Simaan General Contracting Company v Pilkington Glass Ltd (No. 2)

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeTHE MASTER OF THE ROLLS,LORD JUSTICE BINGHAM,LORD JUSTICE DILLON
Judgment Date17 February 1988
Judgment citation (vLex)[1988] EWCA Civ J0217-4
Docket Number88/0126

[1988] EWCA Civ J0217-4

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM AN ORDER OF HIS HONOUR JUDGE JOHN NEWEY Q.C.

(OFFICIAL REFEREE'S BUSINESS)

Royal Courts of Justice

Before:

The Master of The Rolls

(Lord Donaldson)

Lord Justice Dillon

Lord Justice Bingham

88/0126

Simaan General Contracting Company (a firm)
and
Pilkington Glass Limited

MR D.M. HARRIS, instructed by C.R. Bayley Esq. (St. Helen's), appeared for the Appellants (Defendants).

MR R. TAGER, instructed by Messrs Michael Conn & Co., appeared for the Respondents (Plaintiffs).

THE MASTER OF THE ROLLS
1

I will ask Lord Justice Bingham to give the first judgment.

LORD JUSTICE BINGHAM
2

This appeal concerns a new building in Abu Dhabi. It is owned by Sheikh Al-Oteiba, who is not a party to the action. The main contractors under the building contract for the building are the plaintiffs in this action and the respondents to this appeal ("Simaan"). The supply and erection of curtain walling for the building were sub-contracted to Industria Componenti Per L'Architettura Feal SpA ("Feal"), who are not parties to the action. Glass units for incorporation in the curtain walling were supplied by the appellant defendants ("Pilkington") to Feal.

3

Pilkington appeal against a decision of His Honour Judge Newey Q.C., sitting as an Official Referee, on a preliminary issue argued before him. The issue was:

"In manufacturing the double-glazed units to be incorporated into the curtain wall of the Al-Oteiba Building, did Pilkington as the specified supplier of the units, owe to Simaan, as the main contractors, a duty to take reasonable care to avoid defects in the units which (it is assumed for the purpose of this preliminary issue) have caused Simaan economic loss as alleged in paragraphs 14 and 15 of the Statement of Claim?"

4

The assumed loss is the withholding of money which Simaan would otherwise have been entitled to receive from the building owner, and loss of interest. The alleged defects in the glass (also to be assumed for purposes of the issue) relate not to their durability, serviceability or present or future performance characteristics, but simply to their colour. They should have been a uniform shade of green. They are (it is said) in variable shades of green, and in places red. This colour discrepancy is not acceptable to the building owner, being (it is said) unpleasant in appearance, contrary to specification and not in accordance with a sample supplied. Green is the colour of peace in Islam, so the discrepancy is regarded as one of some moment.

5

The learned judge resolved the issue in favour of Simaan, holding that in all the circumstances Pilkington did owe them a duty of care. In reaching this conclusion he made a wide-ranging survey of the law of negligence since 1932, but he relied in particular on the House of Lords' much-discussed decision in Junior Books Ltd. v. Veitchi Co. Ltd. [1983] 1 A.C. 520. Factually, the situation in Junior Books was different from that here. The pursuers were the building owner, not (as here) the main contractor. The plaintiff had received a floor which was unfit for use as such, not (as here) a wall which was serviceable as such but unacceptable visually. The defenders were sub-contractors nominated by the plaintiff, not (as here) a supplier of goods. The judge's decision accordingly involves the application of Junior Books to a new factual situation. That is not in itself an objection to his decision. It is how the law develops. The question for us is whether Junior Books (or any other case) lays down a principle which can and ought to lead us on the present facts to answer the question as the judge did.

6

I do not think that any very detailed account of the facts is called for. From an early stage in the planning of this building project the Sheikh's architect favoured the use of Pilkington's Suncool 24/22 green double-glazed units in the curtain wall of the proposed building. The architect and Pilkington discussed the technical properties of the material in detail and a sample was supplied to the architect. On 6th July 1982 the main contract for the building was made between the sheikh and Simaan. It incorporated the Conditions of Contract (International) for works of Civil Engineering Consctruction (FIDIC) dated March 1987, Part 1, subject to variations and amendments. Under the contract Simaan were entitled to subcontract parts of the work with approval, but not so as to relieve themselves of liability to the building owner. There was no clause governing the transfer of title to goods delivered to site for purposes of the building or incorporated in it. There was an arbitration clause. The contract was to be governed by the law of Abu Dhabi; no evidence of Abu Dhabi law has been adduced, so English law principles are assumed to apply. The contract incorproated a specification which contained this provision:

" Glass Types (All glass to be approved by the Engineer)

1. Curtain Wall:

Pilkington [Suncool] Ref 24/22 (Green) sealed double glazing units or other approved with similar characteristics

Shading coefficient

0.25

'U' value

1.80 W/m 2 deg C/hr

Visible light transmission reflectance

0.24

0.19

Solar radiant heat reflectance absorption

0.21

0.64

Total transmission

0.22

Sound insulation

29 dBA".

7

Failure to meet these technical requirements could have had far-reaching effects, for example on the air-conditioning of the building. But no such failure is alleged. It is only the colour which gives rise to complaint. No other manufacturer produced glass having these characteristics.

8

On 31st July 1983 Simaan subcontracted to Feal the works:

"for the installation complete of curtain walling and all aluminium components and metalwork including…the exclusive use of glass supplied by Messrs. Pilkington Brothers of St. Helens, Lancashire, England."

9

The subcontract terms broadly followed those of the main contract, although the arbitration clause was different. Both before and after the placing of the subcontract Feal did their best to induce the architect to use glass other than Pilkington's, but without success. So Feal at the end of 1983 ordered the units from Pilkington, the contract apparently containing no exemption clauses.

10

Pilkington proceeded to fabricate units to the dimensions specified for the building. It seems that the, mineral coatings may have been incorrectly applied to the inner side of the outer layer of glass of the units, with the result that a uniform green colouring was not achieved, but no-one appreciated this at the time.

11

The units were shipped to Abu Dhabi and Pilkington were paid. Feal incorporated the units in the curtain walling which they erected, but the architect objected to the "variation in inconsistency in the colour/shading of the glass between the various panels and within each panel", and after unsuccessful attempts to find a solution Simaan rejected the units and instructed Feal to replace the units with glass panels to be approved by the architect and the building owner. To date, no replacement has taken place. The building owner has not paid Simaan, nor has Simaan paid Feal, the price attributable to the supply of the panels.

12

In this situation one might expect a claim by the building owner against Simaan (to be arbitrated if disputed), by Simaan against Feal (also to be arbitrated if disputed), and by Feal against Pilkington. This procedure would, in the absence of agreement on an alternative procedure to save time and expense, be cumbersome, but it would reflect the contractual obligations which the parties had respectively undertaken. The problem arises here because Simaan have chosen to sue Pilkington in tort rather than Feal in contract.

13

In Junior Books the defenders were specialists in the laying of floors, nominated by the pursuers' architect as subcontractors to lay the floor at the pursuers' new factory. In laying the composition floor the defenders used too wet a mixture and applied too thin a top coat and failed to cure the material properly. As a result cracks began to appear in the floor and it started to break up. The floor required replacement and the pursuers contended that while this replacement work was carried out they would lose business and incur irrecoverable overheads. The issue was determined on the defenders' plea to the relevancy of the pursuers' averments, so that (as here) the facts alleged by the pursuers had to be assumed to be true. The full averments are reported in [1982] S.L.T. 333.

14

Since Lord Roskill's speech in Junior Books represents the high water mark both of that decision and of Simaan's argument, I begin my analysis of the case by considering it. Lord Roskill saw the pursuers' claim as one based on pure economic loss, not physical damage to the floor. There was no danger to life or limb or any other property. The question was whether English law extended the duty of care beyond a duty to prevent harm being done by faulty work to a duty to avoid such fault being present in the work itself. The answer should, he said, be founded on considerations of principle rather than policy. Lord Roskill acknowledged that Donoghue v. Stevenson [1932] A.C. 562 had at first been understood as limited to cases of physical injury or damage to the plaintiff's person or property, but pointed out that claims for pure economic loss had succeeded (narrowly) in Morrison Steamship Co. Ltd. v. Greystoke Castle (Cargo Owners) [1947] A.C. 265 and decisively (in principle) in Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1964] A.C. 465. His Lordship referred to the statement of principle by Lord Reid in Dorset Yacht Co. Ltd. v. Home Office...

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