Review your share of the losses

Imagine you own a patisserie in London and part of your shopfront falls onto a passing pedestrian (a whole family of them). If you had recently had works done to your shopfront then, as the shopowner who is good with patisserie and not really a connoisseur of construction, you might want/need to work out which of your contractors were jointly liable to compensate the family for their injuries.

This is not merely a fairy tale in bad taste. In June 2007, a family were seriously injured when a concrete shopfront and sign from Maison Blanc’s patisserie in Putney fell onto them. The question  was: in the complex web of contractors, suppliers and supervisors, who was liable?

Imagine a game of Cluedo and it might make the whole decision easier to understand. The relevant people were:

  • shopowner (tenant) – Maison Blanc (MB)
  • contractor 1 – who had a contract with MB for certain works.
  • contractor 2 – who carried out works to the floors above the patisserie in 2006/7; by the trial, everyone agreed that there was no evidence to link Contractor No 2 to the incident so they were not liable for the losses.
  • sign supplier – who installed the sign in 2005; by Contractor No 1 admission, it was clear the sign supplier had not breached its contractual requirements or its duty of care so they were not liable for the losses.
  • the contract administrator – who supervised Contractor No 2’s works but did not have a contract with the shopowner. Any claim from MB would have to be in negligence (tort) and not under a contractual agreement.

Sharing Liability

The Civil Liability (Contribution) Act 1978 Act allows one party to legal proceedings (as opposed to parties to a contract) to ask for a contribution towards any compensation payable from any other company or legal person who is held by the court to be liable ‘in respect of the same damage‘.

This means that if one or more company is proved to be responsible for the injury to the family then the losses are shared between them.

Contractor 1 (Active)

Maison Blanc had a contract with Contractor No 1 (Active) and claimed an indemnity. This means that Maison Blanc expected Active to pay them £1 for every £1 of losses they were liable to pay.

MB and Active also claimed contributions from each other under the Civil Liability (Contribution) Act 1978.

The Indemnity: The court accepted Active’s admission that they were in breach of Building Regulations – which created a strict contractual obligation – and in breach of various terms in the contract. Active had to indemnify MB, and pay 100% of the compensation.

Contributory Negligence: Active claimed that MB had been negligent. It wanted to reduce its liability using the partial defence of ‘contributory negligence’.  Active had to prove that MB ‘ought to have known’ that the shopfront and sign were dangerous. Active needed to prove MB knew that: there had been a breach of the contract, the situation was dangerous, and the defects needed fixing.  As MB knew neither of the breach of contract, nor that the situation was dangerous, it was not negligent.

Legal Nuance: There was also discussion in the court on the issue of the type of liability Active had to MB. Essentially, the court repeated a finding from an earlier case, that contributory negligence cannot be ‘a defence to a claim for damages founded on a breach of a strict contractual obligation’.

The Contract Administrator (Cluttons)

The supervisor of the works, Cluttons, did not have a contract with Maison Blanc. It supervised Contractor No 2’s works to the floors above the patisserie. The works involved erecting scaffolding on the front of the patisserie. When removed, damage to shopfront was visible.

MB brought a claim in negligence – Cluttons had failed to meet its duty to use reasonable care in carrying out its services – and also under the Civil Liability (Contribution) Act 1978.

Negligence: Without a contract, any liability to MB would be in negligence. The issue was whether Cluttons owed a duty of care to the shop-tenant? The court asked:

  • Was there ‘proximity’ between Cluttons and MB? This does not mean physical nearness but a link between their acts. Although employed by the landlord, Cluttons had access to MB’s property and had responded to MB’s request to inspect the property after the works were complete.
  • Was it foreseeable that a breach of a duty of care would cause losses to MB? The court held this was obvious.
  • Is it fair and just to impose a duty of care? MB were relying on Clutton’s advice to help resolve the damage to their shop and it was reasonable for them to rely on Cluttons.

When Cluttons responded to MB’s request to carry out an inspection on their premises, it accepted a responsibility to MB. So, Cluttons owed MB a limited duty of care, which was breached by Cluttons surveyor ‘failing to observe what the ordinary reasonably competent surveyor should have observed’.

Contribution:  For the contribution claim, MB had to prove that Cluttons also owed the injured claimants a duty of care. The three questions above were answered in this way based on ‘an ordinary reasonably competent surveyor’:

  • It was foreseeable if she failed to observe the damage to the shopfront could result in physical injury to passers-by on a busy high-street.
  • She should know that her failure to inspect and advise about a defect in a shopfront could have resulted in injury to passers-by.
  • The like liability of others, does not make it unjust or unfair to impose the duty of care.

So MB can ask Cluttons to contribute to the compensation.

What’s your share?

The court had to decide whether both were liable to contribute to the compensation (spoiler, yes). The next step was to agree the relative proportions that Contractor No 1 and Cluttons should bear. The court reasoning was:

  • Active caused the danger during the 2005 works; Cluttons failed to observe the danger in 2007.
  • Active were at least twice as liable and the starting point was therefore 2:1.
  • Active’s breach was a serious breach, as the Building Regulations are concerned with public safety or interest. Clutton’s breach was of a limited duty in negligence.
  • So Active and Clutton were ‘blameworthy’ to reduce the 33% starting point for Cluttons to 11%.

Active had to pay 100% of the compensation to MB, and could recover 11% from Cluttons.

What should you do?

There are several lessons from this web of construction intrigue.

For everyone: It can take 6 years to sort out the respective liability of just four potential defendants. Settle where you can.

For contractors: Ensure your work complies with all legislation and regulations, and use reasonable skill and care.

For contract administrators: Beware accepting instructions from people who are not your employer. Carry out your services using reasonable skill and care – the standard is not a ‘paragon of virtue’ merely an ordinary reasonably competent person.

For the public: avoid patisseries as they can seriously damage your health!

Case: Harrison & Ors v Technical Sign Company Ltd [2012] EWHC 2887 (TCC)

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