Case notes...from Ann Wright

Witness protection

The City Arms in Butchery Lane, Canterbury in Kent, was damaged by fire on 3 July 2001. The fire started inside and spread, damaging adjoining properties. The cause was disputed, resulting in a multi-party court action. Seven of the nine claimants owned or occupied neighbouring properties, the other two were the manager and owner of the City Arms.

The defendants were EDF, which supplied the electricity, Whitbread which had sold the City Arms only a few weeks before the fire, and Whitbread’s electrical contractor. Between them the parties employed five experts. EDF’s expert concluded the fire started on the consumer’s side of the electric meter, meaning EDF would not be liable. The other four experts thought the fault was on EDF’s supply side, meaning EDF might have a liability.

By 21 January 2008, the neighbouring claimants had settled with Whitbread and its electrical contractor. Although Whitbread and its contractor were now off the case, the neighbouring claimants wanted to use those experts’ reports as well as their own against EDF.

EDF opposed the use of these reports, arguing that as Whitbread and its contractor had settled, any reports their experts had prepared could not be used. It said time and cost would be wasted if too many experts were involved in the case.

The judge held that once an expert witness report had been submitted, it was available to all the parties that had taken part in the proceedings. The reports could be used.

Moral: Experts’ views are not private.

Case: Shepherd & Neame and others v EDF Energy Networks (SPN) Plc and others. (TCC January 29, 2008)

To pay out or not to pay out

The Joseph Rowntree Foundation (JRF) apartments in North Street, Leeds, were unusual. Named CASPAR II (city centre apartments for single people at affordable rents), they were a five-storey pod and flatpack construction.

The 45-apartment semi-circular block stood on a sloping site. The outer convex front had walkway balconies to the front doors while the rear (the concave area) had private balconies. Access was by three main staircases supported on steelwork.

Each pod was substantial, with three rooms and a bathroom. The mostly wooden flatpacks were to be used for the walls, floors and ceilings.

The main building and the walkways had separate foundations, with the walkways sloping away so rainwater would flow away from the living areas.

The project was completed in June 2000. By 22 February 2001, differential settlement had caused ponding on the walkways against the living area walls. Contractor Kajima duly notified its insurers The Underwriter Insurance Company (TUIL) that the adjoining roofing and balconies were distorting.

TUIL insured Kajima on a ‘claims made’ policy until May 2002. If Kajima issued a notice as soon as it became aware of circumstances which might reasonably be expected to produce a claim, then that claim would be deemed to have occurred during the insurance period.

Initially Kajima thought the problem was expected and was easily rectified. It wrote to TUIL on 2 May 2002 that it had carried out remedial works and there had been no more settlement. However, over time extensive examinations unearthed further defects, many of which were unconnected with the initial notice. Eventually Kajima realised the apartments were irreparable and it had to buy them from JRF.

TUIL refused to pay out, arguing that the majority of defects were not covered by the 2001 notification. The court agreed with TUIL, holding that to be valid, a notification must be specific.

Moral: Claim early, claim often.

Case: Kajima UK Engineering Ltd v The Underwriter Insurance Company Ltd (TUIL). (TCC January 2008)

Residential block

Jason Mencer and his father were directors of Cre8, a development company. They lived in adjacent houses in Finchley, and hired Edenbooth to carry out groundworks at the properties.

When Edenbooth felt it was owed money it took Mencer to adjudication, which was abandoned because he successfully argued Cre8 was the client, not him personally.

The second adjudication had its own problems. In spite of the speed necessary for communications in the process, Cre8 provided neither email nor fax contacts. This meant both Edenbooth and the adjudicator had to resort to leaving voicemail messages and the adjudicator therefore allowed Cre8 more time to respond. He eventually awarded Edenbooth £18,343.06. When Cre8 made no payment, Edenbooth applied for summary judgment.

Mencer himself represented Cre8 at the hearing. He argued that the second adjudication was void for three reasons: groundworks were not a construction operation; he could not provide responses in the time allowed; and, as he was a residential occupier, adjudication did not apply.

The judge disagreed with Mencer. He said that groundwork was a construction operation and was therefore expressly included within the Construction Act. He also reminded Mencer that the first adjudication had been abandoned because he had argued Cre8 was the client and he could not change his position now. Furthermore, the judge could not conceive how a limited company, particularly a development company which was set up for a commercial purpose, could ever be a residential occupier.

Finally, the communication problems were partly Cre8’s fault and the adjudicator had treated it fairly. Therefore, the adjudicator did have jurisdiction and he had been fair.

The judge ordered Cre8 to pay the £18,343.06 plus interest.

Moral: Companies can only reside at Companies House.

Case: Edenbooth Ltd v Cre8 Developments Ltd.(TCC March 2008)