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England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> BDW Trading Ltd v Integral Geotechnique (Wales) Ltd [2018] EWHC 1915 (TCC) (25 July 2018)
URL: http://www.bailii.org/ew/cases/EWHC/TCC/2018/1915.html
Cite as: 179 Con LR 112, [2019] TCLR 1, [2018] PNLR 34, [2018] EWHC 1915 (TCC)
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHONOLOGY AND CONSTRUCTION COURT (QBD)
Fetter Lane, London EC4A 1NL Date handed down (at Manchester Civil Justice Centre): |
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B e f o r e :
SITTING AS A JUDGE OF THE HIGH COURT
____________________
| BDW TRADING LIMITED |
Claimant |
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- and - |
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INTEGRAL GEOTECHNIQUE (WALES) LIMITED |
Defendant |
____________________
Sean Brannigan QC and Jessica Stephens (instructed by Weightmans, London) for the Defendant
Hearing dates: 17, 21, 22, 23, 24 May, 8 June 2018
Draft judgment circulated: 6 July 2018
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Crown Copyright ©
- This is a professional negligence claim brought by the claimant national housebuilder, which is part of the Barratt Group and which carries on business under the trade names Barratt Homes and David Wilson Homes ("BDW"), against the defendant firm of consulting engineers ("IGL"). The essential complaint is that IGL failed to give proper advice to BDW of the risk that materials containing asbestos (known as "ACMs") might be present within part of a site in Ogmore by Sea near Bridgend in South Wales which it was interested in acquiring for housing development ("the site"). Since there was no contract between BDW and IGL, who was instructed to produce its site investigation report by the vendor of the site, Bridgend County Borough Council ("Bridgend"), it is necessary for BDW to establish that IGL owed it a duty of care in tort. I must resolve that issue and, if I find in BDW's favour, decide whether or not IGL was in breach of that duty and, if so, determine what recoverable loss BDW has suffered as a result and, finally, determine an issue of contributory negligence.
- The evidence was heard over 5 days with written closing submissions followed by a further day fixed for oral closing submissions after which I reserved judgment.
- I will begin by referring briefly to the witnesses, including making certain observations as to an issue which arose as to the respective roles of expert and legal adviser in relation to the preparation of the joint statements of the experts, continue by addressing the relevant facts and then address each of the four issues of duty, breach, loss and contributory negligence in turn.
- All of the witnesses of fact were plainly honest and largely reliable, subject to the usual difficulties facing most witnesses in recollecting the detail of events some years past and to the usual temptation for some to seek to argue the case both in witness statements and under cross-examination. This is not a case which turns to any significant degree on my assessment of the credibility of the competing witnesses of fact.
- Mr Peter Ballantyne. Mr Ballantyne is a senior land manager employed by BDW. He was BDW's main witness, having identified and progressed the project for the acquisition and development of the site up to completion of the purchase in his capacity as a land manager in its South Wales division. He produced a principal witness statement referring in detail to the chronology together with a supplemental witness statement responding to evidence adduced by IGL in relation to other projects.
- Mr Stevon Watkins. Mr Watkins is the senior estimator for BDW South Wales division, with long experience in that role.
- Mr David Kelland. Mr Kelland is the commercial director for the South Wales division.
- Mr Rhodri Williams. Mr Williams was at the relevant time a technical manager with BDW South Wales division, working within the technical department. He has since transferred to another company. He gave evidence as to his involvement with the commissioning and analysis of the IGL report and the subsequent discovery of ACMs and the remediation of the site.
- Mr Martin Lewis. Mr Lewis is the land director for the South Wales division.
- Ms Hayley Shivers. Ms Shivers is a senior quantity surveyor with BDW's South Wales division. She was responsible for procurement of the works on the site from June 2014, when she joined BDW. She gave evidence as to the consequences of the discovery of asbestos outside of the area of the buildings, in particular as to the remedial costs incurred. It became apparent that although she had done her best she was in certain difficulties in giving precise evidence due to the lack of contemporaneous records available to her.
- BDW also adduced a witness statement from Mr Nicholas Parsons-Young of West Environmental Services and formerly of City Environmental Services. IGL decided shortly before trial that it did not wish to cross examine Mr Parsons-Young. Although that does not mean that IGL agreed his evidence it does mean that I must approach his evidence on the basis that IGL elected not to test it in cross-examination.
- Mr Huw Pritchard. Mr Pritchard is a civil engineer and a director of IGL who was called as its only substantive witness. He had reviewed the draft report produced by Mr Shawley (see below), having considered the source documents and formed his own views as to the matters covered in the report before reading the content of the draft report and approving it. He was cross-examined over a full day.
- IGL did not call Mr Gary Shawley, who had been responsible for undertaking the desk study, the site investigation including the trial pitting and the production of the first draft of the report. He is still employed by IGL and could have been called to give evidence. It is, therefore, somewhat surprising that he was not called to give evidence. Mr Pritchard said that the decision not to call him was taken on legal advice but also on the basis that he, Mr Pritchard, took full responsibility for the report which he reviewed and endorsed and for the defence of the case. Mr Mort submitted that I should conclude that the decision not to call Mr Shawley was tactical and because IGL and its legal advisers feared that his evidence would prove unhelpful to IGL's case. I do not accede to this submission. If BDW believed that Mr Shawley's evidence would positively support its case it could of course have served a witness summary (if necessary with permission once it knew that IGL was not calling him) and served him with a subpoena to attend. If Mr Mort was deprived of the opportunity to seek to investigate any inconsistencies there might have been between Mr Pritchard's evidence and Mr Shawley's evidence that is speculation and not a legitimate matter for complaint in the absence of some evidential foundation such as an inconsistency between what they said in contemporaneous documents. If BDW was able to identify a specific pleaded issue or issues which IGL and its advisers must have known would turn on the factual evidence of Mr Shawley as to what he did or did not observe on the site inspection or from the trial pits or as to the credibility of his explanation for the contents of the report or otherwise then he would of course be entitled to invite me to draw an adverse inference against IGL in relation to that issue: Wisniewski v Central Manchester Health Authority [1998] PIQR 324. However that is not the case here.
- All four of the expert witnesses were in my judgment knowledgeable in their expert area, properly independent and sincere in their opinions both as expressed in their reports and in their oral evidence.
- Mr Nick Waite. Mr Waite is a chartered geologist with a special expertise in engineering and environmental geology undertaking technical assessments of potential development sites including those involving contaminated land. He was cross-examined on the basis that both he and his firm had regularly undertaken site investigation work for BDW and that he ought to have declared this in his report since it raised a potential conflict of interest. I agree that it would have been better if he had done so, however I accept that in fact there is no actual or potential conflict of evidence and that he has been properly independent in his approach. I considered that there was more force in the criticism made by Mr Brannigan that: (a) his approach was to decide what he would have done in the same situation, rather than considering what a competent engineer might reasonably have decided to do; (b) he had failed to put out of his mind hindsight as to what had been revealed when the site came to be cleared when considering whether what IGL had done fell below the standard properly to be expected from a competent geotechnical and geo-environmental engineer.
- Dr David Tonks. Dr Tonks is a consulting engineer with a specialism in geotechnical engineering and with considerable experience in acting as an expert witness. An issue arose in his evidence when he was asked about the preparation of the joint statement of the experts. He accepted that he had sent the first draft of the joint statement to IGL's solicitors for their comments and, having received feedback, made some changes to that draft as a result.
- Mr Mort rightly complained that it was quite inappropriate for independent experts to seek input from their client's solicitors into the substantive content of their joint statement or, for that matter, for the solicitors either to ask an expert to do so or to provide input if asked, save in the limited circumstances referred to in paragraph 13.6.3 of the TCC Guide, which states that:
- What happened here was, I agree, a serious transgression and it is important that all experts and all legal advisers should understand what is and what is not permissible as regards the preparation of joint statements. To be clear, it appears to me that the TCC Guide envisages that an expert may if necessary provide a copy of the draft joint statement to the solicitors, otherwise it would not be possible for them to intervene in the exceptional circumstances identified. However, the expert should not ask the solicitors for their general comments or suggestions on the content of the draft joint statement and the solicitors should not make any comments or suggestions save to both experts in the very limited circumstances identified in the TCC Guide. That is consistent with the fact that any agreement between experts does not bind the parties unless they expressly agree to be so bound (see Part 35.12(5)). There may be cases, which should be exceptional, where a party or its legal representatives are concerned, having seen the statement, that the experts' views as stated in the joint statement may have been infected by some material misunderstanding of law or fact. If so, then there is no reason in my view why that should not be drawn to the attention of the experts so that they may have the opportunity to consider the point before trial. That however will be done in the open so that everyone, including the trial judge if the case proceeds to trial, can see what has happened and, if appropriate, firmly discourage any attempt by a party dissatisfied with the content of the joint statement to seek to re-open the discussion by this means.
- However, it was plain to me having heard him give evidence that Dr Tonks was genuinely unaware that his conduct in this respect was inappropriate. Furthermore, I am quite satisfied that there is no basis for considering that he had modified in any significant way the substance of his opinion as discussed with Mr Waite as a result of his contact with and feedback from IGL's solicitors. My only qualification to that is that I am satisfied that he added to his opinion in section 14 of the joint statement, in relation to the specific issue as to whether or not the investigation undertaken by IGL was a "main investigation" as defined by the relevant Code of Practice (as to which see below), as a result of feedback from IGL's solicitors.
- Nonetheless overall Dr Tonks' evidence seemed to me in the main to be balanced and realistic and I tend to accept his views. In closing submissions Mr Mort contended that Dr Tonks came across as a "hired gun", prepared to argue the case and to change his opinion based on what Mr Pritchard said or based on input from IGL's solicitors. He disclaimed however any suggestion that Dr Tonks was not an independent expert witness.
- I accept the criticism, referred to above, that Dr Tonks appeared to change his view as to whether or not IGL's investigation was a "main investigation". However that point did seem to me to be quite a difficult point of construction of an opaque document and, as it transpires, I agree with the interpretation he gave in evidence. Otherwise I do not accept the criticisms made, whilst accepting that Dr Tonks did come across as an experienced and persuasive expert and reminding myself that a judge must be astute to consider the substance of the evidence rather than the manner of its presentation. Having heard his evidence and having re-read the transcript of his evidence I am quite satisfied that he did not cross the line into inappropriate advocacy or partisan evidence.
- Mr Mort also submitted that since Dr Tonks had no experience in undertaking site investigations or preparing site investigation reports his expert opinion as to their content was less weighty than Mr Waite who did undertake such work. However what Dr Tonks said was that as a consulting geotechnical engineer with wide experience in advising in relation to contaminated land he regularly instructed site investigations and reports and reviewed them in order to give advice to his clients. In the circumstances it seems to me that his opinion on the matters in issue in this case carries as much weight as Mr Waite, since this is not a case which turns on a dispute between the experts as to precisely how a site investigation should be conducted.
- Mr Nicholas Soady and Mr Bill Swan. The quantity surveyors had reached a substantial measure of agreement on the key issues. Much of the cross-examination of Mr Soady was directed to identifying the issues which his report had not addressed. In my view there is no criticism to be made of Mr Soady in these respects; he plainly did what was asked of him and did so in a sensible and careful manner. Mr Swan had addressed some of these issues and much of his evidence was to the effect that he had insufficient information to offer any clear opinion on those issues. His evidence appeared to me to be rather more in the nature of argument on certain issues than did that of Mr Soady. On the issues where there was disagreement between the experts on quantity surveying issues directly within their expertise I tended to prefer Mr Soady's view.
- I have already said that BDW is a national housebuilding company. This case is concerned with its South Wales division, which forms part of its South West region. It has a number of different departments, including the land department, the commercial department and the technical department. Its business model involves the identification and acquisition of suitable sites for residential development and then the construction and sale of housing. It is obviously important that it understands the ground conditions in any sites which it is interested in acquiring. This normally involves procuring a geotechnical ground investigation and report. Historically the South Wales division has procured such reports from IGL. Whilst it is fair to say that BDW does not have the same detailed knowledge of ground conditions as would a construction company which undertakes more sophisticated projects requiring greater civil engineering activity it is nonetheless relatively knowledgeable, particularly given the expertise within its technical department.
- IGL is a firm of consulting geotechnical and geo-environmental engineers based in Caerphilly, South Wales.
- Bridgend was the owner of the site in question, which had been used as a residential education centre, known as the Ogmore Residential Centre, from around 1935 until 2006. It comprised an area of approximately 8.23 acres. The easterly section of the site contained a number of existing buildings and associated hardstanding areas which had formed part of the residential centre ("the built-up area") whereas the westerly section was grassed over and included what had formerly been a dry ski slope ("the grassed-over area"). It is important to emphasise that the distinction is relative rather than absolute; not all of the built-up area was covered with buildings or hardstanding and there was no clear or straight dividing line between the two areas.
- By 2010 Bridgend's intention was to obtain planning permission for residential development and then to sell the site for housing development. Since Ogmore by Sea is a seaside village just within the Vale of Glamorgan and since the opportunities for housing development in such an area are and were at the time extremely limited such an opportunity was of particular interest to BDW as a residential housebuilder as well as to its competitors. It was made even more interesting because: (a) a local property development company known as Wygfach Property Company ("Wygfach") owned an adjoining site used as a caravan park ("the adjacent caravan park site") for which planning permission for housing development had already been obtained; (b) Wygfach was open to offers to sell that site to the highest bidder. It is clear from the evidence that Wygfach, as a shrewd local developer, would have known that acquiring both the site and the adjacent caravan park site at the same time would be of particular interest to any potential purchaser since that would: (a) convert the potential of development from around 80 new-build houses (the number for which permission was eventually granted was 83) to around 170 (the total number as built by BDW); (b) give the developer the comfort of knowing that it would not be marketing houses on the site in competition to houses built by a rival on the adjacent caravan park site.
- Thus in 2010 Mr Carter began the process of putting the site out to tender. As part of the process of assembling a tender package Mr Carter invited IGL to provide a site geotechnical report. His letter of 5 November 2010 included the following:
- It is clear, and Mr Pritchard accepted, that whilst IGL was being invited to enter into a contractual relationship with Bridgend the report was intended to be used for marketing the site to residential developers who, therefore, would be provided with the report. He also accepted that it was intended that developers would rely on it in the sense that they would use it. However, it is also clear that it was envisaged that the mechanism for giving the successful purchaser and, indeed, any further purchaser comfort that it could place legal reliance upon the report was through the mechanism of an "assignment with warranties". Mr Pritchard's evidence, which I accept, is that he expected that IGL would in due course be approached by the successful purchaser with a view to IGL providing suitable legal documentation to achieve that objective and that in principle IGL would have had no objection to so doing.
- IGL through Mr Pritchard responded by letter of 14 November 2010 suggesting that "the required site investigation is best undertaken in two phases" and providing its proposals and costs "for carrying out a Phase 1 site investigation".
- It described Phase 1 as beginning with a geotechnical desk study, including an examination of available historical maps, followed by a trial pitting investigation, with representative samples being taken for laboratory soil and/or chemical testing. The schedule of work and estimated costs, amounting to £2,555, provided further details of the proposed work, stating that: (a) the trial pits should be logged by a qualified geotechnical engineer; (b) the laboratory testing should comprise physical testing, sulphates and Atterbergs; (c) the final stage should comprise an assessment of the findings and preparation of a site investigation report with findings and recommendations.
- Under the heading Phase 2 it said that: "depending upon the outcome of the desk study and the trial pitting investigations further exploratory works in the form of boreholes, gas monitoring and/or laboratory testing may become necessary". It said that: "the scope of any Phase 2 works, together with associated costs, could be best determined following the completion of the recommended Phase 1 investigations. If any of the items in a Phase 2 investigation become required, we would advise you after the completion of the trial pitting".
- It follows that what was anticipated was that after the Phase 1 investigations had been undertaken but before production of its report IGL would consider and advise as to any necessary further investigatory works and their costs which could then be undertaken, if sanctioned by the client, and the findings incorporated into the final report.
- Mr Waite suggested that there was a mismatch between what Mr Carter had asked for and what IGL had quoted for in relation to contamination. I disagree. Mr Carter asked IGL to provide "a remedial strategy if contaminated material is found". IGL was clearly going to look for contaminated material both in Phase 1 and, if appropriate, in Phase 2. It is true that IGL did not specifically refer in its proposals to providing a remediation strategy if contamination was found but that would have been premature unless and until contamination was found. Even if there was a mismatch the fact is that IGL's quotation was accepted without qualification and there is no pleaded case to the effect that IGL was somehow negligent in proposing an inadequate investigatory exercise.
- There was some debate between the experts and at trial about how this proposal sat with BS 10175:2011, the Code of Practice for the Investigation of potentially contaminated sites ("the Investigation Code"). This is relevant because the report stated that the site investigation had been designed in accordance with the Investigation Code. The relevant edition was published in March 2011. It is a lengthy and detailed document, running to some 140 pages. Its purpose is to give recommendations for and guidance on the investigation of potentially contaminated land.
- It identifies the typical phases of an investigation and their typical objectives. The first phase is the preliminary investigation (desk study and site reconnaissance). The second optional phase is the exploratory investigation. The third phase is the main investigation. The fourth phase is any supplementary investigation if required. The first task is to develop an investigation strategy. It is clear from the section which describes this process that there is no "one size fits all" approach and that the objective of the exercise overall is to obtain sufficient relevant data to "characterise potential source-pathway-receptor scenarios". What this means, as will be familiar to those dealing with contaminated land, is to focus on identifying: (a) source areas of potential contamination; (b) pathways through which any contamination could migrate from the source outwards; (c) receptor areas of any contamination migrating outwards from the source through such pathways.
- The debate was as to whether IGL's proposal envisaged that the site investigation phase was an "exploratory investigation" or a "main investigation". The only practical relevance of the distinction is that section 7.7.2.3.3 of the Investigation Code, addressing the spacing between sampling locations for non-targeted sampling (which would include the trial pitting proposed by IGL), advises that: "typical densities of sampling grids can vary from 25m to 50m centres for exploratory investigations and 10m to 25m centres for main investigations". In my view the debate is a red herring and of no relevance for the following reasons: (a) as I have said, the Investigation Code does not purport to be prescriptive and it is clear from section 5.2.7.2 that an exploratory investigation may vary quite considerably in its scope; (b) for all practical purposes it would not matter whether IGL's proposal is analysed as a proposal for an exploratory investigation followed by a main investigation if considered necessary or a main investigation followed by a supplementary investigation if considered necessary; (c) section 7.7.2.3 begins by stating that "non-targeted sampling should usually be carried out using a regular pattern of sample locations" – that is not mandatory and here, as will be seen, was not possible due to the existing ground conditions where the east side was still built-up; (d) section 7.7.2.3.3 is no more than general guidance; (e) in this case, as will be seen, the report specifically recommended that further sampling should be carried out anyway. IGL was under no contractual obligation to undertake a site investigation in accordance with the Investigation Code, let alone to sample at no less than 25m centres in Phase 1. I did not understand Mr Waite to say that in his view no competent geotechnical engineer could have decided to design its site investigation in the way which IGL did and, insofar as he did, I prefer Dr Tonks' view that the approach adopted was perfectly sensible and pragmatic in the circumstances.
- IGL also attached its standard conditions of engagement and contract dated March 2010. Mr Pritchard said that he believed that these were sent out by IGL with all of their proposals. They included, as relevant, the following specific clauses:
- As relevant, the Association of Consulting Engineers Conditions of Engagement 2009 edition ("the ACE Conditions") provided by clause E8.1 that "neither party may assign or transfer any benefit or obligation under this agreement without the prior written consent of the other party".
- IGL did not specifically address DTZ's requirement that the report should state that it was capable of assignment however as I have said Mr Pritchard had no objection to doing so and, as will be seen, that is in fact what was done. There might be room for argument as to whether IGL, by putting forward its proposal referring to the ACE Conditions but without expressly rejecting DTZ's requirement as to assignment, was rejecting that requirement or was agreeing, in derogation of clause E8.1, to give its consent to assigning the benefit of the agreement to an eventual purchaser however, in the light of what the letter attaching the report said (as to which see paragraph 43 below) there is no need to decide that question.
- DTZ accepted IGL's offer on behalf of Bridgend by letter dated 22 December 2010, in which Mr Carter also said that an asbestos survey was being obtained.
- However there was then a significant delay during which nothing happened to progress the report as a result of Bridgend's application for planning permission being refused and Bridgend appealing that refusal. It was not until March 2012 that Bridgend obtained outline planning permission on appeal and was in a position to proceed. Immediately it did so, instructing Mr Carter – who by this stage had transferred to Savills - and on 15 March 2012 Mr Carter emailed IGL instructing it to proceed in accordance with the terms of its quotation of 14 November 2010.
- IGL produced its report on 18 May 2012, addressing it to Bridgend. The desk top study and site investigation was undertaken by IGL's engineer Mr Shawley who then produced the report in draft. The draft was then reviewed and some amendments made to it by Mr Pritchard (which cannot be discerned because the original draft was not stored and Mr Pritchard cannot recall) and finally authorised by Mr Bateman, also of IGL. IGL sent the report to Savills under cover of a letter of 18 May 2012 which stated: "We confirm that the attached may be assigned to the site purchaser and onto two further parties".
- The report extended over 29 pages together with five appendices and two plans. It has been subject to close scrutiny at trial. As relevant to this case, the following sections are material.
- Section 1.1 – General. In this section IGL confirmed its understanding that Bridgend was proposing to market to the site for residential development, that it had been appointed as geotechnical engineers to "undertake a site investigation to enable a geotechnical and geo-environmental appraisal of the site and provide a basis for design" and that the report "presents the findings of the site investigation and gives recommendations for the design of foundations, floor slabs and other geotechnical and geo-environmental aspects of the project". In section 1.2 IGL confirmed its understanding that the site "will be marketed with residential planning permission".
- It is important to note that this report had not been commissioned nor was it provided on the basis that IGL had been asked to or was giving advice as to: (a) the suitability of the site for acquisition by a residential developer; (b) its value as a site to a residential developer; (c) the further steps which a residential developer proposing to acquire the site for residential development should take before committing itself unconditionally to the purchase of the site. As would be expected from a report prepared by a geotechnical engineering consultancy, the report was considering matters from a geotechnical engineering, as opposed to a valuation or a legal, perspective. Although the report made some reference to allowing a contingency or making an allowance for certain works which might become necessary (see section 9.2) this was in my view clearly in the context of the allowance or contingency which anyone undertaking residential development on the site would need to provide for, as opposed to purporting to advise a prospective purchaser as to what financial allowance or contingency should be made in the purchase price to allow for a particular risk. Whilst I acknowledge that in cross-examination Mr Pritchard agreed not only that a developer would need to allow a financial contingency but also that this was advice to a purchaser about a financial allowance that should be included in their valuation of a site, he also said that it was advice to the vendor as well as to the purchaser. Whilst I accept that a reasonable engineer in IGL's position may well have foreseen that a prospective purchaser might use the report in this way, that was not the purpose of the report.
- Section 1.3 - Scope of works. IGL stated that it had undertaken a desk study of available information, site reconnaissance and intrusive investigation, followed by laboratory testing and geotechnical and geo-environmental reporting. It stated that the site investigation had been "designed in accordance with" BS 5930:1999, the Code of Practice for Site Investigations, BS 10175:2011, the Code of Practice for Investigation of Potentially Contaminated Sites and a further document produced for use in Wales known as "Land Contamination: a Guide for Developers". It explained that the soils had been "sampled for concrete classification testing". This was a reference back to the proposal, which included for sulphates and Atterbergs testing and which, as would have been known to any residential developer and was known to BDW on reading the report – see section 6.3 below - did not include testing for contamination with ACMs.
- Section 1.4 – Limitations. IGL stated that the document was intended to be a "working document for further development in discussion with all concerned". This in my view reflects the fact that it was recommending, as will be seen, further investigations and was not intended, therefore, to be necessarily the last word on the issues addressed in the report.
- IGL also stated that it was important to recognise that because contamination may be localised there may be areas of contamination that had not been found or areas of contamination at concentrations higher than found since "no investigation, however comprehensive, is capable of finding such occurrences other than by chance". As was accepted by Dr Tonks this is a fairly standard form of wording which is not specific to the particular circumstances of this site investigation. Nonetheless it is a statement which accurately reflects the position and, as BDW accepts, no investigation can be guaranteed to identify localised contamination "hotspots".
- IGL also stated that intrusive site investigations were predominantly confined to the western area of the site due to the difficulties with access arising from the buildings and underground services on the eastern half of the site. It stated that further investigation of these buildings and beneath building floor slabs was outside the scope of work of the report but was planned for in "subsequent post demolition supplemental investigation works".
- This section concluded, in a passage upon which IGL places particular reliance, by saying that: "This report has been prepared for the use of Bridgend and should not be passed to others without the express consent of IGL".
- Mr Pritchard agreed that he knew full well that the report had been prepared for use by Bridgend to make it available through Savills to prospective purchasers. He also accepted that these would likely be residential developers, including BDW as a residential developer which was well known to IGL given its previous relationship (see below). He also accepted that IGL had no objection to this being done. I shall consider the legal implications, if any, of this evidence later in this judgment.
- I should however also observe that there was no reference, whether in this section of the report or elsewhere, either to the proposals as to the scope of the report as submitted to and agreed by Mr Carter on behalf of Bridgend or to the contractual terms and limitations stipulated for by IGL and accepted by Mr Carter.
- Section 2.0 – the Site. IGL reported that the eastern half of the site was occupied by a series of buildings apparently constructed in the 1960s together with associated hard standings and grassed areas, whereas the western half of the site was laid to grass and included an overgrown artificial ski slope in the south-western corner.
- Section 3.0 – Site history. In this section IGL set out its analysis of the history of the site by reference to the maps obtained dating from 1878 and its physical inspection. It recorded that by 1947 the vast majority of the northern half of the site had been built upon, with further buildings being constructed within the south of the site by 1970 and with further development through the 1970s, whereas by 1984 the layout of the site conformed to the present day position.
- There is no explicit statement in this section of the report that it followed from comparing the historical maps with the present day position that a number of buildings which had previously been erected on the north-western part of the site must have been demolished some time before 1984. Nonetheless it is plain to me that a careful informed reader would pick up that there had been a pattern of development including at least some demolition. Indeed, a simple comparison of the maps attached to the report would have put the matter beyond doubt. Equally, however, I am prepared to accept that a busy person reading the report as part of a full day's work, especially one who was not professionally qualified in geotechnical engineering or otherwise engaged in the technical side of land development, would not necessarily have picked this up.
- Section 4.5 - Potential contamination. In this section IGL began by considering the previous uses of the site which "may have resulted in ground or water resource contamination". In Table 4 IGL recorded against the residential education centre as a land use and a material or process the following: "No potential contamination across the vast majority of the site. Asbestos within building structures". The evidence for this was stated to be the historical maps and site walkover.
- An issue arose as to what this section was intended to signify. Mr Waite read it as a statement that asbestos was only to be expected within the building structures themselves and, on that footing, was critical of the failure to record the risk of ACMs in the ground arising from demolition of the buildings formerly on the site. Mr Pritchard's position was that on a proper reading of the section, and particularly by reference to the opening words of the section, this statement did no more than identify asbestos within the building structures forming part of the residential education centre, whether in its current or previous state, as a potential contaminant which might have resulted in ground or water contamination. It was not purporting to express any view, whether provisional or otherwise, as to the risk of contamination from asbestos from the building structures being present in and contaminating the ground (or the water).
- In my view on a careful reading of this section Mr Pritchard is right. It is simply stating that from a reading of the maps and from a site walkover (i.e. from the initial stage in the process and before the trial pitting was conducted) the only potential source of contamination from the residential centre was asbestos within the building structures. It was not purporting to express an opinion that this activity had not resulted in a risk of ACMs in the ground from any demolished structures. In my view it cannot be criticised on that basis.
- Again I am prepared to accept that this conclusion, reached after a careful reading with the benefit of knowledge as to how land contamination issues are investigated in accordance with the source-pathway-receptor model, might not have been the one which would immediately have suggested itself to the non-technically minded busy reader not well versed in the practice of undertaking site investigations and producing reports in relation to potentially contaminated land. Indeed it appears that both Mr Waite and, at least initially, Dr Tonks did not fully understand this point until Mr Pritchard explained it. However once it is understood that this section is not intended to do anything more than record the initial assessment at this early stage of the site investigation process then the meaning does seem to me at least to be clear.
- Section 5.0 – Preliminary conceptual site model. In this section IGL explained the risk assessment process it had undertaken by reference to the source-pathway-receptor model, the purpose of which was to establish any potential contaminant sources. It was made clear that this was only the preliminary stage of the risk assessment, again based only on the desk study and site walkover. No mention was made of asbestos as being a potential contaminant of concern; the only such contaminant being referred to being petroleum hydrocarbons in the above ground fuel storage tanks which had also been mentioned in the previous section.
- Mr Waite was critical of the failure to identify ACMs as a potential contaminant whether in the existing structures or in the made ground as regards any demolition materials. I agree with this criticism. Since ACMs within the building structures were identified as a potential contaminant source in section 4.5 and since it was known that former building structures had been demolished, and since there was a risk that the products of demolition remained in made ground, then the risk of ACMs being present within made ground should also have been identified as a potential contaminant source. Indeed Mr Pritchard said as much under cross-examination in relation to section 4.5. The receptor would have been human health and the pathway would have been dermal contact, ingestion or inhalation, all as identified in table 6 in section 5.8. However it is important in my view not to cherry-pick and read sections of the report in isolation. This section was never intended to be read as the last word on the subject, as opposed to recording one of the steps along the way to the eventual conclusion. As the report states at section 5.8 "the preliminary conceptual exposure model will be reviewed and refined following the completion of the site works and laboratory testing".
- Section 6.0 and Section 7.0 – Site investigation and Ground conditions. In section 6 IGL recorded that the trial pitting exercise it had undertaken involving nine machine excavated trial pits located across the site, with representative soil samples being taken for laboratory physical testing. IGL recorded that the fieldworks were supervised by a qualified geotechnical engineer who also logged the trial pits; it is known that this was Mr Shawley. The approximate location of the trial pits was shown in Figure 2 attached to the report and the logs were attached in Appendix C. Apart from his criticism of the number of trial pits by reference to the Investigation Code which I have addressed above and his criticism of the failure to trial pit in the ski slope mound which I address below I did not understand Mr Waite to criticise the number and location of the trial pits as negligently inadequate or misplaced. Insofar as he did I prefer Dr Tonks' view that they were perfectly adequate for this stage of the investigation and, in that respect, note that in cross-examination Mr Williams, who said that he had wide experience of site investigations and reports, agreed that he had no criticism of the number and location of the trial pitting.
- It was recorded in section 6.2 that "no visual or olfactory evidence of any contamination was observed during the excavation of the trial pits". It was also recorded in section 6.3 that the laboratory chemical testing was only for pH and soluble sulphates to aid in the classification of concrete required for the development.
- In section 7 IGL reported on the ground conditions found. This included the discovery of isolated sections of made ground down to 0.7m maximum in three trial pit locations which generally comprised reworked natural deposits with "varying quantities of anthropogenic materials including brick, ash, clinker and concrete". It stated that the made ground was identified "in close proximity to the former dry ski slope, within areas of hardstanding and in close proximity to buildings".
- Trial pit 7 ("TP7") was one of the three trial pits and was located in the area of the former ski slope. There was an issue at trial about whether or not it was located within the ski slope itself or outside the ski slope. Insofar as it was not located within the ski slope there was some criticism about whether or not it should have been.
- It became clear to me during the course of the evidence that this was more of a dispute about terminology than precise location. The former dry ski slope was a relatively modest feature intended for use by children visiting the centre rather than for commercial use. The evidence is that it was highest at its eastern section, where it formed a mound from the top of which skiers would have ski-ed down the slope to the west. That comprised a steep slope dropping around 3m, which was then followed by a shallower slope, also dropping around 3m, and finally a further steep slope dropping around 2m. It appears from Figure 2 when read with the topographic survey that TP7 was located to the south west of the main mound, at the southern end of the intermediate gentler slope. Since there is no precise differentiation between the intermediate gentler slope and the land to the south it is not possible to say for certain whether TPY was located in the one or the other. What can however be said is that if it was not actually within the former it was on any view very close to it.
- It is difficult to be certain from the topographic survey whether this gently sloping ground was simply the pre-existing natural slope of the land or whether it had been artificially altered during the course of construction of the ski slope so as to ensure that skiers were slowed down when coming off the steep ski slope down the mound. However given that TP7 encountered made ground it appears to me to be more likely that it was, at least to some extent, an artificially altered feature. Indeed this also indicates to me on the balance of probabilities that TP7 was located in that artificially altered feature. Moreover I am satisfied that the intention of digging a trial pit in this location was to identify the ground in or at the very least in close proximity to the former ski slope.
- The question why the trial pitting was not conducted in the mound itself was ventilated at trial. In cross-examination Mr Pritchard suggested that since IGL's subsequent October 2014 report stated that access to the ski slope was limited as it was overgrown the reason for not trial pitting on the mound itself would have been due to the presence of nesting birds on the mound. Whilst this evidence emerged only in cross-examination and is speculation on Mr Pritchard's part based either only on the subsequent report or, possibly, on unattributed hearsay from Mr Shawley, nonetheless it seems credible to me and on balance I accept it. I am of course alert to the fact that there is no direct evidence on the point from Mr Shawley as the conductor of the original investigation and author both of the original and subsequent reports, whether within those reports or in a witness statement. However it is also right to record that this criticism of the precise location of TP7 was not a pleaded allegation so that in my view IGL cannot be criticised in my view for failing to call Mr Shawley specifically to deal with this point.
- Another point canvassed in evidence was whether Mr Shawley actually checked for ACMs in TP7 and if so whether ACMs may have been present but were simply missed by him. The difficulty for BDW is that the report contained a clear statement that there was no visual or olfactory evidence of any contamination. It would defy belief that any competent geotechnical engineer, knowing of the presence of asbestos in the building structures, would not have looked for evidence of ACMs in the trial pits, especially when encountering made ground. Indeed under cross-examination Mr Waite very properly did not suggest that he had any basis for contending either that Mr Shawley was not looking for ACMs or that TP7 did in fact contain ACMs which he failed to note or to report. Since this was not a pleaded allegation, nor indeed one which Mr Waiter had asserted in his report, I do not consider that I can or should draw an adverse inference from the failure to call Mr Shawley. In cross-examination Mr Williams ventured for the first time his belief that ACMs must have been present in the trial pits but missed during visual inspection because of the widespread quantity of asbestos cement particle board which was found later across the grassed-over area but I am satisfied that this is simply surmise and reconstruction by Mr Williams.
- The other two trial pits which encountered made ground were both located between the easterly and the westerly parts of the site, one in the middle area and the other to the south. They were therefore – as the report states – either within an area of hardstanding or close to an existing building or both. All of the other 6 trial pits were located in the westerly part of the site, in grassed areas. None encountered any made ground.
- Mr Waite was clearly of the view that contamination testing for ACMs should have been recommended and undertaken at the very least in relation to the trial pits which encountered made ground. This is an issue which I will address in the section of this judgment dealing with the allegations of negligence.
- Section 8.0 – Contamination. In this section IGL stated that "no obvious contaminated practices have been undertaken on site … other than the use of oil fired heating" and that "therefore, it is considered that there is very little risk of any sources of contamination being located on site". Referring back to section 5, it stated that "the preliminary conceptual model failed to highlight any contamination issues other than possible fuel spillage. IGL stated that the conclusions in the preliminary conceptual model were reinforced by the fieldworks having revealed only limited and localised made ground. No express reference was made to ACMs within made ground as a possible risk.
- Again I agree with Mr Waite that this section of the report ought to have referred to ACMs from the historic building structures within the made ground as a potential source of contamination, albeit that IGL would have been justified in adding that, the fieldworks having revealed no evidence of such contamination within the limited and localised made ground encountered, it was no more than a risk.
- Furthermore, the section continued as follows:
- Section 9.0 – Engineering considerations and recommendations. This is a lengthy and important section extending over eight pages.
- In section 9.2, headed "Site Preparation", IGL recommended that: (a) the existing topsoil and made ground should be stripped and existing topsoil subject to chemical analysis to confirm its suitability for use in garden and landscaped areas; (b) all existing buildings, foundations, slabs … and all other buried structures should be demolished [and] all building structures should be subject to a Part III asbestos survey and asbestos soft strip prior to demolition". This is a reference to a Type 3 asbestos survey which is a comprehensive assessment through a detailed survey of building structures intended to be refurbished or demolished.
- Importantly the final section, section 9.8 headed "Recommended Further Works", stated as follows:
- During the course of the trial there was a vigorous debate both in cross-examination and in submissions as to what was meant by "the exposed formations". BDW's case was that this was a recommendation which referred only to the easterly parts of the site where the existing building structures still stood, which was how it was understood by its personnel involved in the site acquisition at the time. IGL's case was that it referred to everything which was encountered below ground level as a result of site clearance and, thus, extended to the grassed-over area, which was Mr Pritchard's evidence.
- In my judgment a reasonably careful reading of the report overall would have shown that the recommendation was intended to extend to the whole of the site. As Mr Brannigan demonstrated, there were a number of other references to "site clearance" and "exposed formations", particularly in section 9, from which it was clear that this was not intended, nor could it reasonably be understood, as referring only to the clearance of the existing buildings or the exposure of building structures under the existing buildings as a result of such clearance. It is plain, not least, from the reference in section 9.2 to the need for stripping of the existing topsoil and made ground and chemical analysis of the existing topsoil, that it extended beyond the existing building structures. Although Mr Mort suggested that section 9.2 should be understood as referring only to the built-up land because of the qualification in paragraph 1.4 I do not agree that paragraph 1.4 makes it clear that all further works recommended in section 9.2 should be read as being limited to that area.
- In his report Mr Waite had suggested that what was intended under section 9.2 in this respect was unclear. Under cross-examination he accepted that the best interpretation of it was that it applied to the whole site. I accept that BDW assumed that this referred back to the Part III asbestos survey and asbestos soft strip referred to in section 9.2 above. However, in my view that was an incorrect assumption. It appears from Mr Watkins' evidence in cross-examination that the reason for this may have been because it was BDW's practice to instruct a demolition contractor to undertake what he referred to as site clearance, namely removing existing structures and foundations and hardstanding and the like, including any asbestos removal, whereas BDW's own groundworkers would separately undertake what he referred to as topsoil strip, namely stripping the existing topsoil and storing it in spoil heaps ready for re-use or removal dependent on its quality and, thus, their perception of site clearance was that it was limited to what they outsourced to a demolition contractor. However, to state the obvious, the meaning cannot be controlled by BDW's subjective understanding.
- This conclusion is extremely important in my view. Whilst I accept that the failure to refer in sections 5 and 8 of the report to a potential contamination risk from the possibility that there might be ACMs in made ground may well have led BDW into a false sense of security as to the risk of encountering ACMs in the grassed-over area, nonetheless on a proper reading of the report BDW ought to have appreciated that this could only be taken as a provisional conclusion and one which could not be relied upon as definitive pending the further investigations, both in terms of the 25m grid testing and chemical analysis, across the whole site once the site clearance operation was underway.
- In March 2012 Mr Carter gave BDW advance notification that the site was going to come on the market. Mr Carter and Mr Ballantyne had dealt with each other previously and Mr Carter knew that BDW would be interested in the site, as indeed it was. It is clear that Bridgend and Mr Carter as its retained agent were both fully aware that the site was an attractive one. Its marketing strategy was: (a) to produce a tender package which included the reports, already commissioned by Bridgend, which it knew that potential purchasers would want to see to understand the development potential of the site; (b) to require tenders to be made on an unconditional basis. Bridgend did not want to be faced with offers which were heavily caveated with conditions which the preferred purchaser would then deploy to seek to reduce the price downwards once it had obtained its own reports.
- BDW was extremely interested in acquiring the site for development. It was interested in the site as a standalone site but it was even more interested in acquiring the site in conjunction with the adjacent caravan park site. Indeed BDW had already opened discussions with Wygfach with a view to acquiring the adjacent caravan park site once it knew that the site was on the market.
- Mr Ballantyne accepted that Bridgend, well advised by Mr Carter as a savvy local agent, knew that as vendor it had a strong hand due to the desirable location of the site and the absence of other development opportunities in the area. He also accepted that Mr Carter would have known that housebuilders such as BDW would have been particularly interested in the site given the opportunity to combine it with the adjacent caravan park site. He accepted that Bridgend felt able to ask for unconditional offers for the site because it knew it was in a strong commercial position.
- On 1 June 2012 BDW received the tender package from Savills. As envisaged, the tender package included the technical information pack which included IGL's site investigation report as well as IGL's covering letter to Savills confirming the position as regards assignment. It also included an asbestos survey and some budget demolition quotes, both of which were said to be for information only. The former comprised a large number of Type 2 asbestos surveys of specific buildings dating from 2008 and before, from which it was apparent that ACMs were present in some of the existing building structures. The latter comprised a number of quotations from demolition contractors, which included an allowance for removing the asbestos identified in the surveys but not for removing asbestos discovered during demolition outside of those specifically identified areas.
- Section 1 of the technical information pack stated as follows:
- In accordance with its internal procedures, BDW began the process of gathering information from each of the relevant departments which would be used for a decision to be made whether to make an offer to acquire the site. The internal processes operated by BDW at the time required a report to be produced by the relevant employees within the relevant departments in the South Wales Division, which would then be signed off by the relevant heads of department and submitted to the South West Region board for approval. The departments included the commercial department, where Mr Ballantyne was responsible for the relevant input, the estimating department, where Mr Watkins was responsible and the technical department, where Mr Williams was responsible. The role of the technical department was to assess the risks and potential engineering constraints associated with development of the site. Mr Williams, who read the report at the time, said that he had read "dozens and dozens" of such reports previously.
- Mr Williams accepted that BDW was aware from the information which it received that there might be asbestos found within the ground under the existing building structures following demolition. As he said, until the buildings were demolished and the foundations and ground investigated that could not be known. He also accepted that BDW was aware that there might be localised contamination hotspots which the site investigation had not picked up, in circumstances where he considered the number of trial pits excavated by IGL in this case perfectly adequate. Whilst he initially also accepted that the report flagged up that there had previously been buildings on the site which were no longer present, when he was taken to the report he said that he had not known that. He was then cross-examined further and accepted that "it was absolutely plain to any reader of this report that there had been buildings on this site that were no longer visible on the site" and that he knew that at the time when he read the report.
- In closing submissions Mr Mort invited me to conclude that he did not know and that he was confused by the questions. I do not consider that I can or should draw that conclusion. He was cross-examined clearly and repeatedly and he gave clear answers. On any basis what he clearly knew was that 3 of the trial pits had encountered made ground containing bricks and the like but, in the absence of any reference to ACMs or other contaminants being encountered in the made ground or across the site where investigated, he was not troubled by that.
- In August 2012 Mr Watkins completed an internal viability appraisal. This included an allowance of £1.38M for abnormal costs. Within this was an allowance of £6,750 for the intrusive asbestos survey recommended by IGL to be undertaken to the existing structures and £30,000 for removing asbestos within the existing structures Thus these allowances related solely to the risk of asbestos within the existing buildings. This is consistent with Mr Ballantyne's evidence in his witness statement that he knew there was asbestos in the buildings for which provision would need to be and was made in the costings, but that his reading of the report was that the grassed-over area was free of contamination so that no allowance was made for asbestos removal in respect of that area.
- Mr Ballantyne was aware that there was a risk of contamination beneath the buildings during demolition. His evidence was that BDW always intended to obtain to obtain an intrusive asbestos survey in relation to the built-up areas and then, depending on what was revealed by such survey, to take a view as to how to proceed and on what basis. He said that no such condition was applied so far as the grassed-over area was concerned, due to his belief that there was no need to carry out further investigations for ACMs in that area. Mr Williams' evidence was to the same effect. Whether or not that belief was justified by the report is of course a matter which I shall have to consider later.
- The first direct contact between BDW and IGL in relation to this site occurred on 11 September 2012 when, out of the blue, BDW's technical department emailed IGL on 11 September 2012 with a number of enquiries about a number of different sites, including an enquiry in relation to this site about whether soakaways would work given the hardness of the rock. Mr Pritchard of IGL responded by email within 24 hours. This enquiry had nothing to do with asbestos and related to a question, addressed in the report, as to whether or not the underlying strata would permit rainwater to be discharged through soakaways.
- The circumstances of this informal approach are explained by the pre-existing nature of the relationship between BDW and IGL, who had worked closely together on a number of projects over a number of years by this time. According to Mr Ballantyne, IGL was BDW's "go to" geotechnical engineers for the South Wales area. According to Mr Pritchard BDW was IGL's fourth largest client by amount invoiced. They had entered into a term agreement in April 2010 which regulated the relationship between them in circumstances where IGL performed work when directly instructed by BDW to do so. It is common ground that under this agreement ("the Term Agreement") IGL agreed to and did maintain professional indemnity insurance of £5M. There was no limitation of liability within the Term Agreement such as the £300,000 included in IGL's standard terms as sent to Savills.
- Separately IGL pleaded that it was common practice, either where BDW wished to rely on reports produced by IGL for third parties or where BDW wished to allow third parties to rely on reports produced by IGL for it, for a written agreement expressly agreeing such reliance. Eight examples were given in the Amended Defence, although a number of those post-dated this case. In his witness statement Mr Pritchard referred to three examples pre-dating this case and five post-dating it.
- Some time was spent at trial considering the circumstances of these other dealings. In my view the evidence adduced falls very short from establishing any clear common practice as at the date of this case. In general terms it appears to have been IGL's preference to use a bespoke form of reliance agreement under which, in return for a nominal consideration, IGL acknowledged that the third party was entitled to place legal reliance on the report. However that clearly did not happen in every case. For example in the second of the cases pre-dating the present case (Glyn Dwr Avenue) there appeared to have been a different approach adopted as between two housing associations. Furthermore it is difficult to see how there could have been a custom pre-dating the present case in circumstances where the first dated from 2005, the second from 2009 and the third from April 2013 and thus after the date of production of the instant report. In relation to other dealings post-dating the present case again there was no universal practice. In at least one case (Jubilee Park plot H5) IGL was willing to enter into a letter of reliance on a form proffered by the developer.
- Returning to September 2012, BDW places reliance upon this exchange as showing that IGL must have known that BDW had received and read the report and that both parties proceeded on the basis that the relationship between the two companies was such that IGL would not insist on formality and would be quite willing to provide advice and assistance on an informal basis. I accept this. Whilst it is true that there was no explicit statement by BDW in the exchange of emails that it had seen and read the report it is inherently unlikely that BDW would have written as it did had it not done so.
- Indeed Mr Pritchard accepted in his evidence that he presumed that this was the case, consistent with his earlier evidence Mr Pritchard that he knewthat Bridgend intended to include the report in a technical pack to be sent to prospective purchasers in order to inform them as to the site.
- On 14 September 2012 BDW made an offer subject to contract to purchase the site for the sum of £4.5 million. The offer was expressed to be unconditional although, as everyone would have known, because it was subject to contract it would not have been legally binding even if accepted.
- In evidence BDW's employees also indicated that it was considered internally to be conditional on an issue as to drainage capacity being resolved with Welsh Water, which was something which was discussed at a tender interview which was held later that month. However it is plain in my judgment that BDW knew full well that any express reference to its offer being conditional would prejudice its prospects of success, which is why this reservation was not expressed. As it transpired the problem with drainage capacity was resolved so that there was no need to seek to make the eventual contract conditional on that basis.
- In October 2012 BDW was notified that Bridgend had approved its offer and was provided with heads of terms.
- In the same month BDW produced a draft land feasibility survey, including reference to known hazards, and referring to the need for a full intrusive asbestos survey to be carried out prior to any works commencing on site. This, as Mr Watkins said in his witness statement, related only to surveying for asbestos within the existing buildings.
- In November 2012 Mr Williams produced a technical feasibility report, which included reference to the cost for demolition and associated asbestos removal but made no provision for any costings as regards asbestos within the grassed-over area. He recorded at [2.41]: "asbestos within buildings. No contamination of soil surrounding the site". In his witness statement he said that the reference to soils surrounding the site was a reference to the grassed-over area rather than the land outside the site itself.
- Accordingly, said Mr Ballantyne in his witness statement, BDW proceeded on the basis that the risk of asbestos contamination within the grassed-over area was not an issue which had to be further addressed by BDW either generally or prior to exchange in relation to the terms of its offer to purchase the site. His evidence was that if they had been aware of that as an issue it would have been decided that no unconditional contract would be entered into until that issue had been properly investigated and resolved. He said in his witness statement that after receiving the technical report and on this basis he produced an internal document known as a Land Acquisition Request which was intended for submission to the Land Development Leaders Group ("LDLG") - which was the main board decision making authority which was tasked with the decision whether or not to proceed to formal acquisition. In the first version dated February 2013 he confirmed his understanding that "apart from a small amount of asbestos, the cost of which has been allowed for, the site has no further remediation works required".
- It was Mr Ballantyne's evidence that at that time BDW worked on the basis that to be feasible a project needed to achieve a specified fixed percentage development profit, which was then 27% trading profit (21.65% after sale and finance costs), so that any offer would only be made at a level which allowed the trading profit percentage to be recovered taking into account all known costs. This was relevant to BDW's case that it would have insisted on any additional remediation costs for ACMs being deducted from its offer and, if Bridgend would not agree, to have walked away. He was cross-examined on the basis that the evidence of BDW's published accounts showed that historically BDW had not achieved this profit level. He accepted this but said that by 2012 BDW's approach was only to bid for sites where it could achieve the specified percentage in order to improve its profit level going forwards.
- However BDW's policies and procedures manual, to which Mr Ballantyne was referred in re-examination, made reference to exceptions to BDW's minimum trading profit requirements being submitted for clearance by an executive member of the LDLG prior to submission to the LDLG. In short, there was – as would be expected – a procedure whereby sites where the required trading profit could not be demonstrated could nonetheless be submitted to the decision-making board for consideration and approval. No evidence has been adduced by BDW as to the approach the decision-making board would have taken had the situation which is now postulated arisen. Nor is there any evidence as to whether or not BDW's competitor would have proceeded on the same strict basis as to minimum profit recovery. As Mr Brannigan observed, BDW may well have been disinclined to refuse to continue negotiations unless Bridgend agreed to its terms in full if the end result would have been to allow one of its competitors to acquire the site and, probably, the adjacent caravan park site as well.
- A separate issue arose in January 2013 when an unconnected party made a claim to ownership of a piece of land which would have blocked development (hence colloquially referred to as a ransom strip). The resolution of this claim caused significant delay. It is not directly material to this case save only in that ultimately Bridgend agreed that it should be resolved by BDW negotiating and making a payment to buy out the claim which was then deducted from the total sale price. This is relied upon by BDW as showing that Bridgend was amenable to agreeing a full deduction from the sale price in the event of difficulties arising with the development of the site.
- In February 2013 BDW instructed a company known as West Environmental ("West") to conduct the recommended Type 3 intrusive asbestos surveys in relation to the existing structures on the site as recommended by IGL in the report. West was BDW's contractor of choice for obtaining reports of this nature, its managing director Mr Parsons-Young being the main point of contact. Mr Parsons-Young was also managing director of City Environmental Services ("City") which was BDW's contractor of choice for asbestos removal works. For West to go onto site obviously required Bridgend's consent, since at this stage BDW was no more than a purchaser subject to contract. Bridgend gave its consent and West went onto site.
- West reported in late February 2013 that it had detected "considerable amounts of positive material in the buildings", producing a number of survey reports in relation to the specific buildings on site. City was asked to provide an indication of costs. On 19 April 2013 City provided a fixed price lump sum quotation of £180,000 to undertake demolition of the existing structures, including the removal of asbestos. In July 2013 City produced its demolition phase plan, safe systems of work and method statement which identified in section 2.2 the extent of the works as being the "demolition of all existing (masonry and concrete framed) structures that exist on site down to the underside of building slabs. All waste arising is to be removed from site with discovered asbestos removed as hazardous waste". I shall return to the issue of precisely what City's (subsequent) quotation included for as regards the removal of any ACMs later.
- The land acquisition request was amended to show that "a fixed price demolition quotation has been secured for the buildings and hard standings, and apart from a small quantity of asbestos the cost of which has been allowed for, the site has no further remediation works required".
- BDW also asked IGL to quote for undertaking additional site investigation work in respect of percolation testing for the soak away drains. This was also something which had been recommended by IGL in the report and had been touched on in the email communications between Mr Watkins and Mr Pritchard in September 2012. In March 2013 IGL produced a quotation which BDW accepted and the work was duly undertaken, IGL producing a report in relation to that particular issue in April 2013. Although my attention was not drawn to this quotation during the course of the trial, I note that the version in the trial bundle contained a copy of IGL's Conditions of Engagement and Contract October 2012 edition which also contained a limitation of liability clause which, in this iteration, was gradated in accordance with the fee level.
- These events are said to be relevant to BDW's case for three reasons. First BDW says that they show that it was still relying on IGL's report in the period from agreement to exchange. Second BDW says that they show that it was proceeding on the basis that since any risk of ACMs under the built-up area was at its risk and had not been reported on by IGL it needed to cover off this risk prior to exchange, whereas it believed in reliance on IGL's report that there was no need to undertake a similar exercise as regards the grassed-over area. Third, Bridgend was prepared to allow BDW to undertake investigations into the site prior to exchange rather than for example, refusing on the basis that BDW had submitted and Bridgend had accepted an unconditional offer and there was nothing more to be said or done as regards the site pending exchange.
- On 5 July 2013 Bridgend and BDW finally exchanged contracts for the sale and purchase of the site for the sum of £4.5M. The contract was unconditional subject only to resolution of the ransom strip issue which was duly resolved as stated above.
- Upon entering into the agreement subject to contract BDW instructed the conveyancing department of its current solicitors. However Mr Ballantyne made clear in his evidence that BDW did not show the technical pack to its solicitors nor did it expect them to investigate or advise in relation to technical issues such as contamination.
- Neither BDW nor its solicitors communicated with IGL in respect of its letter enclosing the report to request IGL's consent to the report being assigned to BDW upon exchange of contracts or, for that matter, requesting that IGL consent to the contract with Bridgend being assigned or novated to BDW or to enter into a collateral warranty. No explanation as to why BDW did not do so was advanced in its pleaded case or in its witness evidence.
- Not surprisingly BDW's witnesses were cross-examined on this point and the position as it emerged was as follows:
- Mr Ballantyne accepted that he knew that IGL would have contracted with Bridgend on commercial terms, which may have included limitations, but did not seek to ascertain what those terms might be. He was referred to an internal BDW form referred to as a "SHE form" which was in the nature of an internal land purchase feasibility checklist which was to be completed, as I understand it, by the technical department which, Mr Ballantyne confirmed, was responsible for dealing with surveys and their assignment where necessary. One section required the person completing the checklist to confirm whether or not a site survey had been undertaken and, if so, whether commissioned by a BDW division and, if not, "ensure site survey novated to division". Although it appeared that this section referred to topographical surveys rather than site investigation surveys, nonetheless it is clear in my judgment that it reflected BDW's general awareness of the need to ensure that where any survey relating to land acquired by it for development was not commissioned by BDW itself steps should be taken to ensure that BDW could effectively rely upon it, whether by novation strictly so called or otherwise.
- Mr Williams had noted on another internal BDW form known as a technical feasibility report under the section "ground investigation", in answer to the question "soil investigation assigned / by whom": "Assigned by Bridgend". This was, of course, clearly incorrect since there had been no such assignment. Mr Williams was asked about this. Although his evidence was confused and confusing, not deliberately so I accept, his understanding and belief at the time, I am satisfied, was that once BDW had acquired the site the benefit of the report would be transferred to it without the need for any specific step to be taken or document to be produced or executed. In fairness to him, he had only joined BDW in 2012 and had no prior legal training nor experience and nor had anyone ever explained to him such relatively esoteric legal concepts as assignment, novation or collateral warranties.
- In the Land Acquisition Request form BDW stated: "A full site investigation is available for the site which will be assigned to BDW South Wales. The report has been prepared by IGL, who are the preferred geotechnical engineer".
- Mr Ballantyne was asked about this and confirmed that all those responsible for this report would have known that IGL had not been instructed to produce the report directly for BDW under the terms of the Term Agreement. He was asked why the assignment had not taken place. He was unable to give a direct answer from his own knowledge. He suggested that it was possible that a decision had been taken by the then South Wales technical director, Mr Llewellyn, that it was unnecessary to do so because BDW had been asked to undertake further work relative to the site in early 2013. The suggestion was that: (a) on other occasions when IGL had produced a report on the instructions of someone other than BDW and subsequently BDW had taken over the project, BDW had asked IGL to do more work and IGL had done so, producing a further report addressed to BDW which incorporated its previous report into that further report; (b) the further report would have been governed by the Term Agreement; and accordingly (c) there was no need for any formal assignment or other legal process in order for BDW to rely on the content of the earlier report, because it was written into the further report. Although that was pure supposition on Mr Ballantyne's part and there is no positive evidence before the court to that effect, it does have a certain ring of truth and explain an omission which otherwise is difficult to understand.
- Insofar as relevant, I am satisfied that the reasons why there was no assignment were that: (a) BDW failed to instruct its solicitors to deal with this matter; (b) Mr Llewellyn assumed it was unnecessary because BDW would be obtaining a formal report from IGL incorporating the previous report; (c) Mr Williams, due to his lack of knowledge and experience and, perhap,s on the basis of what he was told by Mr Llewellyn, completed the technical feasibility report to say that the report had been assigned; (d) everyone else simply assumed that this was correct and did not regard it as their job to query or check.
- There is no evidence as to why BDW has not subsequently taken an assignment from Bridgend of the benefit of the report, to which it would appear to have been entitled. Mr Brannigan speculated that it was because BDW did not want to be bound by the limitation of liability of £300,000. Since the reason why it has not done not so do not seem to me to be relevant to any of the issues I have to decide I do not need to make any positive findings in that respect.
- Following exchange of contracts BDW continued to liaise with City in relation to the proposed demolition works. City produced a revised quotation in the sum of £176,000 on 18 February 2014.
- Completion finally took place on 15 May 2014.
- Following completion BDW instructed City to proceed in accordance with their quotation which it did, beginning work sometime in May. It would appear from Ms Shivers' witness statement that the order was placed by her colleague, Mr Woods. As I have said an issue has arisen as to whether or not, and if so to what extent, the cost of removing any ACMs discovered under the existing structures remained with BDW or was accepted by City under the resultant contract. Mr Ballantyne and the other BDW witnesses who were asked about this said that they believed that it did, however they did not have first hand knowledge. Thus Mr Williams believed that City had not made any claim for the removal of ACMs under the existing building structures but was unable to give or to point to any specific evidence to justify that belief. It is also clear that Ms Shivers had no detailed direct knowledge either, even though she appears to have been involved in discussions with City in relation to costs.
- What the quotation said so far as relevant was as follows:
- In his witness statement, on which he was not cross-examined, Mr Parsons-Young said that:
- In cross-examination Mr Swan suggested that there was an ambiguity between the quotation and what Mr Parsons-Young said. He suggested that City had excluded liability for material buried or encountered during BDW's development works and also anything encountered below 1.5m.
- Whilst I accept Mr Swan's point that City had excluded liability in the specific respects stated it does not seem to me that this is material to the present case. In my view the quotation and Mr Parsons-Young's statement are consistent and are also clear and unambiguous. City had included for removing contaminated material from the building structures themselves and also from under the slabs of the existing buildings down to 1.5m, but not further or otherwise. Insofar as there is any uncertainty about this I am quite satisfied that this does not mean that City had taken on the risk of removing all contaminated material found under the surface across the built-up area, whether that was under building slabs or under roads or other areas of hardstanding or under any grassed-over areas within the built-up area. There would have been no reason for City to accept any further contractual responsibility since the asbestos surveys and its quotation related only to the building structures.
- In his witness statement Mr Parsons-Young described how City encountered ACMs when asked to excavate and level an area to place site offices. Although his statement is not specific it would appear that this area was located partly in the built-up area and partly in the grassed-over area. It appears from the contemporaneous email correspondence that ACMs were initially encountered some time prior to 11 August 2014. Subsequently the ski slope area was excavated and ACMs were found there as well. In his witness statement Mr Parsons-Young explains that later in September 2014 ACMs were also found in the location of the proposed show home and sales office in the northerly section of the grassed-over area. In its remediation strategy report in October 2014 IGL recorded at [2.5] and in Figure 2 that there were 8 areas of ACMs found, some in the grassed-over area and some in the built-up area. As early as August 2014 IGL had been asked to attend site and was in communication with Mr Williams to address how best to deal with the ACMs. By September 2014 City had been instructed to proceed with identifying and removing the ACMs in conjunction with IGL on the basis of dayworks rates identified in its email dated 28 August 2014. The evidence is that in around September 2014 Mr Parsons-Young gave BDW an estimate of around £400,000 - £500,000 based on the ACMs that had by then been found in the ski slope area and the show home area and a combined estimated removal volume of around 3,000m2.
- It is clear that at the time and on this basis BDW believed that the asbestos remediation costs would fall within that cost range. Thus its internal site start authorisation pack produced in September 2014 appears to be recording that the costs could be contained within the full contingency provision of £462,000, albeit that – as Ms Shivers emphasised in her evidence – this contingency related to every aspect of the works and was not limited to remediation costs.
- However the position was different by the end of October 2014, once IGL had undertaken a further site investigation and produced its supplementary site investigation report and remediation strategy reports. By this stage it is apparent from the remediation strategy report that 25m grid sampling had been undertaken across the site and that further 10m grid sampling was being proposed in the grass finished areas of the site, principally in the western area (i.e. the grassed-over area) where ACMs had been observed.
- In his witness statement Mr Parsons-Young confirms that the remediation strategy which it adopted was discussed by and agreed by IGL. Mr Pritchard accepted in cross-examination that IGL was heavily involved in the remediation strategy and the monitoring of those works and that there was no basis for disputing the scope of the works which were undertaken.
- By November 2014 City was reporting that the estimated removal volume was around 8,500m2 based upon the further areas of ACMs which had been encountered and with a consequential very significant increase in the costs already incurred and expected to be incurred to complete, approximately £860,000 based on the estimate provided by Mr Parsons-Young in his emails of 18 November 2014. Not surprisingly by this stage BDW was becoming very concerned about these costs. On 17 November 2014 Mr Parsons-Young had written a very lengthy letter explaining the reasons for the increases both in volume and cost. It is clear that not all of the reasons given were solely to do with the increased volume of areas containing ACMs which had been discovered since August 2014. However in his evidence Mr Williams contended that this was because the remediation works had to be undertaken without the benefit of advance planning and in circumstances where site operations were already underway so that City were obliged to work around the existing works which had already commenced by the time that the full extent of the remediation works were known. Further there is evidence that the costs increased because of adverse weather conditions which made the removal of ACMs more difficult and time-consuming.
- A point made by IGL is that the records produced by BDW do not identify any differentiation being made either by City in its payment applications or supporting documents or by BDW in its own records as to the quantities remove from the different areas on site. In particular there is no differentiation as between the areas under the floor slabs of the existing buildings, the remaining areas within the built-up area and the grassed-over area. I have already referred to City's quotation and concluded that it covered the removal of asbestos from the areas under the slabs of the existing buildings and not otherwise. There is no evidential basis for a submission that City wrongly charged BDW for the cost of removing asbestos from these areas. Whilst I appreciate that IGL can point to the absence of positive evidence that these areas were separately dealt with, if IGL had wished to advance a case that City had not proceeded in accordance with what Mr Parsons-Young clearly stated was the contractual position and had claimed and been paid amounts for asbestos remediation for areas for which it was not contractually entitled to claim then IGL should have required him to attend and cross-examined him on that particular point.
- The remediation works were duly completed and BDW proceeded to develop the site. There is no need for me to refer to the pre-action correspondence or to the chronology of this action, so that I now turn to address the first of the key issues which I must decide.
- In their written opening submissions counsel for BDW reminded me that the law has identified three separate but parallel tests for determining the existence or absence of a duty of care, namely: (1) the "threefold" test (being (i) whether the loss was reasonably foreseeable; (ii) whether there was a sufficient relationship of proximity, and (iii) whether in all the circumstances it is fair, just and reasonable to impose a duty of care); and (2) the "assumption of responsibility" test; and (3) the "incremental approach".
- It is common ground that this is not a case to which is incremental approach test would be apt, since this case breaks no new ground in the law of negligence.
- So far as the two other tests are concerned, in particular the inter-relationship between them, I have found extremely helpful the decision of the Court of Appeal in Lejonvarn v Burgess [2017] EWCA Civ 254, an unsuccessful appeal by the claimant from a decision of Mr Alexander Nissen QC sitting as a TCC Judge.
- In that case the question was whether an architect who had previous social and professional dealings with the claimant houseowners owed them a duty of care in tort for services provided in connection with the design and construction of a garden project in circumstances where there was no contractual relationship between them. The judge had found that she did, answering the question by reference to the assumption of responsibility test. On appeal it was contended that he ought to have applied, either alone or additionally to the assumption of responsibility, the threefold test, on the basis that this would have focused particular attention on whether or not it was fair, just and reasonable to impose a duty of care.
- Hamblen LJ, with whom Gloster and Irwin LJJ agreed, having reviewed the relevant authorities, rejected this argument. Referring to the decision of the House of Lords in Customs and Excise Commrs v Barclays Bank plc [2007] 1 AC 181, he observed [64] that in the core category of case where a defendant voluntarily tenders skilled advice or services where he knows or ought to know that an identified claimant will rely on his advice or services the assumption of responsibility test is sufficient because "whilst there is no need to make a further inquiry into whether it would be fair, just and reasonable to impose liability, that is because such considerations will have been taken into account in determining whether there has been an assumption of responsibility". As he said at [69] this was because – as Lord Bingham said in the Barclays Bank case – much depends on "the detailed circumstances of the particular case and the particular relationship between the parties in the context of their legal and factual situation as a whole."
- Hamblen LJ also accepted [67] that there was an important distinction to be drawn "between duties in contract and in tort and between undertaking positive obligations (the realm of contract) and the imposition of a negative duty to avoid doing something or to avoid doing it badly (the realm of the tort of negligence)".
- In their closing submissions Mr Mort and Mr Thompson reminded me that the test is an objective one, referring to the judgments of Lord Goff in Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 at 181 and Lord Steyn in Williams v Natural Life Foods Ltd [1998] 1 WR 830 at 836. They also reminded me that it is not necessary for the claimant's reliance upon the defendant's advice to have been reasonable, referring to the judgment of Arden LJ in Precis (521) Plc v William Mercer Ltd [2005] PNLR 28 at [27-28].
- Following oral closing submissions counsel for IGL drew my attention to two further authorities which they suggested might be of assistance. The one which I did find of some assistance was the decision of Mr Stephen Males QC sitting as a deputy High Court Judge (as he then was) in Arrowhead Capital Finance v KPMG [2012] EWHC 1801 (Comm). In that case the judge decided the issue by an application of the assumption of responsibility test and also of the three-fold test, concluding that in neither case was it reasonably arguable that a duty existed. His analysis of the relevant legal principles is at [41] – [47]. His application of those principles to the facts of the case before him is instructive. In that case, as in this, the question was whether A, having contracted with B to provide a service, owed a duty of care to C when performing his contract with B. In that case, as in this, the terms of the contract included a limitation of liability and an exclusion of third party rights. He held that those terms of the contract between A and B, which C accepted might reasonably have been expected to be likely to be present, were relevant factors in concluding that no duty of care existed.
- It is plainly right, if I may respectfully say so, that these are relevant factors which may, in an individual case, carry considerable weight. Whether or not they do so in any individual case is also plainly dependent upon the particular facts of the case and I do not, therefore, consider that I should place any weight on the actual decision in that case, which concerned facts very different to the present case.
- The other decision to which I was referred was that of Males J (as he had by then become) in Golden Belt 1 Sukuk Company BSC v BNP Paribas [2017] EWHC 3182 (Comm). That case concerned the duties owed by the defendant bank as the arranger of a Sukuk (an Islamic financing transaction) to the issuer and certain holders of Sukuk certificates. Golden Belt (as issuer) argued that the bank owed it a duty of care, namely to take reasonable care to ensure that the Promissory Note was property executed. The judgment involves the application of authority concerned with investment decisions to the particular facts of that case and does not provide any assistance to me in deciding this particular case.
- So far as disclaimers are concerned, the law is helpfully summarised in Clerk & Lindsell on Torts (22nd edition) at [8-130] as follows:
- I have also been referred to the decision of Akenhead J in Galliford Try Infrastructure Limited v Mott McDonald Limited [2008] EWHC 1570 (TCC), which is of relevance as regards: (a) the general law; (b) the position where transfers of contractual liability are contemplated but do not proceed; and (c) the significance of disclaimers.
- In that case the claimant, a design and build contractor (referred to as MCL), made a claim in negligence against consulting engineers (referred to as MM) in circumstances where MM had been retained by a separate company to provide their services and where, although there had been discussions about the retainer being novated to the contractor, that had never taken place. The engineers' engagement included the statement:
- The specification produced by the engineers also contained a disclaimer in wide terms as follows: "Mott MacDonald accepts no responsibility or liability for the consequences of this document being used for a purpose other than the purposes for which it was commissioned. Any person using or relying on the document for such other purpose agrees, and will by such use or reliance be taken to confirm this agreement, to indemnify Mott MacDonald for all loss or damage resulting therefrom. Mott MacDonald accepts no liability for this document to any person other than the person by whom it was commissioned".
- Akenhead J conducted a careful review of the law in paragraphs 180 – 189 of his judgment and summarised the key principles at paragraph [190], including the following which are of relevance to this case:
- In relation to the case before him he added this at [191]:
- Having conducted a detailed review of the facts he concluded that no duty of care was owed by the engineers to the contractor. In relation to the absence of any concluded novation he said this at [327]:
- In relation to the disclaimers he said at [330] that they: "acted as a kind of warning to MCL not to rely upon material produced by MM either on the drawings or specifications themselves or to any change to or amplification of them. The fact that MCL may not have paid any attention to them is immaterial; that was its risk". At [331] he said, referring to Hedley Byrne, that the disclaimers: "are not exclusion or limitation clauses as such. They are simply aspects of the factual background from which the Court determines whether a duty of care arises. If a duty of care arises, then the disclaimer would not exclude; the reverse of this applies also: if there is no duty of care at all, there is nothing upon which UCTA can bite". At [332] he said: "they are simply a reminder to MCL in this case not to rely upon what it itself has not commissioned".
- Having referred to the legal principles it is apparent in my view that the answer to this question depends on a close analysis of the relevant facts and, in particular, the effect of the statements relied upon by IGL as amounting to an effective disclaimer of any duty of care in negligence to third parties. That is because in my view the facts of this case lie somewhere between two situations where it may reasonably easily be concluded either that a duty of care does and does not exist.
- Thus one can without difficulty postulate a situation not far removed from the current where in my view it is reasonably clear that a duty of care would be found to exist as regards the contents of the report, namely where (a) IGL had been asked by on behalf of Bridgend to prepare a report which it knew was intended should be provided to all prospective purchasers; (b) IGL had agreed to do so without any reservation as to the use of the report or the reliance which could be placed on the report or to any need for assignment or novation or the like; (c) the report itself contained no such reservation; (d) IGL had become aware that BDW had been given the report as a prospective purchaser and was using and relying on it in such capacity; (e) IGL communicated no objection to BDW doing so; and (f) BDW had decided to purchase the site in reliance on the report.
- However the converse is also true, so that if by contrast: (a) IGL had been asked by Bridgend to prepare a report which it knew was intended should be given to all prospective purchasers; (b) IGL had agreed to do so but on the express basis that it should accept no liability to any prospective purchaser unless either the contract with Bridgend was assigned or novated to the purchaser with its express written consent or it entered into a separate reliance agreement or collateral warranty with the purchaser; (c) the report contained that express statement; (d) IGL had no knowledge that BDW had been given or was using or relying upon the report before purchasing the site; (e) there was no discussion or agreement whereby IGL assured BDW that it could use and rely on the report even without any assignment, novation, reliance agreement or collateral warranty, then in my view it is equally clear that no duty of care would be found to exist.
- Here the material facts in my view are as follows:
- It is important to remind myself that the test is an objective one, so that I should not decide the issue on the basis of the subjective unexpressed and uncommunicated intentions or understandings of the parties. It is however also relevant to take into account what might reasonably have been expected to have been known to the parties even if not expressly discussed or communicated and what might reasonably have been expected to have been revealed by enquiries which ought reasonably to have been expected to have been made.
- In my view a key issue is the effect of the assignment statement. Mr Mort submitted that the statement itself was ambiguous, because the statement that the report may be assigned does not make it clear whether it is the report or the contract which will be assigned and, if the latter, whether it is the benefit or the burden or both which will be assigned. I reject this argument. In my view it is perfectly plain that it is a non-legal shorthand for a statement that the benefit of the contract with Bridgend, of which the report is the end product, may be assigned.
- In my view the assignment statement is important for two reasons. The first is that it would naturally convey to a party in BDW's position that the way in which IGL was prepared to accept liability to a party such as itself was through the medium of an assignment. Whilst the assignment statement did not say in terms that this was the only way in which IGL was prepared to accept liability to a party in BDW's position, that conclusion would in my judgment have been apparent to BDW: (a) from the Savills' introduction to the technical information pack; (b) from the terms of the contract between IGL and Bridgend; and (c) from the limited use statement and no passing on statement.
- As to (a), the significant point is that what is stated about the assignability of the IGL report is by way of exception from the stated position generally, which is that the information provided in the technical pack is for guidance only and that interested parties need to satisfy themselves as to the statements made. This makes clear in my view to a reasonable reader in BDW's position that without the assignment there can be no reliance upon the IGL report.
- As to (b), it would be expected in my view that any reasonable party in BDW's position, having seen the assignment statement, would want as part of its "due diligence" to understand what benefits it would be acquiring through any assignment. Although I have already referred to the confusion in the minds of various of the witnesses, both at the time and at trial, about precisely what was meant by an assignment, I proceed on the basis that both BDW and IGL should be treated as reasonably sophisticated business entities with a reasonable knowledge of basic contract law principles as applicable to the construction sector and with access to legal advice if needed.
- It follows that BDW would have wanted to know what was in the contract the benefit of which was available to be assigned should it proceed to purchase the site. There is no reason to believe that the contract documents would not have been provided by Bridgend or IGL. They would have revealed both the third party rights exclusion and the liability limitation. Although Mr Mort submitted that the third party rights exclusion was only concerned with the enforcement of contractual terms I disagree. On its clear wording it extended to any third party benefit. It is true that it did not seek to exclude any duty of care arising independent of the contract. However what is relevant is that IGL was making it clear that by entering into and performing the contract with Bridgend it was not agreeing to confer any benefit on any third party. As Mr Ballantyne accepted, and as in any event I would have found, any reasonable party in BDW's position would have envisaged that the contract might contain limitations of liability, as it indeed did.
- As to (c), there has been some debate as to the meaning which would reasonably have been conveyed by these two statements to BDW. When read literally it is of course true that IGL could not ensure that only Bridgend used the report nor could it prevent Savills from physically passing on a copy of the report to any prospective purchaser. Indeed, as I have said, Mr Pritchard knew that this was the intention and had no objection to Savills passing on a copy of the report to prospective purchasers of their using the report. Moreover, BDW would reasonably have assumed on receipt of the technical information pack that IGL did not object to Savills including the report in the technical information pack since it would make little sense for IGL to have agreed to assigning the report to the site purchaser unless it was also willing to allow the prospective purchasers to see it and use it in advance of purchase. After the exchange in September 2012 it would have been clear to both parties that BDW had been passed and was using the report and that IGL had no objection to its doing so. Read literally, therefore, it may be said that in the particular circumstances of this case the no passing on statement and the no use statement signified very little.
- However in my view there is a small but crucial difference between the common meaning of "using" and "passing on" and the meaning which in my judgment was intended to be and was conveyed, on an objective assessment, by IGL in including these statements in the report. The difference was illustrated in the cross-examination of Mr Pritchard where it was repeatedly put to him that IGL knew that BDW was relying on the report and did not object to its relying on the report. He demurred, on the basis that in his opinion IGL did not know and had not agreed to BDW relying on the report in a legal sense in the absence of IGL having been asked and having agreed to provide a reliance letter or assignment or contractual warranty or some such similar legal document. In my judgment he was right to analyse the situation in that way by reference to these statements. The essential point in my judgment is that what IGL was making clear was that it did not agree to any prospective purchaser being passed and making use of the report such as would entitle it to a legal remedy against IGL if the report was defective unless it expressly consented to the report being passed to and used by that prospective purchaser in the context of its willingness to assign the benefit of the report.
- I accept that this is not what the report says in express terms. It was argued that an alternative and equally - if not more - plausible interpretation is that it was simply a standard exclusion inserted by IGL in its report which could easily be seen as having no application to the particular circumstances of this case. Indeed, Mr Pritchard accepted in cross-examination that it was a standard exclusion used by IGL. However, that is where the assignment statement assumes key importance in my view. In my judgment the "no legal reliance" interpretation is supported by and entirely consistent with the assignment statement.
- It is trite law that a party can usually assign the benefit of a contract to a third party without the consent of the other party. However it is not uncommon, especially in the construction sector, for contracts to include a prohibition against assignment without consent, as was the case here due to the incorporation of the ACE Conditions. Moreover, it is also common in the construction sector for parties commissioning a report or other services from a professional to wish to be able to assign the right to rely upon the report or other services and thus, as here, they stipulate for that at the time. Not uncommonly they go further and require the professional to agree in advance that it will agree to a novation or provide a collateral warranty in specified terms to specified parties. The essential point is that, as in the Galliford Try case, the fact that there is discussion or – in this case – agreement that an assignment should be provided is consistent with a recognition that without it the intended beneficiary is not entitled to place legal reliance on the report or services.
- In my judgment the only sensible interpretation of the assignment statement is that IGL was making it clear that it agreed that the eventual site purchaser should be entitled to place legal reliance on the report only through the mechanism of an assignment. Whether in the end that turned out to be an assignment properly so called or a novation or a reliance letter or collateral warranty is immaterial in my view. What is important in my judgment is that IGL was making it clear that it was willing to allow the eventual site purchaser to place legal reliance on the report but only if some legal document was put into place to allow it to do so. Without it, the eventual site purchaser would not be permitted to place legal reliance on the report. All this is reinforced by the third party rights exclusion in the contract and, insofar as placing unlimited reliance on the report was concerned, the liability limitation in the contract. Indeed the provision limiting liability to the direct clean up costs incurred by "the Client" would appear to have the effect that no-one other than the original client or (probably) its assignee would be entitled to recover even direct clean-up costs.
- It follows, in my judgment, that the no use and no passing on statements and the assignment statement when read together in the context of the contract containing the third party rights exclusion and the liability limitation made it reasonably clear, on an objective assessment, to BDW that if it wanted to place legal reliance on the report it would have to obtain an assignment or other legal document from IGL to do so (and to negotiate a waiver of the liability limitation if it wanted to ensure greater financial comfort or, on one view, to recover at least its direct clean-up costs). That, of course, is consistent with what it plainly did believe at the time. It is only through oversight or unfortunate mistake that it did not ask IGL to provide it with an appropriate legal confirmation since, had it done so, it is reasonably clear that Mr Pritchard would happily have provided IGL's standard reliance letter.
- Whilst I accept that it is a relevant factor that IGL would have been willing to assign the benefit of the report – and indeed it probably had already consented to that occurring anyway - or indeed to issuing a reliance letter permitting BDW to override the liability limitation had it been asked, since: (a) it was not asked and never communicated its willingness to do so; (b) BDW could not safely have assumed with complete confidence that IGL would have agreed; (c) no assignment or reliance letter or other legal document was entered into; (d) any assignment would have contained the liability limitation, this factor does not appear to me to be of sufficient weight to override what was contained in the documents to which I have referred.
- In short, I have to decide whether or not a duty of care exists in circumstances where IGL was not asked to nor did it agree to BDW placing legal reliance on the report other than through the mechanism of an assignment which did not take place. In my judgment, it does not. It follows, in my judgment, that the claim must fail on this preliminary basis.
- I should also say that even if I had come to a contrary view I would have concluded that IGL could not fairly, justly or reasonably be treated as having assumed liability to BDW in the absence of an assignment for clean-up costs incurred by BDW or in any event in excess of the £300,000 limitation of liability. Of course if BDW had obtained an assignment from Bridgend it would have been open to BDW to have contended that the liability limitation was unreasonable and hence ineffective under the Unfair Contract Terms Act 1977. It is not necessary for me to express any opinion on that hypothetical issue.
- Furthermore, I should also say that even if I had come to a contrary view I would have concluded that the scope of the duty assumed by IGL to BDW was not the equivalent of the duty which IGL would have owed to BDW had it been instructed by BDW to provide the report as a prospective purchaser. The report is addressed to Bridgend as the existing site owner. Its stated purpose at [1.1] is to "enable a geotechnical and geo-environmental appraisal of the site and provide a basis for design". As I have indicated the advice at [9.2] to allowing for contingencies and making of allowances is not, contrary to Mr Mort's submission, a reference to financial contingencies or allowances but to the contingencies or allowances to be provided for in the scope of site preparation works.
- Whilst it may be said that this comes to the same thing there is a distinction relevant to Mr Mort's submission that IGL owed BDW a duty to advise as to the risks of proceeding to purchase the site without first warning as to the nature and extent and, thus, any potential financial exposure arising from the risk that there might be ACMs below ground level which had not revealed by the investigations undertaken by IGL. That was not in my view a duty which IGL undertook. Whilst IGL was fully aware that Bridgend was proposing to market the site for residential development it was not being asked to advise prospective purchasers such as BDW as to the financial risks or implications of proceeding to purchase without undertaking further investigations. Indeed, to impose such a duty would be contrary to the interests of IGL's actual client, Bridgend, as site owner and prospective vendor. If BDW had wanted advice from IGL on that specific point it would have needed to ask for it and BDW would have needed to provide it, doubtless having sought Bridgend's consent first – a point which Mr Pritchard made when he was being cross-examined about the other dealings between BDW and IGL. I return to this point later when I come to consider the issue of breach.
- I should also address the fall-back argument advanced by BDW that since IGL knew that BDW had the report and was relying on it then it ought to have warned or advised BDW that it had not consented to BDW having or relying upon it nor to it accepting any liability (or only a capped liability) should the report prove to be negligent. In my view this argument is hopeless, for the reasons pleaded by IGL in its defence, in summary that no duty could reasonably be imposed upon IGL to warn or to advise a company in the position of BDW that if it wished to ensure that it had legal recourse against IGL in the event that the report was deficient then it would need to take the appropriate steps to ensure that it could do so.
- In particular there was nothing in the exchanges between BDW and IGL in and after September 2012 and preceding BDW's entry into the contract to purchase the site from which it could reasonably have been understood by IGL that BDW believed that it had legal recourse in relation to the report without the need for any further legal document being entered into whereas IGL knew or believed that this was not the case or from which any duty to warn or advise could be derived. It was clearly for BDW to take the steps which it needed to take in order to ensure that it obtained legal reliance and, as already stated, it is only as a result of its inadvertence or error that it did not.
- Given the conclusion I have reached in relation to duty of care strictly speaking there is no need to address this issue but, given that I have heard full evidence and submissions on the point and, in case the matter should go further, it is clearly right that I should address and determine this issue in reasonable detail.
- The pleaded case on negligence is at [25] – [27]. It is alleged that IGL failed to:
- It is further alleged that:
- As to allegations (1) and (2), I agree that the report did not in terms identify the risk that extensive past demolition activity within the site, in particular the potential re-use of demolition arisings both to construct the old ski slope and generally, could have resulted in contamination with ACMs on site. I accept that a careful reader within the intended target audience would have: (a) seen from sections 2.0 and 3.0 and the historical maps that there had been a pattern of development including demolition; (b) seen from section 4.5 that there was asbestos within the existing building structures; (c) seen the reference to the artificial ski slope in section 2.0 and the trial pits. However, I do not think that it can be concluded that a reasonably careful reader within the intended target audience could have been expected to have identified the risk of contamination with ACMs, generally or specifically in relation to the old ski slope, for him/herself when it was not identified in the report itself. In my view that is asking too much of even a careful reader unless he/she had particular expertise in site investigation and contaminated land.
- The crucial question however is whether or not it was negligent for the report not to identify this risk.
- BDW contends that it was negligent in circumstances where it is its case that there was a real probability of ACMs being present underground due to the demolition of old buildings which had likely been constructed using ACMs and the retention and/or use of the demolition products on the site.
- IGL contends that, given the result of the trial pitting, the risk was no more than theoretical and that it would have been wrong to identify a risk which was no more than theoretical when express advice was given as to the need for further contamination testing on site clearance.
- In my judgment a reasonably competent geotechnical engineer would have had to take into account the following significant points: (a) on the basis of the historical evidence there was clearly a risk of underground contamination with ACMs from the products of demolition of former building structures; (b) however physical investigation in the form of trial pitting had not revealed such contamination; (c) nonetheless there was still clearly a risk of underground contamination with ACMs, on the basis that it had not been possible to physically investigate the built-up area and on the basis that the trial pitting of the grassed-over area was relatively limited; (d) the risk of underground contamination with ACMs was going to be subject to further physical investigation and testing on a 25m grid during site clearance with the results informing the decision whether or not to undertake any additional sampling and testing.
- In those circumstances the reasonably competent geotechnical engineer would have needed to consider the purpose of identifying that there remained a risk that this further investigation and testing would reveal underground contamination with ACMs, especially in circumstances where the extent of that risk was still essentially unquantifiable.
- Insofar as BDW contends that IGL should have advised that there was a real risk, as opposed to an essentially hypothetical and unquantifiable risk, I disagree. Whilst it is easy to say with the benefit of hindsight that it was a real risk because: (a) there was a real risk that the previously demolished structures contained ACMs; and (b) there was also a real risk that the demolition products would simply have been re-used or left on site, I disagree. As at 2012 there was no actual evidence to give rise to a real risk that previously demolished structures which included ACMs had been used to create the ski slope or otherwise used or spread across the site. IGL was obliged to act on the basis of information available to it and the most important evidence at that stage was that: (1) made ground was only encountered in three of the nine trial pits; (2) the three trial pits revealed only limited made ground and no evidence of ACMs. To suggest that this clear evidence should have been ignored and that there was still a real risk is in my view to proceed with the benefit of hindsight and to elevate the hypothetical remaining unquantifiable risk over the clear evidence of the trial pits.
- In my judgment this is also where the difference between the purpose of the report: (a) as contracted for by IGL and as stated on the face of the report; and (b) if it had been commissioned by BDW as a would-be purchaser which wanted advice specifically to assist it in deciding whether or not to acquire the site and if so on what terms, assumes some importance. Although IGL knew that the report would be shown to prospective purchasers and had agreed to its being assigned to any actual purchaser nonetheless the purpose for which it had agreed to provide the report was – as it stated – to provide a geotechnical and geo-environmental appraisal and provide a basis for design.
- Anyone interested in developing the site would have the same interest in obtaining information relevant to its development. That would be the case whether it was Bridgend who developed the site or BDW as the actual purchaser and intended developer. Mr Pritchard accepted that the report was produced for the intended audience of the ultimate site purchaser, which was clearly correct since IGL was made aware that Bridgend was marketing the site for sale for development. However there is a crucial distinction in my view between producing a report for the use of: (a) the eventual purchaser and developer; as opposed to (b) a potential purchaser, even one who becomes the eventual purchaser. A potential purchaser would have a special interest in obtaining information relevant to the decision whether or not to buy and if so on what terms. The reasonably competent geotechnical engineer in IGL's position would, rightly, not regard her/himself as owing a duty to give information relevant to that special interest. As I have already said, I do not regard the references in the report to contingencies or allowances as advice to a potential purchaser on what financial allowances should be made when formulating an offer to purchase the site.
- It follows in my judgment that there was no need to make express reference to what was at this stage still essentially a hypothetical and unquantifiable risk of underground contamination with ACMs, in circumstances where that was to be the subject of further targeted investigation once demolition of the existing building structures had begun. A developer who already owned or who had already agreed to buy the site would not need to be informed of a hypothetical and unquantifiable risk when the next step in the development process (i.e. site clearance and testing) would reveal whether or not in fact that risk was present. IGL owed no duty to consider the particular interests of prospective purchasers in their capacity as such, particularly when it had been commissioned to provide the report by the existing owner.
- If BDW wanted confirmation before committing to purchase the site as to the nature and extent of any risk and/or the extent and cost of any remediation strategy if that risk materialised, or if it wanted to ensure that any risk was further and/or fully investigated before it committed to purchasing the site, those were matters which it could have taken up with IGL and/or Bridgend at that stage. Indeed BDW did take up the specific matter of the surface water drainage with IGL and subsequently commissioned IGL to advise further in that specific respect and BDW also took up the specific matter of the asbestos within the existing building structures with Bridgend in the context of obtaining their consent to West undertaking intrusive asbestos surveys pre-exchange of contracts and obtaining a quotation from City.
- It was noteworthy that when under cross-examination Mr Waite was asked what he considered a reasonably competent professional should have reported he said:
- What he did not say, and what in my view he was unable to say, was that the reasonably competent professional would, in the light of the trial pitting, have continued to maintain that there was still a significant risk in terms of contamination with ACMs. Indeed at the end of his cross-examination he agreed with Mr Brannigan that on the basis of the trial pitting it was appropriate to advise that whilst there was very little risk of contamination in the grassed-over area nonetheless the 25m grid testing should be undertaken. That is in substance what the report stated.
- What BDW's case really amounts to is that IGL, having identified ACMs from the building structures as a potential source of ground contamination, ought to have stated that: (i) this was a real risk because there was evidence of earlier buildings having been demolished and a possibility that the demolished materials had been left on site and, possibly, to build the ski slope mound; (ii) although no evidence of ACMs had been found in the trial pitting undertaken there remained a risk that ACMs were present, hence the reason why 25m inspection was advised across the whole site following site clearance; (iii) any prospective purchase who was concerned about the financial implications of this risk ought to consider taking suitable steps to protect its position before committing to a purchase. In my judgment this criticism is misconceived because it: (i) elevates hypothetical risks above the results of site investigations; (ii) is made with the benefit of hindsight; (iii) wrongly treats IGL as under an express obligation to give advice to prospective purchasers about the financial risks of acquiring the site resulting from the risk that ACMs might still be present. It also ignores the fact that IGL expressly advised in paragraph 1.4 as to the limitations of the site investigation as regards the possible presence of contamination.
- Allegations (3) and (4) are effectively criticisms of the scope of the report. However, as Mr Waite accepted in cross-examination, the scope of the report was set by the terms of the contract between IGL and Bridgend and there can be and was no suggestion that IGL did not do what it was contractually obliged to do in terms of the scope of the report in relation to Phase 1.
- I have already addressed and rejected Mr Waite's opinion that because IGL was conducting a "main investigation" as opposed to an "exploratory investigation" under the Investigation Code it was obliged, whether contractually or otherwise, to conduct grid testing at a spacing of between 10m and 25m.
- Mr Waite did however also argue that since IGL undertook to advise Bridgend if any further investigatory works were necessary, i.e. any Phase 2 works, after the completion of the trial pitting but before production of the report then it ought, on the facts of this case, to have advised Bridgend to undertake a wider assessment of the site and intrusive ground investigation and to carry out analyses of the ground chemistry to identify the presence or otherwise of contamination at that stage.
- In my view there are a number of reasons why this criticism is misconceived:
- Insofar as BDW now says that regardless of anything else IGL should have recommended a specific trial pitting of the ski slope area at that stage, not only is that not a pleaded allegation but I reject it on the merits. Again in my judgment it is made entirely with the benefit of hindsight. I acknowledge that Dr Tonks stated that the mound was an obvious thing to want to investigate. Nonetheless, given that TP7 – which on any view was closely adjacent to the former ski slope - did not reveal any contamination even though it revealed made ground I am satisfied that it was not negligent for IGL not to have advised that the ski slope mound itself should have been trial pitted for ACMs at that stage. There is no reason in my view to consider that as at the time these trial pits were undertaken it ought to have been so obvious to any reasonably competent geotechnical engineer that the chance of finding ACMs in the middle of the ski slope proper was so significantly different to and higher than the chance of finding ACMs in the actual location of TP7 that it was negligent not to advise further to trial pitting in the latter location before the full 25m grid sampling exercise. Leaving aside the other points made above about the need for further limited investigations at this stage in advance of the full sampling exercise, there was no evidence that the construction of the ski slope was contemporaneous with the demolition of the existing buildings and, as Dr Tonks stated, in such circumstances it was equally possible that the ski slope had been formed by mounding the local material which, as revealed by the other trial pits, did not contain ACMs. In those circumstances there was no compelling reason to advise further specific testing in this limited area. My finding that there would have been a practical difficulty in gaining access to the mound itself due to the presence of nesting birds supports me in this view.
- Furthermore, nor was it pleaded (nor indeed was Mr Waite able to say) that if a trial pit had been excavated and properly inspected in the ski slope proper it would, on the balance of probabilities, have revealed the presence of ACMs. Mr Waite accepted that the evidence of the subsequent investigations indicated that the asbestos which was found was of a reasonable size, comprising macro-fragments, so that it cannot be said for certain that they would have been revealed on the basis of one trial pit, and he also accepted that in such circumstances it was unlikely that chemical testing would have found any sign of asbestos. As with all testing for contamination there can be no guarantee that any sampling testing will actually encounter contamination that may subsequently be found to exist, as indeed IGL warned in the report.
- There is no basis for suggesting that a specific chemical or other analysis to test for ACMs should have been recommended after completion of the trial pitting, given that the trial pits did not reveal any visual or olfactory or other evidence of ACMs. Nor is there any evidence to say that it would, on the balance of probabilities, have revealed the presence of asbestos in the trial pits.
- Under cross-examination Mr Waite did not suggest that anything more other than 25m trial pitting should have been recommended in advance of the results of that further trial pitting.
- Allegation (5) cannot succeed in isolation, because the complaint that the report should have identified the presence of asbestos contamination can only succeed if the material which was available to IGL justified such a conclusion when in my view it did not.
- As to allegations (6) – (8), these amount to specific criticisms of specific parts of the report. I have already rejected the criticism of section 4 of the report. I have accepted that section 5 ought also to have referred asbestos contamination within made ground as a potential risk, albeit one which had not been demonstrated by the site investigations. It was not a positive statement that there was no such risk. In the same way I agree that section 8 does not specifically refer to the potential risk of asbestos contamination. However the conclusion that there was "very little risk of contamination" was one which in my view was not negligent, given the results of the site investigations and given that on a proper reading of the section in the context of the whole report it ought to have been apparent that this was still only a provisional conclusion given the specific advice in section 8 to undertake confirmatory testing.
- Fundamentally, and for the reasons already given, I am satisfied that the report when read as a whole cannot be criticised as regards its advice in relation to the risk of asbestos contamination as it reasonably appeared at that stage. Some parts of the report are open to criticism as I have identified above. Other geotechnical engineers might have explained in terms that despite the results of the trial pitting undertaken thus far asbestos contamination could not be ruled out and remained a risk which was one of the reasons why the 25m grid inspection and testing was being recommended. However given that the report could only properly have been read as provisional and subject to the further inspection and testing, both in relation to asbestos contamination and more generally, I do not consider that in can be viewed as negligent.
- In the circumstances I am satisfied that BDW has not established that IGL was negligent as alleged.
- In the same way as with the issue of breach I address the issue of recoverable loss in reasonable detail, given that it has been fully contested and in case matters go further. It is important however to make clear on what assumed findings in relation to breach I am addressing this issue.
- In my view BDW's case as I have analysed and considered it amounts to this. First, that IGL should have warned in the report as to the significant risk that demolition activities on site had resulted in a risk of demolition materials including ACMs forming made ground in the grassed-over area, even though this had not been found on the limited trial pitting already undertaken. (I limit the case to the grassed-over area because it is not possible for BDW, given the content of the report and their reading of it, to complain that IGL should also have warned about the risk of ACMs under the built-up area.) Second, that IGL should have recommended either after the trial pitting or in any event in the report itself that in the circumstances it would be sensible to conduct further trial pitting in the grassed-over area on a greater density and specifically including the ski slope mound, in order to ascertain whether or not this was the case.
- If I had found for BDW on duty of care and on breach I would have needed to ascertain the consequences of this advice being given.
- In my view it is inconceivable that BDW and Bridgend would have been prepared to negotiate and conclude terms for the acquisition of the site on the basis of that information without more when it would have been perfectly practicable to have instructed IGL to undertake the further trial pitting in the grassed-over area. (In that respect: (a) the position would of course have been different in relation to the built-up area where access was limited but that is a different matter; (b) the problem over access to the ski slope mound due to nesting birds would have been capable of resolution given the length of time the whole process took.) In the circumstances I have no doubt that IGL would have been instructed to undertake the further trial pitting and, on the basis of the evidence, this would probably have revealed the presence of the ACMs which were subsequently found in the grassed-over area. At that stage I have no doubt that IGL would have been instructed to advise on a remediation strategy – albeit in all probability at a high-level rather than a detailed basis - so that an estimate of the likely costs of remediation could have been ascertained.
- This is consistent with BDW's factual evidence that if it had known that there was a real risk of contamination with ACMs under the grassed-over area it would have ensured that this was investigated prior to exchange and that it would not have proceeded unless that was done. BDW can also say that this is consistent with what it actually did – with Bridgend's consent – as regards the risk of asbestos within the existing structures and as regards the soil percolation issue.
- IGL's case appeared to be that in fact BDW was willing to proceed to exchange without any proper investigation as to the risk of underground ACMs in the built-up area, since the asbestos investigations conducted in relation to the existing building structures could not have given BDW any comfort as to the risk of ACMs under those existing structures because the sub-base area was not – and could not be pending demolition and site clearance – inspected at that point. It relies upon Mr Ballantyne's acceptance in cross-examination that the unknown risk was not only whether or not ACMs were present but whether there were ACMs over a wide area and/or to a significant depth and also whether the ACMs were found in clumps, which would be relatively easy to identify and remove, or in fibres, which would be much less so.
- However the answer to that objection in my view is that: (a) in fact, before exchange BDW had obtained a quotation from City which included, as I have found, for the cost of removing asbestos under the slabs; (b) there was no basis for BDW to consider, nor did it consider, that this left it with any significant area of risk so far as the built-up area was concerned given the content of the report overall; (c) it also seems likely to me that if IGL's further investigations had revealed ACMs in the grassed-over area it is likely that IGL would also have inspected those parts of the built-up area which were free from structures and could be inspected without risk to services and, probably, discovered ACMs there as well. BDW's approach in relation to the built-up area supports, in my view, my conclusion as to what it would have done in relation to the grassed-over area in this counter-factual scenario.
- My decision in relation to quantum proceeds on the basis of this hypothetical counter-factual enquiry.
- BDW's pleaded case on quantum was relatively brief. It contended that: (a) had it known of the presence of the asbestos it would have put in a lower bid to allow for the cost of remediating the site; (b) the actual cost of remediating the site has been around £1.6M together with consequential costs of around £400,000.
- BDW said that it would serve a Schedule of Loss in due course. It did so and in its Schedule of Loss it clarified that its claim was put on the basis that either: (a) it would have been able to negotiate a reduction in the purchase price with Bridgend which took into account the presence of asbestos and the anticipated or likely cost of decontaminating the site ("the primary case"); or (b) it would have been able to agree with Bridgend that there should be a deduction from the purchase price to reflect the actual reasonable decontamination costs which were incurred in decontaminating the site ("the secondary case").
- So far as the primary case is concerned BDW put forward in the Schedule what it referred to as a "high-level estimate" of the cost it would have expected to incur, based on a typical cost per acre, producing a reduction in the price of between £2M and £2.5M, together with the avoidable costs of the delay to the project due to the decontamination works, namely circa £0.5M.
- So far as the secondary case is concerned, BDW contended that the actual cost was just over £2.2 million, including the delay costs of £0.5 million, as set out in a spreadsheet upon which a commentary is provided in the Schedule of Loss.
- IGL's pleaded case in relation to quantum comprised of a series of general denials and non-admissions, including a non-admission as to the contamination found and as to the remedial works undertaken and their cost. IGL also expressly required BDW to prove that any lower bid which it might have made would have been accepted. It did not plead a positive case in relation to any other matters. Although IGL said that it would respond to the Schedule of Loss on receipt it did not do so and, regrettably perhaps, no order for the service of a counter-Schedule was sought by BDW or made by the court.
- In its opening skeleton IGL made a number of points in relation to quantum:
- It did not advance any specific points in relation to the figure for actual remediation costs.
- In its written opening BDW noted that IGL had not served a counter-schedule of loss and submitted that in the circumstances the only live issue between the parties was the cost of the remediation works in respect of which IGL had put BDW to proof. It also submitted that IGL's quantum expert, Mr Swan, had strayed beyond the confines of that live issue in his report.
- I agree with IGL that on proper analysis this is a loss of a chance claim or at least one which has similarities to or elements of a loss of chance claim. That is because the claim is advanced on the basis of: (a) an assertion as to what BDW would have done with the benefit of a non-negligent report – which is that it would have put forward one or other alternative offers to Bridgend – and; (b) an assertion as to what Bridgend's response would have been to those offers – where BDW says that Bridgend would have accepted one or other of them. It follows that in order to address this case it is necessary to: (a) reach a conclusion on the balance of probabilities as to whether BDW would have acted as it says it would had the report been non-negligent; and (b) to reach a conclusion as to the chance that Bridgend would have accepted one or other of those offers, whether in the form proposed by BDW or in a modified form following any likely process of discussion and negotiation.
- Given that IGL in its Defence expressly required BDW to prove that any lower bid which it might have made would have been accepted it follows that BDW's implicit assertion that Bridgend would have accepted one or other of its proposals without modification must be tested and determined. The court must reach a view as to what Bridgend would have done in this necessarily hypothetical situation. Since this involves an assessment of what a third party would have done in this counter-factual situation the court does not simply answer the question one way or the other on the balance of probabilities; instead it must consider whether or not there was a real or substantial chance that the third party would have acted as alleged by the claimant and, if so, it must evaluate the chance that it would have done so in percentage terms. Since on the facts of this case this is not a binary question but also involves considering the prospects that some form of negotiated compromise would have been found the court has to factor that option into its assessment of the chance which BDW has lost.
- I also agree with IGL that this is not a case where BDW has sought to advance a claim on a "no transaction" basis. In other words BDW does not advance a case on the basis, whether primary or alternative to its actual case, that it would have refused to acquire the site other than on the basis of one or other of its two alternative proposals and that Bridgend might have refused to sell the site on either of those two alternative proposals. The reason for that, as Mr Brannigan observed, is that even though BDW's evidence was that it would have refused to proceed save on the basis of one or other of its pleaded alternatives it is unable to advance a case that it has suffered an overall loss as a result of acquiring the site and undertaking the development. To the contrary Mr Lewis gave evidence in cross-examination - after some prevarication - that BDW expected to make a profit of between £3M and £3.5M on this site and a further £4.5M and £5M on the adjacent caravan site.
- It follows that BDW's complaint could only really be that it has made less of a profit on the site than it would have done had there been no ACMs under the ground. However, BDW accepts that it has no contractual claim against IGL and, hence, cannot contend that IGL gave it a contractual warranty that there were no ACMs under the ground. Thus, BDW cannot advance a claim on the basis that its loss is represented by the difference between the profits which it will actually make on the development and the profits which it would have made had there been no ACMs under the ground. Nor has BDW advanced an alternative case to the effect that unless Bridgend had accepted one or other of its proposals it would have walked away and found a more profitable alternative development on which it could have achieved a higher profit on its outlay. One reason for that may well be because the evidence, at least insofar as it appears from the filed accounts, is that BDW has not achieved the level of return on its developments overall that its witnesses said would have been required in 2012 – 2013.
- It follows from all of the above that I am required to assess quantum on the basis of my assessment of the prospect that BDW, armed with what it contends would have been a non-negligent report and the results of the further site investigation and consequential remediation strategy and costings, would have been able to agree a contract with Bridgend which would either have given it complete protection or alternatively some measure of protection against the likely or actual costs of remediation of underground ACMs. This requires me to consider the prospects of Bridgend simply accepting the terms proposed or, if not, the prospect of Bridgend entering into a negotiation under which BDW would have achieved some measure of protection.
- I can begin by stating my firm conclusion that there was no real or substantial prospect that Bridgend would have agreed to sell the site to BDW on the basis of a conditional contract whereby BDW agreed to pay £4.5M subject to a deduction for the actual costs of the remediation of the grassed-over area. It is obvious that Bridgend's clear preference was for an unconditional contract and it is also clear that BDW was keen to secure the site by bidding on that basis. I accept that: (a) BDW's non-disclosed position was that it would have looked to revisit that basis if the potential problems in relation to drainage capacity, asbestos in the existing building structures and soakaways had not been resolved by the time of exchange; (b) Bridgend was willing to agree a conditional contract in relation to the ransom strip issue.
- However in hypothetical circumstances where the question of ACMs under the grassed-over area had been investigated and a remediation strategy and costs obtained I see no reason why BDW would have demanded or Bridgend would have agreed a conditional contract rather than a negotiated price which took into account the estimated costs of remediation. That is not what BDW asserts as its primary case nor was it the evidence of its witnesses that it would have insisted on a conditional contract as opposed to a suitably discounted price. In my view it would have been a solution only of last resort, appropriate only where the uncertainties and cost fluctuations were so significant that it was impossible for two businesses, acting commercially, to bridge the gap. Here there is no reason to think that this would have been the case; to the contrary both parties were keen to reach a deal and they would have had the benefit of IGL as a mutually acceptable geotechnical engineer to advise on a suitable remediation strategy and City in the shape of Mr Parsons-Young as a respected local asbestos remediation specialist to provide advice and a competitive quotation in relation to remedial costs which Bridgend could of course have cross-checked. In the circumstances I reject BDW's secondary case.
- It is convenient at this stage therefore to refer to the joint report of the quantum experts and to express my conclusions in relation to the significant points of disagreement between them. Having met and produced their joint report in March 2018, in which they identified 13 key issues for their consideration, they then produced their separate reports before providing a supplemental short report in the course of the trial and giving evidence for a half day each.
- The experts agreed that it was an over-simplification to suggest that £250,000 per acre was a typical cost for decontaminating contaminated land given the considerable variance between the many different forms of site contamination. They agreed that it could only be used to arrive at a provisional sum allowance for remediation of a known contaminated site. They agreed that it would have been feasible to provide a high-level cost estimate for site remediation at the time of site acquisition, based upon the findings of a site investigation report and a remediation strategy produced by an appropriately qualified geotechnical engineer.
- This supports my conclusion that if BDW had been given the warning which it says it should have been given then it would have been practicable to undertake further site investigations and obtain a remediation strategy which could have been used to obtain a high-level cost estimate on an informed basis.
- The experts disagreed on the use of dayworks rates for the remediation works. Mr Soady considered it was reasonable to use dayworks rates whereas Mr Swan considered that other valuation methods might also be appropriate and that in any event the rates should be on the basis of open competition net of excess costs.
- In my view there are two separate issues here. The first is that, insofar as relevant, I am quite satisfied there is no basis for criticising BDW for entering into the agreement which it did with City as regards the asbestos removal works on a dayworks basis. They had no other reasonable alternative choice. Whilst there might be scope for criticism of some of the individual choices made by BDW in relation to the cost control of the works it actually carried out that is not a relevant enquiry for me to undertake given my rejection of the secondary case.
- The second and more relevant issue in my view is that had the costs been sought in advance in accordance with a remediation strategy it would, at the very least, have been possible to have a competitive tender process to achieve the most competitive rates and process together with fixed price elements where that was realistically possible. It is self-evident in my view that the hypothetical reasonable cost which I am assessing on the primary case would be arrived at on the latter basis.
- The experts disagreed on the valuation of site overheads over the period of delay, with Mr Soady using BDW's set rates for site preliminaries over the period of delay and Mr Swan suggesting that only actual costs incurred net of any excess costs unrelated to the ACMs should be allowed.
- In my view there is a more fundamental point here which is, as adverted to by IGL in its submissions, that there is no basis for including delay costs under the primary case. On the case advanced by BDW it would have secured a reduction based on the costs of removing the ACMs. That would clearly have been undertaken as a preliminary operation, in the same way as City was instructed to undertake site clearance as a preliminary operation. BDW would only have begun development once the site had been cleared and, hence, would not have incurred the site preliminary costs. If BDW had suggested to Bridgend that the price reduction should also take into account the cost to BDW in terms of finance costs due to the delay which would be caused to the project overall whilst the remediation operation was being carried out I have no doubt that it would have refused and that BDW would not have pressed the matter. It is relevant that even though the period from agreement to completion was very significantly delayed for reasons which were not BDW's responsibility there was never any suggestion that the agreed price should be reduced on that basis of delay.
- If BDW had advanced a separate claim on the basis that due to IGL's negligent reporting it was faced with the discovery of ACMs at a time when it was unable to plan for the works to be done in a time-efficient and cost-efficient manner, then that would have raised a number of issues which would have needed to have been investigated. In particular the issue as to whether or not that was within the scope of IGL's duty to BDW would have needed to be investigated. Furthermore, the factually complex investigation of the difference between the estimated costs of the remedial works if it had been possible to assess and cost them in advance and the actual costs incurred by BDW on an unplanned basis would have assumed an importance which has not been present on the case which has been advanced.
- In their supplementary joint statement the experts provided an update on the costs estimate which they had prepared based on the primary case. They explained that it was based on actual quantities of material remediated and removed. Their respective figures and comments appear in Schedule A, from which it may be seen that they have reached a reasonable measure of agreement, with Mr Soady for BDW arriving at a total of £1,588,190.51 and Mr Swan a total of £1,330,542.17, a difference of only £267,648.34.
- In cross-examination Mr Soady agreed, as indeed did Mr Swan when the same point was put to him, that this exercise had been approached from a purely retrospective basis, given that it was based on the actual quantities remediated and removed. Mr Soady accepted that he had not adopted the approach of using IGL's October 2014 remediation strategy to assess the scope and cost of the works based on the areas identified by IGL at that point. It would plainly have been open to BDW to have approached the quantification of the claim on this basis, either by adopting the IGL October 2014 remediation strategy or by instructing Mr Waite to produce a hypothetical remediation strategy on the assumption that he had been brought in to investigate at that time.
- This criticism of the approach adopted by Mr Soady – and in fairness to him I should emphasise that it was more properly a matter for BDW and its legal advisers to instruct him as to the basis on which he should approach this element of his task – is a serious one. The question I have to resolve is whether it is so fundamental as to invalidate the whole exercise conducted by the experts. It is a finely balanced point. Whilst the point was not specifically raised until cross-examination of Mr Soady IGL might with some justification observe that this was because until the experts had met and agreed that the high-level cost estimate approach as pleaded was not appropriate in this case neither party had advanced and neither expert had even considered an alternative case on this basis. Nonetheless both experts have undertaken a valuation on this basis in relation to the primary case. Not without some hesitation I conclude that the most appropriate course is to approach the case on this basis but, where there is room for reasonable doubt, give IGL the benefit of that doubt.
- As to the differences, my decision is as follows:
- The difference is £199,444.98. Mr Soady has already allowed a reduction of 10% from the actual costs to reflect his assessment that if the works had been planned in advance it would have been undertaken more efficiently than in the circumstances in which it was done. In cross-examination it was put to him that this did not take full account not only of the opportunity to achieve efficiencies but also all of the other costs which arose due to the works being conducted at the same time as BDW was already on site and instructing changes in order to facilitate and/or avoid delay to their works. He accepted this, although he also observed that he had already discounted his valuation by removing the 10% addition for contingencies which had previously been included and which he contended a quantity surveyor would have added had s/he been estimating the cost at the time. In contrast Mr Swan allowed £813,357.83 for this in his appendix B to the supplemental report, whereas he had previously allowed £1,132,352.96 in Table 3 of his principal report. Although it is not immediately apparent why his valuation has decreased he was not cross-examined in any detail on this element of his evidence. Adopting the approach stated above of giving IGL the benefit of the doubt, in circumstances where the starting point of actual incurred costs seems to me to be likely to be far too generous to BDW for the reasons I have already stated I adopt Mr Swan's figure of £813,357.83.
- The difference is £9,000, based on an assessment of the anticipated duration of the works which in turn is based on an assessment of the hourly throughput. On balance I prefer Mr Soady's assessment.
- The difference is £35,599.89. Mr Soady's evidence was that this was his valuation of contaminated topsoil which otherwise would have been available for use. However since IGL did not warrant that the topsoil would be free of contamination I do not consider that this is an appropriate element of claim. Moreover it is apparent from Ms Shivers' evidence in her witness statement that if the initial allowance for imported topsoil is deducted from the actual cost the difference would be minimal. I therefore allow nothing for this element.
- The difference is £11,603.47, which again is based on an assessment of the anticipated duration of the works and as I have said I prefer Mr Soady's assessment.
- The difference is £2,000. Again I prefer Mr Soady's assessment.
- The total is therefore £1,333,145.64.
- There are however two further points which I must address.
- The first is IGL's argument that what actually happened in August / September 2014 was that after the ACMs had been discovered City gave an estimate of £400,000 - £500,000. It submits that this should be taken as the likely cost estimate as opposed to that based on the above analysis. However this submission seems to me to miss the point that this was a reactive estimate to a problem which had only emerged during the course of an unplanned excavation and at that stage was believed to be confined to specific areas, so that there is no basis for comparing this with what would have happened had a planned further site investigation of the grassed-over area leading to the production and costing of a remediation strategy been undertaken by IGL before works had started on the site.
- The second is IGL's argument that the actual remedial works extended to the whole of the site so that there must be a reduction from this cost estimate to reflect that in the counter-factual scenario the court is only concerned with the costs in relation to the grassed-over area. I can deal with this briefly, having already rejected IGL's case that City wrongly charged for remedial works under the floor slabs of the existing structures. As regards any remaining areas within the built-up area, I am satisfied that there is no basis for any deduction in that regard for two reasons: (i) first, IGL has not advanced any positive case supported by any evidence in this respect and, given that this case was first advanced by way of ambush in cross-examination of Ms Shivers, cannot complain if I am not prepared to penalise BDW for failing to address it in its evidence (this being a case which was as relevant to the secondary case as it was to the primary case and, hence, which IGL ought to have prepared for and addressed in advance); (ii) second, as I have already found I think it likely that insofar as there were any significant areas in the built-up area other than under the existing structures they would in all probability have been inspected and ACMs revealed so that the remediation strategy and hence costs would have included these areas anyway. Moreover, insofar as it is possible to draw a conclusion given the rather confused and confusing evidence as to where the remediation works were undertaken, as raised with Mr Swan in cross-examination (and which is a point which goes against IGL as much as BDW, since IGL were on site monitoring and inspecting the works in progress), it does appear that the vast majority of the remediation works related to the grassed-over area as opposed to the built-up area.
- Accordingly, my conclusion is that the estimated remediation costs in this counter-factual scenario remain as stated above.
- I must finally consider the question as to whether or not Bridgend would undoubtedly have refused to reduce the purchase price at all or whether or not it would have agreed to reduce the purchase price by this amount in full or whether some intermediate position would have resulted. It is convenient to consider those points relied upon by IGL as demonstrating either that there would have been no reduction or that any reduction would have been very modest.
- IGL emphasised the attractiveness of the site as a development site and the substantial profit which BDW was proposing to make and which it would have believed it would still make even if it had absorbed the estimated remediation costs. It contends that BDW would have been aware that other developers would have been interested and that it would not have wanted to lose the opportunity to acquire the site by seeking too high a discount. IGL also placed considerable reliance on BDW's interest in acquiring the adjacent caravan site as well as the site given that this would have afforded BDW the opportunity to maximise its overall profits. In short, IGL argued that: (a) BDW would have been willing, in colloquial terms, to take a hit on the risk and cost of ACMs being encountered on the site in return for the opportunity to develop both sites at the same time; and (b) Bridgend's negotiating strategy, knowing this, would have been tougher than it might otherwise have been.
- IGL also pointed to the significant contingency of £462,000 which BDW had allowed for in its build up to justify its offer. Whilst it is true, as Ms Shivers said, that this was a contingency for the whole of the development works, nonetheless it clearly represented a fund available for writing off by BDW in whole or at least in part without compromising its profit recovery.
- There is clearly some force in all of these points. In particular, although BDW's witnesses sought to contend that BDW's development strategy was such that it would not have been prepared to accept a lesser return on the site simply because it was still profitable or because there was the prospect of earning the required return on the adjacent caravan park site, I do not accept that BDW's approach was so formalistic as they contended. I have already referred to the internal guidance which allowed the LDLG to approve proposals even though they did not show the required return being obtained. It is clear from the evidence that BDW was very interested in acquiring both sites and I am satisfied that, as with any commercial organisation, it would have taken a decision by reference to the potential of the overall development.
- However in my view the counter-argument is that on the counter-factual hypothesis which I am considering it is plain that this would have been a known contamination problem which represented an obvious problem and an obvious cost to anyone wishing to develop the site. Everyone, including Bridgend and all other interested developers, would have known that it had to be resolved and that this would impact on the profitability of the development. There is evidence – albeit hearsay – from Mr Carter that this was a close tender process. This would make sense, given that the proposal was clearly of interest to a number of developers and there is no particular reason to believe that other developers would have viewed the development as any less attractive than did BDW. In all the circumstances whilst I am satisfied that there was no guarantee that the full amount would have been obtained I am satisfied that the loss of the chance ought to be reflected by a relatively high percentage.
- Taking everything into account I arrive at 75%.
- 75% of £1,333,145.64 is £999,859.23, rounded up the claim value which I would have awarded is £1M.
- There are four pleaded allegations of contributory negligence which I can address briefly given my primary conclusions.
- The first is that BDW wrongly relied on the report as conclusive evidence that the site was free from asbestos. I reject this allegation on the basis that it is clear from BDW's evidence and my findings that it did not rely on the report as stating that the site was asbestos free.
- The second is that BDW failed to carry out the further recommended investigations before deciding to purchase the site. Again, I reject this allegation as contrary to my factual findings. BDW did instruct City to undertake the intrusive asbestos survey before committing itself to exchange. BDW could not be criticised for failing to undertake 25m grid testing before exchange, given that the report advised this should take place in concert with site clearance which BDW could scarcely have done before completion or – with Bridgend's permission – before exchange at the earliest. Nor did the report suggest that there should be some further limited intermediate or localised testing before the 25m grid testing so that there can be no criticism of BDW in that respect.
- The third is that BDW failed to procure an assignment from Bridgend. That could not be a relevant allegation of contributory negligence had I found that IGL had assumed a duty of care to BDW and had been negligent.
- The fourth is a general allegation that BDW failed to take proper steps when purchasing the site to deal with the risk of contamination and to protect itself against that risk. This is not further particularised and I am satisfied that it has no merit given my finding that BDW obtained reasonable protection by entering into a contract with City which placed the risk of sub-base asbestos on City.
- For completeness, if I had found that IGL was negligent on the basis that the wording of the report negligently conveyed to BDW as a reasonable reader that there was no need to undertake a 25m demolition survey of the grassed-over area because there was no risk of ACMs being found within the grassed-over area and if I had also found that in reliance on this BDW had consciously chosen not to conduct further investigations into the grassed-over area before committing to the purchase which would have detected the ACMs, then I would have concluded that BDW - as a knowledgeable and experienced developer with an in-house technical department including Mr Williams who was experienced in reading site investigation reports and knew that there had been demolition of buildings previously standing on the grassed-up area - was negligent in not querying the position with IGL before exchanging contracts to purchase the site. I would have reduced the damages payable to BDW by 30% on that basis.
- The claim must be dismissed for the reasons given.
- Finally, I express my gratitude to all involved in the case for enabling the evidence to be presented and tested within what was an ambitious timetable and for the full, skilful and helpful presentation of the respective cases.
His Honour Judge Stephen Davies:
Contents
| Section No | Section heading | Paragraphs |
| 1 | Introduction | 1 - 3 |
| 2 | Witnesses | 4 - 23 |
| 3 | The relevant facts | 24 - 136 |
| 4 | Did IGL owe a duty of care to BDW? | 137 - 177 |
| 5 | Was IGL negligent? | 178 - 206 |
| 6 | What, if any, recoverable loss has BDW sustained? | 207 - 259 |
| 7 | Contributory negligence | 260 - 265 |
| 8 | Conclusions | 266 - 267 |
Introduction
Witnesses
Witnesses of fact:
I did not hear from his then superior Mr Huw Llewellyn, who was the technical director for the South Wales division at the relevant time, but who left BDW some time ago.
Expert witnesses:
"Whilst the parties' legal advisers may assist in identifying issues which the statement should address, those legal advisers must not be involved in either negotiating or drafting the experts' joint statement.
Legal advisers should only invite the experts to consider amending any draft joint statement in exceptional circumstances where there are serious concerns that the court may misunderstand or be misled by the terms of that joint statement.
Any such concerns should be raised with all experts involved in the joint statement."
This is consistent with the Practice Direction to Part 35, which at paragraph 9 makes clear that:
(1) The role of the legal representatives in expert discussions is limited to agreeing an agenda where necessary and, whilst they may attend the discussions if ordered or agreed, they must not intervene and may only answer questions or advise on the law.
(2) Experts do not require the authority of the parties to sign a statement, which should be done at the conclusion of the discussion or as soon thereafter as practicable and in any event within 7 days.
3. The relevant facts
| Section No | Section heading | Paragraphs |
| (i) | Preliminary | 24 - 27 |
| (ii) | The contract between IGL and Bridgend to undertake the site investigation | 28 - 42 |
| (iii) | The site investigation and report | 43 - 82 |
| (iv) | BDW's receipt of the report and the contract to acquire the site subject to contract | 83 - 101 |
| (v) | From agreement to exchange | 102 - 113 |
| (vi) | Why was the report not assigned to BDW? | 114 - 122 |
| (vii) | Completion and the subsequent discovery of ACMs | 123 - 136 |
(i) Preliminary
(ii) The contract between IGL and Bridgend to undertake the site investigation
"I act for Bridgend, the owners of the above site, we are instructed to shortly commence marketing the property with a view to its sale by residential development.
We require a geotechnical report to include an enviro check, historic ordnance survey plans plus services and utility records.
Your geotechnical report must provide foundation recommendations and a remedial strategy if contaminated material is found. Please note an asbestos survey has already been undertaken.
It is intended that your report should be relied upon by the eventual purchaser therefore it must be capable of assignment with warranties at least twice. A statement on this is to be included in your report.
The commissioning party will be Bridgend [who] will be responsible for payment of your invoice."
(i) Clause 1: "Unless otherwise amended the appointment will be in accordance with the Association of Consulting Engineers Conditions of Engagement 1995 or the latest revision thereof, inclusive of all current amendments."
(ii) Clause 5: "Nothing in [this contract] confers or purports to confer any third-party benefit or any rights to enforce any term of this contract."
(iii) Clause 10: "For any matter arising out of or in connection with pollution or environmental contamination the total liability under or in connection with this agreement at any time shall be limited to the lesser of: the direct costs incurred by the Client [Bridgend] in cleaning up the site of the works or any part thereof: and the amount if any recoverable by [IGL] in respect of such claims under any professional indemnity insurance taken out by [IGL]."
(iv) Clause 11: "Subject to a limit of £300,000 for all such claims."
(iii) The site investigation and report
"However, it would be prudent to undertake confirmatory laboratory chemical analysis once access to the eastern half of the site is readily available following demolition of the existing buildings and the removal of the numerous underground services. The testing should include a general suite of determinants, and more specific hydrocarbon analysis around the location of the fuel storage tanks/boiler room."
There is no suggestion either that the chemical analysis should be limited to the eastern half of the site or that the chemical analysis should not include testing in relation to asbestos.
"During site clearance the exposed formations should be inspected by a suitably qualified engineer for signs of contamination, and samples taken on a 25m grid. Additional sampling and testing should be carried out as deemed necessary."
(iv) BDW's receipt of the report and the contract to acquire the site subject to contract
"This technical pack provides useful information for interested parties to consider prior to making an offer to purchase the site. The majority of the information provided is for guidance only and interested parties should satisfy themselves in respect of statements made, and in particular the capacity of services and utilities. The budget demolition quotes are for guidance only. Interested parties must satisfy themselves in respect of the costs of removing asbestos, demolition and site clearance. The ground investigation report prepared by IGL will be assignable to the successful purchaser if required."
(v) From agreement to exchange
(vi) Why was the report not assigned to BDW prior to exchange of contracts?
(vii) Completion and the subsequent discovery of ACMs
"To remove and dispose of all asbestos products … that are identified in the West reports or encountered within the buildings or structures during the demolition but excluding any material that may be buried or encountered during your development works.
To soft strip buildings … To remotely demolish identified structures on site. To grub up building slabs (assumed 0.2m) and foundations to a depth of 1.5m …. To dispose of all other materials arising from the demolition works to suitable licensed facilities …
No allowance within the above has been made for … removal of any hazardous materials other than mentioned above …"
"When the buildings were demolished we also carried out work on the foundations underneath. There were extensive materials which had been used as a sub-base for the slab. We had agreed with BDW at the outset of the contract when giving a price that any contaminated material under the slab was at the contractor's risk. This is fairly standard industry practice."
Did IGL owe a duty of care to BDW?
The relevant legal principles
"A disclaimer of liability in respect of a statement or service may be sufficient to preclude a finding of assumption of responsibility and reasonable reliance. This was the case in Hedley Byrne itself where the credit reference provided by the defendant bank was stated to be given without responsibility and as a result the bank was held to owe no duty. In McCullagh v Lane Fox & Partners Ltd Hobhouse LJ explained that a disclaimer was not to be construed narrowly in the same way as an exclusion clause, rather the court should "treat the existence of the disclaimer as one of the facts relevant to answering the question whether there had been an assumption of responsibility by the defendants for the relevant statement. This question must be answered objectively by reference to what the reasonable person in the position of [the claimant] would have understood at the time he finally relied upon the representation."
"We understand that there is a possibility of the Design Team being novated to a contractor at some stage in the project. We confirm that we have had experience of this type of situation and are comfortable with this arrangement. Our fees would still stand if novation took place."
There was, however, ultimately no novation.
(c) It is always necessary to consider the circumstances and context, commercial, contractual and factual, including the contractual structure, in which the inter-relationship between the parties to and by whom tortious duties are said to be owed arises. Thus, it is not every careless misstatement which is actionable or gives rise to a duty of care. Foreseeability of loss is not enough.
(d) It is necessary for the party seeking to establish a duty of care to establish that the duty relates to the kind of loss which it has suffered. One must determine the scope of any duty of care.
(h) So far as disclaimers are concerned, they are simply one factor, albeit possibly an important one, in determining whether a duty of care arises. One can not, usually, voluntarily undertake a responsibility when one tells all concerned that one is not accepting such responsibility.
(i) The context of and the circumstances in which statements are made by one party to another need to be considered to determine not only if there is a duty but also the scope of any duty. The facts that a statement is made by A to B, that A knows that B will rely upon it and that B does rely upon it are not or at least not always enough to found a duty of care."
"One needs to determine what responsibility, if any, judged objectively was assumed by MM towards MCL in this case. One can have regard, amongst other matters, to:
(a) The contractual nexus or lack of contractual nexus between the party said to owe the duty of care and the party said to have been owed it;
(b) What was said in writing and orally by MM to MCL and in what context it was said;
(c) Any disclaimers issued by MM to MCL in relation to what was said;
(d) What was said to MM or mutually understood by MCL and MM as to why information was sought; put another way, what was the express or necessarily implied purpose for the information being sought and supplied."
"In my view, the very fact that the parties were trying to agree terms points more to there being no duty of care than there being one. The parties were seeking to legislate for their relationship by way of a proposed contract; it would be odd if, the contractual route having failed or not being achieved, MCL could procure for free an enforceable duty or warranty on the part of MM to exercise reasonable care together effectively with duties to perform services for MCL."
Discussion
(a) IGL had been asked on behalf of Bridgend to prepare a report which it knew was intended should be provided to all prospective purchasers and which was capable of assignment to the eventual site purchaser.
(b) IGL had agreed to do so, but pursuant to a contract which excluded third party rights ("the third party rights exclusion") and which limited liability for environmental contamination to the lesser of the direct clean-up costs incurred by the client or of IGL's insurance recovery but in any event no more than £300,000 ("the liability limitation").
(c) The report as provided to BDW clearly stated that it was for Bridgend's use only and should not be passed onto others without IGL's express consent, but that it could be assigned to the eventual site purchaser ("the assignment statement"). It did not however expressly refer to the third party rights exclusion or to the liability limitation.
(d) Notwithstanding the statements that the report had been prepared for Bridgend's use only ("the limited use statement") and should not be passed to others without IGL's express consent ("the no passing on statement") IGL knew that the report would be passed to and used by prospective purchasers and, if any had asked, would willingly have consented to this being done. However BDW did not know this for sure and did not ask for IGL's consent to use the report.
(e) When IGL became aware that BDW had been given the report as a prospective purchaser and was using it and relying on it in such capacity it did not communicate any objection to BDW doing so and, indeed, entered into discussions with BDW from which BDW could reasonably have assumed that IGL knew that it had he report and was using it and did not object.
(f) BDW did not ask for confirmation from IGL that it was willing to allow BDW to place legal reliance on the report or that it was willing to assign the benefit of the report to it if it purchased the site. Neither did BDW make any enquiries as to the contractual terms agreed as between Bridgend and IGL so as to understand whether it excluded or restricted either third party rights or IGL's liability under the contract, even though BDW knew (or at least would have known, had it applied its mind to it) that it might contain clauses which would affect what if any reliance it might place on the report.
(g) BDW always intended to obtain a formal assignment of the benefit of the report from IGL and – although internally its thinking was muddled – knew that it was important that it should do so if it was intended to place legal reliance on the report. The only reason it did not do so was due to some internal mistake or confusion. It was not reasonable for BDW to assume, if it did, that because IGL had provided many reports to BDW under the Term Agreement which contained no relevant exclusions or restrictions the provision of this report could also be treated as if provided under the Term Agreement.
(f) Nonetheless BDW in fact decided to purchase the site in reliance on the report.
(h) Had IGL been asked it would have been willing to assign the benefit of the report to BDW. In fact it would have been quite willing to provide BDW with a letter of reliance or some other legal document which would have enabled BDW to rely upon it in full and without any limitation of liability of £300,000. If there had been any express discussion about limitation of liability IGL would have suggested and BDW would have agreed a limit of liability of £5M. However none of this was actually known to BDW. The most that could be said is that it would have been reasonable for BDW to assume that IGL would have been willing – indeed would have been unable to object – to the benefit of the report being assigned. BDW might also reasonably have believed that IGL might have been willing, given their previous dealings, to provide an unlimited letter of reliance, but it could not have been sure about that. This is not a case where BDW and IGL agreed on an unqualified basis that there would be an assignment or a reliance letter but then, through simple inadvertence, that agreement was not put into effect.
Decision
BDW's fall-back argument
Was IGL negligent?
(1) Identify the fact that extensive past demolition activity within the site and potential re-use of demolition arisings could have resulted in contamination with ACMs on site.
(2) Identify the fact that the use of made ground to construct the old ski slope could potentially contain contaminants including ACMs.
(3) Undertake a wider assessment of the site and intrusive ground investigation.
(4) Carry out analyses of the ground chemistry to identify the presence or otherwise of contamination.
(5) Identify the existence of and report on the fact that the site was contaminated by asbestos.
(6) The brief reference in section 4.5 to asbestos within the building structures without further elucidation or explanation and without reference is made to previous demolition works over a significant area of the site which would have highlighted the potential presence of ACMs on site was insufficient.
(7) There was a failure in Section 5.6 to list asbestos as a potential contaminant of concern.
(8) Section 8.1 wrongly stated that: "No obvious contaminative practices have been undertaken on site or within the immediate surrounding area, other than the use of oil fired heating. Therefore, it is considered that there is very little risk of any sources of contamination being located on site."
"I would have expected a reasonably competent professional to identify there had been extensive demolition on the site, that there was a significant risk with regard to contamination, with potential demolition materials, which needed to be fully assessed. And that's my conclusion and view."
(1) It would clearly not have been possible to undertake a wider assessment of the site before the existing building structures were demolished and it is fanciful to suggest either that IGL should have advised Bridgend to undertake the demolition before it produced its report or that Bridgend would have agreed to do so.
(2) It would not have made any sense for IGL to recommend a wider or more intrusive investigation of the grassed-over area in isolation and before the whole site could be investigated on a 25m grid as advised by IGL in its report. Given the absence of evidence of contamination in the trial pits which were carried out there was no reason to advise further trial pitting in the grassed-over area in isolation and in advance of the full investigation. That is a suggestion made entirely with the benefit of hindsight.
(3) I do not accept that it could be said to have been negligent of IGL to decide that given all of the circumstances there was no need to hold up production of the report in order to advise Bridgend that it could always consider having these further investigations done even though IGL had taken the perfectly reasonable view that they were not necessary at that stage.
What, if any, recoverable loss has BDW sustained?
(1) That the calculation for the primary case based on the "high-level estimate" approach was not supported by either expert.
(2) That there was no basis for using the actual costs of remediation as an alternative measure for valuing the primary case based on a reduction.
(3) That there was no basis for including the alleged delay costs in the claim.
(4) That on proper analysis this was a loss of a chance claim, because it depended on what a third party, here Bridgend, would have done in the counter-factual situation under consideration, so that in accordance with authority it was necessary for the claimant to prove that there was a real or substantial chance that the third party would have acted in a way favourable to the claimant and, if so, for the court to assess damages based on the evaluation of that chance in percentage terms: McGill v Sports & Entertainment Media Group [2016] EWCA Civ 1063, following Allied Maples Group v Simmoms & Simmons [1995] 1 WLR 1602 and Wellesley Partners v Withers [2015] RWCA Civ 1146. This involved a consideration of BDW's negotiating position, Bridgend's negotiating position and the position of the other interested parties, not just in relation to the site but also in relation to the adjacent caravan park site.
BDW's high level cost estimate.
(1) Remediation works
(2) Geotechnical engineer
(3) Imported topsoil
(4) Road sweeps
(5) Additional preliminaries/supervision
Further points
Contributory negligence
Conclusions