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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Offer-Hoar & Ors v Larkstore Ltd & Ors [2005] EWHC 2742 (TCC) (02 December 2005) URL: https://www.bailii.org/ew/cases/EWHC/TCC/2005/2742.html Cite as: [2005] EWHC 2742 (TCC) |
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QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
133-137 Fetter Lane London, EC4A 1HD |
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B e f o r e :
____________________
GORDON ![]() MRS ![]() ![]() MRS ![]() MICHAEL GUY MARY GUY |
Claimants |
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- and - |
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![]() ![]() BESS LIMITED |
Defendants |
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Part 20 Claimant |
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-and- |
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TECHNOTRADE LIMITED |
Part 20 Defendant |
____________________
Mr Mark Pelling QC (instructed by Squire & Co.) for the Part 20 Defendant
Hearing dates: 24 and 25 October 2005
____________________
VERSION
OF JUDGMENT
Crown Copyright ©
His Honour Judge Wilcox
"Prior to the commencement of the development the applicant shall obtain a written report from the specialist soil consultants, advising on the suitability of the land for the proposed development and identifying any works for stabilising the land and adjoining land and properties, reinforcing the foundations and strengthening the proposed development and any other works (including works of drainage) as may be necessary to ensure the stability of the land, proposed buildings and associated services, and any neighbouring land and building. This report shall be submitted to the Local Planning Authority for its consideration and approval before development commences".
i) Starglade with full title guarantee assigns to Larkstore
the Report together with all the benefit and interest and rights of Starglade in and under the Report and the right to enforce the same TO HOLD to
Larkstore
absolutely.
ii) For the avoidance of doubt the assignment effectively hereby includes the right to sue in respect of breaches of Technotrade of its duties and obligations and to bring all such claims against Technotrade as are available at law.
"… In consideration of you making the assignment of even date, we undertake to pay you half of the net monies received from Technotrade Limited.
"Net monies" means all sums received from Technotrade Limited, whether by Court order or judgment or by compromise or otherwise and whether in respect of the cause of action assigned by you to us or otherwise, but after deduction of our costs of pursuing Technotrade Limited and deduction of any costs we may be ordered to pay Technotrade Limited.
We agree to hold all monies received from Technotrade Limited on trust for division in accordance with the foregoing ..."
i) Whether Larkstore
is able to recover the or any part of the loss allegedly suffered by it, by the operation of the assignment.
ii) Whether Technotrade owed a duty of care to the Claimants as alleged.
iii) Whether Technotrade owed Larkstore
a duty of care as alleged.
THE ASSIGNMENT BASED CLAIMS
"05 The introduction to the Technotrade site investigation clearly states that it was undertaken to determine ground conditions to enable foundation and hard standing design to be carried out. It was not produced to deal with any other issues, such as the short time stability of third party land during the construction process.
06 Item 2.3 of the Technotrade Report warns of the possibility of landslips and rotational slips.
07 Bess Limited commenced work on site at their own risk without so much as making a Building Control application, let alone obtaining approval. The local authority have confirmed to us that had a Building Control application been made to them, they would have required Bess Limited to provide sufficient information "to ensure that a satisfactory technical solution is achieved and implemented for all land stability issues on the site and adjoining land arising as a consequence of the proposed development".
08 Bess Limited carried out and provided us with a copy of a condition survey on the retaining wall prior to their commencement on site, clearly demonstrating their concern over its stability and the potential for problems in this area ..."
"I cannot agree with the Learned Master of the Rolls…when he said in the instant case that 'merely saying that you cannot assign a bare right to litigate is gone'. Iventure
to think that that still remains a fundamental principle of our law. But it is today true to say that in English law an assignee who can show that he has a genuine commercial interest in the enforcement of the claim of another and to that extent takes an assignment of that claim to himself is entitled to enforce that assignment unless by the terms of that assignment he falls foul of our law of champerty, which, as has often been said, is a branch of our law of maintenance. For my part I can see no reason in English law why Credit Suisse should not have taken an assignment to themselves of Trendtex's claim against CBN for the purpose of recouping themselves for their own substantial losses arising out of CBN's repudiation of the letter of credit upon which Credit Suisse were relying to refinance their financing of the purchases by Trendtex of this cement from their German suppliers".
"Assignee cannot recover more than assignor
A further aspect of the idea that an assignee takes an assignment "subject to equities" is the principle that an assignee cannot recover more from the debtor than the assignor could have done had there been no assignment. For example, in Dawsonv
Great Northern & City Railway Company the assignment of a statutory claim for compensation for damage to land did not entitle the assignee to recover extra loss suffered by reason of a trade carried on by him, but not the assignor that the assignor would not have suffered."
"The application of this principle has given rise to particular difficulty in relation to building contracts or tort claims for damage to buildings. Say for example a building is sold at fullvalue
along with an assignment to the purchaser of claims in contract or tort in relation to the building. The building turns out to need repairs as a result of the breach of the builders contract with the assignor (whether that breach is prior, or subsequent, to the sale to the assignee) or of a tort (damaging the building prior to the sale). The assignee pays for the repairs. It might be argued that the assignor in that situation suffered no loss so that, applying the governing principle the assignee cannot recover more than the assignor, the assignee has no substantial claim. If correct … "the claimed damages would disappear… into some legal black hole, so the wrongdoer escaped scot free". Acceptance of the argument would also nullify the purpose of the governing principle which is to avoid prejudice to the debtor and not allow the debtor to escape liability".
"… The basic question at issue is whether in this action the Pursuers are really seeking to pursue against the Defendants a claim or claims which the [assignor] itself could have pursued at the date of the [assignment] … the only relevant loss which byvirtue
of the [assignment] the Pursuers could claim title to recover its loss suffered by the [assignor] for which the [assignor] could at the date of the [assignment] have sought reparation."
"Where a specific property has been damaged by delict, it is a general rule that the owner of the property does not, by parting with it to another, lose his title and interest to pursue a claim for damages against the wrongdoer: Gordonv
Davidson¸ per Lord Justice Clerk-Inglis at page 769. Where the property is disposed of in an arms length transaction for the price which it is fairly worth in its damaged condition the difference between that price and the price which it would have fetched in an undamaged condition is likely to be the best measure of the loss and damage suffered. But it may happen that the owner of the property disposes of it otherwise than by such a transaction. He may, for example, alienate it gratuitously …
It is absurd to suggest in such circumstances the claim to damages would disappear, as the Lord Ordinary put it, into some legal black hole, so that the wrongdoer escaped scot free. There would be no agreed market prices available to form an element in the computation of the loss, and so some other means of measuring it would have to be applied, such as an estimate of the depreciation invalue
or of the cost of repair. In the present case I am of the opinion that the price for which, in pursuance of group policy Rest convey the damage building to the pursuers is completely irrelevant for the purpose of measuring the loss suffered by Rest through the Defendant's negligence … the figure of the price was fixed in an internal group transaction for accounting purposes only".
"That brings me to the last point to be considered in connection with the assignment of choses in action. Where the assignment is of a cause of action for damages, the assignee must of course have a sufficient proprietary right, or a genuine commercial interest, if the assignment is not to be invalid. It is no longer in issue in these appeals that the assignees have such a right in each case; we heard no argument to the contrary from the contractors. But it is said in such a case the assignee can recover no more damages than the assignor could have recovered. That proposition seems to me to be well founded, it stems from the principle already discussed that the debtor is not to be put in any worse position by reason of the assignment. And it is established by Dawsonv
Great Northern and City Railway Company … see also GUS Property Management Limited … cited later in this judgment. But in a case such as the present, one must elucidate the proposition slightly: the assignee can recover no more damages than the assignor could have recovered if there had been no assignment, and if the building had not been transferred to the assignee (emphasis provided)".
"What is the measure of damages recoverable by the assignee? Inview
of my decision on the earlier issues, this does not arise for determination. I mention it only to explain that the Court of Appeal considered that the assignee was entitled to recover what the assignor could have recovered had there been no assignment. On that basis Staughton LJ (who held that the assignees in both actions could sue) had to consider what the assignors could have recovered".
"In my judgment the present case falls within the rationale of the exception to the general rule that a plaintiff can only recover damages for his own loss. The contract was for a large development of property which, to the knowledge of both Corporation and McAlpine was going to be occupied, and possibly purchased, by third parties and not by the Corporation itself. Therefore it could be foreseen that damage caused by a breach would cause loss to a later owner and not merely to the original contracting party, Corporation. As in contracts to the carriage of goods by land, there would be no automaticvesting
in the occupier or owners of the property for the time being who sustained the loss, of any right of suit against McAlpine. On the contrary McAlpine has specifically contracted that the rights of action under the building contract could not without McAlpine's consent be transferred to third parties who became owners or occupiers and might suffer loss. In such a case it seems to me proper, as in the case of the carriage of goods by land, to treat the parties as having entered into the contract on the footing the Corporation would be entitled to enforce contractual rights for the benefit of those who suffered from defective performance but who, under the terms of the contract, could not acquire any right to hold McAlpine liable for breach. It is truly a case in which the rule provides "a remedy where no other would be available to a person sustaining loss which under a rational legal system ought to be compensated by the person who caused it …" If the ultimate purchaser is given a direct cause of action against the contractor (as is the current signee or endorsee under a bill of lading) the case falls outside the rational of the rule. The original building owner will not be entitled to recover damages for loss suffered by others who can themselves sue for loss. I would therefore hold that the Corporation is entitled to substantial damages for any breach by McAlpine of the Building Contract (emphasis added)."
WAS THERE A DUTY OF CARE OWED BY TECHNOTRADE TO LARKSTORE?
"… to protectLarkstore
from damage or the threat of damage to people or property other than that which comprised the works and in particular to take into account the risk of instability of the land and any neighbouring land and buildings".
THE POSITION IN RELATION TO LARKSTORE
"The salient feature of all these cases is that the Defendant giving the advice or information was fully aware of the transaction which the Plaintiff had in contemplation, knew that the advice or the information would be communicated to him directly or indirectly and knew that it wasvery
likely that the Plaintiff would rely on that advice in deciding whether to engage in the transaction in contemplation. In these circumstances, the Defendant could clearly be expected … specifically to anticipate that the Plaintiff would rely on the advice or information given by the Defendant for the
very
purpose for which he did in the event rely on it. So also the Plaintiff … would in that situation reasonably suppose that he was entitled to rely on the advice or information communicated to him for the
very
purpose for which he required it".
"A defective bottle of ginger beer may injure a single consumer but the damage stops there. A single statement may be repeated endlessly with or without the permission of its author and may be relied upon in a different way by many different people. Thus the postulative of a simple duty to avoid any harm that is, with hindsight, reasonably capable of being foreseen becomes untenable without the imposition of some intelligible limits to keep the law of negligence within bounds of common sense and practicality. Those limits have been found by the requirement of … a requirement of proximity between the Plaintiff and Defendant and by the imposition of a requirement that the attachment of liability …. be just and reasonable".
"… that the necessary relationship between the … giver of advice ("the advisor") and the recipient who acts in reliance upon it ("the advisee") may typically be held to exist where (i) the advice is required for a purpose, whether particularly specified or generally described, which is made known, either actually or inferentially to the advisor at the time that the advice is given; (2) the advisor knows, either actually or inferentially that his advice will be communicated to the advisee, either specifically or as a member of an ascertainable class, in order that it should be used by the advisee for that purpose; (iii) it is known either actually or inferentially that the advice so communicated is likely to be acted upon by the advisee for that purpose without independent enquiry and (iv) it is so acted upon by the advisee to his detriment".
"Whilst the client was originally hoping to sell the site, he has now decided to build and wishes to commence work as soon as practically possible".
"I would certainly wish to stress that in cases where advice has not been given for the specific purpose of the recipient acting upon it it should only be in cases where the advisor knows there is a high degree of probability that some other identifiable person will act upon the advice that the duty of care should be imposed. It would impose an intolerable burden upon those who give advice in a professional context if they are to owe a duty not only to those to whom they gave the advice but to any other person who might choose to act upon it."
"In those circumstances it seems to me a justifiable increment to hold that an insurance broker owes a duty of care to the specific person who he knows is to become an assignee of the policy, at all events if (as in this case) that person actively participates in giving instructions for the insurance to the broker's knowledge."
THE CLAIM FOR CONTRIBUTION
"In the natural state of land one part of it receives support from another upper from lower straighter and soil from adjacent soil. The support is natural and is necessary as long as the status quo of the land is maintained … On division status quo support passes with the property in the land not as an easement held by a distinct title but as an incident to the land itself."
"It is, I think, conclusively settled by the decision in this House in Backhousev
Bonomi (1) that the owner of land has a right to support from the adjoining soil; not a right to have the adjoining soil remain in its natural state (which right, if it existed, would be infringed as soon as an excavation was made in it); but a right to have the benefit of support, which is infringed as soon as, and not until damage is sustained in consequence of the withdrawal of that support."
"It is however an undoubted fact that the speeches contain passages which indicate the law imposes no liability in circumstances where the damage for which compensation is claimed is damage to thevery
chattel or building which was negligently manufactured or constructed. I refer to the following passages:
The question is whether the appellant counsel owed the respondent a duty to take reasonable care to safeguard him against the particular kind of damage which he in fact suffered, which was not injury to person or health or damage to anything other than the defective house itself … per Lord Keith at page 464.
We realise that the damage may be qualitative occurring through gradual deterioration or internal breakage. Or it may be calamitous … But either way, since by definition no person or other property is damaged, the resulting loss is purely economic. Even when the harm to the product itself occurs through an abrupt, accident like event, the resulting loss due to repair costs, decreasedvalue
and lost profits is essentially the failure of the purchasers to receive the benefit of its bargain – traditionally the core concern of contract law – per Lord Bridge at 476F quoting with apparent approval the unanimous opinion of the United States Supreme Court in East River Steamship Corporation
v
Trans America Delaval … I consider that the Judge was right not to depart from the guidance given in Murphy and the cases cited in it to the effect that where the damage is to the
very
building itself there should be no liability."
CONCLUSION