Claimant
and
Asme Engineering Limited
Defendant

[2007] EWHC 1507 (TCC)

Before

His Honour Judge Peter Coulson QC

Claim No: HT 07 27

IN THE HIGH COURT OF JUSTICE

QUEEN's BENCH DIVISION

TECHNOLOGY AND CONSTRUCTION COURT

Mr Justin Althaus (instructed by Plexus Law) for the Claimant

Mr Jonathan Selby (instructed by Edwin Coe) for the Defendant

Hearing dates: 23 & 24 May 2007

His Honour Judge Peter Coulson QC

A. INTRODUCTION

1

This case raises, by way of preliminary issue, two unrelated topics, both much-loved by practitioners in this area of law. They are, first, the interplay between the insurance provisions in the JCT Forms of Contract and the existence of duties of care at common law and, second, the proper interpretation and application of the Court of Appeal decision in Biggin & Co Ltd v Permanite Ltd [1951] 2 KB 314. I set out in Section B below the factual background. At Section C below, I then identify and answer the preliminary issues concerned with the insurance provisions and the duty of care. At Section D below, I identify and address, insofar as I am able to do so, the arguments of principle that arise in this case in respect of the proper application of Biggin v Permanite.

2

As noted above, the parties have endeavoured to deal with the disputes of principle that have arisen between them by way of preliminary issue, without calling any evidence at all. The parties agreed that the factual background to which I should have regard (for the purposes of the preliminary issues only) was either that which they had expressly agreed, or which could be discerned from the Claimant's pleaded case. I should say at the outset that I am extremely grateful to both Counsel for their comprehensive and thoughtful submissions.

B. FACTUAL BACKGROUND

3

By a main contract, dated 30 June 2002, and incorporating the JCT Standard Form of Building Contract, With Contractor's Design, 1998 Edition, Kier (Whitehall Place) Ltd (“Whitehall”), engaged Kier Build Ltd (“Build”) to carry out the design and construction of commercial office premises at 3–8A Whitehall Place, London, SW1 (“the property”). The standard form was the subject of a number of bespoke amendments, to which reference is made below. The main contract works required the demolition of much of the existing buildings on the site, but necessitated the retention of certain facades of the existing property.

4

By a sub-contract dated 27 March 2003, Build retained the Claimant, John F Hunt Demolition Limited (“Hunt”) to carry out the demolition of the existing buildings. The demolition sub-contract incorporated the JCT Domestic Sub-Contract DOM/ 2 1981 Edition (reprinted in 1998) with Amendments 1 to 8, and there were again some further bespoke amendments.

5

By a sub-sub-contract made on or about 2 or 3 December 2002, Hunt engaged the Defendant, ASME Engineering Limited (“ASME”), to construct a temporary steel structure to support the existing facades of the property during the course of the demolition works. The sub-sub-contract was evidenced in an exchange of correspondence dealing with the temporary steel works package. There was no reference in that correspondence to the JCT contracts that had been agreed up the contractual chain.

6

On the afternoon of Tuesday, 22 April 2003, ASME were carrying out a part of that temporary steel work construction. The work involved the use of arc welding equipment. It appears that sparks from the welding work set light to the bitumen felt weather-proofing on the retained facades. The facades caught fire and it took in excess of 45 minutes for the fire to be extinguished. For the purposes of these preliminary issues only, I am asked to assume that the fire was due to ASME's culpable default.

7

The two separate Kier companies, Whitehall and Build, indicated a joint claim against the sub-contractor, Hunt. It appears that this claim focussed entirely on the consequences of the damage to the existing facades and the repair work that had to be carried out to those facades. The total amount claimed was £248,145.04. Hunt notified ASME of the claim. In about August 2005, Hunt and ASME jointly instructed quantity surveyors, Haleys Ltd, to assess the value of the claim. Following the provision of further information by the Kier companies, Haleys advised that the claim was worth about £151,545 exclusive of interest. This was, on its face, a quantum-only assessment; in other words, assuming a full liability to the Kier companies, Haleys were advising that such a claim was worth about £151,545, plus interest.

8

In the summer of 2006, Hunt offered to settle the claims that had been made for £152,500. This offer was accepted by the Kier companies. That is the sum which Hunt now seeks against ASME in these proceedings, together with other legal costs and fees. Following the identification (and my order for the hearing) of these preliminary issues, a certain amount of further detail relating to this claim was agreed by the parties.

9

Accordingly, the position now is as follows:

a) Of the settlement figure of £152,500, it is agreed by the parties that £108,987.12 constituted the losses suffered by Whitehall. This figure represented the cost of reinstating the retained facades. Hunt accept that, pursuant to the terms of the main contract, Whitehall could not have recovered that sum against Build and that, therefore, Build could not have recovered that sum against them under the terms of the sub-contract. However, Hunt maintain that they would have been liable to Whitehall for this sum in tort, a proposition which ASME deny. That dispute gives rise to preliminary issues 1 and 2, addressed in Section C below.

b) It is also agreed that the remaining part of the settlement, namely the sum of £43,512.88, constituted Build's own losses as a result of the fire and its consequences. It is not suggested that this sum could not have been recovered by Build under the terms of their sub-contract with Hunt. However, ASME contend that because, on their case, this figure of £43,512.88 represented Hunt's maximum liability to the Kier companies, the settlement at £152,500 was plainly unreasonable, and thus not the true measure of loss. That in turn gives rise to preliminary issues 3 and 4, dealt with in Section D below.

C. THE CONTRACT PROVISIONS AND THE DUTY OF CARE

C1. Preliminary Issues 1 and 2

10

The Preliminary Issues that arise in respect of the insurance and the duty of care disputes are as follows:

(1) Insurance Issue

(a) Were Build liable to Whitehall for any claims under the terms of the main contract?

(b) If not, were Hunt liable in principle under their sub-contract with Build solely for Build's own losses, and are those losses now claimed as against ASME at a maximum of £43,512.88?

(2) Duty of Care Issue

Assuming the answer to (1)(a) is No, and the answer to (1)(b) is Yes, did Hunt owe a duty of care at common law to Whitehall, thereby allowing Whitehall to recover the entirety of its claim against Hunt as damages for breach of that duty?

11

For the reasons noted above, Hunt now concede that Build had no liability to Whitehall under the terms of the main contract. The answer to preliminary issue (1)(a) is therefore No. As we shall see, this concession is the result of the operation of the relevant indemnity and insurance provisions and, in my judgment, it is entirely in accordance with the authorities. In those circumstances, the maximum that Build could recover pursuant to their sub-contract with Hunt was in respect of Build's own losses, claimed at a maximum of £43,512.88. The answer to preliminary issue (1)(b) is therefore Yes. Thus preliminary issue 2 is now what matters: whether, in all the circumstances, including in particular the terms of the main contract and the sub-contract, Hunt owed a duty of care to Whitehall in respect of the fire damage to the existing facades, so as to enable Hunt to say that the joint claim made against them by the Kier companies was not limited in law to Build's losses alone.

C2. The Contract Terms

The Main Contract

12

Clause 2.1 of the main contract provided:

“The Contractor shall upon and subject to the Conditions carry out and complete the Works referred to in the Employer's Requirements, the Contractor's Proposals …, the Articles of Agreement, these Conditions and the Appendices in accordance with the aforementioned documents and for that purpose shall complete the design for the Works including the selection of any specifications for any kinds and standards of the materials and goods and workmanship to be used in the construction of the Works so far as not described or stated in the Employer's Requirements or Contractor's Proposals …”

13

Clause 18.2.1 of the main contract, as amended, provided:

“Subject to Clause 18.2.4.1 and to Clause 18.2.4.4 the Employer hereby consents to the sub-letting by the Contractor of the Works and to the sub-letting of the design of all or any part of the Works to the Contractor's Design Consultants and to sub-contractors carrying out substantial design works.”

14

Clause 20 of the contract, as amended, provided:

“20.1 The Contractor shall be liable for, and shall indemnify the Employer against, any expense, liability, loss, claim or proceedings whatsoever arising under any statute or at common law in respect of personal injury to or the death of any person whomsoever arising out of or in the course of or caused by the carrying out of the Works (including performance by the Contractor of his obligations under Clause 16) or out of the presence on Site of any persons for any other reasons, except to the extent that the same is due to any act or neglect of the Employer or of any person for whom the Employer is responsible including the persons employed or otherwise engaged...

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2 firm's commentaries
  • The Recoverability Of Settlements
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    ...of its liability insurers, does so at its own peril. Further reading: John F Hunt Demolition Limited v ASME Engineering Limited [2007] EWHC 1507 (TCC) This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to Law-Now i......
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    ...with the result that it is left up to the court to decide. References: John F Hunt Demolition Ltd v ASME Engineering Ltd [2007] EWHC 1507 (TCC) http://www.bailii.org/ew/cases/EWHC/TCC/2007/1507.html Note that the judgment in Hunt v ASME also analyses the circumstances in which amounts paid ......
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