Construction – Multi-party dispute – Summary judgment – Respondents claiming damages against appellant main contractor for destruction of timber cabin by fire in course of construction works – Appellant denying liability – Appellant disputing existence of contract for works alleged to have caused fire and also disputing causation – Various third parties joined to proceedings – Whether respondents entitled to summary judgment against appellant – Whether summary judgment inappropriate in light of issues in dispute and number of parties – Appeal allowed
The respondents engaged the appellant as main contractor to erect a pre-fabricated luxury timber cabin in Poole Harbour, Dorset. The building was destroyed by a fire while it was still in the course of construction. The respondents brought a claim against the appellant for more than £3.5m in damages, claiming that the fire had originated in the roof space where the chimney passed through the roof, and had been caused by defects in the chimney which led to a fire when the wood burner in the cabin was used by workers. The appellant denied liability.
The construction works for the cabin had been divided into three phases. The appellant had carried out the phase 1 works without any letter of intent or signed contract being in place, although it had subsequently signed an undated JCT Intermediate Building Contract with Contractor’s Design 2005, Revision 2, 2009 in respect of those works. Both phase 2 and phase 3 were carried out without a contract being signed. The specification for phase 3 comprised various fitting-out works; the installation of mechanical works, including a flue system and wood burner, was carried out by a subcontractor. The parties proceeded on the basis that the JCT contract applied in respect of phase 3, and the architect issued certificates for payment from time to time as the work progressed. However, in its defence to the respondent’s claim, the appellant denied that there was a contract for phase 3; further, it did not admit the causation of the fire. It joined the sub-contractor for the mechanical works as a third party and that sub-contractor in turn joined other parties who had been involved in the works.
The claimant succeeded in an application for summary judgment on its claim pursuant to CPR 24.2 and judgment was given for damages to be assessed. The judge found that: (i) the parties, through their correspondence and conduct, had concluded a contract whereby the appellant agreed to carry out the phase 3 works in accordance with the appellant’s tender, subject to the conditions of the JCT contract; (ii) that contract included an obligation on the appellant to design the wood burner and the flue; (iii) all the possible causes of the fire arose from defective installation of the flue; and (iv) the appellant was therefore liable to the respondents for defective workmanship: see [2014] EWHC 2125 (TCC); [2014] PLSCS 203. The appellant appealed.
Held: The appeal was allowed.
(1) It would be appropriate to grant summary judgment if the only question to decide was whether there was a contract between the parties for the execution of the phase 3 works. The parties had understood that the appellant should carry out the phase 3 works in accordance with the appellant’s tender and subject to the conditions of the JCT contract. Thereafter both parties had acted on that basis. The appellant had carried out the works, the architect had issue certificates under the terms of the JCT contract and the respondents had paid those sums to the appellant. In those circumstances, there was a contract for the phase 3 works.
(2) However, there was also an issue, or a potential issue, concerning design responsibility. On the material before the court, it was at least arguable that the design responsibility of the appellant was limited to part only of the mechanical works. The specification required the appellant to “complete” the design of the heating system rather than undertake the whole of that design, which made sense because the sub-contractor had already done most of the design work; moreover, the appellant’s priced schedule only allowed a fairly small sum for that residual design work. The contract was made partly by conduct and, in the absence of any evidence concerning the relevant conduct, the documents alone were not sufficiently clear to establish, for summary judgment purposes, that the appellant’s contract included responsibility for the design of the flue.
(3) Furthermore, there remained an issue as to the cause of the fire. As the case stood before the judge, it appeared that one or more construction defects had caused the fire, although no one could identify precisely which defect was the culprit. While it seemed highly likely that the respondents would prove at trial that, one way or another, defective installation work was to blame, the actual cause was still unknown and there had been no judicial investigation of the facts.
It was likely that, as was normal practice in multi-party construction disputes, each defendant would adopt all available allegations which might pin the blame on others. Although the parties should have made their position clear in pre-action correspondence, pursuant to the TCC Pre-action Protocol for Construction and Engineering Disputes, issues over compliance with the protocol should be determined by reference to the substance of the matter rather than the minutiae of the protocol. Moreover, the court deplored any excessive front loading of costs in order to comply with protocol: CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd (Costs no 2) [2015] EWHC 481 (TCC) applied. In the instant case, there was a limit to the extent to which the appellant could set out its positive case in correspondence, as required by the protocol, when it would inevitably be seeking to pass liability down the contractual chain and would be likely to adopt the future pleaded allegations of the third, fourth and fifth parties, so far as it was advantageous to do so. Standing back from the detail and looking at the case in the round, the position as to causation was not so clear at the date when it was considered by the judge as to justify the grant of summary judgment on liability in favour of the respondents. Further, it was not appropriate to uphold a summary judgment on liability in favour of one party when very similar issues were going to be the subject of a full trial between the other parties in any event. A judge in multi-party litigation had to aim to do justice as between all parties involved in the case. Since there was going to be a trial in any event, at which extensive factual and expert evidence would be called in order to establish the cause of the fire and who was responsible for it, summary judgment against the appellant would achieve much less in terms of saving costs and court time than was normal. The respondents would have to participate in the trial, because they needed to prove the quantum of their damages. Accordingly, in the particular circumstances of the case, there was a “compelling reason” not to enter summary judgment within the meaning of CPR 24.2(b).
Karim Ghaly (instructed by Clyde & Co LLP) appeared for the appellant; Richard Wilmot-Smith QC and Julian Field (instructed by DAC Beachcroft LLP) appeared for the respondents.
Sally Dobson, barrister
