Michael Hyde & Associates Ltd v J.d. Williams & Company Ltd

JurisdictionEngland & Wales
JudgeLord Justice Ward,Lord Justice Sedley,Lord Justice Nourse
Judgment Date06 July 2000
Judgment citation (vLex)[2000] EWCA Civ J0706-11
Date06 July 2000
Docket NumberCase No: QBENF 98/1650 CMS1
CourtCourt of Appeal (Civil Division)

[2000] EWCA Civ J0706-11





Lord Justice Nourse

Lord Justice Ward and

Lord Justice Sedley

Case No: QBENF 98/1650 CMS1

Michael Hyde & Associates Ltd.
J.d. Williams & Co. Ltd.

Mr Stephen Grime Q.C. and Mr Nicholas Fewtrell (instructed by Elliotts for the Appellant)

Mr Ian Pennicott (instructed by Addleshaw Booth & Co. for the Respondent)

Lord Justice Ward

Phenolic yellowing is a phenomenon which may be known to researchers into the subject but it is known to very few others. It affects textiles; but in the opinion of the claimant's own expert, textile suppliers and merchants only become aware of the problem after they have experienced it. It was certainly not known at the material time to the claimant in this action, J.D. Williams & Co., ("JDW"), but it is now. JDW is a large catalogue mail order company which was holding vast quantities of clothing in two converted former cotton mills. A computer database search of the architectural journals, the publications in the building and construction industry and the heating and ventilation literature made no reference to phenolic yellowing. Not surprisingly, therefore, the defendant, Michael Hyde & Associates Ltd., a company of chartered architects, knew nothing about phenolic yellowing.


Phenolic yellowing occurs in this way. Yellowing precursors are commonly present as antioxidants in plastic packaging made of polythene, but not cellophane, in foam and in some lubricants, or as naturally occurring phenols (derived from lignin in wood) which can be present in cardboard and paper. These yellowing precursors are often quite volatile and so they can migrate to textiles placed in close proximity to these packaging materials. This will occur more readily when the yellowing precursors come into contact with oxides of nitrogen, because it is in this way that the yellow products are formed and transferred to and absorbed by the textiles.


Oxides of nitrogen from various sources are present in the atmosphere. They are a product of the combustion of the natural gas which takes place in a direct fired system of heating which operates by air being drawn into the heater from the atmosphere, mixed with gas, burnt and expelled within the premises.


This was the heating system installed in the claimant's premises during the conversion and refurbishment of the old cotton mills. The defendant was appointed as architect for the project. The distribution centre became operational in about December 1990. By May 1991 the extent of the yellowing of the claimant's clothing had become significant. The causal link between the direct fired gas heating system and the phenolic yellowing was eventually obvious.


JDW alleged in the proceedings which followed in 1995 that the architects ought to have been aware of the risk of discoloration and ought to have warned the claimant of it. The defendant contended that it could not reasonably be expected to be aware of phenolic yellowing – if anyone ought to have known about its dangers it was those within the textile industry and the claimants could not blame others for its own short comings. The hearing in July 1998 lasted for five days before His Honour Judge S P Grenfell conducting the Official Referee Business in the Queen's Bench Division of the High Court at Salford. In a judgment handed down on 16th December 1998 he found for the claimant and on 22nd December 1998 judgment was entered against the defendant in the sum of £365,325.60. This is the architect's appeal against that order.


A Summary of other Material Facts.


The claimant company is in a very large way of business in the garment sector. In April 1989 the company purchased Briar Mill, a derelict five storey cotton mill in Shaw, Oldham. The original intention was to convert the mill for use as a bulk storage warehouse. It would need a modern heating system and in May 1989 British Gas through its Sales Officer, Mr Higginson, quoted for the more usual indirect gas-fired system. Later he suggested that a direct fired system might be preferable. It required less units than an indirect fired system so it had economic advantages. Moreover the fans could be used to provide ventilation in the summer to improve the comfort of those who work there. It was clearly attractive to Trevor Fowler, JDW's newly appointed Engineering and Building Services Manager, a qualified engineer with experience in the textile business. Mr Fowler asked Mr Higginson to make further enquiries.


British Gas turned to its supplier, PC Rapid, the English distributor of the American made system. In his witness statement Mr Higginson said:-

"I understand we had experienced a problem with the discoloration of products containing foam at a factory at which a direct gas-fired heating system had been installed. There was a standing order within British Gas North Western requiring consideration of the risk of discoloration in all quotations for direct gas-fired heating systems in situations where there might be foam or other man made materials or fabrics. PC Rapid were unhappy about this and tried to persuade us to drop the disclaimer which they saw as prejudicial to their product and business."


In their response PC Rapid drew attention "to existing direct fired installations in sensitive areas which might be prone to discoloration" and, having listed a number of installations on premises where clothing was kept, they stated:-

"The above examples are only a few selected from a comprehensive list to demonstrate the suitability of the Rapid approach to direct firing in areas where discoloration might occur on the customer's product, we confirm that none of our customers have experienced this problem."


Nevertheless a disclaimer was included in the quotation dated 15th June 1989 given by British Gas to J.D. Williams. It was to this effect:-

"British Gas plc will not be liable for any discoloration effect on materials resulting from direct gas fired heating."


The disclaimer did not escape the claimant's attention. The judge found that Mr Beveridge, a Director of the claimant company, highlighted that sentence on a copy of the quotation which remained on the company's files. Mr Fowler was not called by the company but the architects put his witness statement in evidence. That revealed that he made a note on the quotation:-

"Man-made products from foam … with primitive type."


That was his record of the discussion he had with Mr Higginson who told him that British Gas had experienced a problem with an older system and products containing foam. According to Mr Fowler, Mr Higginson assured him that discoloration was not a problem. The judge found:-

"Higginson achieved his aim which was to reassure Fowler, which Fowler in turn took to mean that there was no problem … I am satisfied that neither (Beveridge) nor Fowler had any prior knowledge of discoloration caused by direct fired gas heaters, let alone phenolic yellowing. It seems that Beveridge's prime concern was to ensure that an efficient heating system avoided some of the staff problems which had occurred in the past … Against this background it would seem that JDW, as I find, would have been ready to install direct fired heating in Briar Mill".


Those plans changed because in the summer of 1989 JDW managed to acquire Lilac Mill which was situated on the other side of the railway line and the project turned into the very much larger development of converting and refurbishing both mills. In those circumstances MHA was engaged to provide "all architectural, clerk of works, surveys, quantity surveying and structural engineering services" necessary for the project. The judge characterised that engagement as indicating "a multi-disciplinary administrative and advisory service". The extent, if any, of their duty to advise in respect of the choice of the heating system was of course in issue.


Mr Warrington, a civil engineer, was responsible for the project on the defendant's behalf. In addition to the architects, JDW appointed a project manager who had its own engineering and building expertise. When the question of heating was raised, Mr Fowler suggested to Mr Warrington that he communicate with Mr Higginson. Mr Fowler provided the June quotation and Mr Warrington noted the disclaimer and realised it was a matter to explore with Mr Higginson. There was a meeting on 24th November 1989. The judge found:-

"… Warrington asked (Higginson) about the disclaimer in the British Gas quotation and was told that it was a standard clause but that direct fired units had been used in similar installations elsewhere without there being a discoloration problem. Later on the same day Warrington met Fowler, pursuing his manuscript note "Check JDW discoloration" repeated what he had been told by Higginson and obtained Fowler's confirmation that this was in line with what he had previously learnt. Both Warrington and Fowler were of the view that the use of direct heating was not a cause for concern and I am satisfied that they jointly decided to proceed on the basis of the direct fired system."


In paragraph 11 of his judgment the judge made these important findings:-

"Therefore, although there are some background facts in issue, the basic facts are that both Fowler on behalf of JDW and Warrington on behalf of MHA had a similar state of knowledge as to the risk of discoloration attached to direct fired heating in November 1989 at the crucial time (the meeting of 24th November) when in effect Warrington presented to...

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