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

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		St Dunstan's House 133-137 Fetter Lane London, EC4A 1HD
		2 December 2005

His Honour Judge Wilcox

1. The main proceedings concern a claim by the Claimants who are the owners of properties in Hythe Road, Kent for damages in respect of losses suffered by them on 15 October 2001 when their properties sustained damage as a result of a landslip alleged to have been caused by excavations carried out on the development site down slope and to the rear of their properties.
2. The First Defendant Larkstore Limited, a property development company, is the freehold owner of the site and the Second Defendant Bess was the building and civil engineering contractor engaged by Larkstore under a design and build contract to carry out the works being carried on at the site at the time of the loss.
3. Following the commencement of proceedings against Larkstore by the Claimants Larkstore commenced Part 20 proceedings against the Part 20 Defendant Technotrade Limited a limited company offering geo-technical site investigation and engineering services. Technotrade produced a site investigation report dated 14 December 1998 for a company called Starglade Limited.
4. Starglade sold the site to Larkstore on 21 June 1999 in two phases. Phase I was completed immediately. The completion of Phase II of the sale of the site to Larkstore was in August 2000.
5. On 28 March 2001 planning permission was granted by Shepway District Council to Larkstore's agents for Phase II of the site. In September 2001 part of the Phase II land was sold off to a third party.
6. It was a condition of the planning permission at paragraph 9(a):

"Prior to the commencement of the development the applicant shall obtain a written report from the specialist soil consultants, advising on the suitability of the land for the proposed development and identifying any works for stabilising the land and adjoining land and properties, reinforcing the foundations and strengthening the proposed development and any other works (including works of drainage) as may be necessary to ensure the stability of the land, proposed buildings and associated services, and any neighbouring land and building. This report shall be submitted to the Local Planning Authority for its consideration and approval before development commences".

7. Larkstore used the Technotrade report to satisfy that condition. It was the second time they had relied upon the report. The first time was to satisfy a similar condition in the planning consent given in relation to Phase I land and its development.
8. The consent of Technotrade was not sought by Larkstore for their use of the 14 December report. The report contains no prohibition against assignment.
9. Larkstore came into the possession of the Technotrade report when they purchased the development site from Starglade Limited in June 1999. It was offered for sale with detailed planning and building regulation approval for eight detached units.
10. The planning consent that related to the site at this time was that dated 19 November 1997 and contained at paragraph 10(a) an exactly similar condition as to the requirement for a specialised soil report which appears at paragraph (9)(a) of the 2001 consent.
11. It appears that this is a common form requirement in planning consents given for that area of coastal land extending from Sandgate in the east and into Hythe and is known as "the Latchpath" condition after an historical Hythe landslip. Mr Nash the managing director of Larkstore was given a copy of the Technotrade report which had been used to fulfil that condition.
12. The planning consent of March 2001 was applied for by Larkstore in relation to Phase II and the Technotrade report was recycled to fulfil the geo-technical report condition in the consent Y01/0128/SH.
13. At no time did Larkstore seek permission from Technotrade to use the report of 14 December 1998. There was no attempt to obtain from Technotrade any form of collateral warranty.
14. On 2 October 2001 Larkstore entered into the design and build contract with Bess Limited and the contract documentation included the Technotrade report of 14 December 1998.
15. The landslip occurred on Phase II of the site whilst Bess Limited were carrying out works on the 15 October 2001.
16. Some damage occurred to the neighbouring properties upslope from the site and extensive stabilisation works had to be undertaken on the site for the purposes of the proposed development.
17. On 25 March 2003 the main proceedings were commenced by the upslope neighbours against Larkstore and Bess.
18. On 23 February 2003 a Deed of Assignment between Starglade Limited and Larkstore Limited was entered into, some five years after Technotrade had completed its duties under the contract of retainer with Starglade Limited, 3½ years after the Phase II completion and 2¼ years after the landslip had occurred.
19. The material parts of the assignment are:

i) Starglade with full title guarantee assigns to Larkstore the Report together with all the benefit and interest and rights of Starglade in and under the Report and the right to enforce the same TO HOLD to Larkstore absolutely.

ii) For the avoidance of doubt the assignment effectively hereby includes the right to sue in respect of breaches of Technotrade of its duties and obligations and to bring all such claims against Technotrade as are available at law.

20. On the same date Larkstore wrote to Starglade confirming the agreement that had been reached in relation to the assignment:

"… In consideration of you making the assignment of even date, we undertake to pay you half of the net monies received from Technotrade Limited.

"Net monies" means all sums received from Technotrade Limited, whether by Court order or judgment or by compromise or otherwise and whether in respect of the cause of action assigned by you to us or otherwise, but after deduction of our costs of pursuing Technotrade Limited and deduction of any costs we may be ordered to pay Technotrade Limited.

We agree to hold all monies received from Technotrade Limited on trust for division in accordance with the foregoing ..."

21. On 6 October 2004 Part 20 proceedings were commenced against Technotrade Limited who served a defence of the 3 November 2004. Larkstore served a reply of the 18 January 2005.
22. On the 14 June 2005 an order was made for the determination of preliminary issues:

i) Whether Larkstore is able to recover the or any part of the loss allegedly suffered by it, by the operation of the assignment.

ii) Whether Technotrade owed a duty of care to the Claimants as alleged.

iii) Whether Technotrade owed Larkstore a duty of care as alleged.

THE ASSIGNMENT BASED CLAIMS

23. Larkstore pursue a claim for breach of contract which is exclusively referable to the assignment there never having been any contract between Larkstore and Technotrade.
24. By paragraph 32 of the Particulars of Claim under the assignment is claimed the benefits of Starglade's rights of action for breaches of tortious duty.
25. Mr Pelling QC attacks the validity of the assignment contending that it is so remote from the transfer of the land by Starglade to Larkstore, that it could not be considered incidental to that transaction and that furthermore since there was a separate consideration agreed, namely half of the net proceeds recoverable from Technotrade, it is champertous.
26. Mr Nash, the managing director of Larkstore gave evidence that it had been anticipated at the time of the original transfer of the site in March 2001 that there would have been an assignment of the geo-technical report to Larkstore, and that it was clearly overlooked. However, when the landslip occurred and the alleged defects in the report became apparent Mr Nash wrote to the loss adjusters representing Bess Limited the contractor in respect of the claims pursued by the upslope property owners. The letter dated 21 November claims the following:

"05 The introduction to the Technotrade site investigation clearly states that it was undertaken to determine ground conditions to enable foundation and hard standing design to be carried out. It was not produced to deal with any other issues, such as the short time stability of third party land during the construction process.

06 Item 2.3 of the Technotrade Report warns of the possibility of landslips and rotational slips.

07 Bess Limited commenced work on site at their own risk without so much as making a Building Control application, let alone obtaining approval. The local authority have confirmed to us that had a Building Control application been made to them, they would have required Bess Limited to provide sufficient information "to ensure that a satisfactory technical solution is achieved and implemented for all land stability issues on the site and adjoining land arising as a consequence of the proposed development".

08 Bess Limited carried out and provided us with a copy of a condition survey on the retaining wall prior to their commencement on site, clearly demonstrating their concern over its stability and the potential for problems in this area ..."

27. At that stage Mr Nash's fire was directed to the contractors Bess Limited. When they became insolvent he belatedly looked to Technotrade as potential Defendants.
28. Nevertheless, it was not until 23 February 2003 that Larkstore took the assignment from Starglade and notice of it was given to Technotrade.
29. Mr Pelling submits that it was never in the contemplation of Starglade and Larkstore that the benefit of the Technotrade report and Starglade's rights in relation to it should be assigned to Larkstore. I reject that submission because Mr Nash's evidence is confirmed by the fact that Larkstore from the outset did use the report on a number of occasions to fulfil planning consent conditions.
30. I believe Mr Nash when he says that the report was an incident of the vital planning consent being sold with the land and that a formal assignment was intended but overlooked. Considered alone Starglade's insistence upon sharing any monies recovered is consistent with the view that the assignment transaction was remote from and not incidental to the property interest acquired by Larkstore. Larkstore's willingness to pay and development relying upon the report is an affirmation of the strong and legitimate commercial interest that Larkstore had at the time of the assignment.
31. In Trendtex Trading Corporation and Another v Credit Suisse [1982] AC p.679 the plaintiff Trendtex contracted to sell 240,000 tonnes of cement to an English company for shipment to Nigeria. The purchase price and demurrage were to be paid by a letter of credit issued by CBN a Nigerian bank which failed to honour the letter of credit. Trendtex claimed damages in England, failing at first instance and succeeding in the Court of Appeal. CBN were given leave to appeal to the House of Lords. Credit Suisse was a substantial creditor of Trendtex and Trendtex could not have undertaken its contractual duties without the financial help of Credit Suisse who had guaranteed the legal costs and fees incurred by Trendtex's English solicitors in the action against CBN. Following agreements by which Trendtex purported to assign its cause of action against CBN by way of security, an agreement between Trendtex and Credit Suisse was signed reciting that an offer had been received from a third party to buy Trendtex's right of action against CBN for US $800,000 and provided that Trendtex released to Credit Suisse all its residual rights against CBN who arranged for the other Trendtex creditors to be satisfied and gave power of attorney to a representative of Credit Suisse to enable the actions to be settled.
32. The action was assigned to a third party for US $1,100,000. The action was settled by a payment by CBN of US $8,000,000.
33. Trendtex commenced an action claiming, inter alia, that the assignment was void as being of a bare cause of action savouring of maintenance and champerty. All parties were Swiss and the relevant agreements had an exclusive Swiss jurisdiction clause. At first instance a stay was granted on this basis and that judgment was restored in the House of Lords where at page 703 Lord Roskill said:

"I cannot agree with the Learned Master of the Rolls…when he said in the instant case that 'merely saying that you cannot assign a bare right to litigate is gone'. I venture to think that that still remains a fundamental principle of our law. But it is today true to say that in English law an assignee who can show that he has a genuine commercial interest in the enforcement of the claim of another and to that extent takes an assignment of that claim to himself is entitled to enforce that assignment unless by the terms of that assignment he falls foul of our law of champerty, which, as has often been said, is a branch of our law of maintenance. For my part I can see no reason in English law why Credit Suisse should not have taken an assignment to themselves of Trendtex's claim against CBN for the purpose of recouping themselves for their own substantial losses arising out of CBN's repudiation of the letter of credit upon which Credit Suisse were relying to refinance their financing of the purchases by Trendtex of this cement from their German suppliers".

34. The assignments in Dawson, Linden Gardens provide further examples of assignments made on the basis of a genuine commercial interest (see below).
35. In my judgment, given the circumstances of this case, I hold that Larkstore have a genuine commercial interest in the enforcement of any claim against Technotrade Limited arising out of the breach of the contract of retainer and the recovery of at least an agreed portion of the damages and that the assignment is valid.
36. Mr Pelling on behalf of Technotrade submits that the contractual and tortious claims based on the assignment are misconceived and it has long been the law that an assignee cannot recover more than could the assignor had there been no assignment.
37. Starglade made a transfer to Larkstore at full value and the landslip did not occur until several years later. Starglade has not suffered any loss or damage as a consequence of the report or the landslip. Further, it is not liable to Larkstore under the sale agreement to indemnify them against any loss. In fact they are the potential beneficiaries under the agreement of 23 February 2003.
38. Mr Pelling relies on a statement of principle in Chitty on Contract 29^th edition volume 1 at paragraph 19 – 073:

"Assignee cannot recover more than assignor

A further aspect of the idea that an assignee takes an assignment "subject to equities" is the principle that an assignee cannot recover more from the debtor than the assignor could have done had there been no assignment. For example, in Dawson v Great Northern & City Railway Company the assignment of a statutory claim for compensation for damage to land did not entitle the assignee to recover extra loss suffered by reason of a trade carried on by him, but not the assignor that the assignor would not have suffered."

39. Dawson v Great Northern & City Railway Company [1905] 1 KB at page 260 CA concerned property owned by Blake subject to a lease in favour of the Plaintiff. Blake entered into an agreement with the Defendant whereby the Defendant was permitted to maintain and use a tunnel under the land. Thereafter, Blake conveyed the freehold to the Plaintiff and assigned to the Plaintiff all rights derived by him from the agreement with the Defendant, including a right to claim statutory compensation for injury to the land by the Defendant. The land, on which the Plaintiff operated trading premises, suffered damage as a result of the activities of the Defendant and the Plaintiff sought statutory compensation not as occupier but as Blake's assignee. The Plaintiff sought to recover as part of her claim damage to trade stock. The Court of Appeal held that this claim failed because the Plaintiff as assignee was not entitled to recover any greater amount of compensation than the assignor Blake could have recovered and he could not recover under the compensation agreement for damage to trade stock.
40. The application of the principle in practice is by no means straightforward, as the editors of Chitty recognised in the following passage at 19 - 074.

"The application of this principle has given rise to particular difficulty in relation to building contracts or tort claims for damage to buildings. Say for example a building is sold at full value along with an assignment to the purchaser of claims in contract or tort in relation to the building. The building turns out to need repairs as a result of the breach of the builders contract with the assignor (whether that breach is prior, or subsequent, to the sale to the assignee) or of a tort (damaging the building prior to the sale). The assignee pays for the repairs. It might be argued that the assignor in that situation suffered no loss so that, applying the governing principle the assignee cannot recover more than the assignor, the assignee has no substantial claim. If correct … "the claimed damages would disappear… into some legal black hole, so the wrongdoer escaped scot free". Acceptance of the argument would also nullify the purpose of the governing principle which is to avoid prejudice to the debtor and not allow the debtor to escape liability".

41. Mr Pelling placed reliance upon a passage in GUS Property Management [1982] SLT (HL) at 583 a case in delict. That passage was in the speech of Lord Keith where he concluded at page 537/8:

"… The basic question at issue is whether in this action the Pursuers are really seeking to pursue against the Defendants a claim or claims which the [assignor] itself could have pursued at the date of the [assignment] … the only relevant loss which by virtue of the [assignment] the Pursuers could claim title to recover its loss suffered by the [assignor] for which the [assignor] could at the date of the [assignment] have sought reparation."

42. That case concerned a property damaged as a result of construction work carried out on an adjoining site owned by the Defendant. After the damage was sustained but before any repairs had been carried out, the property was transferred to the Claimant and the transferor assigned all claims that it would have been entitled to bring to the Claimant. As part of the claim, the Claimant claimed the costs to certain rectification works that it (not the transferor) carried out. It was contended by the Defendant that this claim was unsustainable.
43. It was held that the cost of the rectification works carried out by the Claimant was in fact recoverable and consideration was given to the assessment of damages at page 538 column 1:

"Where a specific property has been damaged by delict, it is a general rule that the owner of the property does not, by parting with it to another, lose his title and interest to pursue a claim for damages against the wrongdoer: Gordon v Davidson¸ per Lord Justice Clerk-Inglis at page 769. Where the property is disposed of in an arms length transaction for the price which it is fairly worth in its damaged condition the difference between that price and the price which it would have fetched in an undamaged condition is likely to be the best measure of the loss and damage suffered. But it may happen that the owner of the property disposes of it otherwise than by such a transaction. He may, for example, alienate it gratuitously …

It is absurd to suggest in such circumstances the claim to damages would disappear, as the Lord Ordinary put it, into some legal black hole, so that the wrongdoer escaped scot free. There would be no agreed market prices available to form an element in the computation of the loss, and so some other means of measuring it would have to be applied, such as an estimate of the depreciation in value or of the cost of repair. In the present case I am of the opinion that the price for which, in pursuance of group policy Rest convey the damage building to the pursuers is completely irrelevant for the purpose of measuring the loss suffered by Rest through the Defendant's negligence … the figure of the price was fixed in an internal group transaction for accounting purposes only".

44. At page 539 Lord Keith went on to observe that the expenditures by GUS on repairs to the building may have evidential value in arriving at an estimate of the loss suffered by Rest which the pursuers, assignees of the claim, were seeking to recover.
45. Mr Thomas QC contends that Technotrade's "no loss" argument also failed in Linden Gardens Trust Limited v Lenesta Sludge Disposals Limited 57 BLR at page 57 in the Court of Appeal where Staughton LJ said:

"That brings me to the last point to be considered in connection with the assignment of choses in action. Where the assignment is of a cause of action for damages, the assignee must of course have a sufficient proprietary right, or a genuine commercial interest, if the assignment is not to be invalid. It is no longer in issue in these appeals that the assignees have such a right in each case; we heard no argument to the contrary from the contractors. But it is said in such a case the assignee can recover no more damages than the assignor could have recovered. That proposition seems to me to be well founded, it stems from the principle already discussed that the debtor is not to be put in any worse position by reason of the assignment. And it is established by Dawson v Great Northern and City Railway Company … see also GUS Property Management Limited … cited later in this judgment. But in a case such as the present, one must elucidate the proposition slightly: the assignee can recover no more damages than the assignor could have recovered if there had been no assignment, and if the building had not been transferred to the assignee (emphasis provided)".

46. On appeal to the House of Lords 1 AC 85 as to the effects of the prohibition against assignment provisions in JCT contracts, in the speech of Lord Browne- Wilkinson reference was made to the above passage:

"What is the measure of damages recoverable by the assignee? In view of my decision on the earlier issues, this does not arise for determination. I mention it only to explain that the Court of Appeal considered that the assignee was entitled to recover what the assignor could have recovered had there been no assignment. On that basis Staughton LJ (who held that the assignees in both actions could sue) had to consider what the assignors could have recovered".

47. Mr Pelling observes that there are no express words of approval. However, the passage of Lord Browne-Wilkinson in my judgment expresses no qualification or demurrer and in my judgment the passage in the Court of Appeal judgment accurately and authoritively states the law and is implicitly confirmed as the proper approach to damages.
48. In the associated case St Martin's Corporation Limited and Another v Sir Robert McAlpine and Sons Limited (heard with Linden Gardens) the Plaintiff Corporation purported to assign rights of action under a construction contract with the Defendant to a group company Investment to whom it transferred the building at full value. The breach giving rise to the cause of action occurred whilst the right of action was that of Corporation and before the building had been transferred. The cost of putting right the defects in the building causing substantial loss occurred after transfer to Investment and was paid for by Investment. It was by reason of the invalid assignment that the cause of action remained with Corporation who suffered no loss whilst a substantial loss was suffered by Investment. Had the assignment been a valid assignment there is no doubt that Investment would have been able to recover as damages the substantial cost of repairing the building after the transfer from the ownership of Corporation. At page 114 Lord Brown Wilkinson said:

"In my judgment the present case falls within the rationale of the exception to the general rule that a plaintiff can only recover damages for his own loss. The contract was for a large development of property which, to the knowledge of both Corporation and McAlpine was going to be occupied, and possibly purchased, by third parties and not by the Corporation itself. Therefore it could be foreseen that damage caused by a breach would cause loss to a later owner and not merely to the original contracting party, Corporation. As in contracts to the carriage of goods by land, there would be no automatic vesting in the occupier or owners of the property for the time being who sustained the loss, of any right of suit against McAlpine. On the contrary McAlpine has specifically contracted that the rights of action under the building contract could not without McAlpine's consent be transferred to third parties who became owners or occupiers and might suffer loss. In such a case it seems to me proper, as in the case of the carriage of goods by land, to treat the parties as having entered into the contract on the footing the Corporation would be entitled to enforce contractual rights for the benefit of those who suffered from defective performance but who, under the terms of the contract, could not acquire any right to hold McAlpine liable for breach. It is truly a case in which the rule provides "a remedy where no other would be available to a person sustaining loss which under a rational legal system ought to be compensated by the person who caused it …" If the ultimate purchaser is given a direct cause of action against the contractor (as is the current signee or endorsee under a bill of lading) the case falls outside the rational of the rule. The original building owner will not be entitled to recover damages for loss suffered by others who can themselves sue for loss. I would therefore hold that the Corporation is entitled to substantial damages for any breach by McAlpine of the Building Contract (emphasis added)."

49. Thus by another route Investment was put into the same position had the assignment been valid.
50. This case, as Mr Thomas rightly concedes does not fall within the exceptions to the general rule referred to by Lord Brown Wilkinson because the assignment effectively gives Larkstore a right to pursue a direct cause of action against Technotrade.
51. In my judgment, Larkstore under the assignment acquired Starglade's right to sue Technotrade in contract, the cause of action having accrued at the time of the alleged breach of the contract of retainer. The measure of damages would not be nominal. The actual cost of repair and stabilisation of the site by Larkstore would be evidentially relevant to what would be recoverable, as would be the cost of reasonable repair to the neighbouring properties. Since the damage to the site occurred after the transfer, and damage is an essential ingredient in tort it follows in my judgment that under the assignment there was no cause of action in tort capable of being assigned by Starglade.

WAS THERE A DUTY OF CARE OWED BY TECHNOTRADE TO LARKSTORE?

52. Larkstore pleads that Technotrade owed a duty of care to Larkstore to carry out its obligations to protect Larkstore from economic loss and/or so as to:

"… to protect Larkstore from damage or the threat of damage to people or property other than that which comprised the works and in particular to take into account the risk of instability of the land and any neighbouring land and buildings".

53. Mr Thomas submits that Larkstore's case principally concerns physical damage the neighbour's property upslope of the Larkstore development site and that the damages claimed are all in respect of that physical damage and loss consequential upon it including the cost of restoration and preventing further damage to the neighbouring site. The giant share of the damage is the cost of stabilising Larkstore's site by overcoming the effects of slippage.
54. It is necessary to properly characterise the true nature of the damage to the neighbouring properties upslope and to the development site.
55. The claims of the neighbours have not been settled. They amount to approximately £88,000.
56. The costs of remedial work on site were in excess of £800,000.
57. The neighbours' claims were essentially for physical interference to their land caused by the removal of lateral support by Larkstore's contractor Bess. The damage caused was physical damage. The loss of support was caused by the removal of soil and material by Bess who may have relied upon the expert opinion of Technotrade that the part of the site then being worked upon was safe and the retaining wall for the neighbour's land was stable when in fact the factor of safety in relation to the land was close to unity.
58. The remedial works on site were principally undertaken to enable Larkstore's development to take place. The costs of the stabilisation works substantially added to the cost of development and reduced the expected margin of profit. Such loss was clearly economic loss. Any costs albeit on the development site solely referable to the replacement of support to the neighbour's upslope property would be consequential upon remedying the physical damage caused to the neighbouring property. It is necessary to consider whether Technotrade owed a duty of care to Larkstore and the owners of the neighbouring properties.

THE POSITION IN RELATION TO LARKSTORE

59. The defective professional advice could only have been discovered by a further site investigation. The loss and damage claimed is economic loss alleged to have been caused by the negligent provision of professional services. To establish liability, Larkstore as a third party recipient of that advice must demonstrate that Technotrade either knew or ought to have known at the time the advice was provided that the information or advice would be supplied by Starglade to Larkstore as a specified third party recipient or to an ascertainable class of which Larkstore was a member and that that advice would be and was acted upon by that third party without any further enquiry.
60. Larkstore's case on economic loss is based upon Hedley Byrne principles.
61. The convenient and authoritive statement to the relevant principles is contained in Caparo Industries v Dickman [1990] 2 AC page 605.
62. Lord Bridge at page 620H to 621G having reviewed the previous case law including Hedley Byrne and Smith v Bush said:

"The salient feature of all these cases is that the Defendant giving the advice or information was fully aware of the transaction which the Plaintiff had in contemplation, knew that the advice or the information would be communicated to him directly or indirectly and knew that it was very likely that the Plaintiff would rely on that advice in deciding whether to engage in the transaction in contemplation. In these circumstances, the Defendant could clearly be expected … specifically to anticipate that the Plaintiff would rely on the advice or information given by the Defendant for the very purpose for which he did in the event rely on it. So also the Plaintiff … would in that situation reasonably suppose that he was entitled to rely on the advice or information communicated to him for the very purpose for which he required it".

63. As Lord Oliver put it in his speech at page 633 A-B:

"A defective bottle of ginger beer may injure a single consumer but the damage stops there. A single statement may be repeated endlessly with or without the permission of its author and may be relied upon in a different way by many different people. Thus the postulative of a simple duty to avoid any harm that is, with hindsight, reasonably capable of being foreseen becomes untenable without the imposition of some intelligible limits to keep the law of negligence within bounds of common sense and practicality. Those limits have been found by the requirement of … a requirement of proximity between the Plaintiff and Defendant and by the imposition of a requirement that the attachment of liability …. be just and reasonable".

64. At page 638 paragraphs C-E Lord Oliver summarised the effect of Hedley Byrne as being:

"… that the necessary relationship between the … giver of advice ("the advisor") and the recipient who acts in reliance upon it ("the advisee") may typically be held to exist where (i) the advice is required for a purpose, whether particularly specified or generally described, which is made known, either actually or inferentially to the advisor at the time that the advice is given; (2) the advisor knows, either actually or inferentially that his advice will be communicated to the advisee, either specifically or as a member of an ascertainable class, in order that it should be used by the advisee for that purpose; (iii) it is known either actually or inferentially that the advice so communicated is likely to be acted upon by the advisee for that purpose without independent enquiry and (iv) it is so acted upon by the advisee to his detriment".

65. Larkstore submits that the size or class of persons who foreseeably have relied on the report would include any other property developers to whom Starglade sold the site with the benefit of full planning permission. However the letter of instruction to Technotrade states that:

"Whilst the client was originally hoping to sell the site, he has now decided to build and wishes to commence work as soon as practically possible".

66. Mr Thomas also submits that since there was no prohibition on assignment within the Technotrade report and that the original plan albeit abandoned was to sell the site nonetheless it was reasonably foreseeable that Starglade would dispose of the site to others who would conduct operations on the site in reliance upon the report and without further reference to Technotrade. Mr Thomas contends that actual or constructive knowledge of Larkstore by Technotrade is not necessary it suffices that Larkstore was within the class of people who foreseeably might rely on the report, namely other property developers. He points to the requirement of condition 10 of the planning consent and contends that Technotrade's knowledge of the requirement was sufficient to establish a necessary degree of proximity.
67. Lord Griffith's words in Smith v Bush [1990] 1 AC page 831 H of L at page 865H are particularly appropriate in this case in setting the limits determining the issue of proximity:

"I would certainly wish to stress that in cases where advice has not been given for the specific purpose of the recipient acting upon it it should only be in cases where the advisor knows there is a high degree of probability that some other identifiable person will act upon the advice that the duty of care should be imposed. It would impose an intolerable burden upon those who give advice in a professional context if they are to owe a duty not only to those to whom they gave the advice but to any other person who might choose to act upon it."

68. Technotrade was expressly informed that there was to be no other developer let alone a class of developers.
69. An inference of proximity to a class of developers is not warranted or fair.
70. Furthermore Larkstore were not made known to Technotrade until some years later. The planning permission for which Technotrade was originally used was superseded by later planning permission. The development was carried out in two phases and part of the site was sold off to another builder. I accept for the purposes of these issues that the use of the site in extent and degree was broadly similar to that included in the original planning permission. The later use of the site by others however illustrates the dangers of enlarging the scope of the persons to whom a duty is owed outside those immediately connected to the actual transaction in hand. This is not a case where it would be appropriate to incrementally increase the scope of the duty, as for example was done in Punjab National Bank v de Boinville [1992] 1 Lloyds Rep page 7 Court of Appeal where at page 36 Staughton LJ said:

"In those circumstances it seems to me a justifiable increment to hold that an insurance broker owes a duty of care to the specific person who he knows is to become an assignee of the policy, at all events if (as in this case) that person actively participates in giving instructions for the insurance to the broker's knowledge."

71. In this case the transaction was between Starglade and Technotrade. In relation to the original planning consent it may be said that the planning authority were immediately connected with it and had an interest and placed reliance upon the report but only for the purposes of the planning permission.
72. It could not have been in the reasonable contemplation of Technotrade that their report would be recycled in succeeding years to satisfy further planning permission conditions by a developer who they had no knowledge of and who proceeded without any further investigation.
73. In my judgment no relevant duty of care arises.

THE CLAIM FOR CONTRIBUTION

74. In addition to the claim for damages for economic loss by Larkstore against Technotrade there is a claim for an indemnity for contribution in respect of claims made by the adjoining land owners which is particularised in paragraph 54 of the Particulars of Claim.
75. The claim by the Offer-Hoars against Larkstore is characterised as in nuisance and negligence and in breach of the duty of care laid down in Leakey v National Trust [1980] QB 485. The Henderson and Guy claim similarly alleged nuisance and negligence.
76. Technotrade contends that Larkstore owe no duty of care to the Claimants and said that there is only a claim in nuisance for actual damage to houses and land caused by the withdrawal of support, and since Larkstore owed no duty of care to the Claimants so too those engaged by Larkstore to execute the works, and a fortiori that is so in relation to Technotrade who were not even engaged by Larkstore.
77. Mr Pelling submits that in English law, in relation to rights of support for adjoining land there are potentially two rights which the owner of a dominant tenement has as against the owner of the servient tenement. Firstly a natural right to support the dominant land from the servient land and secondly, subject to relevant conditions being satisfied, an easement of support in relation to buildings erected on the dominant land.
78. He contends that if a dominant land owner has the benefit of either of these rights then any duty of care owed by the owner of the servient tenement is negatived. The imposition of a duty of care he contends arises only in relation to cases where either no easement is owed or engaged, or the right of support is not engaged.
79. In Dalton v Angus [1881] 6 App cases 740, at p.791 Lord Selborne, Lord Chancellor, said:

"In the natural state of land one part of it receives support from another upper from lower straighter and soil from adjacent soil. The support is natural and is necessary as long as the status quo of the land is maintained … On division status quo support passes with the property in the land not as an easement held by a distinct title but as an incident to the land itself."

80. Lord Blackburn in his speech at page 805 said:

"It is, I think, conclusively settled by the decision in this House in Backhouse v Bonomi (1) that the owner of land has a right to support from the adjoining soil; not a right to have the adjoining soil remain in its natural state (which right, if it existed, would be infringed as soon as an excavation was made in it); but a right to have the benefit of support, which is infringed as soon as, and not until damage is sustained in consequence of the withdrawal of that support."

81. Mr Pelling relies upon Midland Bank Plc v Bardgrove Property Services Ltd [1990] 24 Con LJ page 98 as a case where no duty of care was held to be owed by a servient land owner to a dominant land owner where the relevant rights of the parties could be resolved by reference to a claim of nuisance for violation of a natural right of support of land. His Honour Judge Thane Forbes QC (as he then was) considered the position of a dominant land owner, where the lawful activity by way of excavation on the servient land gave rise to the real risk of the removal of support in a time span of 10 to 15 years. In order to eliminate the risk of loss of support causing future physical damage the dominant land owner drove sheet piling into his land restoring it to its former state. The cost of these prudent measures was properly considered economic loss in the absence of physical damage consequent upon the removal of support. Thus no action lay against the servient land owner, his contractor or professional advisers. In the Court of Appeal at 60 BLR page 1 the court considered whether an actionable interference with the right of support enjoyed by the Plaintiff was disclosed against the developer and contractor and concluded that there being no actual physical damage the tort of interference with the neighbour's right to subjacent and lateral support the Plaintiff's action failed. Clearly had there been physical damage the claim would have succeeded against the developer and the contractor. The finding of His Honour Judge Forbes that the developer contractor and professionals owed no duty of care as to how the land was worked because the activity on the servient land was lawful was not the subject of appeal.
82. Midland Bank v Bargrove clearly differs from the instant case because in this case there was physical damage and in relation to the developer Larkstore and the contractor Bess Limited an actionable interference with the Claimant's right of support is disclosed. The case is no support for the proposition that the existence of one form of action precludes reliance upon another concurrent action. The wording of the Civil Liability (Contribution) Act of 1978 underlines that there may be "liability in respect of the same damage (whether jointly with him or otherwise)".
83. If Technotrade owe a duty of care to the Claimants, Larkstore are entitled to succeed in their claim for a contribution because the physical damage caused to the Claimant's land is essentially the same damage as that for which Larkstore and Bess may be liable.
84. Larkstore's liability to the Claimants is a consequence of their ownership of the development site and the "bad bargain" that they have concluded with Starglade. Mr Pelling submits on behalf of Technotrade that this amounts to economic loss.
85. Mr Thomas characterises it as a consequence of the physical damage to the Claimant's houses and lands being property other than that comprising the site and the development benefits of the transaction between Starglade and Larkstore.
86. He submits that the reasoning in Nitrogin Eireann Teoranta v Inco Alloys Ltd [1992] 1 WLR at 498 and Bellefield Computer Services Ltd v Eaton & Sons Ltd [2000] BLR at page 97 CA applies in relation to this case. In Nitrogin May J found that no cause of action had arisen against a specialist pipe maker who installed piping in a building which cracked and was repaired, for the cost of the repair since it amounted to irrecoverable economic loss. However the makers were found liable for losses caused by the subsequent explosion when the pipe cracked a year later causing damage to the surrounding but separate plant and property on the basis that the damage amounted to damage to other property and was thus recoverable.
87. In Bellefield the duty of care was held not to exist in relation to the subsequent purchaser of a dairy plant against a builder who built an inadequate fire wall in a storage area for fire damage caused to property outside that area. The Court of Appeal held that the other parts of the building affected by the fire did not constitute "other property" the whole structure being a single building. However equipment comprising machinery, plant and laboratory equipment, office equipment and stock did constitute "other property". Schiemann LJ at page 103 analysing Murphy v Brentwood District Council [1991] AC 398 distinguished between the "very chattel or building which was negligently manufactured and constructed" and "other property". At page 103 he said:

"It is however an undoubted fact that the speeches contain passages which indicate the law imposes no liability in circumstances where the damage for which compensation is claimed is damage to the very chattel or building which was negligently manufactured or constructed. I refer to the following passages:

The question is whether the appellant counsel owed the respondent a duty to take reasonable care to safeguard him against the particular kind of damage which he in fact suffered, which was not injury to person or health or damage to anything other than the defective house itself … per Lord Keith at page 464.

We realise that the damage may be qualitative occurring through gradual deterioration or internal breakage. Or it may be calamitous … But either way, since by definition no person or other property is damaged, the resulting loss is purely economic. Even when the harm to the product itself occurs through an abrupt, accident like event, the resulting loss due to repair costs, decreased value and lost profits is essentially the failure of the purchasers to receive the benefit of its bargain – traditionally the core concern of contract law – per Lord Bridge at 476F quoting with apparent approval the unanimous opinion of the United States Supreme Court in East River Steamship Corporation v Trans America Delaval … I consider that the Judge was right not to depart from the guidance given in Murphy and the cases cited in it to the effect that where the damage is to the very building itself there should be no liability."

88. In my judgment Mr Thomas is right, a duty of care lies in respect of the physical damage suffered by the owners of the neighbouring upslope property and such loss would be recoverable from Technotrade. To that extent therefore the damage is the same damage as that for which Larkstore is liable albeit recoverable through separate and different causes of action.

CONCLUSION

89. Preliminary Issue 1 – whether Larkstore is able to recover the, or any part of the loss allegedly suffered by it, by operation of the assignment. Yes – that arising from breach of contract only.
90. Preliminary Issue 2 – whether Technotrade owed a duty of care to the Claimants as alleged. Yes.
91. Preliminary Issue 3 – whether Technotrade owed Larkstore a duty of care as alleged. Yes, in relation to ensuring that the development of the site would not cause physical damage to the adjoining property owners. No, as to economic loss.