Dry rot — Specialist company’s guarantee against recurrence — Company denied liability under guarantee — Appeal from decision of county court judge finding company liable — Guarantee provided for further treatment without charge on recurrence of trouble, the guarantee, for 20 years, to run with the property for the benefit of future proprietors — The relevant affected area in the respondents’ house was in the front wall of a first-floor room where a balcony sill joined the floor boards — Underneath the floor boards and the sill there was a bressummer beam partly embedded in the brickwork of the front wall — The rot occurred in that area, affecting parts of the bressummer — The judge found that the specialists who had been called in, Protim Services Ltd, had not done the disinfestation work properly — Although they knew or ought to have known that the bressummer was infected and that the infected portion should have been cut out, they sprayed over the infected area — A fresh outbreak of dry rot appeared in the same area some 8 years later — Protim disclaimed liability on the guarantee
owners, plaintiffs below, took proceedings against both Protim and the
contractors employed to open up the affected area on the ground of bad
workmanship — This particular claim failed as it was impossible to establish
whether the damage had occurred within the limitation period — The plaintiffs
also claimed against Protim under the guarantee and the county court judge
upheld this claim — Protim appealed and relied on two provisos set out in the
guarantee — The first excluded the guarantee if the recurrence was the result
of a failure to keep the property in a dry and weatherproof condition and in a
good and proper state of maintenance — The second excluded liability if the
recurrence was a result of failure to carry out any recommendation given by the
company in writing which was the responsibility of the client
Appeal held that the appellants could not rely on the first proviso as it was
not shown that the existence of dampness in the wall was due to some act or
omission by the respondents which was describable as a ‘failure’ — As regards
the second proviso, although the respondents’ contractors had been at fault,
the dominant cause of the reinfestation was the appellants’ action in proceeding
to spray the infected bressummer and seal the area although the infection must
have been clearly visible — Appeal dismissed — Some comments by the court on
the attitude of the appellants
The following
cases are referred to in this report.
Alghussein
Establishment v Eton College [1988] 1 WLR
587, HL
Webster v Higgins [1948] 2 All ER 127, CA
Yorkshire
Dale Steamship Co Ltd v Minister of War
Transport [1942] AC 691
This was an
appeal by Protim Services Ltd, the first defendants in the court below, from the
decision of Judge Martin QC, at Bloomsbury County Court, in favour of the
plaintiffs, the present respondents, Jack Pesach Ackerman and Joseph Ackerman,
the owners of a property at 14 Grove Terrace, London NW5, which was the subject
of a complaint against Protim Services Ltd, in connection with works for the
treatment of dry rot. The second defendants below, C P Roberts & Co Ltd,
contractors employed by the plaintiffs, were not parties to the appeal, the
plaintiffs not having appealed against the judge’s dismissal of the claim
against the contractors.
Jeffrey Terry
(instructed by Bishop & Sewell) appeared on behalf of the appellants;
Selwyn Bloch (instructed by Wallace & Partners) represented the
respondents.
Giving
judgment, KERR LJ said: This is an appeal from a judgment delivered by His
Honour Judge Martin QC in the Bloomsbury County Court on November 20 1987. It
concerns two outbreaks of dry rot at a property owned by the plaintiffs at 14
Grove Terrace, London NW5. It appears from the judgment that this property is
of the order of 200 years old but that the exterior is in perfectly good
condition. The plaintiffs are the owners of the property and were described as
‘professional landlords’. The appellants, who were the first defendants in the
action and to whom I shall refer as ‘Protim’, are well-known specialists in the
treatment of timber infestation and rising damp.
The value of
the services of Protim and of other prominent concerns in the same line of
business does not lie merely, or even mainly, in the treatment which they apply
at the time when the property requires attention. The value lies above all in
the fact that they give a 20-year guarantee that in the event of any
recurrence, subject to certain provisos, they will carry out further treatment as
appropriate, together with all the necessary work, free of charge. The value of
that guarantee is that it runs with the property for the benefit of future
owners and that Protim is a large and well-known company which is likely to
remain in business so as to be able to honour its guarantees, whereas similar
guarantees by smaller concerns may not have the same value. Unfortunately,
however, on this appeal Protim have taken points on the interpretation of their
standard form of guarantee which are somewhat surprising and which would, if
the judge were wrong in his conclusion, render the guarantee largely worthless
and something of a trap.
The judge held
that Protim were wrong in rejecting a claim by the plaintiffs under this form
of guarantee. He gave judgment against Protim in the sum of £2,800 odd, the
cost of the work which the plaintiffs had to do to deal with the recurrence of
an outbreak of dry rot. The judge concluded that the work should have been done
by Protim under the guarantee, in which case that cost would, of course, have
fallen on them. Protim now appeal against that decision, maintaining that
notwithstanding the adverse fact findings of the judge, which they do not
challenge, they are under no liability.
The history is
briefly as follows. In February 1973 there was an outbreak of dry rot in one
room on the first floor of this property, in two areas of that room. One was in
a party wall; that was successfully dealt with in 1974 and there has been no
recurrence. The second area, which is the relevant one, was in the area of the
front wall of the building, where the sill of a balcony running the full width
of that room, to which access can be had through french windows, joined the
floor boards. Underneath the floor boards and the sill of the balcony there was
a bressummer or wall-plate, a heavy piece of timber, evidently running the full
length of the room, which was partly embedded in the brickwork of the front
wall. It was in that area, or in
outbreak occurred originally in February 1973.
Protim were
contacted; they gave certain quotations and certain documents came into
existence to which I refer later. Nothing was then done until the plaintiffs
had carried out further investigations with the assistance of surveyors, J
Maunder Taylor & Son, and in 1974, through these surveyors, Protim were
contacted again. As a result of some further contractual correspondence, to
which I shall also come, the outbreak was dealt with in November 1974. The area
was opened up by contractors employed by the plaintiffs, C P Roberts & Co
Ltd, who were the second defendants in the action but play no part in this
appeal. The area having been opened up, one of Protim’s employees, a Mr Aley, evidently
to a substantial extent under the supervision of a surveyor employed by Protim,
a Mr Wright, applied treatment to the affected area by spraying it with a
chemical which Protim recommend for the eradication of dry rot. The judge found
that that was done improperly, in the sense that Mr Aley knew, or ought to have
known, that part of the bressummer which had been infected by dry rot had not
been removed before he applied the treatment, but that he sprayed over the
affected area although in all probability this must have been visible to him. I
shall return to the findings hereafter. That was the position after November
1974.
There was then
a fresh outbreak in the same area, in 1982. When that happened, not
surprisingly the plaintiffs got in touch with Protim pursuant to the 20-year
guarantee which they had been given after completion of the works in 1974. But
Protim declined liability under the guarantee, whereupon the plaintiffs
instituted the present proceedings in July 1983. They sued both Protim and the
contractors, C P Roberts & Co Ltd, as joint defendants.
The claim
against Protim was twofold. First, there was a claim for bad workmanship in
1974 on the grounds which I have already briefly indicated. Second, there was a
claim under the guarantee. The claim against Roberts was for bad workmanship,
breach of contract and/or negligence on the ground that they had opened up the
infested area insufficiently and/or had failed to notice that they had not done
so.
The judge held
that it was impossible to establish the date of the fresh outbreak and that it
was therefore impossible to know whether the damage due to it had occurred
within six years prior to the issue of the writ in July 1983 or not. On that
ground he dismissed the claim against the contractors, Roberts, and the
plaintiffs have not appealed against that decision. In the result the
contractors disappear from the picture. He also dismissed the claim for bad
workmanship against Protim, whether it be for breach of contract or negligence,
on the same ground. However, his findings show that but for the defence of
limitation this claim would have succeeded. Again there has been no appeal by
the plaintiffs against that decision. For present purposes, that means that the
plaintiffs’ sole claim lies under the guarantee.
This provides:
The Company
hereby GUARANTEES that, save as hereinafter provided, in the event of the
person entitled to the benefit of this Guarantee (hereinafter included in the
term ‘the Client’) notifying the Company within a period of TWENTY YEARS from
the Date of Completion of the Work, of
and I read the
relevant words
any . . .
recurrence of infestation . . . or attack by wood-rotting fungi in any of the
timbers treated against any such . . . fungi . . . in the work carried out . .
. the Company will upon production of this Guarantee and all Survey Reports,
Estimates and Specifications . . . issued by the Company in connection with the
work carried out, arrange for these timbers . . . to be inspected at a mutually
convenient time, and for the carrying out without further charge of such
further chemical treatment against infestation . . . or attack . . . as may be
necessary. In addition the Company will open up and make good as may be
necessary to complete such further chemical . . . treatment. The Company does
not accept responsibility under this Guarantee for any other costs or expenses
which are not included in the foregoing.
Then I come to
the proviso:
Provided that
in the following cases this guarantee shall not be applicable
(a) . . .
infestation . . . which is not reported to the Company as soon as it becomes
apparent —
That has no
application here, since the recurrence was reported.
One then comes
to (b):
Timbers or
walls of the property which suffer a recurrence of fungal attack —
That means ‘in
relation to’ such timbers or walls, and it provides that the guarantee will not
be applicable:
(b)(i) as a result of failure to keep the Property
in a dry and weatherproof condition and in a good and proper state of
maintenance.
I think I
ought to read (ii) although it is not relevant here:
as a result
of structural alterations to the property
and then
(iii), which is relevant here as well as (i):
As a result of
a failure to carry out any recommendation given by the Company in writing which
is the responsibility of the Client
The defences
raised by Protim are based on (b)(i) and (b)(iii).
Putting it
broadly for the moment, the judge held that the fresh outbreak in 1982 was due
to a combination of two causes. First, a recurrence of the infestation in the
bressummer plate which I have mentioned, because this had not been treated
properly at the time. Protim’s employee, Mr Aley, had sprayed over the infected
area; and that area should, in any event, have been cut out in the first
instance. But Mr Aley, and Protim’s surveyor, Mr Wright, knew or ought to have
known that this had not happened, because on a balance of probability the
infestation was visible to them. That was the first cause found by the judge.
Second, he
found that the dormant infestation, as I suppose it may be called, in this
bressummer was reactivated and triggered off into a fresh attack of active dry
rot because the bressummer was in contact with the inner face of the brick wall
of the building which was damp, although the wall was not in any way defective.
The fact that the inner surface of the brickwork was damp could not be seen,
since it was covered up by laths and plaster which were separated from the
brickwork to allow ventilation. So there was no indication that the inside of
the brickwork was damp.
I deal first
with the dampness aspect, although of course it came second in time. I deal
with it first because I can do so more briefly. In that regard Protim rely on
proviso (b)(i). They say that the bressummer suffered a recurrence of dry rot
‘as a result of failure to keep the property in a dry and weatherproof condition
and in a good and proper state of maintenance’.
In that regard
the judge’s findings (which are not challenged on this appeal) were as follows.
After he had dealt with what went wrong with the original work in 1974, to
which I shall come later, he went on as follows:
However, it
is common ground that dry rot cannot become active unless there is at least 20%
moisture in the wood. In this case the moisture arose because the wood was in
contact with the interior face of the brickwork of the front wall. (Protim) say
that the Plaintiffs failed to keep the property in a dry and weatherproof
condition and in a good and proper state of maintenance and that (Protim) are
not, therefore, bound by the guarantee.
It is
important to realise that the Plaintiffs must be shown to be guilty of some
failure in that respect. The only evidence of failure is the fact that the
internal face of the brickwork was, in fact, damp. Mr Maunder Taylor
the
plaintiffs’ surveyor
and Mr Wright
Protim’s
surveyor
carefully
examined the brickwork in 1982 and could find no defect in the wall. There was
no hole or crack and the brickwork did not require repointing. Mr Wright said
there were high moisture readings in the mortar joints at or near the junction
of the wall with the balcony and that readings were taken on the inside. He
made no note of the readings and his memory in general, on his own admission,
was fragmentary. He says the Plaintiffs should have asphalted the balcony with
an upsweep of about three inches above the balcony floor. I do not accept that
it was necessary or reasonable for the Plaintiffs to do this because the rain
water drained away over the front edge of the balcony. This can be seen in the
photograph on page 3 of Mr Maunder Taylor’s report. Mr Wright accepted this.
Also, there is moss on that half of the floor of the balcony further from the
wall of the house. This indicates that it was that part of the balcony that was
damp and not the part next to the wall, and that the water on the balcony ran
off the front edge or collected at the front. In addition, where the balcony
meets the wall is a plinth about three inches above the floor. This is covered
in concrete.
I have no
doubt that this wall was damp because it is west facing and received the full
force of the weather. That was known to (Protim).
In the
absence of an apparent defect in the wall (and there was none) I suppose it is
possible that there may be a design defect. This was not canvassed in evidence
or argument. The house has been there over two hundred years. It seems that
this is the original bressummer and the 1973 outbreak of dry rot was the first
outbreak so far as one knows.
No damp was
visible on the plaster of the room in question. The front wall of the room
situated in the north-west corner is composed of battens, laths and plaster
three inches from the internal face of the external wall. This provides
ventilation and should help minimise the dampness on the interior.
In my
judgment (Protim) failed to show that the Plaintiffs did not keep the property
in a dry and weatherproof condition or failed to maintain it. They
concede that dry does not mean bone dry. Mr Wright said that new timber may
have a moisture content as high as 16%. This is acceptable. If (Protim) require
their customers to keep the moisture content below 20% then they should say so
in clear and unequivocal terms.
Despite these
unchallenged findings, Protim maintain that the judge’s construction of proviso
(b)(i) was wrong because the dampness on the inside of the brickwork had the
effect that the property was not in fact in ‘a dry and weatherproof condition’.
Mr Terry, on
behalf of Protim, has referred us to the dictionary meaning of ‘weatherproof’,
in effect ‘impervious to the weather’. He also referred us to the meaning of
‘impervious’, which is in effect ‘wholly impenetrable or unpenetrated’. He
therefore says that the fact that there was dampness showed that the inside of
the wall was not ‘dry’ or ‘in a weatherproof condition’.
In my view,
this defence fails. While one can fully understand that the claim under the
guarantee may have been properly challenged below on the basis that there was
some failure on the part of the owners in allowing the dampness to arise, the
allegation being that the cause was leakage between the balcony and the brick
wall which should have been prevented by concreting, it seems astonishing for
Protim to have appealed the judge’s construction of proviso (b)(i) in the light
of these findings. The important words are ‘as a result of failure’. If (b)(i)
is given a reasonable interpretation by reading it as a whole, including the
words ‘and in a good and proper state of maintenance’, and if one reads the
guarantee as a whole and (b)(i) in the context of other provisions to which I
have not referred, it is clear that the word ‘failure’ connotes some act or
omission of the owner or occupier which is open to criticism. It is not enough
to show that there was in fact dampness to an extent sufficient to trigger off
a recurrence of infestation in combination with other circumstances. Proviso
(b)(i) does not refer merely to a state of fact. To rely on it Protim would
have to show that this dampness was due to something which can properly be
described as ‘a failure to keep the property in a dry and weatherproof
condition’. This implies something which ought to have been prevented so as to
be properly describable as a ‘failure’. That did not happen in this case, and
on that basis I would dismiss Protim’s appeal on this ground.
I turn now to
proviso (b)(iii), which I must read again. This deals with a recurrence of
infestation:
as a result
of a failure to carry out any recommendation given by the Company in writing
which is the responsibility of the Client.
The first
question is what is referred to by the words ‘any recommendation given by the
Company in writing which is the responsibility of the Client’. For that purpose
one must in my view go to the contractual documents, since these show that
those words are in effect terms of art in relation to the contract between
Protim and a client.
I refer first
to a letter from Protim to J Maunder Taylor & Son, the plaintiffs’
surveyors, dated February 16 1973:
The
accessible timbers at the abutment of the firebreast party wall
that does not
matter
and the front
external wall, were inspected for attacks of wood rotting fungi, and the
following infestation noted.
Then it
describes the infestation, which was a clear outbreak of dry rot and it was
mentioned that full exposure works had not yet been carried out and that the
infestation may have been more widespread than had appeared at present. Then
the letter goes on, under the heading ‘Generally’:
Timbers
bearing in or adjacent to external walls in the areas where moisture has
penetrated the fabric must be regarded as being suspect.
Then there is
a heading ‘Recommendations’ consisting of ‘Chemical Treatment’ and ‘Attendance
Work’ which are both governed by the words ‘as set out in the attached
estimate’. Then, under ‘Other Works’, they wrote:
Not included
in the Estimate: Your attention is drawn to the section of the General
Principles of Treatment headed (1) ‘Clients’ Responsibility’, and in particular
the paragraphs numbered:
(i) attendance and other building works
(ii) sources of moisture
and I need not
refer to the rest.
So one has
there, for the first time, but to be repeated later, reference to
‘Recommendations’ and ‘Clients’ Responsibility’.
Attached to
that letter were the ‘General Principles of Treatment’ which are mentioned in
the letter; these included a sheet headed ‘Clients’ Responsibility’. The first
item was ‘Attendance and other building work’. I need not read that in full,
but I should read the following:
Except where
this work has been included in our estimate for Chemical Treatment, the work
set out under the heading ‘(II) Attendance Work’ in our estimate must be
completed by the client or his building contractor prior to the arrival of our
operatives on site.
Then, a little
further on:
The ends of
timbers bearing in damp walls must be cut back and resupported; embedded wall
plates must be taken out and resultant voids bricked up by a builder
that would be
applicable to this bressummer.
Under ‘Sources
of Moisture’ it says:
All sources
or potential sources of moisture ingress must be carefully checked by a
building contractor and all defects rectified.
There was
another letter of the same date, February 16 1973, from Protim to the
surveyors, which began:
Our Surveyor
visited the above property . . . in order to report on infestations,
and so forth.
Then there was
a heading: ‘Recommendations’.
The following
recommendations are based upon the report by our surveyor which for your
further information is attached
and that was
the letter which I have read. Then, under ‘Chemical Treatment’ and ‘Dry Rot
Treatment’ there was a description of the treatment to be carried out by
Protim, which I need not read; and an estimate in the sum of £40.00 in respect
of ‘chemical treatment according to the General Principles attached’.
The second
heading under ‘Recommendations’ was ‘Attendance Work’, which was not included
in the estimate for chemical treatment set out above. It provided:
In order to
enable us to carry out the recommended chemical treatment, it is necessary to
provide access to all timber scheduled for treatment; such attendance work must
include:
Full
exposure of all timber in the area to be treated.
Removal of
all timber built into the walls.
Removal
of all infested timber.
Then, under a
further heading ‘Reinstatement’, it said among other matters:
Insert Protim
Joinery Lining between timber and damp walls.
‘Protim Joinery
Linings’, or for short ‘PJLs’ played a very large part in the hearing below,
since no such linings were in fact inserted.
Then, under
the heading ‘(iii) Other Works’ the letter went on again in very much the same
vein as the others to which I have already referred, saying:
We
respectfully draw your attention to the attached report and to our leaflet
setting out our ‘General Principles of Treatment’. In particular the items
under the heading of ‘(III) Other Works’ in the report, and the paragraph
headed ‘Clients’ Responsibility’ in the leaflet should be read with care.
On completion
of the chemical treatment of interior timbers our usual twenty year guarantee
will be issued (except if otherwise stated).
The surveyors
then contacted Mr Wright of Protim again in September 1974, and Roberts, the
building contractors, were also instructed. Visits to the property were again
made by Mr Wright, and on October 21 1974 Protim wrote:
Some opening
up has been carried out, but not as yet to the full extent necessary.
It was agreed
on site that it is possible that the infestation is more widespread than
appears at present. In order to establish the full extent of the attack, all
areas that have been subject to moisture ingress should be opened up by the
building contractor prior to a further inspection and the preparation of a
supplementary report and estimate.
Evidently that
was done, at any rate to some extent, and on November 5 there was a fresh
quotation. It referred to a meeting on the property and submitted a revised
quotation supplementary to the original report dated February 6 1973, ‘now that
the dry rot attack described in our initial report dated February 16 1973 has
been opened up by your builder’.
There was
again a heading ‘Dry Rot Treatment, in accordance with our General Principles’,
and a repetition of the reference to chemical treatment. The revised price was
just under £90. Then there is again a reference to ‘Attendance Works’:
The
attendance works as described in our report dated 16th February 1973 are still
applicable.
We understand
that the attendance works will be carried out by your contractor, prior to our
arrival on site.
Then, under
the heading ‘Other Works’,
We
respectfully draw your attention to the leaflet setting out our ‘Guide to
Timber Treatment’. In particular the paragraph headed ‘Clients’ Responsibility’
in the leaflet should be read with care.
and there were
annexures similar to those which were sent in 1973. It was on the basis of
these documents that the work was done.
Before coming
to the judge’s findings in relation to the way in which the work was done, I
return to the question of what is comprised in the words ‘any recommendation
given by the Company in writing which is the responsibility of the
Client.’ In my view, contrary to Mr
Bloch’s argument that these words must be given a purely general interpretation,
in the present context they already refer to the ‘Recommendations’, which are
the ‘Clients’ Responsibility’, which I have read from the contractual
documents, which included the opening up of the works and in particular
‘removal of all timber built into the walls’ in the relevant area; and ‘removal
of all infested timber’.
I think the
judge construed the reference to recommendations in proviso (b)(iii) in the
same way as I have done. I say that because he quoted the provisions to which I
have referred in full and then dealt at length with the question of the Protim
Joinery Linings (PJLs) which are mentioned in those recommendations. Although
not the subject of this appeal, it is relevant to note that a large part of the
judgment was devoted to an analysis of the question whether the absence of
PJLs, as referred to in the ‘Recommendations’ as being the ‘Clients’
Responsibility’, had any causative effect on the recurrence of the attack of
dry rot. The judge concluded that they had no causative effect and there has
been no appeal against that part of the judgment. But if one looks at that part
of the judgment I think one can see that the judge interpreted proviso (b)(iii)
in the same way as I have done.
One then comes
to the most important aspect of the appeal, concerning the way in which the
work was done. The judge said in that regard:
I find that
the seat of the fresh outbreak was in a piece of timber — part of a bressummer
or plate — which ran along the interior of the front wall at about balcony
level or just below and which was partly embedded in the brickwork and was to
some extent load-bearing.
How did this
timber which probably contained dry rot in 1974 come to be left in situ? Whose responsibility was it?
Then he read
through the contractual documents which I have analysed, and it is clear that
he was fully aware of the significance of the ‘Recommendations’ there referred
to and also of the importance of the words ‘Clients’ Responsibility’.
He went on:
There is no
doubt that the attendance works were to be carried out by the contractors under
contract to the plaintiff
that is
Roberts
The question
is who is to decide the extent to which the works are to be carried out and how
much timber is to be removed? Mr Wright,
Protim’s surveyor then employed by Protim, said that it was for the plaintiff
to indicate the extent of the area to be treated. Who is to see that all the
infected timbers have been sufficiently cut out to prevent a recurrence? I am in no doubt that it was for Protim to
indicate the area to be cleared of rotten timber and to see that any piece of
wood that ought to have been removed was removed. After all they were the
experts; they were giving the guarantee. I hold that there was an implied term
of the contract that they should do so.
He then added:
Mr Wright who
is now a Technical Officer with the British Wood Preserving Association gave
evidence and said in chief that it was probable that the decay in the
bressummer which was in situ would have been visible to the operator who
carried out the treatment, a Mr Aley. He was a very experienced operative
according to Mr Wright. In cross-examination Mr Wright sought to water down
what he had said about visibility but I find that Mr Wright, the servant or
agent of Protim’s, knew or ought to have known that rotten wood was left. So
should Mr Aley. This was the first cause of the outbreak which manifested
itself in 1982 and it was (Protim’s) fault.
We have a copy
of the judge’s note of Mr Wright’s evidence in that connection, which fully
bears out that finding. In cross-examination, referring to Mr Aley, the note
summarises Mr Wright’s evidence as follows:
He is
extremely experienced. His standing brief was to report back if not proper
preparation. Part of the bressummer was left in which should not have been left
in. Was probably visible. No record of anything being reported back by
operative. The probability is that Aley sprayed over timber visibly affected by
dry rot.
Protim
challenge the implied term found by the judge which I have read. I respectfully
agree that he put that too high. I find it impossible to extract from the
documents any implication necessary to give business efficacy to the contract
that Protim were to be responsible for the extent to which the infected area
was opened up and any relevant timber removed, or that they were in any way
bound to supervise the work to be done by the client’s contractor. That was
‘Clients’ Responsibility’. To that extent I feel sure the judge went too far.
But an obligation to use reasonable skill and care in the provision of their expertise
and services must no doubt be implied. Thus, there cannot be any doubt that in
this case Protim were negligent and in breach of an implied term to this effect
on the judge’s finding which I have read. On those findings Mr Wright and Mr
Aley knew, or ought to have known, that timber which was probably visibly
affected by dry rot had not been cut out. Nevertheless, they permitted or
caused it to be treated by spraying it over with Protim’s chemical. That was
clearly a breach of Protim’s duty to their clients to exercise reasonable skill
and care. If they see, or ought to have seen, that the preparatory work has not
been done sufficiently to enable their treatment to be carried out, then they
must not go ahead until the ‘Attendance Works’ have been completed.
However, the
problem is whether this breach of contract and duty has any effect on proviso
(b)(iii) of the guarantee. But for the lapse of the period of limitation Protim
would undoubtedly have been liable in damages on these findings for breach of
contract and negligence, and the award made by the judge would then have been
justifiable on that ground. But that claim is time-barred. In so far as the
judge founded himself on the alleged breach of contract, quite apart from the
fact that in my view he put the implied term too high, his judgment cannot be
supported. Mr Bloch was therefore faced with the problem whether there was any
answer to Protim’s reliance on proviso (b)(iii).
I have already
indicated, although it is not relevant to the strictly legal position, that in
my view it is not to Protim’s credit that they seek to rely on this proviso in
the face of the judge’s unchallenged findings. It is even less creditable than
their reliance on proviso (b)(i). By taking these points they discredit and devalue
their own guarantee. But that is a matter for their judgment.
Mr Bloch
advanced various arguments which in my view cannot get over the problem of the
application of proviso (b)(iii), save one which I leave until the end. He
submitted that the construction of the reference to recommendations should
somehow be affected by the fact that there had been a breach of contract and
negligence by Protim themselves. He submitted that in these circumstances
proviso (b)(iii) did not have the meaning for which Protim contended, or that
they could not rely on it in the face of their own breach of contract and
negligence. In relation to construction he put it as follows in an amended
respondents’ notice for which we gave leave:
On a true
construction thereof the said proviso did not apply to a failure to carry out
recommendations of (Protim) which (Protim) knew or ought to have known had not
been carried out before issuing their guarantee.
In that
connection he relied on Webster v Higgins [1948] 2 All ER 127 and
other cases which I do not find it necessary to mention, since I think that
that case is the only one which could possibly be relevant. However, in my view
it is plainly distinguishable. We are here dealing with a qualified guarantee,
and the question is simply whether or not the event covered by the proviso has
occurred or not. The fact that there was, independently, a breach of contract
and/or negligence on the part of Protim is irrelevant, since these are no
longer capable of supporting a claim.
Mr Bloch also
relied on estoppel and waiver, and in addition on a recent decision of the
House of Lords in Alghussein Establishment v Eton College [1988]
1 WLR 587. But that is equally of no assistance.
However, Mr
Bloch had one final argument, which in my view succeeds. He pointed out that
proviso (b)(iii), in the same way as (b)(i), is prefaced by words of causation.
The words are ‘as a result of a failure to carry out any recommendation’. He
submitted that on the findings of the judge the failure on the part of the plaintiffs’
contractors to comply with the recommendations was not causative and that
therefore the words ‘as a result of a failure’ were not triggered off so as to
bring the proviso into operation. I have already read the judge’s findings. It
is perfectly plain that he regarded the dominant cause — indeed the only one he
mentions in the relevant part of his judgment — to have been the decision by Mr
Wright and Mr Aley to proceed in the face of an infestation which was probably
visible, and that in all probability the chemical was applied over visible
infestation, which clearly should not have happened. In that regard the judge
said:
This was the
first cause of the outbreak which manifested itself in 1982 and it was
(Protim’s) fault.
The second
cause was of course the dampness of the brickwork.
It is true
that some four or five pages further on, in the middle of the part which dealt
with the absence of PJLs, he also said:
The fresh
outbreak began not because of the absence of PJLs but because of the failure to
cut out all the infested wood. In my judgment it is sheer speculation whether
the PJLs would have reduced the extent of the outbreak.
But I do not
read that finding as detracting from the clear finding made in the earlier part
of his judgment. Quite clearly, if he had been asked what the dominant cause of
the recurrence was, he would have said ‘the breach of contract and negligence
of Protim’, which he found explicitly.
That leaves
only one point. It might be said that there were here two causes, the failure
of the contractors to open up and to carry out the recommendations properly
and, second, the bad workmanship of which Protim were guilty, and that
accordingly, as the words are ‘as a result of a failure’, proviso (b)(iii)
still applies.
I would reject
that construction of the proviso. This is a business document; it should not
matter whether the words are ‘as the result of a failure’ or ‘resulting from a
failure’ or ‘as a result of a failure’. There are many cases which show
that what the court has to do in situations such as this is to look for the
dominant cause.
One useful
reference to which I often go on this aspect is a passage in the speech of Lord
Wright in Yorkshire Dale Steamship Co Ltd v Minister of War Transport
[1942] AC 691 at p 706. Admittedly it was a case under a marine insurance
policy in which the question was which of a number of causes was the proximate
cause. But the passage is of general application on causation.
Lord Wright
said:
This choice
of the real or efficient cause from out of the whole complex of the facts must
be made by applying common-sense standards. Causation is to be understood as
the man in the street, and not as either the scientist or the metaphysician,
would understand it. Cause here means what a business or seafaring man would
take to be the cause without too microscopic analysis but on a broad view.
The documents
and the facts of this case show clearly, as the judge held, that Protim were
initially concerned to ensure that the area had been opened up and dealt with
properly in preparation for their treatment before they went ahead. Although
they were not obliged to supervise, or to accept responsibility for these
preparations, it was clearly wrong to have proceeded with the treatment and
allowed the area to be resealed when they knew or ought to have known that it
had been improperly treated and was still infested. That was not only the last
event in time but as a matter of common sense the main cause of this
recurrence. That was the effect of the finding of the judge. On that basis
proviso (b)(iii) does not apply, because the real cause of this recurrence was
not the failure of the plaintiffs to carry out the recommendations. For those
reasons I would dismiss this appeal.
SWINTON THOMAS
J agreed and did not add anything.
The appeal
was dismissed with costs.
