England and Wales High Court (Technology and Construction Court) Decisions

Hospitals National Health Service Trust (1) [1999] EWHC Technology 273 (12th November, 1999)

Between:

Hammersmith Hospitals National Health Service Trust (1)
The Secretary of State for Health (2)
Ealing Hammersmith and Hounslow Health Authority (3)
The Medical Research Council (4)

Claimants

and

Troup Bywaters and Anders (A Firm)

Defendant

Case number 1997 ORB 649

Date of Judgment 12 November 1999

CONTRACT - PROFESSIONAL NEGLIGENCE - DUTY OF CARE - GENERAL CONSULTING ENGINEERS - ADVICE TO NHS TRUST WHETHER NEGLIGENT - EXPERT EVIDENCE - ADMISSIBILITY OF EVIDENCE IN THE SAME PROFESSION WITH SPECIALIST PROFESSIONAL EXPERTISE.

1. This action concerns a claim by the Hammersmith Hospitals National Health Service Trust ("The NHS Trust") and the Medical Research Council ("MRC") against the defendant ("TBA") a firm of Consulting Engineers. The allegations, put in contract and tort, are that as a result of negligent advice which the claimants say TBA gave them, the claimants purchased two Erithglen Corsair 1000S dual fired waste incinerators which were installed at Hammersmith Hospital in 1993 to incinerate waste. Erithglen Ltd (Erithglen) went into receivership on the 27^th September 1994. Originally there was a dispute as to who were the proper claimants but the matter was resolved by agreement before the Hearing. Equally, I am, by agreement, not concerned with any apportionment of damage between the NHS Trust and the MRC in the event that the claimants are successful in the action.
2. Before 31^st March 1994 the Hammersmith Hospital was owned by the Secretary of State for Health and managed by the Hammersmith and Queen Charlotte Special Health Authority ("SHA") along with Queen Charlotte's Hospital and Acton Hospital. Its successor, the NHS Trust, was formed on 31^st March 1994 to own and manage the three hospital sites of the SHA together with the Charing Cross Hospital. There was a further re-organisation of the Health Service in 1999 affecting the hospital but this is not relevant to the issues between the parties. The Royal Post-Graduate Medical School (now the Imperial College of Science, Technology and Medicine) ("RPMS"), a body engaged in post-graduate medical education and research, occupied land and buildings within the hospital and had waste which needed to be disposed of, including both large and small animals that had been used for clinical research. The second claimants MRC sue on its behalf.
3. A similar claim to the one made by the NHS Trust was made by the Gloucestershire Health Authority against M.A. Torpy & Partners who were the consulting engineers advising them in relation to the purchase of two Erithglen 1000S incinerators in February 1992. The case was heard by His Honour Judge Bowsher Q.C. and is reported in [1997] 55 Construction Law Reports 124. His Honour Judge Bowsher found for the Health Authority and awarded substantial damages. I have been invited by both sides to read the judgments carefully and I have done so. I respectfully agree with His Honour Judge Bowsher's general approach in that case but it is clear to me, and both sides agree, that I am bound to consider this case on its own facts. These facts differ significantly from those in the Gloucester case.
4. At a very early stage in the trial I was shown the incinerator installation at Hammersmith which was about to be dismantled and also the Corsair 2500S Boiler in operation at Haslar near Gosport. I join both parties in expressing gratitude to Commander Burton for the hospitality at Haslar.
5. The Statutory definition of waste is set out in the 1990 Environmental Protection Act as "A) any waste which consists wholly or partly of human or animal tissue, blood or any body fluids, excretions, drugs or pharmaceutical products, swabs or dressings, or syringes, needles or other instruments, being waste which unless rendered safe may prove hazardous to any person coming into contact with it, and B) any other waste arising from medical, nursing, dental, veterinary, pharmaceutical or similar practice, investigation, treatment, teaching or research or the collection of blood". As I heard in evidence and saw for myself at Haslar, the waste frequently included substantial amounts of glass and high temperature plastics that were difficult or impossible to dispose of by incineration. These were substantially greater in quantity than the 'small quantities of glass bottles and other combustible items' that were envisaged by the contract for sale and purchase of the Corsair boilers.

THE LAW

6. It is agreed that TBA were and are a firm of Consulting Engineers and that they were not and should not be judged by the standards of specialists in combustion, incineration, or waste handling technology. As general practitioner mechanical and engineering building service consulting engineers acting within their claimed sphere of competence, they should be judged by the ordinary standards of their profession, established in Bolam v Friern Hospital Management Committee [1957] 1 WLR 582; [1957] 2 All E.R. 118, namely that they were required in advising the SHA and the MRC to exercise that degree of care and skill which is ordinarily exercised by reasonably competent members of their profession of the same rank and standing as the defendants tested in an objective way. I should add that insofar as they became aware or should reasonably have become aware that the advice of a specialist in combustion, incineration or waste handling technology was needed to advise the client, TBA was under a duty to inform the client of this in such a way that the client would be able to decide how to proceed. This approach is consistent with that of Slade LJ in Investors Industry v South Bedfordshire DC [1986] 1 All ER 787 at 808.
7. I bear in mind that the extent of the duties depends upon the terms and limits of the retainer and any duty of care to be implied must be related to what TBA was instructed to do see Oliver J in Midland Bank Trust Co Ltd v Hett Stubbs & Kemp ( a firm) [1979] Ch 384 at 402 cited with approval by Peter Gibson LJ in National Home v Giffen Couch & Archer [1997]3 All ER 808 at 813.
8. It is part of TBAs case that it was relieved of such duties by the Claimants who took the decision into their own hands in selecting the Corsair incinerators.

THE RELEVANT INDIVIDUALS

9. The employees of the SHA who were receiving the advice from TBA had themselves significant engineering qualifications which enabled them to evaluate the advice that TBA gave them. Mr Pym was appointed in 1991 as Project Manager to co-ordinate the development of the new energy centre at the Hammersmith Hospital (which at that stage might or might not have included on site incineration). He was a qualified engineer. From 1990 Mr Wright, who was involved in the project as a Consultant Unit Works Officer responsible for the boilers at the hospital and in 1993 took over the overall management of the project, is and was a Chartered Engineer and a member of the Institute of Management Engineers. In the early 1990's he was also a member of the Chartered Institute of Building Service Engineers and a Fellow of the Institute of Hospital Engineers. He said in oral evidence that he found no particular benefit in continuing membership in these two institutions and allowed them to lapse. Mr Pym and Mr Wright were sophisticated and experienced users of TBA's services able to understand and evaluate the advice which they were given and to initiate their own questions to be answered by Erithglen.
10. Mr Vince, who was the supervising partner for the project at TBA, was and is a Chartered Engineer, a Fellow of the Chartered Institution of Building Services, a Member of the Institute of Hospital Engineering and Health Managers and a member of the Association of Consulting Engineers.
11. The defence was opened on the basis that because TBA was recommending the purchase of a specialist product, it was entitled to accept, almost without question, the claims made for the Erithglen Boilers by Erithglen. In view of the fact that TBA was retained by the SHA to evaluate and advise the SHA on the various options, I regard this as a very unattractive argument. When Mr McKenzie, TBAs Project Manager, came to give evidence, it was clear that he regarded it as his duty within his general competence to evaluate the options and to look critically at the data provided by Erithglen. This he did from the standpoint of a Building Services Engineer and not as an expert in combustion, incineration or waste handling technology. Mr McKenzie managed the project on site for TBA and reported to Mr Vince. By 1991 he had many years of experience and was a qualified engineer having started his technical apprenticeship in 1979 and later having obtained a BSc degree in Environmental Sciences. He had completed the Chartered Institute of Building Engineers Associate course but he was not and is not a Chartered Engineer.
12. Mr Evans was largely responsible for preparing the 1990 Option Appraisal Report commissioned by the SHA under Mr Vince's supervision. He did not provide a statement or give evidence. He left the firm in 1991. At an early stage in the project Mr Weller, then an associate, but since 1992 a partner in TBA, also had some involvement. He was and is a Chartered Engineer.
13. There is a dispute between the parties as to whether the expertise of those in the SHA who received the advice limited the normal responsibility of TBA. I shall consider this later but as part of the background I bear in mind that the persons dealing with the project for the SHA had themselves considerable professional expertise.

THE FACTS

The Relationship between SHA and TBA

14. Since the early 1980's TBA has been involved in the management or design of a number of projects for the Hammersmith Hospital. Mr Vince lists 18 projects in the Appendix to his statement. The projects included a study of the needs of the Hammersmith Boiler House in 1987 which was undertaken by Mr Vince and Mr Weller and a specialist report dated 2^nd March 1990 based on a study by Mr Ashton of Ashton Consultancy with advice from Mr Vince.
15. Both the 1987 and the 1990 Reports emphasised that the boilers which had been installed in the early 1960's were close to the end of their effective working life and needed to be replaced. By 4^th June 1990 the Hospital was considering as an option for replacement, the possibility of an incinerator with heat recovery rather than a simple replacement of the boilers without any capacity for incineration.
16. On 12 June 1990 Erithglen submitted the first proposal for installation and annual maintenance of Corsair boilers based on an annual estimate of 3174 tonnes of waste. It proposed either one Corsair 2500S boiler or twin 1250S boilers. Erithglen had previously installed other Corsairs at NHS Hospitals. The first was at the Chorley and District Hospital in 1986.
17. On 1^st October 1990 Mr Pym was appointed as acting director of estate management of the Hammersmith Hospital. He gave statements to both sides but since neither side called him to give evidence I have not read them. After receiving submissions as to how I should view his evidence I have decided not to draw any inferences either way from the fact that he was not called. In November 1990 TBA produced an option appraisal and an Approval In Principle (AIP) Report for a fee of £12,000. This report was required for an (AIP) submission to the Department of Health (DOH) in order to obtain the necessary funding for the project.
18. Mr Vince said that it was prepared by Mr Evans but that he, Mr Vince, was the partner in charge. The Report analysed four options. The options included an investigation into the viability of providing

"4.3...a central facility adjacent to the Hammersmith Hospital boiler house which would dispose of the total SHA waste and from which steam would be produced for the hospital utilising a waste-heat recovery system."

19. Table 1 set out an estimate of the waste disposal requirements of Hammersmith, Queen Charlotte's, Acton and Royal Masonic Hospital and the RPMS/MRC. The estimate was for 1,688 tonnes per annum of domestic waste and 1,486 tonnes per annum of clinical waste giving an annual total of 3,174 tonnes. One of the notes at the bottom of the page says

"The total waste allowance is greater than required leaving capacity for future increase or income generation from disposal of other hospital's waste."

20. This note is relied on by the claimants who say that the need to plan for capacity for merchant incineration (i.e. use the incinerators to burn waste from outside organisations and thus generate income) was clearly flagged.
21. The Report went on to say that proposals had been sought from four major incinerator manufacturers which would both cater for the disposal of the Authority's waste and satisfy the proposed legislation on clinical waste incineration processes.
22. The proposals included two from Erithglen. The first was for one 2500S Corsair boiler which was said to have a waste capacity of 625kg per hour which at a charging rate of 20 hours a day, six days a week and 50 weeks a year would give a capacity of 3,750 tonnes per annum. The second option was for two Corsair 1250S Boilers with a waste capacity of 2 x 312Kg per hour of 624Kg per hour. This also gave a capacity in round figures of 3,750 tonnes per annum.
23. Both Corsair Boilers were said to comply with present and proposed U.K. legislation and new E.C. Draft Directives and with BS3316:1987 Parts I to IV inclusive. The estimated calorific value of the waste was said to be 13,950 Kj where the other options from Hoval, Robert Jenkins and Evans Universal used a calorific value of 17,400 Kj. If the calorific value is higher, in general the amount of waste that can be incinerated is reduced. If the higher rate had been chosen, the figure given of a capacity of 3750 tonnes per annum of the Corsairs would have been significantly reduced.
24. The Erithglen proposals received an enthusiastic endorsement from the Report. In paragraph 5.3.3 it said

"Erithglen Ltd rate these units at 20 hours/day, this being the period per day they guarantee that they can operate at full capacity. However they are on line 24 hours a day."

25. Two paragraphs later the Report says

"Erithglen were the only company contacted who offered as standard a solution to the whole waste disposal problem from the hospital ward right through to disposal of the residue products."

26. Of the two options the Report preferred the twin incinerator proposal. In the event, its conclusions excluded the possibility of accepting either proposal for incineration in view of the cost of the incinerators. The Report recommended proceeding with replacing the boilers. It noted "what is not known is the increased cost to present disposal methods that will result from the promulgation of proposed legislation into law of the Environmental Protection Bill. This can only increase this (the Erithglen) option's viability."
27. In his comment on the Report for the District Management Board Meeting of the SHA on 4^th December 1990 (which also noted the Government's requirement for a 15% energy reduction over 5 years), Mr Pym advised deferring a decision on incineration until more space became available on the Hammersmith site. This view was generally accepted. Mr Herbage, who was the Senior Manager in charge of Estates, and Mr Wright both said that they did not read the 1990 AIP until after July 1991. They had no need to do so because on- site incineration was not a real option in December 1990.
28. In February 1991 the Secretary of State for the Environment produced Guidance PG5/1(91) on Clinical Waste Processes under one tonne. It set out requirements in relation to emission limits and controls which were to be observed including Carbon Monoxide (CO) emissions. Paragraph 35 said that

"Wherever practicable the incinerator should be operated continuously on a 24 hour per day basis."

29. In paragraph 36 of the Guidance it provided that:

"36. The burn-out of waste in the main combustion chamber should be in accordance with the standard specified in BS3316 Part I 1987."

30. The 1987 British Standard provided a specification for standard performance requirements for incineration plant for the destruction of hospital waste. This included surface temperature, noise, emission of smoke, emission of grit and dust, volumetric heat release rate, gas residence time and carbon monoxide concentration. Some of its specific levels were superseded by PG 5/1(91).
31. In paragraph 39 of PG 5/1(91) the guidance provided that the minimum residence time for gases in the secondary combustion zone should not be less than two seconds as calculated in accordance with BS3316, Part II: 1987 or otherwise demonstrated. Part II of the British Standard detailed a comprehensive range of tests so that testing could be performed according to the size, complexity and intended purpose of an incinerator installation. The Claimants say that these questions should have been checked independently by TBA before it gave its advice set out in the first AIP and repeated in subsequent AIPs. The Claimants contend that TBA was not entitled simply to rely on the manufacturers' assurances.
32. Part III of the British Standard identified the information which should be supplied by a purchaser and the form in which it should be presented. Part IV gave recommendations and guidance to both purchasers and manufacturers on the options that need to be identified and the methods of achieving certain specified requirements in a manner that will satisfy the standard performance requirements.
33. In May 1991 Mr Vince started to attend planning meetings for the proposed installation of boilers at the Hammersmith Hospital. TBA was made aware at the meeting with the MRC on 30^th May 1991 that the Home Office required an incinerator to be available on site in any event to dispose of animal carcasses which then amounted to 300 a week and could in the future amount to 600 a week. This requirement was reinforced by the Ministry of Agriculture (MAFF) which required on-site incineration, waste and carcasses from the quarantine facility and also for waste and carcasses from the containment facilities. MAFF's requirements were confirmed at a Planning Meeting on 18^th July 1991. As a result, at the MRC meeting on 21^st June 1991 Mr Pym is reported as having re-opened the discussion on whether a joint SHA/RPMS incinerator might be installed on site. No doubt the significant cost which at the time it was anticipated would have to be spent in any event on on-site incineration played a part in this.
34. The size of the facility that would have been required is a matter of dispute between the parties. This issue will need to be considered further if the claimants succeed because the the provision of an incinerator to dispose of animal waste would have been needed in any event and should be taken into account in the assessment of damages.
35. The issue of animal waste was pursued at the meeting of the MRC on 4^th July 1991 when Mr Pym outlined as possible alternatives an SHA facility costing £1.5m to incinerate all hospital waste and an MRC/RPMS facility at an estimated cost of £440,000. At this meeting there was a suggestion that the Home Office had accepted autoclaving of carcasses as an alternative to incineration. Mr Herbage said in evidence that he thought at that time that there would be an incinerator on site to dispose of all hospital waste but not for 3/5 years.

The Provision of Erithglen Boilers becomes a real possibility

36. The plans all changed as a result of the fire that occurred in the boiler house at the Hammersmith Hospital on 4^th July 1991. This resulted in the demolition of the burnt boiler house and removed the problem of whether there was enough space on site to provide an incinerator plant. The experts agree and I find that the fire created an urgent need at least to replace the boilers as a result of which the normal time for going through planning procedures was abridged. TBA was instructed to advise the SHA.
37. In a letter from Mr Pym to Mr Russell, Principal Engineer of the DOH Building Directorate since 1987, dated 24^th July 1991 Mr Pym described the brief given to TBA as the SHA's Consultant Engineers as 'very broad' covering replacement boilers and incineration.
38. On 2^nd September 1991 Mr Vince and Mr Pym had a meeting at which Kenchington Little Plc (KL) were present as structural engineers. Their letter to Mr Pym reflected the decisions taken at the meeting. KL was asked to prepare outline schemes for the four options. Those four options were similar to the ones considered in the 1990 AIP, namely:

• Rebuild the boiler house on the existing site to a similar size and specification;
• Build a new boiler house adjacent to the existing one of a similar size and specification to the original;
• Build a new boiler house with a small enclosure for a small capacity incinerator unit (Option 2A);
• Build a new boiler house and a large enclosure similar in size and specification to the original boiler house to be used for a large capacity incinerator (Option 2B).

39. KL and TBA were then to proceed with the AIP document which would provide full costings for each option. KL as building and civil engineering consultants would provide the structural costs.
40. The way the AIP was developed has been a matter of controversy between the parties. Having considered both the documents and the oral evidence I am satisfied that although Mr Pym made suggestions as to the form in which the Report was to be written in order for it to be presented in the most attractive way to the Department of Health, he did not take over the responsibility for advising the SHA which remained with TBA. However it is clear to me that the SHA undertook to and did provide TBA with basic information of matters within their knowledge on which TBA was entitled to rely in coming to its judgment as to the appropriate advice to give the SHA.
41. There is no doubt that as the project developed the SHA was more and more inclined to favour Option 2B if it could be achieved. I accept Mr Herbage's evidence of the final position which was that

"they were instructed to write an AIP and I certainly did not – I certainly did not give them an instruction not to consider off-site disposal. ....We clearly preferred to have...an incinerator on site. In the writing of the document we would want to make the emphasis on that but in correct judging of options, the option of us incinerating off-site was available".

42. An important reason for the SHA's preference was that after the removal of Crown Immunity in April 1991 the SHA was ultimately legally responsible for the disposal of its own waste whether this took place on-site or off-site.
43. It is noteworthy that there were no discussions at this stage about providing capacity for incinerating commercial waste. In evidence both Mr Herbage and Mr Wright said that this was not a consideration. Had it been seriously considered and had TBA been required to make provision for it in the advice which they gave, it would have been referred to specifically in the discussions which took place in developing the AIP.
44. I am satisfied that TBA understood that they were advising the SHA that Option 2B was the preferred option and that the SHA accepted that advice which was what they were hoping to hear. The SHA then collaborated with TBA to draft the AIP in the form which would be most readily acceptable to the Department of Health.
45. The draft AIP was sent by Mr McKenzie to Mr Pym on 14^th November 1991 for final discussion and approval. On 3^rd December 1991 TBA sent an invoice for £16,734.02 excluding VAT for the work on the AIP. This invoice covered work on evaluating the four options for the SHA and in advising on which option was the most appropriate.
46. On 25^th October 1991 in an internal TBA note, Mr McKenzie raised questions in relation to the next stage of the project including the scope of TBA's appointment as lead consultants. This was envisaged to include writing contract preliminaries, producing a contract procedures manual, a detailed contract programme, and undertaking Quantity Surveying activities. It was clearly assumed that the advice of TBA contained in the AIP would be accepted and that the SHA would need TBA's assistance in carrying the project through to completion of the installation of the Corsair Boilers.
47. The project was taken forward in a letter from Mr Vince to Mr Pym dated the 21^st November 1991. Interestingly, the letter included fee proposals for both Options 1 and 2 that is for off-site incineration as well as on-site incineration. This was sensible since the final funding decision rested with the Department of Health. It supports the view that the possibility of off-site incineration had not been finally excluded by the parties. The proposal for Option 2B was for co-ordinated design 5.5% engineering costs and for project management 1.5% of engineering costs. The percentages quoted were to relate to fees quoted in the AIP document. Mr Vince went on in the letter:

"I confirm that the design team is currently proceeding with the design for Option 2B and that this is on the understanding that the SHA will underwrite any design fees incurred should the DHSS not approve the AIP submission."

48. Mr Pym replied by letter dated 2^nd December 1991 accepting Mr Vince's proposals.

"I write now to confirm your appointment as lead Design Consultants and that you will be required to undertake the Project Management through to commissioning and completion."

49. The letter ended:

"Finally it is our wish that you proceed with the design work for the preferred Option 2B prior to this Authority's receipt of a decision from the DOH following the AIP submission."

50. The SHA undertook to provide a more accurate estimate of the waste to be incinerated. Mr Wright, as Estates Manager, commissioned a report from Preface Ltd. on the actual waste arising at the hospital by type and weight for one week from the 14^th November 1991. The report gave an average figure of 1430kg of non clinical waste and 800kg of clinical waste giving a total of 2,230kg. To the extent that it was relevant in giving their advice, TBA was entitled to rely on the figures that they were given by the SHA.
51. In his letter to Mr McKenzie dated the 26^th November 1991 enclosing a copy of the Report, Mr Wright said "it looks as though we shall need to cater for about 2 tonnes per day."
52. The report was sent by Mr McKenzie to Mr Piggin, Managing Director of Erithglen, on the 6^th December 1991. It gave the SHA's total capacity requirements, including waste anticipated from other hospitals under the SHA's control, as 3.2 tonnes a day (i.e. the estimate in both the 1990 and 1991 AIP). The report went on "If the hospital is initially looking to burn waste for 8 hours a day, two Corsairs 1000S may be better suited to match their charge rates." This was a reference to the fact that the Corsair 1250S would provide unnecessary additional capacity. If incineration of merchant waste had been in anybody's mind this would have been an obvious time for the issue to have been raised as a query as to whether in such circumstances it was sensible to purchase the smaller boilers which would reduce the capacity for merchant incineration. I find that the decision to reduce the capacity from that of two Corsair 1250S to two Corsairs 1000S was taken on TBAs advice. This was based on the brief given to them by the SHA to advise on the provision of the incinerators to cater for the SHAs own needs. They were not required to make provision for the possibility of merchant incineration.
53. On the 9^th December 1991 Mr Piggin replied to Mr McKenzie providing calculations for boiler operations and waste consumption based on Twin Corsair 1000S waste fired boilers burning for 8 hours, 16 hours and 24 hours. The calculations emphasised that

"When in waste burning mode you will lose 20% in burning time to burn off, boiler routine checks, which has to be taken into consideration in the above figures."

54. The figure of 3.2T a day envisaged an 8 hour day operation taking the 20% burn down period into account.
55. By a letter dated the 12^th December 1991, Mr McKenzie asked Mr Piggin a number of questions. In particular he asked for assurances that the Corsairs would meet the emission limits and the Secretary of State's Guidance Notes and that they would satisfy the requirements of the 1990 Environmental Protection Act. The letter also asked for a copy of the Warren Springs Report on the flue gas emission analysis for the installation of Corsair Boilers at Ryhope Hospital in Sunderland. This was another installation of Corsair Boilers which had been the subject of a Government independent investigation.
56. The Warren Springs report was published in October 1991 based on investigations which had been carried out at the end of 1990. It was one of a number of installations of Corsairs in NHS Hospitals which were in operation before Hammersmith.
57. By a letter dated 17^th December 1991 Mr McKenzie received from Erithglen the assurance that the proposed equipment would fully comply with the Environmental Protection Act 1990 Part 1, the Secretary of State's guidance for clinical waste incineration processes under one tonne an hour PG5/9 (91) of February 1991. The letter also enclosed a copy of the Warren Springs Report.
58. At some date in December 1991 Mr McKenzie together with Mr Wright and Mr Croydon, Energy Adviser at the Hammersmith hospital, visited the plant at Derby where 1000S Corsairs had been installed. They talked to the operators of the plant. Nothing detrimental was learnt. Previously on 25 October 1991 Mr Cross of TBA had visited the plant. He too had received no adverse comments about the plant.
The Warren Springs Report
59. This Report was prepared for the Secretary of State for Trade and Industry. It was an independent report acknowledged on all sides to be of considerable authority. It is of crucial relevance in this case since it analysed the requirements for compliance with Government legislation and guidelines and it identified areas of concern. Except in the areas of concern it reinforced the assurances which TBA received from Mr Piggin. It also renders academic questions about what independent investigations, if any, TBA should have done to verify the claims in Erithglen's literature. Even if TBA had been required to carry out such investigations before recommending the Erithglen Option in the most recent AIP, there is no reason to think that they would have reached different conclusions to those in the Warren Springs Report.
60. The Report describes the performance at Ryhope Hospital in Sunderland of a Corsair 1250S clinical waste incinerator. It describes the incinerator as employing "innovative combustion technology." Although there was some dispute about the accuracy of the term I hold that it does accurately describe the Erithglen technology. The Claimant's expert, Mr Hyde, described the technology as 'novel'. Mr Carver, the defendants expert, accepted the term 'innovative'. It differed from the traditional incinerator in having only one small combustion chamber in place of the two larger combustion chambers of other manufacturers and it adopted a different and relatively untested dry scrubbing technique to clean the gasses produced by combustion.
61. The Report was extremely detailed and careful. It provided an executive summary at the beginning of the Report which raised important questions relating to combustion chamber temperatures and furnace gas residence times and the average hourly emission of carbon monoxide which indicated that further modifications would be needed before the unit would comply fully with the CO requirements of the 1991 Guidance Note.
62. In the body of the Report at paragraph 3.1 headed "Carbon Monoxide", the Report gave the blunt warning that "This type of plant will require combustion modification or face closure." The body of the Report also raised other detailed problems.
63. The Report noted in paragraph 3.4.5 that some operational and minor changes had been made to the incinerator in the weeks following the trial. In a limited re-trial the carbon monoxide levels were much closer to the limits but there were still "appreciable excursions" above twice the permitted limit. This conclusion was set out in Conclusion VI of the conclusions and recommendations. It would give some comfort to an informed reader that with further modifications, the requirements would be met.
64. Mr McKenzie sent a copy of the Warren Springs Report to Mr Pym on the 2^nd January 1992.
65. On the 6^th January 1992 there was a Project Meeting at the Hammersmith Hospital attended by Mr Herbage, Mr Pym and Mr Wright for the SHA and Mr Vince and Mr McKenzie for TBA. The Minute says specifically at 2.0

"The intention of the waste incineration scheme is the disposal of the waste produced on the Hammersmith and Queen Charlotte's Special Health Authority's own hospital sites."

66. This confirms that the objective was to provide for disposal of such waste and that capacity for merchant incineration was not in the minds of those at the meeting. The meeting also noted under paragraph 2.4 that the SHA was registered for VAT and that performance bonds were not to be obtained but parent company guarantees should be obtained. The meeting noted that the Local Authority would consider the planning application on the 17^th February 1992.
67. On the 21^st January 1992 Mr Pym wrote to Mr McKenzie thanking him for obtaining responses to the earlier questions and identifying further issues in the Warren Springs Report on which assurances were required from Erithglen. Mr McKenzie said in evidence, and I accept, that he had discussed the Report with Mr Pym and that this letter reflected the questions that came out of those discussions. They related to paragraph 3.3.1 of the Report which identified high CO concentrations; paragraph 3.3.2 which referred to poor combustion performance and paragraph 3.7 which referred to the difficulty of compliance with a proposed EC directive on heavy metal emissions. Mr Pym also asked Mr McKenzie to check that no problem was caused by the fact that the RPMS waste would contain lower level isotopes. He also asked whether Erithglen had supplied plant to clients with similar waste mixes. Finally he asked Erithglen to confirm that they had obtained advice on the ability of the dry lime injection/back filter system to cope with low level radio active isotopes in a safe manner.
68. At the project progress meeting on the 22^nd January 1992, at which Mr Vince and Mr McKenzie were present with Mr Herbage and Mr Pym, it was noted at paragraph 1.9 that there were "three queries that had to be clarified by Erithglen (waste boiler installers) before we can progress to the stage of sending a letter of intent to cover the design information for the waste disposal scheme." In the margin it noted that TBA was to follow up this item.
69. On the 24^th January 1992 Mr McKenzie forwarded Mr Pym's letter to Mr Piggin with a covering letter requesting a response.
70. On the 30^th January 1992 Mr Piggin wrote to Mr McKenzie in reply to Mr Pym's letter of the 21^st January 1992 and Mr McKenzie's covering letter of the 24^th January 1992. The letter was sent on to Mr Pym and is referred to by him in the SHA's letter to Erithglen dated the 11^th February 1992. In the absence of further queries I conclude by inference that he was satisfied with the assurances that he had been given. Mr Pym did not give evidence .
71. Mr McKenzie's response to the letter has been the subject of much criticism from the claimants. I make it clear that, although it is relevant that an experienced engineer like Mr Pym appears to have been satisfied with the assurances, the responsibility remained with TBA to give the SHA the competent and independent advice for which they were paying.
72. In his very detailed letter of 30th January 1992, Mr Piggin pointed out in relation to high carbon-monoxide concentrations and unburnt hydrocarbon emissions at the Sunderland plant that

"This plant was ordered in early 1989 as a proto-type plant and was tested in late 1990 by Warren Springs Laboratory".

73. "The reasons given in the Report – 3.4 Reasons for poor combustion performance, have now been solved by the following design changes:- ...."
74. The letter referred specifically to particular problems arising out of paragraphs 3.4.1, 3.4.2, 3.4.3 and 3.4.4 of the Report and explained how the problems had been solved. The letter also dealt specifically with heavy metal emissions and the issue of radio active isotopes. In relation to oxygen injection the letter from Mr Piggin said that:

"Erithglen and BOC are conducting tests on Twin Corsair 1000S Boilers at Derbyshire Royal Infirmary and the new system will contribute the following advantages for our clients:-

• High through-puts with total combustion and burn-out.
• Reduced gas/oil consumption
• Increased thermal efficiency.
• Substantially lower emissions to atmosphere including carbon-monoxide and particulates."

75. The claimants say that as a result of this letter Mr McKenzie accepted that there were problems at Derby and agreed in evidence that with hindsight it would have been a very easy and elementary step to take to telephone Sunderland and Derby to find out whether the modifications and tests had enabled Erithglen Incinerators to comply with PG5/1. It is said that if Mr McKenzie had telephoned Sunderland he would have been told that PG5/1 had not yet been complied with. It is also said by the Claimants that had he telephoned Mr Wagstaff at Derby he would have discovered that although the plant achieved its through-put for the purpose of the acceptance tests, in normal running it only achieved a fraction of the claimed performance.
76. The defendants say that whether or not it was proper to rely on Erithglen's letter of the 30^th January 1992 was a matter of professional judgment which must be considered in context. The fact that it was "easy to pick up the telephone" did not mean that Mr McKenzie was under a duty to do so. The defendants regard it as significant that criticism of Mr McKenzie's response to the letter did not figure in the original statement of claim. Of the criticism that TBA fell below a reasonable standard of care in its response to the letter, it is said by TBA that this is such an obvious criticism that if it had substance it would have been pleaded explicitly at the outset. TBA says that in relation to comments about through-put at Derby the letter in its ordinary and natural meaning did not and should not have conveyed to Mr McKenzie that there were problems at Derby but rather that the situation at Derby provided encouragement that the plant would perform better than anticipated. I shall deal with these contentions after completing the history.

Subsequent history

77. On the 31^st January 1992 Erithglen submitted its price for the supply, installation, commissioning and training of operators for the Twin Corsair 1000S waste fire boilers in accordance with the attached drawings at a price of £863,014 excluding VAT. It also offered to do design work at a charge of £42 an hour.
78. This offer was accepted by Mr Pym in his letter dated the 13^th February 1992. The letter from Erithglen dated the 14^th February 1992 noted that Erithglen was to liase with Mr McKenzie "to provide all necessary builders work and design information." It also agreed that all design work should be costed at the agreed rate and be deducted from the agreed tender sum once the official go-ahead had been given for the project.
79. There was a series of queries from the Department of Health in a letter dated the 5^th February 1992 which was responded to by Mr Pym on the 10^th April 1992. From the letter of the 10^th April 1992 it appears that the SHA had a number of meetings with Mr Russell at the DOH in January 1992. The DOH would have had knowledge of the other NHS Projects where the Corsairs were already operating and had anything seriously detrimental been known to them about those projects either in terms of environmental safety or performance the SHA would have been told by the Department of Health that this Project would not be approved.
80. There was a further query from the Department of Health which Mr McKenzie passed on to Erithglen on the 19^th January 1992 relating to the ability of the Corsairs to dispose of animal carcasses.
81. Further enquiries were made by SHA (see Mr Wright's letter of the 10^th March 1992) asking if the new incinerators would cope with cytoxic waste, general pharmaceutical waste and radio-active waste. Assurances were given by Erithglen on the 16^th March 1992.
82. There was a pre-contract project meeting on the 25^th March 1992. Neither Mr Pym nor Mr Herbage were present. Mr Herbage said in evidence that for practical purposes the SHA was committed to the Erithglen project at this time.
83. On the 31^st March 1992 the SHA submitted its official order to TBA for TBA to provide "full mechanical and electrical design service and full project management in respect of the new dual field fuel [means fired] steam boiler house and incinerator service. All in accordance with your quotation dated 21^st November 1991."
84. On the 5^th May 1992 Erithglen provided an updated quotation in the sum of £1,040,000. to take account of additional work.
85. The SHA official order was enclosed with the letter from Mr Pym to Erithglen of the 5^th June 1992 in the sum of £1,052,788 excluding VAT. Mr Herbage confirmed in evidence that the contract was let on the basis of disposing of the SHA's own waste on site including waste from the RPMS and MRC. The order was acknowledged in a letter from Mr Piggin to Mr Pym dated the 8^th June 1992.
86. This was followed by a report from TBA dated the 18^th June 1992 to support the project. It was sent to the SHA for comment. Under paragraph 4.0 headed "Scheme Capacity" the figure of 2230kg daily was used. There is a note at the end of the paragraph which says "It is the SHA's intention, should there be sufficient waste, to operate the plant on a 24 hour basis." There is a claim by the claimants that the note indicated that the SHA required the capacity to burn waste from outside the SHA. TBA contends that the brief remained to burn Hammersmith waste only and that the note gave no such indication. In my view this report was not intended to indicate a change in the requirements that the planned capacity was 3.2 tonnes including the waste from other sites in the SHA. The reason given for the 24 hour requirement was to try to ensure that no limits were imposed on burning times in the plant. I note that Guidance Note PG5/1(91) encouraged 24 hour incineration. Had there been a late change of policy by the SHA before the contract was placed, there would have been explicit discussions between the SHA and TBA and specific SHA comments on the draft report.
87. On 4^th August 1992, TBA sent a technical specification to Erithglen. The performance was to comply with BS 3316, Parts I to IV (1987) and PG.5/1 (91). This was in line with the decision taken at the project meeting on 6 January 1992. I reject the allegation that TBA should have insisted on a performance bond because Erithglen was a £100 Company. There is no evidence that a performance bond was required by the NHS in any of the other projects. Further the SHA or the DOH were in a better position than TBA to know whether such a step should have been taken. Clause 8.1 of the Contract with Erithglen provided that the provision of a bond or guarantee should be deleted
88. After further discussions between the parties, Erithglen wrote on 9^th September 1992 enclosing a revised offer. On 1^st December 1992 TBA sent a Variation Order to the SHA confirming that an order had been placed with Erithglen for the design, supply, installation, testing and commissioning of the boilers for the sum of £1,183,047.
89. Work on the plant was completed by July 1993. The plant was the subject of an independent report by the Coal and Energy Services (CES) in July 1993. In all four tests Carbon Monoxide limits were exceeded. Modifications were carried out. There was a further CES report on 27^th August 1993. The installation was finally handed over on 1^st October 1993 subject to snagging items. TBA issued a certificate of practical completion on 2^nd November 1993 back-dated to 1^st October 1993. CES had completed a further series of tests that were satisfactory. The CES report said that throughput was 116% of design capacity.

The SHA's Change of Policy

90. At the end of 1992 a funding shortfall for the project prompted the SHA to consider ways of generating income and to consider again the possibility of merchant incineration. Mr Wright, who agreed in evidence that he was more commercially minded than Mr Pym, took over the responsibility for the project in January 1993. At a site meeting on 3^rd March 1993 he told TBA that the SHA did not want to be restricted to burning waste from the SHA. Mr Wright agreed in evidence that this represented a change of policy for the SHA. Had the policy from the start been to burn commercial waste, this would have made the question of the precise level of throughput a matter of great importance which might well have required TBA to make further investigations or enquiries. As it was, TBA could reasonably have been satisfied that the two Corsair 1000's could provide the necessary safety net both in terms of the overall quantity of the waste to be burned and also in having an alternative means of incineration if one of the boilers needed to be shut down. The plant (like the plant at Haslar which I visited) was capable, with careful handling, of incineration of the hospital waste expected at the time it was commissioned.
91. Improvements were needed to the installation at Hammersmith and in 1995 two vibrating grates were installed which together with a reduction of burn-off time gave an increased throughput. There was some delay in carrying out the work because Erithglen went into receivership in September 1994.

Closure of the Plant

92. In June 1996 the NHS Trust sought tenders for provision of a waste service for the Trust. They left open the alternatives of disposing of the waste through the existing plant or off-site disposal. In October 1996 the Estates and Maintenance Department submitted a tender for disposal by the existing plant. This tender was, as Mr Hudson, Deputy Director of Works reporting to Mr Wright, conceded in evidence, put forward on a rather optimistic basis. A tender for off-site incineration was put forward by Polkacrest Ltd. The tender evaluation on 14th February 1997 recommended acceptance of the Polkacrest tender. Thereafter Mr Hudson on behalf of the Estates Maintenance Department submitted on 30^th June 1997 a revised proposal for recommissioning the plant but, as Mr Herbage said in evidence, however disappointing it was for the staff, he took the line that the decision had already been taken. The plant was closed on 1^st June 1997.
93. In the course of his evidence, Mr Herbage was asked the reason why the incinerator had been closed down. He said 'I had had a number of years of experience of my staff coming to me to tell me about problems with the incinerator. I was aware that we had invested quite a lot of money in it and I had had optimistic reports in the past that had not actually borne any fruit. We had had modifications before and still we had had problems. I took a judgment that at least with the contract we had awarded which was a very economic contract, we had certainty for a three year period.' I accept Mr Herbage's evidence.

The Evidence of the Experts

94. Two experts have been retained by the parties, Mr Hyde for the SHA and Mr Carver for TBA. Although they agreed that his evidence was generally admissible, objection was taken by TBA to Mr Hyde giving expert evidence on behalf of the SHA to criticise TBA's performance on the grounds that his qualifications and experience do not equip him to pass an adverse opinion on TBA's performance. It is said by the defendants that as a specialist in combustion and incineration he has undertaken detailed design and given technical advice on large incineration plants and is too well qualified to give an adverse opinion on the performance of general practitioner mechanical and engineering building services engineers. TBA appears to contend that it can rely on any of Mr Hyde's opinions which are in its favour.
95. Mr Hyde has spent his working life being involved in large projects with Ove Arup and Partners, a large, well known, international firm. In support of the claim that his evidence should not be admitted, the claimants refer to the decision of the Court of Appeal in Sansom v. Metcalfe Hambleton & Co.[1998] 26 EG 154. The case involved allegations of professional negligence against a chartered surveyor. The Court of Appeal upheld an appeal against a decision of the County Court Judge who preferred the expert opinion of a structural engineer to that of a chartered surveyor in finding against the defendant. After reviewing the authorities Butler- Sloss LJ said:

"In my judgment it is clear that a Court should be slow to find a professionally qualified man guilty of a breach of his duty of skill and care towards a client (or third party) without evidence from those within the same profession as to the standard expected on the facts of the case and the failure of the professionally qualified man to measure up to that standard."

96. I respectfully agree. I note that even in the case of expert evidence from a member of a different profession the rule is not absolute.
97. I am satisfied that Mr Hyde is a member of the same profession as TBA and therefore there can be no objection as a matter of law to my accepting criticisms which he may make against TBA. As with any witness I must evaluate his evidence with care and take fully into account his own experience. I must be sure that he is not applying too high a standard in reaching his opinion.
98. To reject Mr Hyde's professional opinion as a matter of law on the grounds that, although a member of the same profession he was over-qualified would be wrong as a matter of public policy. To go further than Sansom v. Metcalfe Hambleton & Co. would be to encourage parties to try to exclude expert evidence at trial (when it is too late for the other party to secure another expert ) not on the merits but because the qualifications of the expert do not precisely fit the expertise of the individual or firm against whom allegations of professional negligence are made.
99. In this case Mr Hyde and Mr Carver, a general services engineer, spent many hours in reaching agreement on a number of issues in this case. The Court is grateful for their assistance.
100. In considering whether or not TBA fell below the required standard in failing to make further enquiries I have of course to consider their opinions. Both were subject to lengthy cross-examinations in which skilled leading counsel on both sides achieved a considerable measure of success.
101. Mr Carver for TBA maintained in his written reports that TBA did not fall below the required standard of competence but in the end conceded in evidence that bearing in mind the ease with which checks could have been made in response to Mr Piggin's letter dated 30 January 1992 that this was the only competent thing for Mr McKenzie to do.
102. Mr Hyde for the SHA made serious criticisms of TBA in his written reports and maintained in evidence that he would in the circumstances have made further checks, but conceded in relation to Mr Piggin's letter dated 30 January 1992 that a non-specialist would have been comforted by Mr Piggin's answers, and that it was apparent from the Warren Springs Report that further development work could be done and was being done and that some competent engineers "would perhaps consider the assurances appropriate and others would take a more sceptical view." Despite efforts in re-examination to encourage Mr Hyde to modify this answer I am satisfied that it represents his considered opinion. If I accept Mr Hyde's opinion I should conclude that a reasonable body of the profession would have acted in the same way as Mr McKenzie.

Findings on Liability

103. I accept Mr Hyde's oral evidence that at the end of 1991 Erithglen was regarded as a reputable manufacturer and that TBAs conduct and in particular that of Mr McKenzie must be judged with that firmly in mind.
104. There are two separate matters to be considered. The first relates to the assurances requested arising out of the Warren Springs Report. In this regard the assurances seem on their face to have been satisfactory, or at least if one accepts Mr Hyde's evidence on this point, as I do, they would have been so regarded by a reputable body of Mr McKenzie's professional colleagues.
105. In relation to the Corsairs at the Derby Royal Infirmary I agree with the defendant that, on the face of it, the references would provide reassurance and encouragement rather than doubt and suspicion. It would only be if one had a prior knowledge or suspicion that the Corsairs had been under-performing at Derby or elsewhere that one might be put on enquiry. Even then the letter sounded reassuring rather than the contrary. Although the responsibility rested with Mr McKenzie I have no doubt that either Mr Wright or Mr Croydon, who had also recently visited the plant at Derby, would have asked questions directly or through Mr Pym if they had been concerned about what they had seen or heard.
106. In so far as there might be a shortfall in the level of performance for which the SHA had contracted (leaving aside the question of the waste with a higher calorific value than expected), I also bear in mind that before the incinerators would be accepted they would be subject to performance tests. A general practitioner mechanical and engineering building consultant engineer would be well aware that although the outcome would not be ideal in the event of failure, the acceptance or rejection of the incinerators would depend ultimately on the success or failure of the acceptance tests.
107. I also bear in mind that the correspondence must be read as a whole and in the context that there were ongoing and regular discussions between Mr Pym and Mr McKenzie and Mr Vince and Mr McKenzie. I also bear in mind that when giving evidence Mr McKenzie came across in the course of a long and testing cross - examination as a conscientious, competent and truthful witness.
108. In all the circumstances applying the appropriate test I am not satisfied that TBA fell below the level of care and skill which would be ordinarily exercised by reasonable and competent members of their profession in the same rank and standing. I accept the view expressed by Mr Hyde in cross-examination that a reasonable body of competent professional opinion would have accepted the assurances which were contained in Mr Piggin's letter of 30 January 1991. Mr McKenzie should, of course, have continued to keep Mr Piggin's assurances well in mind as the commissioning process proceeded. Having considered his conduct over the following few months I am also satisfied that he was not negligent in failing to reconsider his advice to TBA to purchase the Corsairs.
109. I should add that it was urged on me that Mr Hyde was in no position to criticise TBA because he was supervising the preparation of reports by Ove Arup in 1990 on the possible installation or upgrade of Corsairs at Ealing Hospital and at Walsall Manor Hospital. None of these reports, two at Ealing and one at Walsall, suggested that the Corsair technology was unsound or that, as SHA contends here, the rated throughput should have been based on a cv of 17,400Kj instead of a cv of 13,950Kj. None of the Reports suggested that CO emissions were a problem. I find these reports (which were not disclosed until the final stages of the proceedings despite their obvious relevance) are an important corrective in making it clear that concepts now contended for by the Claimants as demanding caution were not obvious even to employees of an international firm of the highest reputation like Ove Arup. The furthest Ove Arup went in counselling caution was to say in the Walsall Report that there were no insurmountable technical problems which should discourage Dyvell Ltd from investing in the plant.
110. I have already held that TBA did not fall below the required standard of care in failing to make further enquiries on receipt of Mr Piggin's letter of the 30^th January 1992. I also do not accept that a reasonably competent engineer would have made independent investigations (rather than seek assurances) that the plant was capable of incineration of clinical waste at the rated throughputs and in compliance with permissible emission limits. The same considerations relate to the claim that TBA should have carried out its own calculations with regard to the volumetric heat release (VHR) requirements of BS 3316. In my view TBA was entitled to rely on the Warren Springs Report for an analysis of these matters. In any event I accept the defendants contention that under BS3316 Part 2 Clause 8 the time for making the VHR calculation was as part of the pre-acceptance tests to be carried out by the pre-acceptance tester and not at an earlier stage. I am not satisfied that questions relating to the payback period were ultimately for TBA rather than the SHA or that the SHA relied on TBA's advice in this regard. In relation to the alleged breaches of the contract, (bearing in mind that SHA had to provide the figures for contract disposal costs) for the reasons which I have given I do not accept that a reasonably competent engineer would in the circumstances of this case (which differ from the Gloucester Case where the capacity for merchant incineration was a requirement) have advised against the installation of Erithglen plant at the Hammersmith Hospital. The position would have been otherwise if merchant incineration had been an issue (as it was at Gloucester). In those circumstances it would have been necessary to estimate the calorific value of the waste which was to be incinerated in order accurately to estimate the through-put capacity of the boilers and to point out that the capacity would have been significantly lower than predicted by Erithglen in its literature. The evidence is that the calorific value would in fact have been significantly higher than 17,400kj and that the through-put capacity would have been significantly lower than a figure based on 17,400kj. In the event the capacity of the Corsairs at Hammersmith was reasonably thought by TBA and SHA to be substantially in excess of what would be required to the extent that there was no need for any precise calculation.

Damages

111. In view of my findings on liability, I shall deal briefly with the issues of quantum. Most of the figures are agreed between the experts as figures. The Claimants final claim is for £1,723,404. The Defendants say that if they are liable to pay damages the SHA should recover no more than £245,944. The parties have made no distinction between damages claimable in contract and in tort. Had I found in the claimant's favour, I should have concluded that if proper advice had been given, the Erithglen boilers would never have been installed, and that the disposal of hospital waste would have taken place off site. The damages would have comprised Case A Capital costs plus Case A Revenue costs subject to deductions. Credit would have had to have been given for costs which would have been incurred in any event. MAFF would have required the installation of a plant on site to dispose of MRC and RPMS waste. The cost of disposing of the balance of the waste commercially would also have had to be deducted.
112. It is submitted by the defendants that on the principles of the Saamco case, South Australia Asset Management Corp. v York Montague Ltd [1997] AC 191 (HL), that the measure of damages is the difference between the economics of purchasing and running the Corsairs with their reduced throughput and the hypothetical economies of purchasing and running the Corsairs if they had not had the restrictions on CO emissions for which TBA are blamed, i.e. the Corsairs they received and the Corsairs they should have had. There may be some cases where this would be the appropriate measure of damage, i.e. where the SHA had received substantially what they had bargained for but in this case if the SHA had succeeded in establishing negligence against TBA for recommending incinerator boilers which failed to achieve their required capacity taking into account the requirement for commercial incineration, I should have concluded that the failure was by such a large margin that the SHA would never have purchased the incinerators in the first place. I reach this conclusion bearing in mind that the incineration of unsuitable waste would have caused a reduction in the through-put to be expected of the Corsairs from that stated by Erithglen. In essence TBA was asked to advise the SHA whether the Corsairs provided a suitable method for disposal of the Authority's waste. If they had concluded it was not a suitable method, as Mr Herbage said specifically in evidence, they had the alternative choice of contract disposal. There would have been a clear causal connection in this case between the negligent advice and the damage suffered by the claimant.
113. In relation to actual costs, these are set out in the experts final agreement on quantum dated 13^th July 1999. The Case A capital costs (subject to the VAT issue see below) are substantially agreed. In item 10 (demolition costs) the figure of £21,450 was increased to £35,204 by agreement on 3^rd July 1999.
114. As far as Case A revenue costs are concerned, in view of the desirability of running the incinerators on a 24 hour shift system, I make no deduction in item 1. I allow a deduction for the four month shut-down from May to September 1995. This reduces the sum to £259,727.
115. With regard to item 7, the defendant's primary case is that this item is not proved and that the claim should be disallowed. The defendant relies on the absence of details of the transactions which are behind the £189,213 claimed by the SHA. The claimants admit the lack of documentation but say that on the balance of probabilities the sum of £189,213 listed in the claimant's journals was probably incurred. Mr Hyde's evidence is that excluding the expenditure would result in a disproportionately low cost for running the plant.
116. I would have allowed the claim in part reducing the sum to reflect the likelihood that there were items of expenditure included which were not attributable to the cost of running the Corsairs. The parties are agreed that if I reach this conclusion the correct reduced amount is £130,858.
117. Under 11(b) the actual cost of salaries for the operators is agreed at £375,005. I reject the claim that there should be one man fewer and that there should be a deduction because two plants should have been operated for 16 hours a day rather than one for 24 hours. I would have made a deduction for the period of the ash screw modifications in 1995.
118. I reject the defendants claim in Item 13 that the rate per tonne achieved by the Trust was inadequate. Mr Wright obtained the best income that he thought he could achieve.
119. With regard to Case B, the main issue is the capital cost of the MRC/RPMS incinerator which would reasonably have been required in any event. This question was in fact considered specifically on 21^st June 1991 when Mr Pym re-opened the consideration of the incineration option. He concluded that the separate incinerator facility would cost £440,000. This figure was confirmed in oral evidence by Mr Herbage and by Mr Gregory in his witness statement. The figure was carried forward in the Costs Design Estimate dated 30^th July 1991. The cost of this incinerator was also estimated to be £500,000 by Mr Herbage in his letter of 16^th December 1992. I am satisfied that an incinerator of this size would have been purchased to take account not only of the current demand but also the expected increase in demand when the larger animals moved from Northwick Park to the Clinical Research Building at the Hammersmith Hospital. To this figure must be added the fees agreed at 12% of Item 1. This amounts to £52,800. Item 3 was agreed in the sum of £1,036,694 at the end of the hearing.
120. With regard to the issue of VAT, I have come to a different conclusion to that of His Honour Judge Bowsher Q.C. in Dept of National Heritage v. Steensen Varming Mulcahy (a Firm) [1998] 60 Con LR 32 at page 170. The defendants say that when a body which is funded by the Crown pays VAT, the money is simply taken out of one Crown pocket and put into another Crown pocket. The payment is not a loss. This does not seem to me to represent the true position. The Secretary of State for Health is a corporation sole (see paragraph 4(i) of the Ministers of the Crown, the Transfer of Functions (Health and Social Security) Order 1988 (SI 1988 No 1843). Secretaries of State may be defined as corporation sole pursuant to Section 2(a) of the Ministers of the Crown Act 1975. The Secretary of State for Health was empowered to create a body known as a Special Health Authority by Section 11(i) of the National Health Service Act 1977. By S 519 A (5) of the NHS and Community Care Act 1990 such a body shall be regarded as exercising functions on behalf of a Minister of the Crown. The SHA, not the Crown, is the body which can sue or be sued pursuant to the agreement with TBA for the provision of services. VAT is charged by suppliers on the supply of goods and services in the United Kingdom and accounted to the Commissioners of Customs and Excise who must collect the tax and keep it in a special account at the Bank of England. The tax is not one from which the Crown is exempt – see Section 41 of the VAT Act 1994. "(1) This Act shall apply in relation to taxable supplies by the Crown as it applies in relation to taxable supplies by taxable persons." Therefore the Crown as a supplier is liable under the 1994 Act in the same way as anyone else carrying on a business. It is in my view incorrect to look at SHA's as a 'Crown pocket'. SHA's are bodies with separate legal personalities created pursuant to a specific statutory power. The SHA would have suffered a loss. It would have been entitled in my view to recover VAT as it has claimed in this case.
121. These questions are academic because for the reasons which I have given, I have found for the defendants.