Claimants’ recording studio damaged by tunnelling carried out by defendant – Claimants claiming damages for structural defects to building and damages for loss of profits – Defendant making payment-in under RSC Ord 22 r 1(1) – Whether payment in was in satisfaction of a cause of action or only part of a cause of action – Court finding payment ineffective – Appeal allowed
The claimants owned commercial premises known as Hundred House, Southwark, in which they built a professional recording studio. In 1995 and 1996 the defendant drove tunnels into the ground for the Jubilee Line extension. The claimants alleged that, as a result, their premises were damaged and the recording studio became unusable. Particulars were given of physical cracks in the premises and the cost of repairing them was claimed to be £79,000. There was also a claim for £2.5m for loss of profit alleged to have resulted from the damage to the studio.
The defendant made a payment of £70,000 into court, pursuant to r 1(1) of RSC Ord 22, which was stated in the notice of payment-in, to be “in satisfaction of… [the claimants’] claim, namely that by reason of the works carried out by the Defendant the premises… have suffered physical damage (‘the Physical Damage Claim’)…”. The notice stated that the sum of £70,000 was “in satisfaction of the Cause of Action for Physical Damage” as between the claimants. The claimants contended that there was a single cause of action and the payment in was ineffective because it satisfied, or purported to satisfy, only a part of the cause of action. The defendant, relying on Steamship Mutual Underwriting Association Ltd v Trollope & Colls (City) Ltd (1986) 33 BLR 77, submitted that the physical damages claim was a different cause of action from the claim for loss of profits arising out of the damage to the studio. The judge found that the payment in by the defendant was ineffective and ordered that it be withdrawn. The defendant appealed.
Held: The appeal was allowed.
1. The fact that the physical damage was caused by the same breach of duty, negligent tunnelling, was an important factor in determining whether there was a single cause of action. No real distinction could be drawn between the cause of cosmetic cracking and the cause of the damage to the studio, which led to the claim for loss of profits. The damage to the studio was to be treated as a further item of loss arising from the same negligent acts or omissions.
2. Steamship v Trollope (supra), was not authority for the proposition that where there were heads of damage that were very different in size and nature, that in itself established there was more than one cause of action. Although the claimants’ claims were dramatically different, the different money claims were no more than heads of damage constituting a composite claim. They were not separate causes of action.
Clive Freedman QC and Stephen Davies (instructed by Berrymans Lace Mawer, of Manchester) appeared for the claimants; Simon Browne-Wilkinson QC (instructed by Beachcroft Wansbroughs) appeared for the defendant.
Thomas Elliott, barrister
