Tesco wanted to extend its Redditch superstore. In August 2001, while work was being done to cut off some steelwork in readiness for the extension, the insulation in a cavity wall caught fire. The fire spread into the roof space and round the building, which burned down. Fortunately nobody was injured, but Tesco's losses ran to several million pounds.
Not surprisingly, Tesco wanted to recover its cash. The first place it looked was the firm that started the fire – which promptly went into liquidation. So Tesco thought it would have a go at the company building the extension – which went into liquidation, too.
The net was cast a little wider. Tesco thought that however careless the contractor had been in doing the work, the fire should not have spread in the way that it did. It suspected that there was something wrong with the way that the store had been designed, or the way that it had been built. It therefore made claims against the architect and the original contractor, Costain.
The litigation that followed involved all sorts of questions that lawyers find fascinating and clients find expensive. Ian Yule told us about some of them in his "Fabulous creatures" article (3 October article, page 53). He looked at the contract/no contract/letter of intent questions with which Judge Seymour had to grapple.
Another problem for Judge Seymour was what lawyers call "limitation", or sue-by dates. Once you go past the sue-by date, you can't issue a claim. The difficulty is establishing just when that date is.
The sue-by date for a negligence claim is six years from the date that the cause of action accrued
If a claim is being brought in contract, life is reasonably simple. You must issue your action within six years of the breach of contract. If the contract is a deed, you have 12 years in which to issue. Tesco established that it had a contract of sorts with Costain, but it had been formed in 1989, and it had not been a deed. The claim had been issued in January 2002, so if Tesco was to rely on a breach of contract, that breach would have had to have happened no earlier than January 1996 – by which time the job was long finished. Tesco had similar problems in claiming against the architect.
So Tesco alleged negligence, independent of the contract. Tesco said that the building had been designed negligently, and negligently constructed by Costain because some fire protection measures had not been incorporated.
The sue-by date for a negligence claim is six years from the date that the cause of action accrued, which normally means the date that the loss was suffered. Tesco thought it was on a winner with this one, because the fire had happened only a few months before the claim was issued.
Judge Seymour had to decide whether the loss had been suffered when the store burned down, or at some other date. He examined this before considering whether Costain, or the architect, or perhaps both, had been negligent in any way.
He reviewed several cases involving latent defects, most of them involving cracks. In one case a chimney had been built with defective materials and had cracked. The cause of action had not accrued until the cracks appeared, several years after the chimney had been built. There was similar case with defective drains. This all looked good for Tesco.
John Redmond is head of construction at Osborne Clarke in Bristol. Osborne Clarke acted for Costain in this litigation.