Key point
The TCC has refused to extend the duty to warn in construction to projects where there is no actual danger at the time the duty is alleged to have arisen.
In 1904, while deciding Northern Securities Co v United States, 193 U.S. 197 (1904), the famous US Supreme Court Justice, Oliver Wendell Holmes Jr, suggested that “hard cases make bad law”. Although this was not the first time the concept had been aired in judicial circles, it is arguably the best known example of the adage.
However, more recently, the maxim has fallen into judicial disrepute, with Lord Denning MR providing a particularly trenchant criticism in Re Vandervell’s Trusts (No 2) [1974] EWCA Civ 7. Now Akenhead J’s decision in Goldswain and anr v Beltec Limited (t/a BCS Consulting) and anr [2015] EWHC 556 (TCC); [2015] PLSCS 82 has offered an excellent example of a difficult set of facts resulting in a correct legal decision.
Cellar conversion disaster
The case arises from a domestic refurbishment in north London going spectacularly wrong.
In 2010, the claimant couple acquired a long-leasehold interest in a ground floor flat, part of a pair of semi-detached houses. They decided to convert the cellar into useable living space by underpinning the outer walls to create more height. They instructed Beltec to design the structural works for £1,350 plus VAT (as well as an additional £200 per site visit) and later engaged with second defendant AIMS Plumbing and Building Services Ltd to carry out the work in accordance with the Beltec design. A key point to stress is that Beltec was not instructed to supervise the work.
In September 2012, AIMS started to install the underpinning. On 26 September, an engineer from Beltec visited the site (for an agreed fee of £200 plus VAT) to inspect the first pin. AIMS had failed to comply with the design or correct sequence of work. The engineer told AIMS that the pin should be replaced and explained what AIMS should be doing. Beltec did not notify the claimants of AIMS’s initial failure to comply with Beltec’s design. Nor was Beltec asked to return to site.
AIMS’s work on the job was woeful. The pins used lacked the required reinforcement bars to support them; nor was there any propping between the building’s walls. Cracking emerged which, by November 2012, resulted in the claimants (as well as the family living upstairs) hearing “the fabric of the house tearing apart” when they ran out of the property as it fell apart around them.
Needless to say, it was an incredibly traumatic event with the stress causing the second claimant Jacqueline Hale, who was eight months pregnant, to go into premature labour. Thankfully the baby was delivered safe and well.
Unsurprisingly, she and her partner, Edward Goldswain, sought compensation. Unfortunately, AIMS – who were clearly in breach of contract (Akenhead J found against them on all points) – were insolvent and took no part in the proceedings. This left the claimants looking to Beltec for recompense.
The problem they faced was that there was nothing wrong with Beltec’s design; the problems were all caused by AIMS’s failure to carry out the work in accordance with it. Nor had Beltec been asked by the claimants to supervise the design.
This left them with one option – to argue that Beltec was in breach of an implied term in its appointment to warn of the danger to the structure from the works being carried out by AIMS, particularly following its site inspection regarding the first pin in September 2012.
Duty to warn
The existence (or otherwise) of a duty to warn in construction projects has been addressed in a number of cases. The most significant recent authority being the Court of Appeal’s decision in
Plant Construction plc v Clive Adams Associates [2000] BLR 137, where May LJ held that duty did exist where the design in question was dangerous and the subcontractor to whom the duty was held to apply was aware of the danger.
Akenhead J in Goldswain emphasised that a professional’s duty to warn was “no more than an aspect of the duty of a professional to act with the skill and care of a reasonably competent person in that profession”. He held that Beltec was not liable for a failure to warn. Although Beltec did attend a site inspection, the judge said that there was “no danger at that stage” and he did not think that the evidence supported an argument that Beltec should have realised AIMS was out of its depth or not competent to do the work.
The right result
The judgment has harsh consequences for the claimants. They have survived a very traumatic experience only to find themselves significantly out of pocket (the damages awarded by the judge against AIMS will never be paid given its insolvency) and without a house.
However, it is undeniably correct as a matter of law. The claimants hired Beltec to carry out a limited (and specific) set of services, which did not include supervision of the project, for a very small fee. One site visit did not mean that Beltec had any knowledge that meant it was required to warn the claimants of the danger posed by AIMS.
While a duty to warn can exist in construction projects, it arises when the party subject to the duty is (or should be) aware of actual danger. It is not an alternative to construction clients engaging properly with professionals and receiving (and paying for) the correct range of services that their project requires.
Stuart Pemble is a partner at Mills & Reeve LLP
