UK Insurance Ltd v Carillion Specialist Services Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Alexander Nissen |
| Judgment Date | 27 June 2019 |
| Neutral Citation | [2019] EWHC 1588 (TCC) |
| Date | 27 June 2019 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2016-000245 |
[2019] EWHC 1588 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Alexander Nissen QC
Case No: HT-2016-000245
Anna Laney (instructed by BLM) for the Claimant
Ben Sareen (instructed by DAC Beachcroft LLP) for the Second Defendant
Hearing dates: 7 June 2019
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Alexander Nissen QC
Mr Alexander Nissen QC:
Introduction
Before the Court are two unrelated applications issued by the Second Defendant against the Claimant. The first is an application for summary judgment pursuant to Part 24 CPR on the grounds that the Claimant has no real prospect of establishing that its claim against the Second Defendant is not time barred. The second is an application to strike out the claim pursuant to Part 3 CPR on the grounds that, in the absence of a sufficient plea on causation, there is no complete cause of action pleaded against the Second Defendant.
The Claimant is an insurance company. The circumstances in which it claims to be entitled to sue in these proceedings are factually complicated and unnecessary to explain for present purposes. The First Defendant, a company within the Carillion group, is now in liquidation and since then has played no further part in the action. The Second Defendant is a company engaged in the business of acting as independent surveyor and auditor. In these proceedings, the Claimant brings a tortious claim for damages against the Second Defendant arising out of professional services provided by it in circumstances set out in more detail below. The claim is presently quantified in the sum of £626,451.98 plus other consequential costs.
Summary Judgment
CPR Part 24 provides as follows:
“The court may give summary judgment against a claimant … on the whole of a claim or on a particular issue if –
(a) it considers that –
and(i) that claimant has no real prospect of succeeding on the claim or issue; …
(b) there is no other compelling reason why the case or issue should be disposed of at a trial.”
As the notes to the White Book make clear, the inclusion of the word real means that the respondent to the application has to have a case which is not fanciful and is better than merely arguable: International Finance Corp v Utexafrica Sprl [2001] C.L.C. 1361 and ED&F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472. A realistic claim is one that carries some degree of conviction and is more than “merely arguable”: Global Asset Capital Inc v Aabar Block S.A.R.L. [2017] EWCA Civ 37; [2017] 4 W.L.R. 163. There was no issue between the parties as to the test to be applied. The only question was whether the test had been met in this case.
In these proceedings, the Second Defendant has pleaded a limitation defence. Where limitation issues are inextricably bound up with the question of the underlying breach, the merits of a limitation defence usually have to be determined in a full trial. However, in some cases, a limitation defence may be suitable for the trial of a preliminary issue. Both of these outcomes are contemplated by paragraph 8.4.1 of the TCC Guide. However, in this case, the Second Defendant seeks to avoid both a full trial and the trial of a preliminary issue by applying for summary judgment. It contends that no trial at all is necessary because all the available facts are those which are readily apparent from the documents before the Court and, on the basis of those facts and documents alone, the Court can determine that the Claimant has no real prospect of success in respect of the Second Defendant's limitation plea. If that contention is fully made out, I agree that it would be appropriate to grant summary judgment. I did not understand the Claimant to disagree.
Background to the claim
I propose to summarise the facts which are not disputed for the purposes of this application as between the Claimant and the Second Defendant. If a trial is required, it would be for the subsequent Court to determine the facts in the usual way. For simplification, I draw no distinction between the Claimant and its subsidiary or its agent.
The Scheme in outline
In outline, the Claimant was in the business of issuing Latent Defect Policies for the benefit of companies involved in the construction industry. The purpose of such policies was to provide an indemnity to the insured in respect of latent defects caused by defective design or construction during the policy period, subject to any other terms of the policy. The benefit of such policies could be made available to developers or other clients. Unsurprisingly, the Claimant would not wish to have issued such policies unless it had first been satisfied that works in respect of which cover was issued were, during the course of their execution, regularly inspected and monitored by an independent surveyor so that, upon their completion, a surveyor acting with reasonable skill and care would be able to say that, as far as (s)he was concerned, the works had apparently been undertaken competently. In reliance on such confirmation, provided by means of a Certificate of Approval, a policy would then be issued to the insured on standard terms. If a potential or actual defect or problem had already been identified before or at completion, a qualified Certificate of Approval could be issued and the policy would then be issued subject thereto. Of course, it was not expected that the independent surveyor would warrant to the Claimant that the works had been undertaken competently. But the Claimant was relying on an expectation that reasonable skill and care had been exercised. The effect of this was, ordinarily, that the Claimant anticipated that it may have to indemnify an insured in respect of a latent defect which had not been identified during the construction period by a surveyor using reasonable skill and care.
The arrangement in this case
As it happens, the Claimant was introduced to set up this Scheme by the First Defendant though nothing turns on that. Pursuant to the Scheme the First Defendant contractually agreed to undertake surveying services for the Claimant in accordance with a Capability Statement whenever such services were required. The services included the provision of a site technical audit for the purposes of enabling insurers such as the Claimant to receive an informed opinion about the assessment of risk.
Pursuant to the Scheme, the contractor undertaking the works would complete an application form for the policy which would be sent to the Claimant. The Claimant would then require the First Defendant to undertake the audit and, on completion, to issue the Certificate of Approval.
In reliance on the Certificate, the Claimant would then issue the policy to the contractor for the benefit of the insured. The policy in this case contained the following provisions:
“Section 2 – Major Defects Period
The Insurers agree to indemnity the Insured against the following contingencies reported during the period stated against Section 2 in the Schedule:
(a) The cost of repairing or replacing that part of the Insured Works damaged by a Major Defect;
(b) The cost of repairing or replacing those parts of the Premises damaged as a result of a Major Defect in the Insured Works”
“Inherent Defect means any fault, defect, error or omission in the design, specification, materials or workmanship of the Insured Works that existed but remained undiscovered on Practical Completion but which subsequently becomes apparent and is reported during the currency of the policy.”
“Major Defect means any Inherent Defect which results in:-
(i) Major damage to the structure and/or building envelope, or
(ii) Faulty or deficient waterproofing to the structure and/or building envelope…”
In about 2003, the Second Defendant took over the role of certification in respect of the technical audit scheme. As a result, it is assumed for present purposes that it owed a duty of care to the Claimant in respect thereof.
The Facts
The present case concerns a project to apply a rendering system to the external elevations of two existing blocks of flats in Oldham for Oldham Housing Arms Length Management Organisation Ltd (“Oldham HA”). The claim concerns problems that subsequently became manifest in the render system applied to Summervale House. There is no equivalent problem with Crossbank House.
The underlying work essentially comprised the application of an exterior insulation system known as Dryvit Outsulation System to an existing structure. The existing building was clad in pre-cast concrete panels. The works were undertaken by a subcontractor Insulclad (Europe) Ltd, (“Insulclad”) for a main contractor, Emanuel Whitaker Ltd. On 16 December 2003, a Certificate of Approval was issued in accordance with the scheme. It reads materially as follows:
“We certify that the undernoted Building Works have been the subject of the Site Audit Survey as instructed by the Insurers:
Name of Contractor: Insulclad (Europe) Ltd
Date of Final inspection: 5/11/03
Date(s) of site inspections: 14/1/03, 18/2/03, 1/7/03, 9/10/03, 5/11/03
Site address: Cross Bank and Summervale House, Oldham
The purpose of the Site Audit Survey work was to assess by inspection and monitoring that the Works were construed to normal and reasonable standards.
…
The site was visited during construction and a Final Inspection was carried out in order to assess that the Works were constructed in accordance with accepted building practice...
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