England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM OXFORD COUNTY COURT
His Honour Judge Harris QC
8BE 01296

		Royal Courts of Justice Strand, London, WC2A 2LL
		19th December 2013

Lady Justice Rafferty:

1. In this appeal Mr Cross challenges the 22^nd June 2012 Order of HHJ Harris QC before whom he was in person.
2. Trading as JK Surveys Mr Cross advertised for the installation of cavity wall insulation ('CWI'). He or his employees attended properties as the 'surveyor', (also referred to as the assessor) to assess suitability and to measure. Mr Cross contracted with the Respondent Lazenby who would later install CWI.
3. In November 2005 Mr Cross's employee Mr Sharp failed to check that two homes were suitable for installation of CWI. In September 2006 Lazenby before installing CWI also failed to check.
4. Mr Cross was joined as a third party in a claim originally brought against Lazenby by Mr Flanagan and Mrs Coles the householder Claimants.
5. The householders and Lazenby settled the original claim. Lazenby served an Additional Claim against Mr Cross which by later amendment pleaded breach of contract and sought an indemnity or contribution under the Civil Liability (Contribution) Act 1978. We gave Mr Cross leave to adduce as new evidence the Terms and Conditions ("T&C") of Lazenby's contract with the householders.
6. The issue for us is whether the Judge were correct to decide there was no break in the chain of causation following Mr Cross's breach of his contract with Lazenby.

The facts

7. In 2005 Mr Cross put a proposition to Mr Ryan, Managing Director of Lazenby. Mr Cross had a surveying business and could deliver customers who wanted CWI if Lazenby could install it. Mr Ryan told Mr Cross he knew nothing about CWI and would need to rely entirely on Mr Cross's expertise to assess properties for suitability. On that footing the business was established. Since nothing was reduced to writing contractual terms were implied.
8. Two of three governing standards for CWI installers are BBA (British Board of Agrement) and CIGA (Cavity Insulation Guarantee Agency). Each offers guidance on inspection standards. Lazenby was a member of each, Mr Cross of none.
9. Article 14.1 of the BBA Certificate reads:

"The installing operative ensures that the property has been correctly surveyed and is suitable for insulation with the product."

10. The CIGA Technician's Guide where relevant reads:

"Once you are satisfied that the property is of suitable cavity wall construction, technicians should carry out the other necessary checks to make sure that the property has been correctly surveyed."

11. On 1 November 2005 John Sharp, an employee and agent of Mr Cross, surveyed neighbouring properties belonging to Mr Flanagan and to Mrs Coles. He recorded measurements on a Site Survey Sheet which in part read "The building has been surveyed and meets the requirements of BBA Certificate…and BBA Technical Schedule" in small font under the signature fields. Neither did, as each had a timber frame.
12. On 18 September 2006 Lazenby installed CWI in each. Lazenby accepts that its employee should have checked for suitability before installing. A 2007 survey revealed the error.
13. On 3^rd September 2008, in the main action, the householders alleged that Lazenby was in breach of contract because, timber-framed, the properties were unsuitable for CWI. Lazenby's T&C, not before HHJ Harris QC, read where relevant:

"a. If we start to install insulation at your property and then find the structure of your building is not suitable for the work we agreed to carry out then we will be allowed to end the contract;

b. We will write and tell you within 7 days of the survey and we will tell you why your building is not suitable."

14. More than once throughout their relationship, for various reasons, Lazenby's installers found a Cross-surveyed property unsuitable for installation. It would tell Mr Cross why and he would refund fees received. Sometimes customers had turned to other installers. On two occasions the installers found a timber frame, did not install, and made a deduction recorded on the invoice, but each post-dated the index events.
15. After trying the Additional Claim the Judge held that Mr Cross had breached an implied contractual term to ascertain suitability for CWI. Though Lazenby should also have checked before installing, its failure did not break the chain of causation and Mr Cross was liable for his breach of contract, the major cause of loss.
16. In the alternative he was liable to Lazenby under the Civil Liability (Contribution) Act 1978, the appropriate contribution 75 per cent.

Developed submissions

17. The law was not in dispute. When an experienced trial judge (as is HHJ Harris QC) has reached a conclusion on the facts this court will be very reluctant to interfere: Biogen Inc v Medeva plc [1997] RPC 1. The Judge heard Mr Ryan, MD of Lazenby, Mr Chippendale a former employee of Mr Cross, Mr Turner an employee of Lazenby, and Mr Sharp the surveyor of the Claimants properties. All were cross–examined.
18. The Judge included in his judgment a lengthy extract from the thorough analysis of the law and of a desirable approach in Borealis AB v Geogas Trading SA [2010] EWHC 2789 (Comm) at § 43 to 47. Gross LJ said:

"43 First, although an evidential burden rests on the defendant insofar as it contends that there was a break in the chain of causation, the legal burden of proof rests throughout on the claimant to prove that the defendant's breach of contract caused its loss.

44 Secondly, in order to comprise a novus actus interveniens , so breaking the chain of causation, the conduct of the claimant "must constitute an event of such impact that it 'obliterates' the wrongdoing…" of the defendant: Clerk & Lindsell on Torts (19th ed.), at para. 2-78. The same test applies in contract. For there to be a break in the chain of causation, the true cause of the loss must be the conduct of the claimant rather than the breach of contract on the part of the defendant; if the breach of contract by the defendant and the claimant's subsequent conduct are concurrent causes, it must be unlikely that the chain of causation will be broken. In circumstances where the defendant's breach of contract remains an effective cause of the loss, at least ordinarily, the chain of causation will not be broken: County Ltd v Girozentrale [1996] 3 All ER 834 , at p. 849 b-c, per Beldam LJ and at pp. 857 f-g and 858 b-c, per Hobhouse LJ (as he then was). Other examples can be found in the area of shipping law. Where, in breach of charterparty, charterers order a vessel to proceed to an unsafe port, the conduct of the vessel's master in obeying the order (placed as he well may be, on the horns of a dilemma) will be judged sympathetically, in context and will not lightly be treated as unreasonable: Compania Naviera Maropan v Bowaters (The "Stork") [1955] 2 QB 68 . But even negligent navigation following the charterer's order to proceed to an unsafe port will not necessarily break the chain of causation: see, for example, The Polyglory [1977] 2 Lloyd's Rep. 353 , at p.366. Conversely, where the negligence of vessel X caused vessel Y to run aground, vessel X was not liable for such damages as were attributable to the subsequent, clearly separate and negligent re-floating of vessel Y: The "Spontaneity" [1962] 1 Lloyd's Rep 460 ; the negligence of vessel X had ceased to be operative.

45 Thirdly, it is difficult to conceive that anything less than unreasonable conduct on the part of the claimant would be capable of breaking the chain of causation. It is, however, also plain that mere unreasonable conduct on a claimant's part will not necessarily do so – for example where the defendant's breach remains an effective cause of the loss, albeit in combination with the claimant's failure to take reasonable precautions in its own interest: see, for example, County Ltd v Girozentrale , per Beldam LJ ( loc cit ). By its nature, reckless conduct by the claimant would or would ordinarily break the chain of causation, though there is no rule of law that only recklessness on the part of the claimant will do so: Lambert v Lewis [1982] AC 225 , per Roskill LJ (as he then was) in the Court of Appeal, at p.252; County Ltd v Girozentrale ( supra ), per Hobhouse LJ at p. 857, more conveniently discussed below, when dealing with the claimant's knowledge or lack of it.

46 Fourthly, the claimant's state of knowledge at the time of and following the defendant's breach of contract is likely to be a factor of very great significance. For the chain of causation to be broken, the claimant need not have knowledge of the legal niceties of the breach of contract; nor, as it seems to me, will the chain of causation only be broken if the claimant has actual knowledge that a breach of contract has occurred – otherwise there would be a premium on ignorance. However, the more the claimant has actual knowledge of the breach, of the dangerousness of the situation which has thus arisen and of the need to take appropriate remedial measures, the greater the likelihood that the chain of causation will be broken. Conversely, the less the claimant knows the more likely it is that only recklessness will suffice to break the chain of causation. Ready illustrations are furnished by the authorities:

i) In the sad case of Lambert v Lewis ... supra ), the farmer could no longer rely on the dealer's warranty in the factual circumstances graphically outlined by Lord Diplock (at pp. 276 – 277):

"…I would accept that in the case of the coupling the warranty was still continuing up to the date, some three to six months before the accident, when it first became known to the farmer that the handle of the locking mechanism was missing. Up to that time the farmer would have had a right to rely upon the dealers warranty as excusing him from making his own examination of the coupling to see if it were safe…After it had become apparent to the farmer that the locking mechanism of the coupling was broken, and consequently that it was no longer in the same state as when it was delivered, the only implied warranty which could justify his failure to take the precaution either to get it mended or at least to find out whether it was safe to continue to use it in that condition, would be a warranty that the coupling could continue to be safely used to tow a trailer on a public highway notwithstanding that it was in an obviously damaged state. My Lords, any implication of a warranty in these terms needs only to be stated, to be rejected…In the state in which the farmer knew the coupling to be at the time of the accident, there was no longer any warranty by the dealers of its continued safety in use on which the farmer was entitled to rely.

…The farmer's liability arose, not from the defective design of the coupling but from his own negligence in failing, when he knew that the coupling was damaged, to have it repaired or to ascertain if it was still safe to use. The issue of causation, therefore, on which the farmer's claim against the dealers depended, was whether his negligence resulted directly and naturally, in the ordinary course of events, from the dealers' breach of warranty. Manifestly it did not."

ii) In the unreported case of Schering Agrochemicals Ltd v Resibel NVSA [1992] CA Transcript 1298 , the defendants were employed by the plaintiffs to provide safety devices to guard against the known risk of fire. The safety devices were defectively designed and did not provide that protection. The result, on the 30th September, 1987, was a serious fire. However, on the 8th September, so some three weeks earlier, there had been very small fire, which disclosed to the plaintiffs that the safety device did not work. Both the eminent Judge at first instance (Hobhouse J, as he then was) and the Court of Appeal (Purchas LJ and Nolan and Scott LJJ, as they then were) held that the defendants were not liable in respect of the loss occasioned by the 30th September fire. Their reasons for doing so differed, spanning a break in the chain of causation, a failure to mitigate and remoteness of damage. It is unnecessary to explore those differences of reasoning here. The striking feature of Schering was that the 8th September incident was sufficient to disclose to the plaintiffs that a breach of contract had occurred and made it reasonable to expect the plaintiffs to take appropriate steps to minimise the consequences. A highly dangerous situation had been revealed; the production line ought to have been stopped so that a proper investigation could take place. It may further be noted that, as in Lambert v Lewis ... supra ), the plaintiffs' knowledge of the breach and the need to address it took place some period of time before the later incident in respect of which the (bulk of) the damages were claimed. On the facts of the case, viewed as a matter of causation, the plaintiffs' failure to do what was reasonable "…destroyed the further causative potency of the pre-existing breach of contract…": Hobhouse LJ, explaining Schering , in County Ltd v Girozentrale ( supra ), at p.858. Even though the warning on the 8th September had been "purely fortuitous" (Nolan LJ, at p.16 of the Schering transcript), the defendants were entitled to pray it in aid.

iii) By contrast with Lambert v Lewis and Schering , the plaintiff in County Ltd v Girozentrale ... supra ) did not know of the defendant's breach of contract. This case concerned a share issue. The plaintiff bank agreed to underwrite a placement of the shares; the defendant brokers made representations to potential investors outside and in breach of the terms of the engagement letter; for its part, the bank failed to check on the status of indicative commitments obtained by the chairman of the company. In the event, a significant number of shares were not taken up, leaving the bank with a loss. The Court of Appeal held that the bank was entitled to recover its loss from the brokers. In so doing, the Court of Appeal reversed the decision of the trial Judge who had held, inter alia , that "the brokers' representations were not of equal efficacy with the bank's decision to accept the quality of the indicative commitments…without making proper inquiries" (see, the head note, at p.834). Against this background, Hobhouse LJ said this (at p.857 b-d):

" Where a plaintiff does not know of a defendant's breach of contract and where he is entitled to rely upon the defendant having performed his contract, it will only be in the most exceptional circumstances that conduct of the plaintiff suffices to break the causal relationship between the defendant's breach and the plaintiff's loss.

The plaintiffs' conduct was not voluntary in the sense of being undertaken with a knowledge of its significance. Conduct which is undertaken without an appreciation of the existence of the earlier causal factor will normally only suffice to break the causal relationship if the conduct was reckless. It is the character of reckless conduct that it makes the actual state of knowledge of that party immaterial. …"

For completeness, I do not, with respect, read these observations of Hobhouse LJ as furnishing support for any rule of law that only reckless conduct will serve to break the chain of causation. Instead, these observations are authority for a more limited proposition: namely, that in circumstances where the claimant is unaware of the defendant's breach of contract "normally" (i.e., not invariably) only recklessness will suffice. As such the good sense of the rule is difficult to gainsay and its compatibility with rules governing mitigation of damage is apparent.

47 Fifthly and ultimately, the question of whether there has been a break in the chain of causation is fact sensitive, involving as it does a practical inquiry into the circumstances of the defendant's breach of contract and the claimant's subsequent conduct. As Roskill LJ observed, in Lambert v Lewis ( loc cit ), it is "always a question of degree at what point the damage claimed for ceases to flow naturally and directly from the breach". For my part, I respectfully agree with the observations of Evans-Lombe J, in Barings Plc v Coopers & Lybrand [2003] EWHC 1319 (Ch), at [838], where he expressed an unwillingness to accept any all-embracing test for what may constitute the breaking of the chain of causation:

" …It seems to me that what will constitute such conduct is so fact-sensitive to the facts of any case where the issue arises that it is almost impossible to generalise. If one must do so, I would say that it must be some unreasonable conduct, not necessarily unforeseeable…, a new cause coming in and disturbing the sequence of events…, not necessarily reckless…, which may result from an accumulation of events which in sum have the effect of removing the negligence sued on as a cause…, which accumulation of events may take place over time…"

I would add too that while the authorities of course provide guidance, they are not to be read as statutes."

19. Mr Ustych on behalf of Mr Cross submitted that, as Lazenby had a contractual entitlement to terminate the contract with the householder on finding the property unsuitable, its failure to carry out a pre-installation check was serious negligence bordering on recklessness. It was BBA certified whilst he was not. 11 months between survey and installation risked factors affecting suitability having changed.
20. He relied on contrasts. Lazenby secured BBA Approval on 05/07/2005, and in the 14 months leading up to these installations carried out many more. Mr Cross on the other hand was not a member of any of the three schemes. He argued that BBA rules do not permit installers to shed responsibility for pre-installation checks by deferring to the expertise of a non-BBA certified assessor such as himself, rather the overriding obligation is on the installer. Mr. Ryan told the Judge his installers relied solely on Mr Cross's assessment since Mr. Ryan had limited or no knowledge of BBA standards. Thus in installing in ignorance of BBA standards and in deferring to his (Mr Cross's) judgment as an unqualified installer Mr Ustych argued that Lazenby was reckless, closing its eyes to the risks.
21. He submitted that Lazenby had taken no steps to guard against repetition of his own earlier failings, a reference to other households whose CWI had not been installed. Consequently, applying Schering, the chain of causation had been broken. Using Gross LJ's formulation there was "a significant knowledge of the dangerousness of the situation which has arisen" which included Mr Cross's errors. This, he told us, was the crux of his argument.
22. Albeit the context was sale of goods he supported this aspect of his case in reliance on Lambert v Lewis 2 252 in which Roskill LJ said:

"In my judgment there does not have to be recklessness and nothing less than recklessness on the part of the buyer before a seller can disclaim liability for damage in respect of which the buyer claims an indemnity. It is…always a question of degree at what point the damage claimed for ceases to flow naturally and directly from the breach."

23. Mr Ustych maintained that Lazenby, aware that Mr Cross was not the ultimate arbiter of suitability, when it failed to verify suitability and/or placed exclusive reliance on his survey took an unjustified risk and by analogy with Lambert v Lewis, recklessly used the "goods", that is Mr Cross's provisional assessment, to install.
24. It was agreed that almost all novus actus cases involve one party who was the 'but for' cause of the loss. But for his negligence the other would not have acted negligently/recklessly and thus not have generated the damage. The issue is whether subsequent negligence obliterated that 'but for' cause. Was Mr Cross correct to argue that even if, but for him, Lazenby would never have attended the householders at all, its negligence in failing to make its own checks obliterated his?
25. Mr Ustych mounted several arguments in support of that contention. Industry standards place ultimate responsibility for a suitability check on the installer. He said Mr Cross could not reasonably have foreseen Lazenby's negligence in failing to check for a timber frame as required by the installation rules and by its own T&Cs. The Judge, unaware of them, said:

"It would manifestly be inappropriate for a surveyor to get a customer to sign an insulation contract without establishing that the house was suitable for the work in question. The contracts were not expressed as provisional upon later examination of the property for suitability by a fitter."

26. We now know per the T&C that there was a contractual provision for cancellation were the pre-installation check to show unsuitability, and that such a check was referred to as a survey.
27. Mr Ustych suggested Mr Cross's role was considerably less than that of Lazenby since his visit and decision could not bind it. The sole effect of Mr Cross's visit was to secure attendance of the installers who then decided suitability de novo as opposed to merely checking the site survey form.
28. He criticised the Judge for failing inter alia to consider whether Lazenby's installers were reckless, the degree of its negligence, and the extent of its knowledge of Mr Cross's earlier breaches. The judgement he contended substituted a 'but for' test for the correct analysis where it reads:

"Applying [Borealis] which I am content to accept as an authoritative up to date analysis I am satisfied that this is not a case in which it is right to find that the effects of [Lazenby's] breach of contract were nullified by the failure of [Mr Cross] to discover what [Lazenby] should have discovered and pointed out;

If the breach of contracts and the claimants subsequent conduct are concurrent causes it must be unlikely that the chain of causation will be broken. In circumstances where the defendants' breach of contract remains an effective cause of the loss at least ordinarily the chain of causation will not be broken"(per Gross LJ ibid at paragraph 44);

If [Mr Cross by Mr Sharp] had taken the trouble to find out and to point out that the claimants houses were timber framed there would never have been a contract with the claimants at all and [Lazenby's] installers would never have gone to install the insulation. [Mr Cross's] breach of contract was clearly an effective cause. Indeed I would hold the major cause of what happened."

29. Mr Ustych argued that those findings cannot be reconciled with the concessions at trial that it was the installers' job to perform a new check and only then to go ahead.
30. Lazenby submitted that its contractual arrangement allowed it to rely on Mr Cross's expertise but its Ts & Cs with the householders did not impose an obligation to inspect, rather it permitted termination if at installation the structure were deemed unsuitable. Its fallback position was that an obligation to inspect added nothing to the terms of the BBA regulation, which Lazenby accepted it had failed to discharge.
31. It showed the Judge the then current Assessors Guide which it argued placed responsibility on the assessor to determine suitability for CWI. Mr Sharp, who knew he must look out for timber frames, did not notice them, and this breach of contract was neither technical nor inconsequential, rather a failure to perform the central obligation. Lazenby arrived to fit CWI with a natural expectation of suitability. Its failure, negligent but not reckless, did not obliterate the wrongdoing of Mr Cross.
32. It relied on Beoco Ltd v Laval & Co [1995] QB 137. A repaired heat exchanger when returned failed a pressure test but instead of requiring further tests the Claimant used it and it exploded. His use was reckless and broke the chain of causation. Lazenby submitted that by analogy had Mr Cross performed a reliable survey Lazenby would not have installed. That is how HHJ Harris QC briefly and, Lazenby contended, correctly expressed his reasoning in rejecting novus actus. He said:

"If [Mr Cross by Mr Sharp] had taken the trouble to find out and to point out that the claimants houses were timber framed there would never have been a contract with the claimants at all and [Lazenby's] installers would never have gone to install the insulation. [Mr Cross's] breach of contract was clearly an effective cause. Indeed I would hold the major cause of what happened."

Discussion and conclusion

33. It was argued on behalf of Mr Cross that the T&C evidence is of substantial significance, going to the extent of Lazenby's duty to check for suitability and thus to its negligence or recklessness. I am not sure what relevance it has to these proceedings in any event, since, even if Mr Cross were right, Lazenby accepted that it had failed to discharge its BBA obligation, to which the T&C add nothing.
34. Mr Cross relied upon Lazenby's knowledge that he had on other occasions failed to pass muster so as to suggest that its default position should have put it on notice about his capabilities. There are difficulties in his way. Knowledge must be confined to the particular case: Borealis. That much is illustrated by Lambert, use of a coupling device although aware that its locking mechanism had failed and by Schering, use of a safety device which had previously failed to prevent a fire.
35. Lazenby's knowledge was of unparticularised default in re other properties, not necessarily even of similar type or structure. Mr Cross might have been on stronger ground had he led evidence that Lazenby, pre-installation(s), knew he had identified timber frames or had conducted no inspection but installation had followed regardless, or that concern about the quality of Mr Sharp's survey had been expressed to but ignored by Lazenby. The evidence came nowhere near this level of particularity. It established no more than a negligent failure by Lazenby, reassured by the Sharp survey, to identify these two timber frames.
36. The Judge was entitled to emphasise Mr Cross's self-imposed obligation to inspect. His site survey sheet was a form he had designed. He must have elected to use the noun "survey".
37. In any event this amounted to a submission that because Lazenby knew of other failures by Mr Cross's surveyors it should not have trusted him to comply with his contractual obligations. If successful it would permit Mr Cross to rely on his own incompetence. There is nothing in the point.
38. Neither am I persuaded that Lazenby's conduct, undoubtedly and admittedly negligent, can on the facts found be elevated to recklessness or near it. These were no more than ill-advised installations of CWI when the frames of the houses were contraindications to it.
39. As to competing and concurrent causes and Mr Cross's suggestion that he could not have foreseen Lazenby's failure to check for a timber frame, even had he persuaded me of this point once again he would face difficulty.
40. Unforeseeable events combining with the breach to cause loss does not meant that those events supersede the breach as the cause of loss. The effects of a breach may continue to combine with other events to produce the final result: County Limited v Gironzentrale [1996] 3 All ER 834. Even were Lazenby's default an effective and concurrent cause it would not obliterate Mr Cross's earlier breach. Both events combined to cause loss.
41. Mr Cross's strongest suit might at first appear to be the suggestion that the Judge when evaluating the facts found failed to weigh factors which went to recklessness, or to unreasonableness. It is true that his judgement does not list, then describe, then position within a spectrum each fact he had found. However, having quoted comprehensively from and identified Borealis as an exhaustive analysis of the law the Judge was entitled to express his reasons with economy. He had directed himself in accordance with the law and therein lies yet another difficulty for Mr Cross. Gross LJ explained that "mere unreasonable conduct on a claimant's part will not necessarily [break the chain of causation] – for example where the defendant's breach remains an effective cause of the loss, albeit in combination with the claimant's failure to take reasonable precautions in its own interest…" The Judge was plainly entitled to conclude that Mr Cross's breach remained an effective cause, in combination with the negligence of Lazenby.
42. All that said, the overwhelming difficulty Mr Cross cannot surmount is in my judgement the powerful word used to describe the position at law. He must show that Lazenby's negligence obliterated his own. It is not enough to establish, if indeed he can, that Lazenby's poor standards – I use an anodyne epithet to underline that whatever the descriptor the outcome is the same – came later in a brief chain of inadequacy than did his own. He fails to establish that what Lazenby did wiped out what he had already done, that is self-labelling his services as those of a surveyor and contracting with an entity whose MD had explained its 100% reliance on him.
43. I would dismiss this appeal. Consequently it is not necessary for me to consider the alternative submissions on the Civil Liability (Contribution) Act 1978.

Lady Justice Macur:

44. I have read the judgment of Rafferty LJ and gratefully adopt her recitation of the facts and arguments before us. I respectfully disagree with her reasoning and conclusion and would allow the appeal against the order of HHJ Harris QC made on 22 June 2012 which determined the Appellant's liability for damages, interest and costs incurred by the Respondent in respect of defective cavity wall insulation installation.
45. There was and is no issue as to the law to be applied. In granting permission to appeal the single judge reasoned:

"Deciding whether the chain of causation has been broken is a peculiarly fact sensitive issue" This obviously mirroring the observation of Gross LJ at paragraph 47 of Borealis AB v GeoGas trading SA 2010 EWHC 2789 (Comm). He continued: "Here the inferences to be drawn from the facts are as open to the Court of Appeal as to the judge and it is therefore arguable that because the installers should have checked that the houses were suitable before working on them that inspection should have revealed that the buildings were timber framed and thus wholly unsuitable for insulation."

I respectfully agree.

46. This Court has the advantage of the transcripts of evidence from the lower court.
47. HHJ Harris QC's findings of fact on the evidence before him are impregnable. New evidence admitted into the appeal which undermines his conclusion at paragraph 11 (b) to the effect that :

"The contracts were not expressed as provisional upon later examination of the property for suitability by a fitter."

However, I agree with the single judge that this is not of "the greatest importance" in the terms of the outcome of this appeal.

48. However, whilst applauding HHJ Harris QC's succinctly drawn judgment I respectfully disagree with Rafferty LJ that his evaluation of the evidence sufficiently articulated his " practical inquiry into the circumstances of the defendant's breach of contract and the claimant's subsequent conduct" (See Borealis, paragraph 47) or that the outcome he reached is correct. Particularly it is unfortunate that he did not evaluate that evidence of Mr Ryan who in cross examination accepted that he had been aware of previous positive yet erroneous assessments in relation to suitability for installation of insulation in what transpired to be timber framed properties.
49. Whilst recognizing the stricture of approach to identifying novus actus interveniens suggested by Gross LJ in paragraph 44 of Borealis, vis :

"the conduct of the claimant must constitute an event of such impact that it 'obliterates' the wrongdoing…" of the defendant: Clerk & Lindsell on Torts (19th ed.), at para. 2-78. The same test applies in contract"

I consider that the nuances of the legal analysis he describes within paragraphs 44 to 47 of Borealis by reference to the authorities militates against a literal interpretation of the word 'obliterates' to permit the lower courts to avoid careful appraisal of the reality of the circumstances in the case. Borealis makes clear that there is no "all embracing test for what may constitute the breaking of the chain of causation".

50. HHJ Harris QC after referring to Borealis at some length and having previously made findings of fact posed the question "What is the effect of this? Is there a novus actus:" and answered it in terms that "this is not a case in which it is right to find that the effects of the [Appellant]'s breach of contract were nullified by the failure of the [Respondent] to discover what the [Appellant] should have discovered and pointed out……If the [Appellant] had troubled to find out and to point out that the ..houses were timber framed ……the [Respondent]'s installers would never have gone to install the insulation. The [Appellant]'s breach of contract was clearly an effective cause. Indeed I would hold a major cause of what happened".
51. Roskill LJ observed in Lambert v Lewis [1982] AC 225 that it is "always a question of degree at what point the damage claimed for ceases to flow naturally and directly from the breach". In my view the judge below was wrong in his determination of the same.
52. The Respondent's installers may not have attended at the properties previously surveyed by the Appellant which constituted the Respondent's effective introduction to the householders, but they were expected by their employer to verify suitability. They patently did not do so. The loss to the Respondent flowed from its employee's negligence and not that of the Appellant.
53. That is, Mr Lazenby unequivocally conceded in evidence the gross negligence of his employees in failing to check that the houses were suitable before starting work. Set in the context of judicial findings made that investigation as to whether "the house was timber framed…could …be done reasonably simply either by using a borescope through a hole drilled in a wall, or by inspecting the gable ends in the loft", the 10 month time delay between 'survey' and installation, and the actual knowledge of the Respondent that there had been previous jobs where the Appellant was responsible for an incorrect survey as to the suitability, the Appellant surely discharges the evidential burden placed upon him. In my judgment, by the same token, the Respondent is unable to establish that the Appellant's breach of contract and negligence remained "an effective cause of loss." The primary breach of contract was superseded by the subsequent negligence to all practical effect.
54. Consequently I also disagree with the judge's finding in the alternative that the Appellant's liability to the householders under the Civil Liability (Contribution) Act 1978 should be assessed as 75%. The Appellant's breach of contract/ duty of care in November 2005 in completing the erroneous survey had impacted upon the householders in that they agreed to the involvement of the Respondent, but the degree of liability which may be attributed to it in respect of the damage they incurred, negligible.

Lord Justice Maurice Kay:

55. Both judgments have rightly emphasised the fact-sensitive nature of the issue on this appeal. It is common ground that the law is comprehensively summarised in the judgment of Gross LJ in Borealis. It is plain from the terms of his judgment that Judge Harris was endeavouring to apply the law as there stated to the unique facts of this case. His crucial finding was:

"I am satisfied that this is not a case in which it is right to find that the effects of the [appellant's] breach of contract were nullified by the failure of the [respondent] to discover what the [appellant] should have discovered and pointed out."

It seems to me that he was using the word "nullified" as a synonym for "obliterated".

56. The failure of the respondent was undoubtedly unreasonable and negligent. Mr Ryan repeatedly accepted that in cross-examination. However, as Borealis makes clear, "mere unreasonable conduct on a claimant's part will not necessarily [break the chain of causation] – for example, where the defendant's breach remains an effective cause of the loss, albeit in combination with the claimant's failure to take reasonable precautions in his own interest" (paragraph 45). Recklessness on the part of the claimant will usually be sufficient to break the claim (ibid) but there was no finding of recklessness in the present case. Although there was a history of problems, at the date of the dealings with these two customers they had not included the referral of timber-framed houses.
57. In County Ltd v Girozentrale [1996] 3 All ER 834, Hobhouse LJ said (at page 857 b-c):

"Where a plaintiff does not know of a defendant's breach of contract and where he is entitled to rely upon the defendant having performed his contract, it will only be in the most exceptional circumstances that conduct of the plaintiff suffices to break the causal relationship between the defendant's breach and the plaintiff's loss."

In the present case, Lady Justice Macur finds such exceptional circumstances in what she describes as the "gross negligence" of the respondent.

58. In my judgment, gross negligence puts it too high. It was not the degree of culpability which Mr Ryan asserted in cross-examination. His concession was one of error, properly translated into legal language as negligence, but no more than that. He was accepting that the respondent's employees ought to have appreciated the unsuitability of the houses. If (as I believe) their omission was unreasonable or negligent as opposed to grossly negligent or reckless, it is difficult to find fault with the assessment of Judge Harris. The unusual circumstance of one incompetent party placing reliance upon another incompetent party in these circumstances did not break the chain of causation. It would have been different if these had not been the first examples of referrals of timber-framed houses but any evidence of that was tenuous and was not preceded by a pleading to that effect or inclusion in a witness statement. The judge was entitled to disregard it.. In reaching this conclusion, I have been assisted by the passage of the judgment of Gross LJ in Borealis (at paragraph 101-104) where he rejected the alternative case that an unreasonable breach by the claimant had broken the chain of causation and distinguished cases such as Lambert v Lewis and Schering Agrochemicals.
59. It is a close run thing but, like Lady Justice Rafferty, I would dismiss this appeal. It is a case of the appellant's breach remaining an effective cause of the loss.