Priory Caring Services Ltd v Capita Property Services Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Rix,Lord Justice Wilson,Sir Scott Baker |
| Judgment Date | 11 March 2010 |
| Neutral Citation | [2010] EWCA Civ 226 |
| Court | Court of Appeal (Civil Division) |
| Date | 11 March 2010 |
| Docket Number | Case No: A1/2009/0387 |
[2010] EWCA Civ 226
IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
LIVERPOOL DISTRICT REGISTRY
TECHNOLOGY AND CONSTRUCTION COURT
His Honour Judge Stephen Davies
Before : Lord Justice Rix
Lord Justice Wilson
and
Sir Scott Baker
Case No: A1/2009/0387
TCC No 36/08
Ms Lesley Anderson QC and Mr Graham Sellers (instructed by Gregsons Solicitors) for the Appellant
Mr Alexander Nissen QC and Mr Richard Coplin (instructed by CMS Cameron McKenna LLP) for the Respondent
Hearing date : Friday 11 th December 2009
Lord Justice Rix :
In these proceedings, the claimant (in this court the appellant), Priory Caring Services Limited (“Priory”), seeks to recover damages from the defendant (in this court the respondent), Capita Property Services Limited (“Capita”), in respect of Capita's alleged negligence in the course of undertaking the design, specification and supervision of the repair and refurbishment of Priory's hotel, the Priory Hotel, at Prescot Road in St Helens, Lancashire (the “hotel”). The proceedings were commenced on 24 January 2008. The negligence complained of relates to events in 1998/2000, when the hotel was being repaired after a fire which had occurred on 12 January 1998.
In February 2005 Priory discovered that the refurbished hotel had been disastrously affected by damp penetration. The hotel has thus suffered ordeal first by fire and then by water. The damp penetration is ascribed to the negligence of Capita's surveyor, Mr Vince Owen, in failing properly to specify and supervise the necessary repairs following the fire, in particular in relation to the hotel's roof, as well as in failing in his report of October 2000 to identify the inadequacy of those remedial works.
Capita's response to being sued has been to rely inter alia on a preliminary point arising out of an agreement made between the parties on 10 March 2003 and evidenced by a letter of that date from Priory's solicitors to Capita's solicitors. Capita submits that the agreement bars Priory's claim. The trial judge, HHJ Stephen Davies, sitting as a judge of the Technology and Construction Court in the Liverpool District Registry, agreed and struck out Priory's claim. This is Priory's appeal from his judgment and order dated 6 February 2009.
The letter of 10 March 2003
The letter was from Mr Michael Baden of Messrs Gregson & Ashton, solicitors to Priory, to Mr Jim Pinsent of DLA, solicitors to Capita, and reads as follows:
“I refer to our telephone conversation this afternoon and confirm the following:
I am authorised on behalf of my client Priory Caring Services to send this letter to you.
Ian Murray, having provided his statement of today's date, my client Priory Caring Services confirm and undertake that it will not issue proceedings against Capita in relation to matters arising from Capita's appointment as surveyors to Priory Caring Services in relation to the Priory Hotel –irrespective of whether such appointment was conducted through Vince Owen or otherwise in relation to the Priory Hotel.
It is agreed that Priory Services will pay Capita the fees outstanding in relation to the matter, in the event that such fees are recovered within the existing arbitration proceedings before Mr Stephen Grime against CGU.
Save in relation to non-payment of such fees in the event of recovery as outlined in 3. above, it is agreed that Capita will not issue proceedings against Priory Caring Services Limited.”
Capita submitted, and the judge agreed, that the present proceedings had been commenced in breach of the undertaking given on behalf of Priory in paragraph 2 of that letter, in other words that these proceedings were “in relation to matters arising from Capita's appointment as surveyors to Priory Caring Services in relation to the Priory Hotel”. Capita submitted, and the judge agreed, that the negotiated release was broad and without limit, but that in any event Priory knew, already in March 2003, of serious question-marks over the performance of Mr Owen, who was specifically singled out for mention at the end of paragraph 2 of the letter.
Priory submitted, however, that on its true construction, the release of claims was limited to claims of which the parties were aware at the time of the letter and did not extend to claims which were then unknown to the parties. On that basis, it submitted that Priory did not then know of the damp penetration only discovered in February 2005.
On this appeal, Priory maintains that submission, but seeks to combine it with a further point, in part based on the production of new documents, to the effect that the true and only subject-matter of the letter was the then current threat by Priory to dispute Capita's fees. At its broadest, Priory now maintains, the release was concerned only with a second, separate retainer to Capita in relation to expert witness and other assistance that Capita was providing to Priory in relation to a dispute which had broken out between Priory and its insurers, CGU, and which was then being dealt with in arbitration (referred to in paragraph 3 of the letter).
Mr Murray (referred to in paragraph 2 of the letter) was a director of the northern building surveying business of Capita. Priory was keen for him to make a witness statement in the arbitration between it and CGU, to assist Priory in fighting off a point being made against it in its arbitration, to the effect that Priory had given inadequate disclosure in the arbitration.
There is also a point, made by Priory to the judge below, to the effect that the release was ineffective as a contract because it lacked consideration.
It is necessary to explain the background to these submissions.
The factual background to the letter
No trial took place other than the trial of the preliminary issue relating to the release of claims contained in the letter. Therefore when I speak of the factual background to that letter, such facts are a mixture of pleaded allegations, whose truth has been assumed for the purposes of the preliminary issue, and facts found by the judge as to the immediate circumstances of the agreement evidenced by the letter.
In January 1998, shortly after the fire, Priory engaged a firm of surveyors originally called Richmond Associates, but which almost immediately became KDP Richmond Limited, for which Mr Owen had worked before its business was acquired by Capita (“KDP”). KDP was in due course sued in these proceedings as the first defendant (Capita is the second defendant). It has allowed default judgment to be entered against it. It is without means. KDP was engaged to survey the fire damage and to design and project-manage remedial works to the hotel. When in June or July 1999 Capita acquired KDP's business, it stepped into the shoes of KDP's retainer. As Priory pleads the matter in its particulars of claim:
“In January 1998 the Claimant instructed Richmond Associates…to act on its behalf in supervising the repair and refurbishment of the Hotel…By letter dated the 13 th July 1999 [Capita] informed [Priory] that it had acquired the business of [KDP]. Thereafter it continued to act on behalf of [Priory] in respect of the Hotel in (inter alia) inspecting the works and dealing with [Priory's] insurers.”
Mr Owen transferred to Capita and continued to work on the hotel project until he left Capita's employment in 2000. As the judge puts it (in para 3 of his judgment):
“it is common ground that in or around June or July 1999 [Capita] took over the business of [KDP] and continued from that time onwards to perform the same role for [Priory] that [KDP] had performed.”
It appears to have been KDP's responsibility to prepare a specification for the refurbishment of the hotel, and to instruct and supervise a building firm, TRPS Limited, which had been selected to carry out that refurbishment (“TRPS”). A specification for “Hotel Works and Alterations” bearing the date of June 1998 was brought into existence, which ought to have been issued to TRPS as the basis of their work, but it would seem that this specification (the “specification”) was backdated and not in fact brought into existence until about June 1999 and thus possibly just within the era of Capita's retainer. Priory pleads: “the same was not in fact prepared until about June 1999 [and] was not issued to TRPS”.
TRPS began its work in June 1998 and ceased in about May 1999. That was before Capita appeared on the scene. On 24 October 2000 Capita produced a report of that date in relation to the state of the hotel (the “report”). The judge finds that the report was prepared by Mr Owen. At that date it would seem that the refurbishment programme had ceased, but had not been completed. Priory pleads: “The completion of the refurbishment of the Hotel was thereafter delayed due to differences between [Priory] and its insurers which resulted in lengthy arbitration”. Priory complains that the report ought to have picked up the defective refurbishment work which had occurred, but failed to do so. As the judge observed, “the only specific allegation made against [Capita] in the Particulars of Claim is that it produced a report…and that in the report it failed to identify or to bring to [Priory's] attention the fact that the remedial work that had already been done was defective and undertaken without adequate contractual instructions to the contractor from [KDP] as project...
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