Back to the foundations of the Law of Tort (pun intended!)
The Parties
In an attempt to keep matters simple, let’s first look at the parties involved.
The Claimants and their sub-contractors
The First Claimant was the main contractor of a housing project to build two blocks of houses – Block A and Block B. The Second Claimant was a shareholder of the First Claimant and paid some invoices and provided some instructions to the Defendant and sub-contractors on the project. A third company, Beattie Passive Construction Limited (“Beattie Construction”), were also involved in the project and built the initial superstructure of Blocks A and B. These three companies all had at least one Director in common, Mr Ron Beattie. Beattie Construction sub-contracted Foxdown Engineering Limited (“Foxdown”) to undertake the foundation works.
The Defendant
The Defendant was instructed by the First Claimant to design the foundations for Blocks A and B.
The Pleaded Issue
The main issue in contention raised by the Claimants was the Defendant breached their duty in relation to the design of the foundations for Blocks A and B. As a result, the Claimants had to demolish the structures and rebuild both blocks at a loss of £3.7 million. The Claimants both brought their claim referring to both breach of contract and professional negligence.
What Happened? – Where the straightforward issue gets buried!
The site where the blocks were to be built was in an area of Wadhurst clay. This meant that the foundations had to be sufficiently well designed, and constructed, to be resistant to movement. The 1st Claimant instructed the Defendant to design the foundations for the blocks. The Defendant produced the designs and made subsequent revisions, Revision A (shallow depths for foundations and smaller dimensions of pads) and Revision B (deep depths for foundations and larger dimensions for pads). It should be noted at this stage that no measurements were provided on either Revision and there was a lack of dowel connections in the design. The Defendant provided a copy of Revision B to the First Defendant. Foxdown were provided with Revision A marked ‘for construction’ and utilised these drawings to lay the foundations. The drawings also contained a caveat stating ‘if in doubt ask’.
On 27 August 2015, Beattie Construction’s involvement in the construction was terminated by the First Claimant. The works were left uncompleted and another contractor, RG Carter Ltd, was engaged to inspect the works undertaken by Beattie Construction prior to the termination and the complete the works left unfinished by Beattie Construction. The review of the Beattie Construction works identified a long list of defects that required remedial work on both Blocks A and B. Rather than undertaking substantial remedial work, the decision to demolish Block A was made in May 2016, with the subsequent demolition taking place in July 2016. At this point the remedial works had already started on Block B. Despite the remedial works having commenced, the decision to demolish Block B was made in September 2016 with the demolition taking place in November 2016. This was due to further defects being identified in Block A during demolition.
During the trial it was noted that whilst the issue with the foundations became known in May 2016 no one from any of the Beattie companies appeared to investigate how this error occurred when they were in receipt of the correct Revision.
The Contract
It was determined and conceded by the Claimants on the first day of trial, that the Defendant was engaged by the First Claimant on 20 April 2014. This meant that any allegations put forward by the Second Claimant were dismissed, with any breach of contract restricted between the parties of the contract, the First Claimant and the Defendant.
Defendant’s Duty of Care to the First Defendant
Anyone who has studied the law of Tort will be familiar with the hurdles presented by breach of duty.
Where there is an established or pre-defined duty of care, the Claimant need do nothing more than identify the relation, e.g. doctor/patient, manufacturer/consumer, solicitor/client. In this instance of the Defendant and the First Claimant, there is an established duty of care owed given that the First Defendant was instructing a specialist to undertake a design for foundations.
Defendant’s Duty of Care to the Second Defendant
As confirmed above, there is no contract between the parties and therefore no established duty of care. So, in the instance of the Second Defendant the court had to turn to the Caparo Test. This being:
- Is there a duty of care owed by the defendant to the claimant?
- Has that duty of care been breached?
- Has that breach of duty of care caused the damage claimed?
The test must be approached in the above numerical order with an affirmative answer being provided at each stage. Once the answer is negative, there is no case to answer.
Fraser J, eloquently explained the expansion of the duty of care owed to include the scope of the duty owed. The Defendant clearly owed a duty of care to the First Defendant on the basis of the contract, however that scope does not extend to the First Defendants’ shareholders as a separate duty. As such, the Second Defendant was unable to get over the first, basic hurdle of duty of care. Fraser J, rightly so, dismissed the entire claim of the Second Claimant.
Defendant’s Breach of Duty
The Defendant duly acknowledged via their expert evidence that the drawings provided were missing labels which should have been present. These labels would have provided depths for the foundations to be laid. It was confirmed that the foundations design fell below the reasonable standard in relation to the failure to label the designs and the lack of representation showing the dowels connecting the pads to the ground beams. Although, these breaches of duty were not formally admitted in the pleadings.
Factual Causation
Now that we know the Defendant breached their duty of care, how much damage did that breach cause. Here we need to remember that demolition is an extreme action to undertake and should only be undertaken should the building be dangerous or structurally unsound.
It has been previously stated that the superstructure works undertaken by Beattie Construction contained multiple defects but were these all as a result of the Defendants negligence.
In order to determine whether the Defendant’s negligence caused any of the loss sustained, we must consider whether the foundations were the sole reason for the Blocks to be demolished.
It had already been established that there were substandard works to the superstructures that would have required remedial works. However, the foundations of Block A were far too shallow as they had been built using the Revision A drawing. However, Block A was also rife with superstructure defects that meant the safest option was to demolish and start again. It should be highlighted here that the foundations played a part, but not the whole, reason for the demolition.
The remedial works identified to the foundations in Block B had commenced whilst Block A was being demolished. It was during the demolition of Block A that further substandard works were identified in the superstructure and a determination was made to halt the remedial works of Block B and demolish it instead.
The fact that remedial works had already commenced in Block B suggests that the retro-fitting of the missing dowels would have brought the foundations of Block B to the design of Revision B, as these were not so different from the Revision A design (lack of dowel connections was missing from both Revisions). From here, it is clear to see that factual causation cannot attach to the Defendant in relation to the demolition of Block B. It does however confirm that the Defendant’s negligence caused the requirement for remedial works to be undertaken on Block B. This was a real loss suffered by the First Claimant as the remedial works had already commenced. The First Claimant was awarded the meagre sum of £2,000.00, against the £3.7 million claimed for the partial remedial works that had been undertaken.
A Word of Warning
The Honourable Mr Justice Fraser scathingly points out that this case was not one for the High Court taking over three weeks to hear. The parties should have attempted alternative, more cost-effective methods of settling the claim. This highlights the need for proper consideration of ADR prior to issuing proceedings in any claim.
Summary
It is clear, when considering the basic facts of this case, that it can become too easy to forget about the basics of the law of Tort.
At face value, the Second Claimant was a valid party to the claim having been involved in the instructions to the Defendant as well as paying invoices on behalf of the First Defendant. However, strip the case back to duty of care and there is no case to answer.
The First Claimant appears to have pleaded the entire case on the basis that because the foundation was incorrect then all further errors and defects must arise from there. The First Claimant failed to overcome the burden of proof to support their pleaded case.
An important lesson can be learnt here by all practitioners to undertake the groundwork necessary to ensure that there is a solid foundation for a claim to rest.
Find out what happened next as we look at the costs of this matter in the sequel…You’re going to pay for that!
How can Partners In Costs Help?
Whilst PIC are not specialists in contract law or the law of tort, we are specialists in costs law. We can consider highly complex cases involving multiple angles of investigation and dismiss any costs which do not directly relate to the active liability, causation, and quantum issues at large which could ultimately put your costs at risk on assessment.
Here at PIC, we pride ourselves at placing your needs at the forefront of our work. We provide detailed advice in relation to realistic recoverability and will happily take the time to go through any issues with you before they are placed in the realms of the court.
To read the whole judgment: Beattie Passive Norse Ltd & Anor v Canham Consulting Ltd [2021] EWHC 1116 (TCC) (30 April 2021) (bailii.org)
Susie Power, Costs Consultant, Partners In Costs.
Tel: 03458 72 76 78