Norwich City Council v Harvey
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE MAY,LORD JUSTICE CROOM-JOHNSON,LORD JUSTICE GLIDEWELL |
| Judgment Date | 21 December 1988 |
| Neutral Citation | [1988] EWCA Civ J1221-13 |
| Docket Number | 88/1138 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 December 1988 |
[1988] EWCA Civ J1221-13
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
NORWICH DISTRICT REGISTRY
(Mr. Justice Garland)
Royal Courts of Justice
Lord Justice May
Lord Justice Croom-Johnson
and
Lord Justice Glidewell
88/1138
MR. R. AKENHEAD (instructed by Messrs Edwin Coe & Calder; London Agents for Messrs Daynes Hill & Perks, Norwich) appeared on behalf of the Appellant/Plaintiff.
MR. N. DENNYS (instructed by Messrs Sharpe Pritchard; London Agents for Messrs Mills & Reeve Francis, Norwich) appeared on behalf of the Respondents/Defendants.
This is a plaintiff's appeal from a judgment of Mr. Justice Garland of the 2nd November 1987. The learned judge then had before him a claim for damages for negligence against both defendants which he dismissed. The plaintiffs now appeal asking that that order should be set aside and that judgment should be entered for them for damages of £56,362.17.
The case concerns a building contract and a subcontract. I take the facts of the case from the learned judge's judgment in which they are clearly set out. The plaintiffs, the building owners, own and operate a swimming pool complex at St. Augustines in Norwich. In March 1981 they entered into a contract with main contractors, called Bush Builders (Norwich) Ltd., for an extension to the complex. The latter subcontracted certain felt roofing work to the second defendants. Unfortunately one of the latter's employees, the first defendant, while using a gas blow torch, set fire to both the existing buildings and the new extension causing damage, which gave rise to the claim in these proceedings.
The learned judge held that any duty of care which would otherwise have been owed by the defendants to the plaintiffs had been qualified by the terms of the respective contracts between the parties, whereby the plaintiff accepted the risk of damage by fire and other perils to their property and that consequently it would not be just and reasonable to hold that the defendants owed any duty to the plaintiffs to take reasonable care to avoid such damage. This is the fundamental issue in this case.
The contract between the plaintiffs and Bush Builders, to which I shall refer as the "main contract", was in the familiar JCT standard form with Quantities, Local Authorities Edition 1963, July 1977 revision. The material clauses of that contract for present purposes are clauses 17, 18,19 and 20C of which the relevant parts are as follows:
"17. The Contractor shall not without the written consent of the Employer assign this Contract, and shall not without the written consent of the Architect/ Supervising Officer (which consent shall not be unreasonably withheld to the prejudice of the Contractor) sub-let any portion of the Works…..
18 (2) Except for such loss or damage as is at the risk of the Employer under clause 20[B] or clause 20 [C] of these Conditions (if applicable) the Contractor shall be liable for, and shall indemnify the Employer against, any expense, liability, loss, claim or proceedings in respect of any injury or damage whatsoever to any property real or personal in so far as such injury or damage arises out of or in the course of or by reason of carrying out of the Works, and provided always that the same is due to any negligence, omission or default of the Contractor, his servants or agents or of any sub-contractor his servants or agents.
19 (1) (a) Without prejudice to his liability to indemnify the Employer under clause 18 of these Conditions the Contractor shall maintain and shall cause any sub-contractor to maintain such insurances as are necessary to cover the liability of the Contractor or, as the case may be, of such sub-contractor in respect of personal injury or death arising out of or in the course of or caused by the carrying out of the Works not due to any act or neglect of the Employer or of any person for whom the Employer is responsible and in respect of injury or damage to property, real or personal, arising out of or in the course of or by reason of the carrying out of the Works and caused by any negligence, omission or default of the Contractor, his servants or agents or, as the case may be, of such sub-contractor his servants or agents…..
20C The existing structures together with the contents thereof owned by him or for which he is responsible and the Works and all unfixed materials and goods, delivered to placed on or adjacent to the Works and intended therefor….. shall be at the sole risk of the employer as regards loss or damage by fire [and other listed risks] and the employer shall maintain adequate insurance against those risks."
Clearly therefore, as between the employer and the main contractor, the former was solely liable in respect of any loss or damage to his premises caused by inter alia fire.
In so far as the second defendants (as sub-contractors) were concerned, they were invited to tender by the main contractor. The document doing so identified the form of the main contract and in attached extracts from the relevant Bills of Quantities the main contractor expressly stated that clause 20C (Employer's Risk) would apply. In their own additional conditions they also provided inter alia:
"The work is to be carried out in accordance with the contract which exists between Bush Builders (Norwich) Limited (hereinafter called the Main Contractor) and the employer, and the acceptance of this order binds the sub-contractors and suppliers to the same terms and conditions as those of the main contract. It is not however the intention of the main contractor to issue formal sub-contract documents unless specifically required."
The sub-contractors duly tendered on 29th January 1981. Their tender was accepted on 27th March 1981 by the main contractor by a document containing the following conditions:
"1. The work is to be carried out in accordance with the contract which exists between Bush Builders (Norwich) Limited (hereinafter called the Main Contractor) and the Employer, and the acceptance of this order binds the sub-contractors and suppliers to the same terms and conditions as those of the main contract.
5. No exclusions or limitations of liabilities of suppliers or sub-contractors are accepted unless agreed separately in writing by the main contractor and all suppliers and sub-contractors will be held responsible for any increased costs due to their actions together with any consequential loss.
6. The suppliers or sub-contractors shall take out and maintain, to the satisfaction of the main contractor, all necessary insurance policies as required by law and the contract and shall produce evidence of the same if required to do so."
On the facts of this case it is not disputed that if the sub-contractors owed any duty to take care to avoid damage to the employers' property by fire, then they were in breach of that duty and the employers are entitled to recover.
The learned judge held that there was no privity of contract between the employer and the sub-contractors; and also that there was no question of the main contractor acting either as the agent or trustee for the sub-contractors—see Judge Smout, Q.C. in Southern Water Authority v. Carey [1985] 2 A.E.R.1077. The learned judge further declined to act upon any analogy with the bailment cases where, as in The Aliakmon [1986] A.C.785, the contractual exemption is in the defendant sub-bailee's contract with the bailee. Having considered a number of recent authorities relating to the existence and extent of a duty of care he concluded:
"The matter must be approached as one of principle: is the duty owed by the Defendant to the Plaintiff qualified by the Plaintiffs' contract with the main Contractor, or to put it more broadly, by the Plaintiffs propounding a scheme whereby they accepted the risk of damage by fire and other perils to their own property—existing structures and contents—and some property which does not belong to them—unfixed materials and goods, the value of which has not been included in any certificate—while requiring the Contractor to indemnify them against liabilities arising from the omission or default of both the Contractor and of any sub-contractor; then requiring the Contractor to insure and to cause any sub-contractor to insure against the liabilities included in the indemnity? I am left in no doubt that the duty in tort owed by the sub-contractor to the employer is so qualified. This appears to me to follow from the passage to which I have referred in Peabody v. Parkinson, and to be consistent with the approach, albeit on different facts in Scottish Housing v. Wimpey and Mark Rowlands v. Berni Inns:…Each case must turn both on its own facts, and on the authority of Peabody v. Parkinson, what is just and reasonable."
I trust I do no injustice to the appellants' argument in this appeal if I put it shortly in this way. There is no dispute between the employer and the main contractor that the former accepted the risk of fire damage ( James Archdale & Co. Ltd. v. Comservices Ltd. [1954] 2 W.L.R.459 and Scottish Special Housing Association v. Wimpey Construction UK Ltd. [1986] 1 W.L.R.995. However clause 20C does not give rise to any obligation on the employer to indemnify the sub-contractor. That clause is primarily concerned to see that the works were completed. It was intended to operate only for the mutual benefit of the employer and the main contractor. If the learned judge and the sub-contractors are right, the...
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