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England and Wales High Court (Technology and Construction Court) Decisions
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Cite as:  EWHC 1710 (TCC)
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QUEEN'S BENCH DIVISION
LEEDS DISTRICT REGISTRY
IN THE TECHNOLOGY AND CONSTRUCTION COURT
1 Oxford Row
B e f o r e :
|SHEPHERD HOMES LIMITED||Claimant|
|ENCIA REMEDIATION LIMITED||Defendant|
WordWave International Limited
A Merrill Communications Company
190 Fleet Street London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
(Official Shorthand Writers to the Court)
Peter de Verneuil Smith (Instructed by Hill Dickinson) appeared on behalf of the Defendant
Crown Copyright ©
Wednesday, 11th July 2007
"AIG Consultants" means AIG Consultants Limited.
"BSCP" means Birkett Stephens Coleman Partnership Limited.
"Bullivant" means Roger Bullivant Limited.
"FFL" means finished floor level.
"Foundation Engineering" means Foundation Engineering Limited.
"JPA" means Joynes Pike & Associates Limited.
"Knowles" means Knowles Construction Technology Limited.
"NHBC" means the National House-Building Council.
"Ove Arup" means Ove Arup & Partners Limited.
"PMC" means Precision Monitoring & Control Limited.
"PPL" means piling platform level.
"Redrow Homes" means Redrow Homes (Yorkshire) Limited.
"Tay Homes" means Tay Homes (Northern) Limited.
"Tony Gee" means Tony Gee & Partners Limited.
"Yuill" means Cecil M Yuill Limited.
"With regards to your quotation dated 3rd May 2001, I am pleased to confirm that you have been allocated the above development for the site infrastructure and foundation/floor construction works.
"The works are to include full road and sewer construction including wearing course together with completion of 46 plot foundations/floors. The official order will follow shortly subject to our final agreement of prices and fixed price periods.
"Other works including drives and plot drainage may also be incorporated in the works but will again be subject to satisfactory negotiation over price."
"We are pleased to confirm our instruction to carry out civil engineering works and external works at the above site in accordance with your quotation dated 3rd May 2001 and 6th September 2001 ...
"Our order is placed on the basis of an all risk lump sum price ...
"1. All works to be carried out in accordance with the Joynes Pike Report and AIG Consultants Report in relation to details, recommendations and requirements with regards to gas and any other abnormal bodies which require precautions.
"2. The responsibility for setting out lies with yourselves ...
"16. Our "General requirements" as enclosed will apply. Any terms and conditions included in, or appended to your quotation shall be of no effect, unless agreed in writing.
"A copy of our "Contractors Safety Guide" is also enclosed. Would you please ensure that your employees are conversant with the contents and are in possession of a copy."
"All workmanship and all materials where such are supplied by the subcontractor as part of its works shall comply with the requirements of any relevant local authority, the NHBC or any associated or successor body, all statutory and other obligations, current building regulations and further with the requirements of the company, including any specification which the company has supplied for that purpose, and in any event and without operating to reduce the effect of any and all implied conditions or terms to qualify and without prejudice to the generality of the foregoing all workmanship and materials shall be of a high standard, free from defects and fit for their purpose.
"Any design work carried outlet by the subcontractor shall be carried out in such away as to ensure the accurate and reliable performance of that design. The subcontractor shall indemnify and hold the company safe against any and all consequences, claims, losses, expenses or damages resulting from, relating to, or arising out of any breach of the provisions of this condition."
"(a) The subcontractor shall be liable for and shall indemnify the company against any expense, liability, claim, loss or proceedings in respect of any injury or damage whatsoever, to any property including the subcontract works, any temporary subcontract works, any materials or any other things delivered to site for incorporation therein, and construction plant, tools, equipment, temporary buildings and contents owned or hired by the subcontractor or for which he is responsible, insofar as such injury or damage arises out of or in the course of the subcontract works unless due to any negligence of the company or any person for whom the company is responsible.
"(b) The subcontractor shall be liable for and shall indemnify the company against any liability, loss, claim or proceedings whatsoever arising under any statute or common law in respect of personal injury or death of any person whomsoever arising out of or in the course of or caused by the carrying out of the subcontract works, unless due to any act or negligence of the company or any person for whom the company is responsible."
"19. Prior to disclosure and/or prior to further expert inspection of the piling works,the best particulars the claimant can give of the defendant's breaches are as follows.
A. The defendant failed to give any or any proper consideration to the appropriate diameter/cross sectional area and length of the piles used at the phase I land and the phase II land, having regard to the soil conditions at the site.
B. In particular, the defendant failed to give any or any adequate consideration to:
(a) the possible negative skin friction effects caused by the soft soil settling around the piles and reducing the capacity of the pile to carry loads imposed by the structure;"(b) the performance of steel and concrete piles in the ground conditions encountered on the site (the natural topography of the site consisting of a depression of between 3m and 4m in-filled with inert waste comprising rubble and waste soils, underlain by soft alluvium);"(c) the fact that when a pile is driven through soft ground and into harder grown it is common for some of the soft material to be dragged into the interface between the harder ground and the pile, reducing the pile capacity;"(d) the driving conditions above the bearing strata, in particular, in the made ground which potentially contained object constructions such as kerbstones;
"C. Further, in selecting long length driven steel piles with a very small diameter for the phase 1 land, the defendant failed to give any or any adequate consideration to:
"(a) the driveability of the slender piles in the made ground;
"(b) uncertainty as to where the piles were driven to laterally;
"(c) flexion occurring during the driving process, caused by the length of the piles;
"(d) the need for special consideration to be given to the capacity of the piles and the stratum to which they were driven because the base area of the piles was so small that they would rely almost completely on friction on the shaft to hold the load.
"d. Further, the defendant failed to give any or any proper consideration to the appropriate design of the piles.
"e. The basis of the design of any bearing pile is its ultimate axial capacity in the particular soil conditions at the site where the structure is to be built. The ultimate capacity can be determined either by load tests on piles constructed at the site or by the use of an empirical formula to predict capacity from soil properties.
"f. In designing the piles, the defendant failed to make any or any adequate calculation of their ultimate capacity and to adequately characterise the ground conditions of the site to allow such a calculation.
"g. The defendant is understood to have calculated the driving resistance of the piles using a formula known as the Hiley Formula. The defendant is understood to have proceeded on the assumption that the ultimate capacity of the piles was the same as their driving resistance, calculated in accordance with the Hiley formula. This assumption was false. Although the ultimate capacity of piles may occasionally be the same as their driving resistance, there is not necessarily any equivalence between the two. Ultimate capacity is particularly unlikely to be the same as driving resistance in cohesive (clayey) soil conditions, such as though those on the phase 1 land and the phase 2 land.
"h. Taking the piles at plot 10 by way of example from the phase 1 land, three of the piles were too short to carry the anticipated loads (ignoring the effects of negative skin friction which would have reduced the piles capacity still further). The ultimate capacity of several other piles was only just higher than the applied load whereas the usual safety factor would be at least 1.5 to allow for variations in ground strength and uncertainty in the design process.
"i. Taking the piles at plot 56 by way of example from the phase 2 land (and again ignoring the possible effects of negative skin friction), the working load of the piles significantly exceeded their capacity on the assumption that the glacial till occurred at 12m below ground level which it does at BH4, which is close to plot 56).
"j. In addition, taking into account the likely effects of negative skin friction (as they ought to have been, but were not, taken into account by the defendant), the ultimate capacity of the piles would be substantially exceeded by the working load.
"k. Further, the defendant failed to ensure that the workmanship and/or materials used in the piling work were of a high standard and/or free from defects and/or fit for their purposes.
"l. The defendant's engineering experts have carried out pile testing on the houses at plots 9, 10 and 56, each of which contains unacceptable cracks. According to their reports dated 25th June 2003 and 30th November 2004, the piles which they inspected contained the following defects of workmanship and/or materials:
"(a) The original design of the houses envisaged a connection between the hollow steel pile and the ground beam being supported by carrying reinforcement, from the top of the pile, a minimum of 40 bar diameters in to the ground beams, ie a plug of reinforced concrete cast in to the top of the driven pile. The depth of the concrete plug should have been about 700mm.
"(b) Instead of being filled with reinforced concrete to this depth as it was designed to be, pile B1 on plot 9 was found to be hollow at depths of 150mm and 600mm below the foundation beam.
"(c) Pile A4 on plot 10 was similarly found to be hollow and without the designed concrete plug.
"(d) Pile A1 on plot 10 was discontinuous at about 150mm below the base of the ground beam. The top of the pile had been flame cut. The discontinuity was apparently caused by the trimming of the pile at too low a level. A satisfactory solution to this problem would have been to extend the ground beam to form a reinforced enclosure around the pile. The solution adopted by the defendant, of balancing an offcut on the top of the pile, shows a severe lack of understanding and quality control on the site.
"(e) Pile A1 was similarly found to be hollow and without the designed concrete plug. In addition, the concrete piles under plot 56 appear to have had a structural discontinuity.
"(f) In summary, there were significant workmanship defects in each of the houses supported by steel piles, including in particular the lack of a rigid connection between the ground beam and the pile head which would have altered the load spreading pattern between the elements of the ground beam grid as one or more piles settled under the load. Each house inspected contained at least one defective pile."
"Trial to take place on 4th June 2007 in relation to all issues in the claim ... as to liability, causation of damage (including competing remedial schemes) save in respect of quantification of loss."
"Paragraph 13 of the Order dated 20th October 2006 to be amended as so to read 'The Trial to take place on 4th June 2007 in relation to all issues as to (i) liability, (ii) causation of damage including competing remedial schemes (save in respect of quantity of loss) and (iii) the Claimant's claim in the alternative for an indemnity'."
"26. As is apparent from the respective expert reports the main areas of dispute are (i) causation of loss and (ii) damage (existing and the possibility of future damage).
"27. It is D's case that (i) C has in respect of many properties not proven its case on causation, and (ii) the vast majority of properties have satisfactory foundations, notwithstanding design defects and have and will only suffer minor damage ...
"32. D's expert has addressed causation by creating 4 categories (A to D) which can be summarised as follows...
"Category A. Damage is not related to settlement (positive case that there is no causative link to damage).
"Category B. It cannot be shown on the evidence available that all damage is caused by settlement and further evidence is required (there is a causative link to some damage).
"Category C. Causation is made out and there is a high risk of further movement. Monitoring is required to determine remediation.
"Category D. Causation is made out and it is agreed that remediation should go ahead.
"33. D accepts that C has in principle satisfied a cause of action for breach of contract in respect of the properties in category B, C and D (subject to extent of damage, heads of loss and quantum)."
JOHN AND ELIZABETH BELL
CLAIMANT'S VALUATION EVIDENCE
Mortgageability and saleability
Diminution in value
Sales of houses at Eden Park
5 Barley Close (plot 5) £215,000
6 Barley Close (plot 6) £230,000
9 Barley Close (plot 9) £192,000
10 Barley Close (plot 10) £265,000
18 Hayfield Close (plot 56) £265,000
DEFENDANT'S VALUATION EVIDENCE
Design and performance of the piled foundations
Load tests recently carried out
Plot data sheets
Recorded movement of individual properties
Settlement of piles
Factors of safety
Negative skin friction
Analysis of individual properties
A1: plots 3-12 and 52-55
A2: plot 56 and plots 67-76
B1: plots 50-51 and 90-94
B2: plots 47-49
C1: plots 1-2, 13-26 and 57-61
C2: plots 30-38
C3: plots 39-46
D1: plots 27-29 and 62-66
D2: plots 77-89
History of Mr Newman's involvement
"Houses to be supported on new piled raft foundations constructed from inside the property.
Foundations to be constructed through holes in the raft and taken into the gravel layer:
Piles to be jacked into position …
Piles to be sleeved against negative skin friction.
Subsequent fabric repairs to each property."
"In conjunction with the level survey, verticality measurements of the external walls and crack width monitoring may be required for some properties."
The design of the piles
The Capwap tests
Factor of safety
Geology of the Hartlepool area
Our knowledge of the site now
Settlement of the ground at Eden Park
Mr Newman's Repute calculations
The Bullivant test piles
Mr Newman's Lusas calculations
The significance of a house being out of level
Mr Newman's approach to individual houses
The categorisation of houses
(i) SHL's letter dated 12th October 2001 makes no reference to those conditions as an enclosure. As Mr Saunders accepted in cross-examination, it was standard company practice to identify in the covering letter any enclosures sent.
(ii) Mr Saunders has no specific recollection of enclosing those conditions with the letter dated 12th October.
(iii) When Mr Saul retrieved the relevant correspondence from Encia's archive he did not find a copy of SHL's conditions of contract for subcontractors together with that letter. He did, however, find next to that letter (a) SHL's document headed "General requirements", and (b) SHL's document headed "Contractors' Safety Guide". Both of these documents are specifically referred to in the letter as enclosures.
(iv) The documents disclosed by Encia do not include the 2001 edition of SHL's Conditions of Contract for Subcontractors. If those conditions had been sent to Encia in October 2001, I believe that they would have featured in Encia's disclosure.
(a) Encia drove the steel piles to a set, which was inappropriate in cohesive soils.
(b) Encia drove the concrete piles to a predetermined length without having regard to the ground conditions on phase 2.
(c) Encia overlooked negative skin friction.
1. Including positive skin friction.
2. Disregarding both positive and negative skin friction.
3. Including negative skin friction.
(i) The figure of 19.4 MPa derived by Mr Newman from the CAPWAP tests is substantially higher than the values indicated at page 122 of Tomlinson "Pile design and construction practice", fourth edition. Mr Tomlinson is a well-known authority in this field whose works are often quoted in this court in relation to foundation cases.
(ii) Mr Newman's figure of 19.4 MPa is substantially higher than the values indicated in table 4.1 of the Steel Bearing Piles Guide, Publication P156 issued by the Steel Construction Institute.
(iii) Overall the CAPWAP results obtained by Green Piling are so high as to suggest that something went wrong with the testing process. This was acknowledged by both experts in paragraphs 7.1 to 7.4 of their first joint statement. Indeed, in paragraph 7.4 Mr Johnson and Mr Newman both concluded that:
"The CAPWAP test results ... were simply not credible."
(iv) There are anomalies within the CAPWAP test results. In particular, the concrete piles which are solid and are larger than the tubular steel piles would be expected to develop higher shaft resistance and higher end resistance, but this is not what the results show (see the readings for the probe pile on plot 56, which was founded in 1.2 metres of sand and gravel).
(v) When the results of the CAPWAP tests are plotted on a graph of load against set, for the most part they form a vertical column. One would expect to see a diagonal line showing the set diminish as the load increases. When this anomaly was pointed out in cross-examination, Mr Newman placed some reliance on the CAPWAP test results for pile 22-A3. However, those were test results which Mr Newman had previously said were incredibly high and should not be used.
(i) Sometimes a house with inadequate piles may settle uniformly. Thus the foundation failure may not so far have caused significant cracking, tilt or distortion. A classic example of this phenomenon is plot 76, which is at 42 Meadowgate Drive.
(ii) If the piled foundations fail, the load of the house may be shed to the ground. For a time the ground may carry the load satisfactorily, but then the ground may settle away from the ground beam, thus causing damage to the house at a later stage (see the evidence of Mr Johnson at Day 9, pages 53 to 61).
(iii) The factors of safety have been calculated by both experts using data from a number of ground investigations and reputable computer programmes. For the most part there is a good correlation between the two sets of results. Where the experts findings diverge, there are specific reasons for the divergence, which have been explored in cross-examination. For the reasons set out in part 11 above, where there is material divergence, I prefer the factors of safety calculated by Mr Johnson. In my view, the court can have a reasonable level of confidence in those calculated factors of safety.
(iv) This court is dealing with a residential estate where piling failure has led to devastating consequences for many families. The court should not approve any group of piles with inadequate factors of safety unless the grounds for doing so have been made out.
(i) Full underpinning.
(ii) Partial underpinning.
(iii) Demolition and rebuilding.
(iv) Cosmetic works (ie repairs to the superstructure, leaving the foundations as they are).
"RLN calculates higher factors of safety as a result of the piles bearing in sand and gravel. JJ has low factors of safety and notes 57 millimetres of tilt. 40 millimetres out of plumb and evidence from BSCP of progression. RLN considers that with more information it may have been possible to salvage some piles but agrees it is highly probable that foundation remediation was required."
"We agreed that there is little information to support the decision taken to remediate this building, but in the context of the low factors of safety we calculate and the evidence of the surrounding circumstances, it is highly probable that the decision was justifiable."
(i) In December 2005 the costs of underpinning four properties appeared to be somewhat less than the costs of demolition and repiling. Even though criticism is made of the cost analysis undertaken, SHL were certainly entitled to take the view that the costs of the two options were broadly similar. Mr de Verneuil Smith, in his closing speech, developed an ingenious argument to the effect that upon the information available in December 2005, Mr Murray should have calculated that demolition and rebuilding would lead to a costs saving between 15 and 18 per cent. I am not persuaded by that argument. Even if that argument were sound, however, minute calculations of this nature are not a proper basis for alleging failure to mitigate (see Banco de Portugal at page 506 and Lodge Holes Colliery Co Limited at page 325).
(ii) When the number of properties to be remediated increased from 4 to 12 there was no reason to think that the costs balance between the two options would substantially change.
(iii) Planning permission was required for rebuilding, but not, as it turned out, for underpinning. Obtaining planning permission would cause delay. Furthermore, some of the Eden Park residents would have opposed the planning application.
(iv) Demolition and rebuilding would have caused far more disruption for the occupants of the 82 remaining properties than underpinning.
(v) The view taken by the majority of SHL's directors was that demolition and rebuilding would cause greater damage to the reputation of SHL and of Eden Park than the damage to reputation which would flow from underpinning. That was a perfectly reasonable view to take at the time. Claimants are entitled to have regard to their own commercial reputation when deciding what steps to take in order to mitigate their losses (see Banco de Portugal at page 471).
(vi) Not all underpinned houses required extensive cosmetic works. Thus for many houses the external walls and the first floor were retained intact.
(vii) Plots 4, 7, 9, 11, 53, 56, 71 and 72 stood next to properties which were not being remediated. Demolition and rebuilding would have been particularly stressful for the next door neighbours at those locations.
(viii) The demolition and rebuilding of isolated properties on a residential estate would have been difficult, time consuming and slow. In relation to this issue, I prefer the evidence of Mr Connors to the evidence of Mr Bone.
"There is no evidence that shows that foundations are moving at the present, so on the current evidence that would appear to be the case. But the survey data is only three weeks apart, as previously -- in view of the relatively good factors of safety at this location, noting that there are one or two piles between 1 and 1.2, with negative skin friction operating, I consider it is likely that the foundations are stable, but that hasn't been completely demonstrated yet."
(a) Residents will obtain brand new property free of any defects.
(b) Demolition and rebuild can be done swiftly.
(c) Demolition and rebuild is likely to be cheaper than the massive cost of the Bullivant scheme.
(d) The disruption caused by demolition and rebuild is unlikely to be significantly different to that experienced under the Bullivant scheme.
(See paragraph 103 of Mr de Verneuil Smith's closing written submissions.)
(i) In respect of each of the 13 houses specific consideration must be given to the question whether jacking up of the house is required. Jacking up may not necessarily be appropriate in every case.
(ii) SHL must obtain at least three quotations for the repiling works required to those 13 properties. No doubt Bullivant will be one of the tenderers. Indeed, Bullivant may well be the successful tenderer, having gained experience of the first 12 properties. Nevertheless, SHL must proceed by means of competitive tenders in order to control costs.
(iii) If SHL choose to demolish and rebuild all or any of the present batch of 13 properties, they are of course at liberty to do so. However, SHL cannot recover more by way of damages than the cost or the notional cost of the internal repiling scheme.
"There is no existing loss or damage or claim which gives rise to an indemnity. The courts will not provide declaratory relief in respect of speculative or hypothetical matters."
"1. Damages for distress and inconvenience (see Watts v Morrow  4 All ER 937 (CA) and Farley v Skinner  2 AC 732 (HL)).
"2. Loss of use/amenity -- to be assessed (if any).
"3. Loss of earnings -- subject to proof."
"Like Bingham LJ in Watts v Morrow  1 WLR 1421, 1445H, I consider that awards in this area should be restrained and modest. It is important that logical and beneficial developments in this corner of the law should not contribute to the creation of a society bent on litigation."
"SHL is entitled to recover from Encia such damages (if any) as in law are due from SHL to the owners of plots 2, 3, 4, 7, 8, 11, 12, 13, 14, 15, 16, 18, 20, 27 and 28, 30, 37, 48, 50, 52, 53, 54, 55, 57, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 81, 83, 84, 85, 86, 87, 88 and 89 in respect of (a) diminution in value, (b) distress and inconvenience, or (c) incidental expenses in consequence of any breach by SHL of a contractual duty to provide adequate foundations."