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England and Wales High Court (Technology and Construction Court) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Power Magnetics and Electronic Systems Ltd. v Wood Goldstraw & Yorath & Ors [2002] EWHC 2912 (TCC) (22 October 2002) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2002/2912.html Cite as: [2002] EWHC 2912 (TCC) |
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QUEENS BENCH DIVISION
BIRMINGHAM DISTRICT REGISTRY
TECHNOLOGY AND CONSTRUCTION COURT
33 Bull Street Birmingham B4 6DS | ||
B e f o r e :
____________________
POWER MAGNETICS AND ELECTRONIC SYSTEMS LIMITED | Claimant | |
- and - | ||
WOOD GOLDSTRAW & YORATH J. CLIFFE (3) A. E. WHITFIELD | Defendants |
____________________
Mr Charles Phipps of Counsel (instructed by Fishburn Morgan Cole) for the First Defendant
Ms Alison Padfield of Counsel (instructed by Squire & Co) for the Second and Third Defendants
Hearing : 1-4 and 9 July 2002
Date of draft judgment: 16 August 2002
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HTML VERSION OF JUDGMENT
Crown Copyright ©
Background
Defendants' reports
"Further to our visit to the above premises we confirm our professional fees for the Structural Appraisal would be £2500 plus VAT…
Our fees allow for a detailed inspection of all structural elements where accessible and three copies of our final report which would include photographs where considered necessary and recommendations for any remedial works required.
We understand that means of access would be made available to us by the client together with general layout drawings for reference.
We enclose a copy of part of a typical report carried out on behalf of another client as a sample."
"Re fabric/structural report to factory and offices - Rugeley site.
Further to our meeting of 18 January, we offer as a joint "package" with A & J the following services:-
Generally
To identify with related budget costings a maintenance schedule, conditioned on a 15- year life expectation of the structures and building fabric of the factory and office buildings, excluding all mechanical and electrical services and installations.
Structurally
Detailed inspection of all structural elements where accessible and three copies of the final report which includes photographs where considered necessary and recommendations for any remedial works required.
Access to all areas including roofs to be made available for inspection, together with an attendant with ladders, crawl boards and the like. Any defective asbestos or unsafe roofs where close detail is required would be visually surveyed from the nearest safe vantage point."
Mr Lawton quoted a price of £9,000 plus VAT.
"Re Fabric report
Enclosed two copies of the fabric report with budget costings, which is independent of the structural report being prepared by A & J which you will receive direct from the Structural Engineers. …"
"The following contains a written report based on a visual inspection on the present condition of the fabric of the factory, office… [etc] at [the Rugeley site].
This inspection was carried out from the ground and roofs which were accessible from ladders…
The objective of this report is to identify with related budget costings, a priority based maintenance schedule for the next 10 to 20 years.
Extent of report:- building fabric and structures of the aforementioned buildings excluding electrical, heating, lifts and other mechanical and electrical services, drains, pavings, fences and site works."
In the following pages, WGY set out what they describe as a "projected maintenance schedule" for each of five main areas, of which one was the office building. The document identifies areas where WGY recommends that work be carried out, by reference to a priority rating system, namely: A. Immediate; B. To be carried out 1 - 2 years; C. Cosmetic; D. Ongoing maintenance.
"Introduction
Instructions were given by the client to carry out a visual inspection of the structural elements of the main production building together with its ancillary buildings including …. offices.
Inspection
The inspection was carried out during the month of July 1994, the weather was dry and sunny.
Only visible and accessible elements were covered. All inspections being made from ground level or roof level externally.
No drainage has been tested or foundations inspected so no comment can be made on their suitability or otherwise."
Asbestos
In January 1998 the sprayed asbestos was in an unsatisfactory condition, in that it was friable and unsealed where it had been damaged/disturbed.
In January 1998 the asbestos lagging to pipework was in an unsatisfactory condition.
Some asbestos debris must have been removed prior to January 1998.
The sprayed asbestos particularly and the asbestos lagging to pipework was in an unsatisfactory condition in 1994.
The asbestos should have been repaired and sealed, enclosed or removed under controlled conditions prior to 1994.
The recognised procedure for dealing with asbestos materials in 1994 was to seal (encapsulate) or enclose them.
The addition of the lower suspended ceiling, constructed in 1983, did not satisfy the requirements at the time for an imperforate and airtight construction, to deny further access to voids, for making and keeping a paper record of work or for provision of warning notices.
Mr Cotterell also sets out in detail the history of the use of asbestos as fire protection, development of the understanding of its dangers and relevant guidance and legislation. These include the Health & Safety at Work etc Act 1974 and various regulations made thereunder, between 1983 and 1992.
Scope of WGY's and A & J's duty to Automation
WGY
A&J
Asbestos – Standing Instruction
"Further to our recent meeting where we discussed asbestos contaminated areas and the procedure that could be adopted to deal with the problem. Please find attached copy of standing instruction which has now been issued to all maintenance persons involved in this work".
"Health and Safety
The second approach [i.e. full replacement] eliminates the need to repeatedly enter the ceiling voids to run cables through an environment containing asbestos."
Mr Wyatt recommended full replacement, at an estimated cost of over £100,000.
MBO Negotiations and Agreement
"I would reiterate that, in view of the knowledge of the property which the purchaser has, in view of the replies to enquires which have been given…. my clients are not prepared to give any Property Warranties, and this will have to be accepted by your clients".
"We act for the management buy out team in relation to the purchase of certain assets from Thorn EMI Electronics Limited which includes land and buildings at the above mentioned site.
We refer you to the above mentioned report prepared by you in July of this year and would be pleased if you would specifically confirm that the report may be relied upon by our client management buy out team and/or the new company into which the property will be transferred as if the report had been originally prepared for those parties."
"We are in receipt of your letter dated 27 October 1994 with regards to the above survey recently carried out by ourselves.
We confirm that we stand by our report and consider it as being factual at the time of the inspection providing it is read in conjunction with Messrs Wood Goldstraw and Yorath's report which was produced at the same time."
"We are in receipt of your letter, dated 7 October 1994 with regards to the fabric survey recently carried out by ourselves for [Automation].
We confirm that we stand by this report and consider it as being factual at the date of inspection, providing it is read in conjunction with the structural report produced by Messrs A & J Structural Design Ltd, which was conducted at the same time.
The report is complete with the exception of a small number of sensitive locations on the factory that were inaccessible at the time of inspection; we shall, however, inspect these areas in the near future with an escort provided by the Clients. Any resultant findings will be added to the original report."
(It is common ground that the sensitive areas to which Mr Lawton referred in this letter do not include the ceiling voids).
"We are in receipt of your letter dated 3 November 1994 and are pleased to confirm that the report may be relied upon by whoever is involved in the buy out. The proviso of the contents of our letter dated 2 November with regards to the condition at time of inspection still stands.
Please note however that an indefinite re-use of the report in the future would possibly not be permitted by our Professional Indemnity insurers".
"Further to your letter of 4 November 1994, as far as we are concerned, our report describing the condition of the fabric of the buildings, as inspected in July of this year, remains the same whoever the owners of this property are.
It should be noted that failure to carry out immediate repairs as recommended in the report, which could lead to greater expense, would be the liability of the subsequent owners."
"Further to our letter dated 15 November 1994, the report may be relied upon whoever may be involved in the buy out of this property.
Indefinite re-use of this report in the future would not be permitted by our Professional Indemnity Insurers."
£385,000 | for the buildings |
£8,000 | for the land |
£384,010 | for the good will |
£4 | for the intellectual property rights |
£1 | for the assignment of various rights against third parties |
£1 | for other assets |
One of the heads of terms, and a provision which was carried through into the purchase agreement, was that the purchase price should increase or decrease by any difference in the book value of the net trading assets at completion from a figure of £7.835 million. That was effected in early 1995, when a refund of £88,000 was paid by Thorn EMI.
The scope of the duty of care owed to the claimant by WGY and A & J
"(i) the advice is required for a purpose particularly specified or generally described which is made known, either actually or inferentially, to the adviser at the time the advice is given
the adviser knows, either actually or inferentially, that his advice will be communicated to the advisee, either specifically or as a member of an ascertainable class, in order that it should be used by the advisee for that purpose.
it is known either actually or inferentially that the advice so communicated is likely to be acted upon by the advisee for that purpose without independent inquiry
it is so acted upon by the advisee to his detriment"
In Caparo Lord Bridge said at 621 (after reviewing authorities)
"The salient feature of all these cases is that the defendant giving advice or information was fully aware of the nature of the transaction which the plaintiff had in contemplation, knew that the advice or information would be communicated to him directly or indirectly and knew that it was very likely that the plaintiff would rely on that advice or information in deciding whether or not to engage in the transaction in contemplation".
'I conceive from these cases that I have to inquire whether, objectively and in fairness, Binders through Mr Bishop [the partner who attended the relevant meeting] are to be taken to have assumed responsibility to ADT for the reliability of the advice or information which he gave. In this context, Binders undoubtedly professed accounting and specifically auditing skills. It is relevant to consider whether Mr Bishop, being fully aware of the nature of the very transaction which ADT had in contemplation, took it upon himself to give information or advice directly to ADT knowing the purpose for which they required it and knowing that they would place reliance upon it without independent inquiry; whether the information or advice was negligent. Further, I do not find it helpful, as the defendants suggest, to see the responsibility which Binders are said to have assumed in this case as the giving of an absolute warranty. Rather they gave information or advice in the form of a statement. It was upon ADT's case a misstatement arising from Binders' negligent conduct of the 1989 audit. They are thereby said to have assumed a professional responsibility for the statement that the accounts showed a true and fair view of the state of the affairs of the group. In my view, there is no conceptual difficulty in finding that the duty arising from such an assumption of responsibility was broken because the statement was a misstatement on account of historic want of care. No more would a banker giving a reference avoid liability because he was giving without further investigation on his part the identical reference to Inquirer B which Inquirer B knew that he had previously given to Inquirer A. In my judgment, in each case the extent of the duty is to be determined by the extent of the responsibility taken to be assumed. It some cases it may be no more than a duty to answer honestly. In this case, however, Mr Bishop stood by the accounts and thereby assumed responsibility to ADT for the professional competence with which they had been prepared.
"In particular, [the defendants] owed to the claimant a duty:
to exercise the skill and care of a competent structural engineer, and to advise accurately and correctly as to the structure of the Property…
to report upon such matters as the presence, or possible presence, of dangerous and deleterious materials in the Property
to ensure factual accuracy of the report, and in particular that it did not omit any matters which ought properly to have been referred to therein"
Reliance
Measure of damages and Quantum
"If a case for damages is made out, then the judge must assess the appropriate figure, doing the best that he or she can do on the evidence which is available.".
I accept that the court should try, where possible, to assess damages rather than leave a claimant who has succeeded on liability with no remedy. Here, however, the uncertainties as to the 1998 figure and the difficulties to which I have alluded in arriving at a figure for 1994 are such that I should not have felt able to make a fair assessment here.
Contributory negligence and issues between defendants