Outwing Construction Ltd v Thomas Weatherald Ltd

Pursuant to the Practice Statement of 9 July 1990 this text records my judgment and note or further record need be made

The Defendant ("Weatherald") was the main contractor engaged, on a design and build basis, to construct a new nursing home at a site in Bramley Hill in Croydon. For the purposes of the project it employed, amongst others, Messrs Hubert Jenkins and Ptns ("the Engineer") as consulting engineers to prepare the structural design and, in August 1996, it placed a sub-contract with the Claimant ("Outwing") to carry out the required groundworks and substructure construction up to DPC level. Those works included a basement which was designed with blockwork retaining walls taken up from a reinforced concrete floor slab. This case is concerned with the alleged responsibility of Outwing for the failure of the external tanking system of basement waterproofing. Weatherald contends that this is a simple/straightforward case of groundwater penetration having occurred because of workmanship failures on the part of Outwing.

Responsibility for the groundwater penetration problem was discussed/disputed between Weatherald and Outwing in correspondence beginning with Weatherald's letter dated 13 ^th May 1997 and ending with its letter dated 18 ^th November 1997 (see pages 180, 181/2, 183/4, 185, 186/8, 190/192, 193, 194, 194A/194R, 194S/194A5, 194A7, 194A8/194B3, 194B6, 194B7/194B8 and 194B9/194C1). I see no need to go through that correspondence in detail but the main points which it establishes are these:-

(1) From the outset Weatherald identified the problem as water penetration through the tanking membrane and contended that it was Outwing's responsibility to "resolve the problem" (page 180).

(2) Outwing initially did not accept that dampness/flooding had been caused (either wholly or in part) by water penetration as Weatherald contended. Outwing identified other possible sources of the water.

(3) Weatherald accepted that some of the water was properly explained on the alternative bases suggested by Outwing but maintained the position that there was a continuing problem of water penetration through the tanking membrane and required Outwing to acknowledge this and to put forward detailed proposals and to resolve the problems (pages 190/192).

(4) Outwing refused to accept that it was responsible for the dampness/flooding problem and notified Weatherald that it had commissioned a consultant specialising in basement construction to investigate and report. That consultant was Mr P.N. Hewitt (in due course, Outwing's expert witness at the trial). His first report was dated 30 ^th August 1997. It was forwarded to Weatherald on 11 ^th September 1997 (pages 194A and 194B/194R). In that report he stated that there was a high likelihood of water penetration having occurred through the tanking membrane and he criticised the design of the land drainage (in particular he criticised the level at which it had been installed) which was, he said, a "serious defect in the waterproofing design". He also identified two possible approaches to the remedial works viz. external works —(removing the existing land drain and the lean mix concrete below it before constructing a land drain at the base of the concrete slab) —which would eliminate hydrostatic pressure from the external membrane; alternatively, the application of an internal cemetitious waterproofing system to the walls and floor of the basement.

(5) Weatherald forwarded Mr Hewitt's report to the Engineer whose detailed comments were forwarded to Outwing on 1 ^st October 1997 (pages 194S and 194T/194V). Without going into details, the Engineer's response can be summarised as a spirited and unequivocal rejection of Mr Hewitt's criticism of the design coupled with the statement that the moisture in the basement appeared to be the direct consequence of "… either damage, inadequacies or installation faults of the primary waterproofing membrane…". When forwarding that response to Outwing Weatherald unequivocally endorsed the Engineer's views and adopted them as its views. The demand for Outwing to take action to rectify the problem was repeated.

(6) Mr Hewitt responded to the Engineer's comments on 10 ^th October 1997 (pages 194A9/194B3). He took issue with what it had said. He maintained his position and what he then said was, in essence, repeated in his written and oral evidence. That response was sent on to the Engineer on 16 ^th October 1997 (page 194 A8). The view that the problem could be attributed to poor workmanship and defects in either the material or its application was repeated by the Engineer and, once again, Weatherald aligned itself with the Engineer's views (pages 194 B8 and 194 B9194 C1).

(7) Both Mr Hewitt and the Engineer advised that "opening up" or "exposure" was needed if the nature and extent of "defects in the membrane" through which groundwater was able to penetrate was to be ascertained (see the last paragraph on page 194J and the comments arising therefrom on pages 194V and 194B2). It was recognised that any such exercise would probably involve quite extensive works.

At the conclusion of these exchanges Weatherald stated that the only viable method of dealing with the problem was for an internal waterproof rendering system to be installed. No investigating works to determine the state/condition of the membrane were to be undertaken before the remedial works were carried out. It was said that these remedial works would be done and that the costs would be recovered from Outwing. In practical terms Weatherald had decided to rely on clause 2.4 of the sub-contract conditions by which it had reserved the right to deduct the amount of "any bona fide contra account and/or other claims and counterclaims which [it might] have against [Outwing] in connection with this or any other contract". In consequence, this litigation came to be constituted with Outwing as the claimant seeking judgment for the unpaid balances due in respect of the Bramley Hill sub-contract and another sub-contract and with Weatherald as the counterclaiming Defendant.

On the pleadings, issue was taken as to the precise amount which, subject to set-off, was due and owing to Outwing but no time was taken up on this issue at the trial. The parties agreed that a VAT inclusive total of £35,652.27 was the sum otherwise due to Outwing. The agreed sum did not take into account Outwing's claim for interest pursuant to Section 35A of the Supreme Court Act 1981. The interest question was left over to be dealt with, if necessary, after the decision on Weatherald's Counterclaim was known.

I now turn to consider the Counterclaim. Weatherald contends that the Bramley Hill Sub-Contract contained two implied terms. First, that Outwing would carry out the works with reasonable skill and care. Secondly, that the materials supplied by Outwing would be reasonably fit for their purpose and of good quality. Weatherald alleges that "in breach of the said implied terms the damp proof tanking supplied and installed by [Outwing] is defective in that it is permitting water penetration and flooding of the basement of the building". The loss and damage suffered in the event of such breach being established was agreed to be £58,000.

In the Defence to the Counterclaim Outwing does not admit the alleged implied terms but, if found, due compliance therewith is averred. Groundwater penetration of the basement walls is admitted but the alleged breach of the sub-contract is denied and a positive alternative explanation of the cause of the groundwater penetration is pleaded. The alternative explanation is "… [Weatherald's] faulty design which, inter alia, failed to comply with the recommendations of the BS8102 code of practice for the protection of structures against water from the Ground (1990) and in particular paragraph 3.3 thereof. Inter alia the design was defective in incorporating a land drain as part of the measures to protect the building against the ingress of groundwater: (1) it should have required the land drain to be installed at a height no higher than level with the basement floor; (2) it should not have required the land drain to be supported on a concrete base".

On 9 ^th July 1998 Outwing requested particulars of Weatherald's pleaded allegation of breach of the implied terms. The request contained three questions. The first two questions invited Weatherald to give particulars of the allegation that Outwing had failed to carry out the sub-contract works with reasonable skill and care/supplied defective materials and of the allegation that such breaches had caused the water penetration and flooding of which complaint was made. Quite obviously, particulars of this sort could not be given unless Weatherald carried out a fairly extensive "opening up" or "exposure" exercise of the sort which Mr Hewitt and the Engineer had contemplated in 1997. In the alternative, by the third question Weatherald was invited "… if it was [its] intention to adduce no positive case at trial, and merely to rely upon the occurrence of the alleged water penetration and flooding of the basement as evidence of unparticularised lack of reasonable skill or care, or unspecified defective materials, then [to] please say so. For the avoidance of doubt [Outwing stated that it was] not accepted … that the alleged water penetration or flooding [was] evidence of such matters". A response to the request for particulars was given on 10 ^th September 1998 (page 19). That response was manifestly...