This was a preliminary issues hearing relating to a main contract dated 30 June 2002, whereby Kier (Whitehall Place) Ltd (“Whitehall”) engaged Kier Build Ltd (“Build”) to design and construct commercial office premises at Whitehall Place, London. The contract incorporated the JCT Standard Form of Building Contract with Contractor’s Design (1998).

The main contract works required the demolition of much of the existing buildings on site, however certain facades were to remain. By subcontract dated 27 March 2003, Build appointed the claimant, John F Hunt Demolition Ltd, to carry out the requisite demolition work. Hunt, in turn, appointed the defendant, ASME Engineering Ltd to construct a temporary steel structure to support the existing facades during the course of the demolition works.

Unfortunately, the facades caught fire as ASME was carrying out the temporary steel work construction. Whitehall and Build jointly claimed against Hunt, which Hunt settled for £152,500. Of that sum, it was found that £108,987.12 related to losses suffered by Whitehall due to having to reinstate the retained facades. Whitehall could not recover these losses from Build under the main contract and therefore Build could not pass the losses on to Hunt. In addition, joint insurance for fire damage was in place, which meant that the contractual chain of liability had been broken in that regard. Although there was no contractual liability between Hunt and Whitehall, Hunt believed it had a liability to Whitehall in tort. The remaining £43,512.88 related to Build’s losses as a consequence of the fire, which Build was entitled to pass on to Hunt under the subcontract.

Hunt claimed the £152,500 paid the Whitehall and Build from ASME. ASME argued that whilst Hunt was liable to Build, it was not liable to Whitehall in tort. Further, ASME contended that Hunt’s maximum liability was £43,512.88 and accordingly, Hunt’s settlement figure was unreasonable and did not reflect the true measure of loss.

Two main issues arose at trial. The first was whether Hunt owed a duty of care in tort to Whitehall. The second was if the settlement was unreasonable, could Hunt claim a hypothetical amount representing what a reasonable settlement would have been, or did the settlement become irrelevant.