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Corporate Claims bulletin April/May 2017 - Liability

  • United Kingdom
  • Litigation and dispute management
  • Personal injury claims litigation - Claims e-briefing

31-05-2017

Lejonvarn v Burgess and Another (2017) – Court of Appeal

Facts

The Claimant Respondents (“the Burgesses”) own a residential property in North London called “Highfields”. In 2012 they decided to carry out landscaping to their garden. A quotation of £155,837 plus a planting budget of £19,785 (both exclusive of VAT) was quoted by Mark Enright of the Landscape Garden Company Ltd. Although the Burgesses liked the plan produced by Mr Enright they regarded his quotation as being too expensive.

The Defendant Appellant (“Mrs Lejonvarn”) was a friend and former neighbour of the Burgesses. She is an American qualified architect although she is not a registered architect in the UK. She worked for two architectural firms in the UK from 2007 to 2013 during which time projects were both discussed and performed for Mr Burgess's firm, Retail Human Resources plc (“RHR”). By spring 2013 she had decided to work on her own account and had adopted a trading name of Linia Studio.

The Burgesses decided to ask for Mrs Lejonvarn's assistance with their landscaping scheme (“the Garden Project”). She secured a contractor to carry out the earthworks and hard landscaping and a quotation was provided. She intended to provide subsequent design work in respect of the “soft” elements of the Garden Project such as lighting and planting for which she would charge a fee. The project never got that far. The Burgesses were unhappy with the quality and progress of the work and Mrs Lejonvarn's involvement came to an end in July 2013.

The Burgesses claim that much of the work done during the period of Mrs Lejonvarn's involvement was defective, that she is legally responsible for it and claim damages of about £265,000. Their claim was advanced in contract but also in tort on the basis that Mrs Lejonvarn assumed responsibility for the provision by her of professional services acting as an architect and project manager.

The trial of preliminary issues was ordered to determine whether the Burgesses could claim in contract and in tort and also whether a budget figure of £130,000 was discussed. After a 3 day trial the judge determined that there was no contract but that Mrs Lejonvarn did owe a duty of care in tort in relation to the provision of various services pleaded. It was also found that the £130,000 budget figure was discussed on two occasions.

Mrs Lejonvarn appeals against the judge's decision that she owed a duty of care in the terms found or at all.

Findings at first instance

The parties had worked together on four previous projects and the court drew from these prior dealings:

“These various ventures demonstrate that there was a willingness on the part of Mrs Lejonvarn to provide a variety of architectural services, both on an informal and formal basis, to Mr Burgess or his company in the period before the commencement of the Garden Project. Mrs Lejonvarn gave every impression that she, personally, was capable of providing all the services described and Mr Burgess was reasonably left with that impression.

In relation to the Garden Project Mr Enright produced his plan in July 2012. On 2 August 2012 the Burgesses hosted a party to celebrate the London Olympics at which the Lejonvarns were present. The judge found that during that occasion Mrs Lejonvarn commented on Mr Enright's plan indicating that it was his name that pushed the price up and that it did not need to come at anywhere near that price. The judge concluded at that this was a casual remark and did not reflect Mrs Lejonvarn pushing to be appointed for the project.

In the winter of 2012 the judge found that there was a casual conversation between Mr Burgess and Mrs Lejonvarn in which he specifically asked her if she and her team had experience of working on garden projects and she said that she did and that terracing was a construction job like any other. The judge held:

“The exchange was unsurprising as Mrs Lejonvarn did have some professional experience of domestic landscaping projects although I do not believe it was on anything like the scale of what became the Garden Project. In my judgment, she would not have let that stand in the way of the opportunity to secure a prestigious project for her new venture. As their previous dealings show, Mrs Lejonvarn had always been enthusiastic about offering to provide architectural services either for the Burgesses or for RHR.”

In March 2013 Mr Burgess asked Mrs Lejonvarn if her “guys could do our garden”. She replied that she would have a look at the plans and “definitely our guys will be great” and that she would “meet with them to go over the job so that they can price it”.

The “guys” were a construction workforce headed by a Polish man called Przemek Kordyl with whom Mrs Lejonvarn had a good working relationship (she speaks Polish) and who had worked on the Bank Project. By this time Mr Kordyl had formed a limited company known as Hardcore Builders Ltd (“Hardcore”). There followed various exchanges between her and Mr Kordyl about the proposed works.

On 18 March 2013 there were several email exchanges between Mrs Lejonvarn and Mr Burgess upon which both parties placed considerable reliance. It is therefore necessary to set them out in some detail.

At 13.27 Mrs Lejonvarn emailed Mr Burgess as follows:

“We have done the leg work on what needs to be done in preparation for works and we can be ready very soon at minimum getting things lined up. Do you have a start date or thereabouts in mind…Ideally I would not want to be away the week they start, but actually, that week is a short week due to Easter Monday. Hardcore will prepare the first phase for costing which will relate to all the ground preparation, ground works, etc. to get the levelling done. I would also like to instruct a drains survey as quickly as possible. This is the opportune time to confirm that all the below ground drainage is sound and where exactly we can connect to etc, for additional drainage…I use 2 companies who are both very good and very reasonable.”

Mr Burgess replied at 15.54 saying that the works could start at any time once he knew what the cost would be.

Mrs Lejonvarn sent an email in response at 17.12 stating:

“We can cost out the first phase of works to achieve the necessary levels. We have unit costs for the railway ties but we really need to have a more detailed design developed in order to cost out how many ties are needed. What can be achieved is a conservative estimate at the very least. In order to determine full costs for the steps and decking, I will generate areas and number of steps from Mark Enright's design but I would actually like to make my own drawings to develop the design to a realistic quantifiable level. In the meantime, the first phase of the works would include protection and site preparation, initial removal of existing decking…then the initial ground works to achieve the new levels. That can be priced up now….we need to cost up as much as is known of the works”

Mr Burgess replied at 17.37 saying that he did not want to have to go to the cost of a complete re-design unless he had some sort of feel for what the cost would be.

At 18.15 Mrs Lejonvarn responded saying:

“By no means am I suggesting a re-design. Mark gave you a very good general concept and his design should work but he hasn't taken it to a level that is necessary both for costing and for building. He gave you a budget estimate but he didn't give you a breakdown of costs, and once you would have started costs might just have accumulated. I wouldn't be charging you to work through the initial costing anyway. The only design charges I anticipate are for the exact layout of the deck areas, the paving area (it has to be laid out even for ordering of the tiles) and any design features such as the screens to the hedge, the fencing above and how you want it to be. A drawing helps you visualise the final result and it helps work out how much of each item one needs to order. Effectively, you have a general design, but it is not something anyone (other than Mark Enright of course) can implement without working out some further details. For example the fencing, what type, readymade panels or not, will it need some support members etc. The railway ties all come in different sizes and we need to make sure we get ones that are adequate for the job and keep consistency throughout the garden. It is premature for some of these decisions, but those are the kinds of things I mean when I refer to design. I don't mean I want to re-design the general layout. Mark has done that and from there you can move forward, but it isn't quite ready for a meaningful pricing exercise. Remember that Mark Enright does this over and over again, so he will have a good idea of what he needs to charge. From my builder's perspective, they need to go through the job with a fine tooth comb in order to arrive at a price that is realistic.”

At 18.51 Mrs Lejonvarn sent a further email (“the 18 March email”) in the following terms:

“So you would prefer for me to get Hardcore to give you another budget estimate for the whole job just like Mark Enright did? … I am not suggesting a re-design, I am suggesting the next step of the initial concept design for the purposes of pricing. I see the project team as follows:

1. Labour: Hardcore (Przemek and Adam)

2. Project Management and detail design (to include layout and procurement of hard materials such as paving, decking, possibly balustrades and design features (possibly a water feature), consideration of technical aspects such as drainage and building of raised beds and or supports, fences, barriers and or other built items such as storage cupboard and all related finishes.) ME.

3. Lighting: Mark DAVIS

4. Trees: Richard Wassels

5. Planting and any pots or decorative features: Matt

6. Misc. items: underground drainage and irrigation.

My guys are prepared to do all of the “building work”, the ground works, the raised beds and terraces, the deck areas and stairs, and storage and the paved areas at the ground level and they can have it all ready to receive planting.”

Mr Burgess replied at 19.07 that he would love her guys to do it, but that he did not want to be in a position where it cost even more than Mr Enright, that he was thinking it would be substantially less expensive and that he would need a fairly firm price.

At 19.37 Mrs Lejonvarn replied:

“Ok so we get a firm price from them. I doubt their price would come even close to Mark's but the only way to find out is to test it. So that is how I will proceed. I will do what is necessary for them to price it out accurately and I will ask Matt to come and have a look at the garden so that he can get us a price too. I will work on finding the tiles so I can get a price for that too. Mark's design is good and you can always still say it is a Mark Enright designed garden as I am assuming you paid for his design so I don't see how you would lose that value by using Hardcore to carry it out. …Agreed for Hardcore to price out with my input?”

Mr Burgess replied at 19.38 saying “that all sounds great”.

Matters then proceeded as had been proposed. On 17 April 2013 Mrs Lejonvarn sent the cost estimate prepared by Hardcore to the Burgesses explaining that it was a cost estimate for the “Ground works and first phase works” with budget estimates for subsequent stages. “Under the heading “First stage – demolishing and structural works” there were eight listed items with a global cost attached of £45,000. Below that were items for supplying and fitting railway sleepers (£12,000), an allowance for hardwood decking and steps (£9,000), an allowance for the irrigation system (£4,500) and an allowance for new fencing (£8,000). When added together, the total cost was £78,500. VAT was expressly excluded.” The judge found that Mrs Lejonvarn was not merely acting as a conduit – “By this point in time, she had identified the proposed contractor, discussed the scope of work with that contractor and provided quantified estimates for the work as set out in the cost estimate. She had previously agreed to get Hardcore to price the work in phase 1 with her input and that is what she did.”

There followed various email exchanges about the pricing. On Sunday 28 April 2013 Mrs Lejonvarn met Mr Burgess at Highfields. The judge found that Mrs Lejonvarn did identify a (VAT exclusive) budget figure of £130,000 at the meeting, contrary to the evidence of Mr Burgess.

Work on the Garden Project commenced on 15 May 2013. This was “the start of the period during which Mrs Lejonvarn provided further professional services for the Burgesses”. “Mrs Lejonvarn created some design drawings dated 15 May 2013 under the professional title of Linia Studio. Mr and Mrs Burgess are named as the client on the drawings”.

Substantive work began on 16 May 2013. On 17 May 2013 there was a meeting in the kitchen at Highfields at which the judge found that the budget figure of £130,000 was mentioned in the presence of Mr Burgess.

The Garden Project got underway with Mrs Lejonvarn visiting the site from time to time and was said to be supervising the works.

The Burgesses contend that the works executed by Hardcore under Mrs Lejonvarn's supervision were defective in a number of pleaded respects. For the purposes of the trial of preliminary issues it was to be assumed that the defects already existed as at 9 July 2013.

The grounds of appeal

 Ground 1: The judge erred in holding a duty existed at common law in circumstances in which he had found that there was no concluded contract between the parties.

Ground 2: The judge erred in holding that Mrs Lejonvarn owed the Burgesses a duty at common law to inspect and supervise the works.

Ground 3: The judge erred in holding that Mrs Lejonvarn had an obligation at common law to undertake and/or owed the Burgesses a duty of care in respect of the design of the Garden Project.

Ground 4: The judge erred in holding that Mrs Lejonvarn owed the Burgesses a duty at common law to exercise cost control, prepare a budget for the works and oversee expenditure against that budget, and to review and advise in connection with applications for payment.

Ground 5: The judge was wrong to conclude that Mrs Lejonvarn agreed to provide all of the services to which a duty of care was said to attach.

Ground 6: The judge's findings that Mrs Lejonvarn was as a matter of fact providing services to which a duty of care was said to attach were inadequate and/or incomplete and/or wrong.

The law

In considering whether a tortious duty arose, the judge recognised that this was a case in which the losses claimed are pure economic losses. He considered a number of cases which consider the circumstances in which a duty of care may be owed in respect of such losses. These included Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465; Murphy v Brentwood District Council [1991] 1 AC 398; Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 and White v Jones [1995] 2 AC 272.

The judge concluded that this was a case in which the issue of whether a duty of care arose was best addressed by considering whether there had been an assumption of responsibility as explained in the leading case of Henderson v Merrett.

In his judgment in that case Lord Goff placed particular reliance upon the following passages from the judgments in Hedley Byrne:

“My Lords, I consider that it follows and that it should now be regarded as settled that if someone possessed of a special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise. The fact that the service is to be given by means of or by the instrumentality of words can make no difference. Furthermore, if in a sphere in which a person is so placed that others could reasonably rely upon his judgment or his skill or upon his ability to make careful inquiry, a person takes it upon himself to give information or advice to, or allows his information or advice to be passed on to, another person who, as he knows or should know, will place reliance upon it, then a duty of care will arise.”

“I think, therefore, that there is ample authority to justify your Lordships in saying now that the categories of special relationships which may give rise to a duty to take care in word as well as in deed are not limited to contractual relationships or to relationships of fiduciary duty, but include also relationships which in the words of Lord Shaw in Nocton v. Lord Ashburton [1914] A.C. 932, 972 are 'equivalent to contract,' that is, where there is an assumption of responsibility in circumstances in which, but for the absence of consideration, there would be a contract. Where there is an express undertaking, an express warranty as distinct from mere representation, there can be little difficulty. The difficulty arises in discerning those cases in which the undertaking is to be implied. In this respect the absence of consideration is not irrelevant. Payment for information or advice is very good evidence that it is being relied upon and that the informer or adviser knows that it is. Where there is no consideration, it will be necessary to exercise greater care in distinguishing between social and professional relationships and between those which are of a contractual character and those which are not. It may often be material to consider whether the adviser is acting purely out of good nature or whether he is getting his reward in some indirect form….”

From these and similar statements made by the House of Lords in Hedley Byrne and their application in that case Lord Goff drew the following conclusions at pp. 179-180:

“…we can derive some understanding of the breadth of the principle underlying the case. We can see that it rests upon a relationship between the parties, which may be general or specific to the particular transaction, and which may or may not be contractual in nature. All of their Lordships spoke in terms of one party having assumed or undertaken a responsibility towards the other. On this point, Lord Devlin spoke in particularly clear terms in both passages from his speech which I have quoted above. Further, Lord Morris spoke of that party being possessed of a “special skill” which he undertakes to “apply for the assistance of another who relies upon such skill.” But the facts of Hedley Byrne itself, which was concerned with the liability of a banker to the recipient for negligence in the provision of a reference gratuitously supplied, show that the concept of a “special skill” must be understood broadly, certainly broadly enough to include special knowledge. Again, though Hedley Byrne was concerned with the provision of information and advice, the example given by Lord Devlin of the relationship between solicitor and client, and his and Lord Morris's statements of principle, show that the principle extends beyond the provision of information and advice to include the performance of other services. It follows, of course, that although, in the case of the provision of information and advice, reliance upon it by the other party will be necessary to establish a cause of action (because otherwise the negligence will have no causative effect), nevertheless there may be other circumstances in which there will be the necessary reliance to give rise to the application of the principle. In particular, as cases concerned with solicitor and client demonstrate, where the plaintiff entrusts the defendant with the conduct of his affairs, in general or in particular, he may be held to have relied on the defendant to exercise due skill and care in such conduct.”

Following his review of the authorities the judge concluded as follows:

“…it is clear from the authorities referred to above (particularly the passages from Lord Goff at pages 178/9 in Henderson ) that no distinction is drawn between the provision of advice and the provision of services where a special skill is exercised. In the provision of supervision services in respect of construction work, a professional usually deploys a special skill and, in circumstances where there is an assumption of responsibility, a duty of care arises. That is the case even though the contractor who creates the defective construction work in the first place owes no such tortious duty” [173].

“….it is established that in law a duty of care extends to the protection against economic loss in respect of both advice and any service in which a special skill is exercised by a professional. The duty can extend to negligent omissions as well as the performance of negligent acts. For present purposes, the relevant ingredients giving rise to the duty are an assumption of responsibility by the provider of the service coupled with reliance by the recipient of the service, all in circumstances which make it appropriate for a remedy to apply in law. The passages above make specific reference to the fact that a duty of care may be found to arise even in circumstances where services are performed gratuitously and in the absence of a contract. However, as identified by Lord Goff, in the absence of a contract it is important to exercise greater care in distinguishing between social and professional relationships”.

Applying those principles to the facts of this case he concluded that a duty of care was owed by Mrs Lejonvarn on the basis of an assumption of responsibility.

It does not appear that it was suggested that assumption of responsibility was not the appropriate test to apply in the circumstances of this case. In my judgment he was entitled to apply that test. Assumption of responsibility is an appropriate test in cases which involve a relationship akin to contract, as the judge found this case to be.

 This is a case which concerned Mrs Lejonvarn voluntarily tendering skilled professional services in circumstances where she knew the Burgesses would rely on the proper performance of those services.

In the court’s judgment, in determining whether there had been an assumption of responsibility the judge was therefore correct to consider whether the circumstances “make it appropriate for a remedy to apply in law” – i.e. whether it would be fair, just and reasonable to impose liability.

Ground 1: The judge erred in holding a duty existed at common law in circumstances in which he had found that there was no concluded contract between the parties.

In relation to whether there was a contract, the judge found that it was impossible to identify any offer and acceptance from the written exchanges between the parties. He noted that: “Leaving aside the absence of discussion about remuneration, nothing was said about the duration of services, provision for their termination or any other clauses of the type typically to be expected in a professional's terms of engagement. In addition, the parties never discussed, or even mentioned, the notion that they would be entering into a contract between themselves”. He found that whilst the nature of the services which Mrs Lejonvarn intended to provide were described “it was never clear upon what terms (if any) those services would be provided”.

The judge also found that “the parties did not intend to be bound by a contractual relationship” and that there was no consideration.

Although there was no contract the judge found that there had been an assumption of responsibility such as to give rise to a duty of care. In reaching that conclusion the judge emphasised the following matters in particular:

(1)     Over a period of time Mrs Lejonvarn agreed to and did in fact provide a series of professional services for the Burgesses in respect of the Garden Project [179].

(2)     Mrs Lejonvarn expressed a degree of confidence in her own ability to manage projects, control budgets and to select, organise and approve payments for contractors and the Burgesses had no reason to disbelieve that she had such expertise and experience [180].

(3)     The project management services which Mrs Lejonvarn was providing on the Garden Project were akin to those which Papa provided on the Bank Project. The only difference was that, instead of charging a percentage fee on the whole of the construction cost, Mrs Lejonvarn intended to charge a fee for the later phase of the Garden Project beyond the earthworks phase should it ever have come to pass [180].

(4)     The description of the project management and design services Mrs Lejonvarn intended to provide were set out in the 18 March email.

(5)     In the 9 July email Mrs Lejonvarn admitted her responsibility was to work in her clients' best interests and described how she had both assembled an experienced team for this project and managed their services. This was “effectively, her own written confirmation that she had previously been managing the contractor with her knowledge of technical, logistical and design solutions”.

(6)     The fact that the services were gratuitously provided did not mean that they were informal or social in context and the services were all provided in a professional context and on a professional footing. The reality of the relationship on the Garden Project since May 2013 involved separate professional and personal boundaries and was akin to a contractual one. The Burgesses were Mrs Lejonvarn's clients and there was an obvious and sufficient relationship of proximity between them.

(7)     Mrs Lejonvarn was the Burgesses' representative for the purposes of dealing with, instructing and approving payments to the contractor.

(8)     Mrs Lejonvarn was or should have been well aware that the Burgesses were relying on her to properly perform her services in respect of the Garden Project. They placed trust in her. She had skills they did not possess. Mr Burgess had past experience of her professional services and the Burgesses relied on her to perform analogous services. Had she not been responsible for project managing and overseeing the project they would have entered into a contractual relationship with Mr Enright.

(9)     In all the circumstances Mrs Lejonvarn assumed responsibility to the Burgesses for performing professional services in respect of the Garden Project and they specifically relied on her for that purpose.

(10)   The circumstances are such that it is appropriate for a tortious remedy to apply in law.

The fact that the judge found that there was no contract does not mean that the parties' relationship could not be akin to a contractual one. The judge found at that it was so akin, observing that the services “were all provided in a professional context and on a professional footing” and that they “freely accepted by the Burgesses. The Burgesses were her clients (albeit not in a contractual sense) and they owned the land in respect of which the services were performed. There was an obvious and sufficient relationship of proximity between them as a result.”

The judge gave express regard to the fact that the services were being provided gratuitously. He found that they were nevertheless professional services being provided “in a professional context and on a professional footing”. Further, they were being provided in the expectation that they would lead on to Mrs Lejonvarn being paid for her services in relation to the second phase of the work. Carrying out the Garden Project was also going to help in the establishment and growth of her business. There is no legal requirement that indirect economic value be derived from the service performed, but on the judge's findings there was some indirect value.

The judge did consider whether the circumstances were such as to make it appropriate for there to be a duty of care to prevent economic loss. He found that it was so appropriate having regard in particular to the following:

(1)     This was not a case of brief ad hoc advice but was a significant project which was being approached in a professional way.

(2)     The services were provided over a relatively lengthy period of time and involved considerable input and commitment on both sides.

(3)     The services involved significant commercial expenditure on the part of the Burgesses.

(4)     Neither party saw this as akin to a favour given without legal responsibility.

(5)     Although there was no consideration Mrs Lejonvarn did hope to receive payment for the soft design services that would later be provided and it was also important to the growth of her new business that she provided a good service.

(6)     Mr and Mrs Lejonvarn had been the recipients of benefits provided by the Burgesses beyond the normal bounds of friendship and the provision of gratuitous services by her should be seen in that light.

(7)     The losses allegedly sustained are of a type which would be expected to flow from a failure to competently perform the services which Mrs Lejonvarn was apparently providing.

The court held the judge was entitled to conclude that there had been an assumption of responsibility in the light of the findings made by him, as summarised above. Mrs Lejonvarn owed a duty of care to Mr and Mrs Burgess to exercise reasonable skill and care in the provision by her of professional services acting as an architect and project manager on the Garden Project.

Ground 2: The judge erred in holding that Mrs Lejonvarn owed the Burgesses a duty at common law to inspect and supervise the works.

The judge found that a duty of care was owed to exercise reasonable skill and care in the provision by Mrs Lejonvarn of the professional service of “attending site at regular intervals (approximately twice a week) to project manage the Garden Project, and to direct, inspect and supervise the contractors' work, its timing and progress”.

The judge qualified this duty by finding that it required “periodic inspection” rather than continuous attendance. On behalf of Mrs Lejonvarn it is contended that it was wrong for the judge so to conclude. In particular:

(1)     There is no previous case in which a common law duty of care to avoid economic loss has been found to arise in connection with the supervision of another's work.

(2)     It is particularly inappropriate for such a duty to arise in circumstances where, as here, no duty of care is owed by the person executing the work.

(3)     The duty found by the judge involves a positive obligation to act in a specific manner in the future. That is the function of the law of contract, not of tort.

(4)     There was no reasonable reliance through choosing not to utilise Mr Enright. He was not to be employed to act as a supervisor or indeed in any professional capacity.

The court could see no reason in principle why such a duty may not be owed where it is a professional service for which responsibility has been assumed and which is then performed negligently. If, for example, Mrs Lejonvarn had intervened during the course of her supervision of the work and negligently directed that a terrace be constructed in a particular manner with the consequence that it fell down causing economic loss then there would be a clear case of liability in the light of the general duty found.

The judge found that the Burgesses relied on the provision by Mrs Lejonvarn of her professional services in relation to the Garden Project. Reliance does not require it to be established that, but for the provision of services by the defendant, those very same services would have been performed by another. Reliance is generally sufficiently demonstrated by a claimant showing that he would have acted differently, and the judge so found in this case.

Whilst accepting that the judge was entitled to find that a specific duty arose, given the importance of the detailed facts the court defined the duty in the following terms:

“In providing the professional service acting as an architect and project manager of project managing the Garden Project and directing, inspecting and supervising the contractors' work, its timing and progress Mrs Lejonvarn owed a duty to exercise reasonable skill and care.”

Ground 3: The judge erred in holding that Mrs Lejonvarn had an obligation at common law to undertake and/or owed the Burgesses a duty of care in respect of the design of the Garden Project.

The judge found that a duty of care was owed to exercise reasonable skill and care in the provision by Mrs Lejonvarn of the professional service of “preparing such designs as were necessary to enable the Garden project to be accurately priced and constructed”. The judge qualified this duty by finding that the duty meant that the designs be sufficient “to enable a fairly firm budget estimate to be prepared” rather than to enable them “to be costed with an absolute degree of precision”.

On behalf of Mrs Lejonvarn it is contended that it was wrong for the judge so to conclude. In particular:

(1)     As to the alleged duty to prepare designs to enable the Garden Project to be accurately priced, the Particulars of Claim do not allege that Mrs Lejonvarn failed to exercise reasonable skill and care in performing such a duty, nor is it alleged that any such failure caused the Burgesses to suffer loss. In those circumstances the judge should have declined to make any finding in relation to the question of whether a duty of care was owed in the provision of the service.

(2)     The qualified duty found by the judge confuses and elides the content of any contractual duty which an architect (or project manager) might owe to his (or her) client with the question of what an architect's (or project manager's) duty might be to a third party at common law absent any contractual relationship.

(3)     A duty of care is owed in order to prevent loss and damage but the nature of the loss which the duty found is aimed at preventing is not identified.

(4)     The duty found involves a positive obligation to act in a specific manner in the future.

(5)     As to the alleged duty to prepare designs to enable the Garden Project to be constructed, this would require Mrs Lejonvarn to go to considerable time and expense to perform services for the Burgesses free of charge until her involvement in the Garden Project was brought to an end. This is not the function of the law of tort, there is no previous case in which an analogous duty has been found to exist and to extend the law in this way is not justified as a matter of principle or authority.

The court held that Mrs Lejonvarn said that she would do what was necessary for the project to be priced out accurately and prepared drawings to enable this to be done. Pricings were then provided which (based on the £130,000 budget figure) Mrs Lejonvarn claimed were accurate and were being adhered to. This is not therefore a case in which Mrs Lejonvarn merely said she would produce designs to enable the work to be priced, but it is a case in which she did so. Further, as the email exchanges of 8 March 2013 make clear, Mrs Lejonvarn knew that costs and a reasonably accurate budget were crucial to Mr Burgess and the decision to use her rather than Mr Enright.

The court defined this duty as follows:

“In so far as Mrs Lejonvarn provided designs to enable the Garden Project to be priced, thereby performing a professional service acting as an architect and project manager, she owed a duty to exercise reasonable skill and care to ensure that they were sufficient to enable a fairly firm budget estimate to be prepared”.

In relation to the alleged duty to prepare designs to enable the Garden Project to be constructed, the judge found that she did in fact undertake detailed design work. In doing so she had to act with reasonable skill and care.

The judge went further and suggests that there was a duty in the following terms: “If an architect should have appreciated the need for appropriate designs to be prepared beyond those which had in fact been prepared then Mrs Lejonvarn ought to have used reasonable skill and care in ensuring that those further designs were prepared either by a professional or by the contractor provided that, in the latter case, she had reasonable grounds to be satisfied that the contractor had sufficient competence and experience to prepare the appropriate designs and was in fact doing so.”

The court defined this duty as follows:

“In so far as Mrs Lejonvarn provided designs to enable the Garden Project to be constructed, thereby performing a professional service acting as an architect and project manager, she owed a duty to exercise reasonable skill and care”.

Ground 4: The judge erred in holding that Mrs Lejonvarn owed the Burgesses a duty at common law to exercise cost control, prepare a budget for the works and oversee expenditure against that budget, and to review and advise in connection with applications for payment.

The judge found that a duty of care was owed to exercise reasonable skill and care in the provision by Mrs Lejonvarn of the professional service of “receiving applications for payment from the contractor, and advising and directing the Claimants in respect of their payment” and of “exercising cost control by preparing a budget for the works, and overseeing actual expenditure against it”.

On behalf of Mrs Lejonvarn it was submitted that the nature and extent of the breaches alleged highlight that the duty found is one which would need be agreed by contract rather than imposed by law. It was further emphasised that the judge has not identified any specific act or advice which was relied upon by the Burgesses and to which the duty might attach.

In relation to applications for payment the judge found that “the receipt of applications for payment from the contractor and the provision of advice and direction to the Burgesses in relation to payment of such applications” was a service which Mrs Lejonvarn was providing. Having so found he was justified in finding that Mrs Lejonvarn owed a duty to exercise reasonable skill and care in so doing. Without a more detailed consideration of the facts it would not in my judgment be appropriate to be more specific as to what this duty required.

In relation to overseeing the budget the judge found that the pleaded service was one which Mrs Lejonvarn did in fact undertake. Again, having so found he was justified in finding that Mrs Lejonvarn owed a duty to exercise reasonable skill and care in so doing.

The appeal court defined these duties as follows:

“In providing the professional service acting as an architect and project manager of receiving applications for payment from the contractor, and advising and directing the Claimants in respect of their payment Mrs Lejonvarn owed a duty to exercise reasonable skill and care.”

“In providing the professional service acting as an architect and project manager of exercising cost control by preparing a budget for the works, and overseeing actual expenditure against it Mrs Lejonvarn owed a duty to exercise reasonable skill and care.”

Ground 5: The judge was wrong to conclude that Mrs Lejonvarn agreed to provide all of the services to which a duty of care was said to attach.

On behalf of Mrs Lejonvarn it is submitted that such an agreement could only derive from her emails of 18 March 2013 and her involvement in the Bank Project.

As to the 18 March 2013 emails, it is submitted that they contain no promise or agreement to provide some or all of the services specified in paragraphs 14 and 15 of the Particulars of Claim. For example, there is no mention of periodic inspection for defects and it is clear that Mrs Lejonvarn was not promising to produce a detailed design for the Garden Project.

As to the Bank Project, there was no allegation of course of dealing and there is no basis for inferring a promise or agreement that an equivalent set of services would be provided to those provided by Papa some years previously, in the context of a professional engagement for which a substantial fee had been payable.

The agreement found by the judge was based, however, not just on what Mrs Lejonvarn said but also on what she did. In relation to each of the specific services identified in paragraph 14.1 and 14.3 to 14.6 of the Particulars of Claim the judge found that it was provided by Mrs Lejonvarn. The combination of what Mrs Lejonvarn said and did, against the background found by the judge, justifies his finding of a duty of care in relation to the provision of the services.

Ground 6: The judge's findings that Mrs Lejonvarn was as a matter of fact providing services to which a duty of care was said to attach were inadequate and/or incomplete and/or wrong.

On behalf of Mrs Lejonvarn it is submitted that in the absence of any contract, the judge ought to have but has not set out the specific occasions on which each service to which a duty of care is said to attach was actually being provided and identified the basis for a duty of care to arise on each such occasion. In fact, the judge wrongly assumed that if an example of the relevant 'service' having been carried out by Mrs Lejonvarn can be identified, there must have been a general obligation to perform that service, and to do so with reasonable skill and care, throughout the period up to 9 July 2013.

No proper basis had been made out for interfering with the judge's finding of fact that the specified services were provided. As already stated, the combination of what Mrs Lejonvarn said and did, against the background found by the judge, justifies the judge's finding of a duty of care in relation to the provision of the services.

The appeal court held that it was correct that the judge has not addressed the detail of the services provided nor sought to identify all relevant acts or advice. It was neither necessary nor appropriate for him to do so for the purpose of the preliminary issue hearing. What the duty of care required in relation to each of the identified services will involve further evidence and findings. This may mean that a more extended duty of care was owed, but that will depend on the evidence.

Conclusion

For the reasons outlined, the appeal court upheld the judge's finding both of a general duty of care in relation to the provision of professional services and of a specific duty of care in relation to the services which he found were provided as identified in paragraph 14.1 and 14.2 to 14.6 of the Particulars of Claim.

 


 

Whyatt and Others v Powell and Another (2017)

Facts

The claim arose out of an accident that occurred on 15 April 2013. The First Defendant, Anthony Powell, and the three claimants had been at the house of another man on 15 April 2013. The First Claimant, Jamie Whyatt, was a 23 year old man. The Second Claimant, Gary Curtis Rees was 16. The Third Claimant, Arron Rees was celebrating his 15th birthday on that day.

At about 10 p.m, Anthony Powell and the three Claimants left in a car driven by Mr Powell. There was an accident and the three Claimants suffered injuries. Mr Powell was subsequently convicted of a road traffic offence and disqualified from driving as a result of this accident.

The Pleadings

The three Claimants each brought a claim for personal injuries against Mr Powell contending that he had been negligent. Judgment has been entered against him. It transpired that Mr Powell did not have insurance as required by the Road Traffic Act 1988. The Claimants also brought proceedings against the Second Defendant (“the MIB”) contending that the MIB would be liable to satisfy any unsatisfied judgment obtained against the First Defendant pursuant to clause 5 of an agreement reached between the MIB and the Secretary of State for the Environment, Transport and the Regions dated 13th of August 1999 (“the Agreement”).

Clause 6 of the Agreement provides that that obligation is subject to exceptions and the obligation does not apply to claims falling within the categories of claims defined in clause 6. MIB, in its defence, relied on an exception contained in clause 6(l)(e)(ii) of the Agreement. In summary, that provides that the MIB is not obliged to compensate a person in respect of an unsatisfied judgment where the claimant knew, or ought to have known, that the vehicle was being used without the relevant insurance. The precise words of the exception in clause 6(1)(e)(ii) of the Agreement, so far as material, are as follows:

Exceptions to the Agreement

“Clause 5 does not apply in the case of an application made in respect of a claim of any of the following descriptions….

(e) a claim which is made in respect of a relevant liability ... by a claimant who, at the time of the use giving rise to the relevant liability was voluntarily allowing himself to be carried in the vehicle and either before the commencement of the journey or after such commencement if he could reasonably be expected to have alighted from it, knew or ought to have known that –

(ii) the vehicle was being used without there being in force in relation to its use such a contract of insurance as would comply with Part VI of the 1988 Act ”

5.     The facts relied upon by the MIB in its defence in relation to the applicability of that exception were set out at paragraph 4 of the Defence in the following terms:

“The Second Defendant notes that the Claimants were all friends with the First Defendant. They had all been at the home of a mutual friend prior to the accident. The Claimants were informed by the First Defendant that he was not insured to drive the Citroen Saxo. Additionally the Claimants knew that the First Defendant had recently obtained the motor vehicle and that the First Defendant had previous driving disqualifications for driving offences. Alternatively, the Second Defendant will aver at trial that the Claimants (at the very least) “deliberately turned a blind eye” to the issue of whether the First Defendant was insured”.

By order dated 25 April 2016, Deputy District Judge Ead ordered, amongst other things, that the question of whether the Claimants knew or ought to have known that the First Defendant was driving without insurance be tried as a preliminary issue.

The Trial

At the hearing, no case was advanced on the basis of any actual knowledge by any of the three Claimants that Mr Powell was not insured. As the judge noted at paragraph 7 of his judgment:

“The essence of the case of the MIB at trial today is that in the specific circumstances, these claimants ought to have known because of knowledge of Powell's past offending, the fact that he had owned so many cars over a relatively short period and at a time in his life when insurance would have been an expensive commodity anyway (even disregarding his history of offending), and he had no apparent means of funding the acquisitions of the vehicles and their insurance”.

Prior to the accident, Mr Anthony Powell had convictions for driving offences and that he had been sentenced to imprisonment for those offences. The MIB (on whom the burden of proof of establishing that the exception applied) did not adduce any evidence of Mr Powell's convictions and, in particular, the MIB did not adduce any evidence that Mr Powell had convictions relating to driving which had led to him being sentenced to a period of imprisonment prior to the accident that was the subject of this claim. Mr Powell did not give evidence.

10.     The three Claimants gave evidence. The First Claimant, Mr Whyatt, confirmed in his evidence in chief that the responses that he had given to requests for further information made by the MIB were true. In those he said, in response to a question as to whether he knew if Mr Powell had previous convictions for dishonesty offences, that he knew that Mr Powell had been in trouble with the police before but did not know what for. He said that he did not know that Mr Powell had been previously disqualified from driving and that he believed that Mr Powell had some penalty points for speeding. Mr Whyatt said in cross-examination that he had heard that Mr Powell had been in trouble for burglaries and he said that Mr Powell had been in prison. He further said that it did not occur to him that Anthony Powell might not have insurance and he just thought that Mr Powell had insurance. Asked if he was surprised to learn that Mr Powell did not have insurance he said that Mr Powell had told him that the car was “legit”. The judge did not accept that that was a truthful statement and did not accept that Mr Whyatt had been told the car was “legit”.

The Third Claimant also gave evidence. In cross-examination, Arron said he did not ask Anthony Powell if he had insurance but just assumed that he had. He did not refer in his evidence in chief to him knowing that Anthony Powell had any convictions and, in his responses to requests for information, he said that he did not know that Anthony Powell had previous convictions for dishonesty offences nor that he had been previously disqualified from driving nor that he had convictions for driving offences. In cross-examination, Arron also said that he did not know that Anthony Powell had been to prison.

The Second Claimant gave evidence. In his evidence in chief, he confirmed that the statement he gave to police (which did not refer to any criminal convictions of Anthony Powell) was true. He confirmed that his answers to the requests for information were true and in those he stated that he knew Anthony Powell had been in trouble with the police and he believed it was to do with robbery. There was another statement signed by the Second Claimant. It transpired that that was prepared by the MIB and signed by the Second Claimant but he has difficulties in reading and the statement was not read back to him before he signed. That statement included a sentence in these terms “I knew that he has been in jail for a number of offences including driving offences”. That statement, however, was not confirmed by him as being true and did not form part of his evidence in chief. In cross-examination, Gary confirmed that he knew that Anthony Powell had been in trouble with the police and he knew that he had been to prison. He thought it was for robbery and a driving offence but he did not know the details. In re-examination, Gary said that he learned about that matter after the accident. The judge, however, did not believe that last assertion. The position was, then, that Gary Rees had given evidence that he believed that Anthony Powell had been to prison for robbery and a driving offence and he knew that information at the time of the accident. In cross-examination, Gary also said that he “thought he had insurance. I wouldn't jump in someone's car if they didn't' have insurance or anything” and he said that he did not actually ask himself whether Anthony Powell did have insurance before getting into the car.

The Judgment

The judge identified that at the heart of the MIB's case was reliance upon the exception in clause 6.1(e)(ii) of the Agreement. The judge referred to the decisions of the House of Lords in White v White & MIB [2001] 1 W.L.R. 481 and of the Court of Appeal in Akers & Others v Motor Insurers' Bureau and another [203] EWCA Civ 18. The judge observed that the MIB was not alleging actual knowledge but was relying on the second category of cases identified in paragraph 16 of White and considered that the question was whether this case “is the type of case where, as applied in the present context, a passenger had information from which he drew the conclusion that the driver might well not be insured but deliberately refrained from asking questions, lest his suspicions be confirmed”.

In the light of those passages, the judge considered that the issues did not relate to actual knowledge but distilled to:

“a central question of whether on the facts of this case these claimants ought to have known in a sense that they were put on enquiry and did not undertake that enquiry. Are these claimants then to be cast as passengers who ought to have known in accordance with that interpretation?”

The judge concluded that the Claimants had not been truthful in relation to a number of matters. He was satisfied that he had not been given a full account of the circumstances relating to the evening of 15 April 2013 and the underlying relationship of the people at the house where Anthony Powell and the three Claimants were immediately before leaving in the car or how it was that the three Claimants came to get into the car. He found that the three Claimants had not been truthful about the amount of alcohol they had consumed that night. Those are findings that the judge was entitled to make having heard the witnesses.

In relation to the question of knowledge, the judge noted the frequency of the contact between Mr Whyatt and Mr Powell. He expressly found that Mr Powell had not told Mr Whyatt that the car was “legitimate”. In relation to Gary Rees, he noted that he had said that he knew that Anthony Powell had gone to prison for robbery and driving offences and claimed only to have been told about that later and the judge said:

“It is clear from the statement that he gave to the police in December 2013 which is just a matter of months after the accident, that he knew that Powell had been to prison for driving offences.”

In relation to Arron Rees, he noted that he had said that he had known Anthony Powell all his life but he did not know that he had been to prison. The judge also noted that the close connection between Powell and all three Claimants in a small community where they lived in close proximity provided the backdrop against which the issue of what they knew about him had to be assessed. The judge concluded that the three Claimants knew far more than they were prepared to say about Powell and it was “probable that all three knew of his driving convictions” and noted that Anthony Powell had had a number of cars and no job and no readily apparent means of insurance.

The judge found that the claimants all knew more about Powell than they now accept. They knew he had convictions. They knew he had been to prison for driving offences.

He held that that seriously undermined their credibility about what was happening at the time and also, therefore, their credibility about their understanding of Powell and what they knew at that time. The claimant were held to have known more than enough to put them in the category of persons who “ought to have known”. They ought to have known that there was no insurance because there was enough there to put them on inquiry and they did not ask”.

The Law

The meaning of “knew or ought to have known” in clause 6(l)(e)(ii) of the agreement has been considered by the House of Lords in the decision in White v White. The House noted that the context in which the phrase occurred was one where an individual was to be able to have compensation for personal injuries caused by vehicles whether the vehicle was insured or not. Clause 6(l)(e)(ii) was an exception to that rule and was to be construed restrictively. The exception was intended to be co-extensive with the meaning of the relevant European Union Directive then in force. The material parts of  the principles are in the following terms:

“... In this context, knowledge by a passenger that a driver is uninsured means primarily possession of information by the passenger from which the passenger drew the conclusion that the driver was uninsured. Most obviously and simply, this occurs where the driver told the passenger that he had no insurance cover. Clearly, information from which a passenger drew the conclusion that the driver was uninsured may be obtained in many other ways. Another instance would be when the passenger was aware, from his family or other connections with the driver, that the driver had not passed his driving test. Knowledge of this character is often labelled actual knowledge, thereby distinguishing other types of case where a person, although lacking actual knowledge, is nevertheless treated by the law as having knowledge of the relevant information.

There is one category of case which is so close to actual knowledge that the law generally treats a person as having knowledge. It is the type of case where, as applied to the present context, a passenger had information from which he drew the conclusion that the driver might well not be insured but deliberately refrained from asking questions lest his suspicions should be confirmed. He wanted not to know. The law generally treats this state of mind as having the like consequences as would follow if the person, in my example the passenger, had acted honestly rather than disingenuously. He is treated as though he had received the information which he deliberately sought to avoid. In the context of the Directive that makes good sense. Such a passenger as much colludes in the use of an uninsured vehicle as a passenger who actually knows that the vehicle is uninsured. The principle of equal treatment requires that these two persons shall be treated alike. The Directive is to be construed accordingly.

There was no doubt that “knew” in the Directive does not include what can be described broadly as carelessness or “negligence”. Typically this would cover the case where a passenger gave no thought to the question of insurance, even though an ordinary prudent passenger, in his position and with his knowledge, would have made inquiries.

He “ought” to have made inquiries, judged by the standard of the ordinary prudent passenger. A passenger who was careless in this way cannot be treated as though he knew of the absence of insurance.

The courts concluded that “'Ought to have known' is apt to include knowledge which an honest person who enters the vehicle would have. It includes the case of a passenger who deliberately refrains from asking questions. It is not apt to include mere carelessness or negligence. A mere failure to act with reasonable prudence is not enough”.

In White, the injured passenger knew that the driver, his brother, had driven in the past without a licence but he did not know at the time that his brother was driving without a licence and was uninsured. The judge had found that, while the passenger did not know that his brother was uninsured, it “'stands out a mile' that he ought to have known. He ought to have made sure one way or the other, and he made no effort to do so”. The House of Lords found that this was a finding of carelessness, assessed by the standard of the ordinarily prudent passenger having the knowledge possessed by the particular passenger in that case. That case did not fall within the exception and the MIB was therefore liable to pay compensation.

In Akers and others v Motor Insurers' Bureau and another [2003] EWCA Civ 18, it was held that:

“The phrase “knew or ought to have known” has been the subject of recent consideration by the House of Lords in White v White & the MIB, where the origins of the MIB are described in the judgment. Their Lordships emphasised that the purpose of the 1988 Agreement was to give effect to the terms of the second EEC Motor Insurance Directive 84/5/EEC , which simply allows for an exception where the injured passenger “knew” that the vehicle was uninsured. Consequently, the phrase “knew or ought to have known” is to be given the same meaning as “knew” in the directive. Moreover, as an exception to a general obligation, this phrase is to be given a narrow interpretation. A mere failure to make enquiries as to insurance, however negligent in the circumstances, is not enough by itself to bring the exception into play. It certainly will apply, however, either if the passenger had actual knowledge of the lack of insurance, or if he had information from which he realised that the driver might well not be insured but he deliberately refrained from asking questions lest his suspicions be confirmed. It follows that it is not enough for the MIB to show that the passenger failed to make the enquiries which a reasonable person would have made in the circumstances. More than that is required.

The appeal

Against that background, the question was whether, in relation to each Claimant, the judge was entitled on the evidence to reach the conclusion that he did. An appeal court will only intervene if the judgement below was wrong or unjust due to a serious procedural or other irregularity. The court had a full transcript of the trial, including the evidence given by the Claimants, the judge below had the advantage of hearing each of the Claimants give evidence and forming a view of their truthfulness. There is no basis for the court to depart from the general findings as to the Claimants' lack of truthfulness in relation to the circumstances of the evening in question, the amount of alcohol they had consumed, the extent of their relationship with Anthony Powell or, in relation to the First Claimant, the claim that the First Claimant had been specifically told that the car was “legit”. Those were matters for the trial judge to assess. The real issue is whether, given the findings of fact, the judge has properly addressed the question of whether each claimant knew or ought to have known that the vehicle was uninsured when they got into it, applying the principles set out in White and in Akers.

Dealing first with the Third Claimant, Arron Rees, the position is this. He was 15 years old on the day of the accident (that day was his birthday). The evidence that he gave was that he did not know that Anthony Powell had been in prison before. His evidence was that he just assumed that the car was insured and did not ask. Those circumstances would not, in my judgment, of themselves amount to a situation where it could be said that Arron Rees ought to have known that the vehicle was uninsured, applying the relevant legal principles. At most they would amount to carelessness or negligence in failing to ask questions. The question is, therefore, what information did the judge find that Arron Rees had and from which he realised that the driver might well have not been insured and then deliberately refrained from asking questions lest his suspicions be confirmed?

The court stated that the judge was influenced by the belief or assumption that Anthony Powell had convictions for driving offences and had been in prison for those offences. He further inferred, from the circumstances and the fact that this was a small community, that the Claimants (including Arron Rees) would know more about Mr Powell than was admitted and that, therefore, they too would know that he had been to prison for driving offences. The difficulty with this conclusion is, in part, that there was no evidence before the judge establishing that Mr Powell had in fact been convicted, and imprisoned, for driving offences before this accident. He did not have evidence as to the antecedents of Mr Powell. Nor did Mr Powell give evidence. The most that there was by way of evidence was Gary Rees' evidence that he believed that Mr Powell had been to prison for robbery and driving offences. But the judge did not base his findings on the fact that Gary Rees had told his younger brother, Arron Rees, those facts (and there was no evidence as to whether he had or not). There is, therefore, no basis for any inference from the facts as found by the judge, that Arron Rees had information (or believed) that Mr Powell had been in prison for, amongst other things, driving offences and realised, from that fact, that Mr Powell might not have been insured and deliberately refrained from asking questions.

Apart from the question of imprisonment for driving offences, a finding that Arron Rees had not told the full truth of what was happening at the house or as to the amount of alcohol consumed would not, of itself, be capable of giving rise to an inference that Arron Rees had information from which he realised that Anthony Powell might not be insured and deliberately refrained from asking about insurance (although it may be relevant to an assessment of his credibility if, for example, he denied knowledge of certain facts).

The judge would have needed to address the evidence that Arron Rees gave that he just assumed that Anthony Powell had insurance. The case law establishes that a failure to make the inquiries that a reasonable person would make would not be sufficient to fall within the exception. Even assuming that Arron Rees knew that Anthony Powell had had a number of cars, and limited means, the judge would have had to consider whether Arron realised that meant that Anthony Powell might not have been insured. Simply failing to make inquiries which a reasonable passenger might make, with knowledge of that information, would not be sufficient to bring the case within the exception. The judge did not, however, address this issue. For those reasons, the appeal in relation to the Third Claimant was allowed.

Dealing with the First Claimant, Jamie Whyatt, the question again is what information did the judge find that Jamie Whyatt knew from which he realised that the driver might well have not been insured and then deliberately refrained from asking questions lest his suspicions be confirmed? It is clear that the judge was influenced by the fact that the judge believed that Anthony Powell had convictions for driving offences and had been in prison for those offences. He further inferred that, given Mr Whyatt's knowledge of Mr Powell and the fact that this was a small community, that Jamie Whyatt knew more about Mr Powell than he admitted and again he found that Jamie Whyatt knew that Anthony Powell had been to prison for driving offences. The difficulty with this conclusion is that there was no evidence before the judge establishing that Mr Powell had in fact been convicted, and imprisoned, for driving offences before this accident. He did not have evidence as to the antecedents of Mr Powell. Nor did Mr Powell give evidence. The most that there was by way of evidence was Gary Rees' evidence that he believed that Mr Powell had been to prison for robbery and driving offences. But the judge did not base his findings on the fact that Gary Rees had told Mr Whyatt this. There is, therefore, no basis for any inference from the facts as found by the judge, that Jamie Whyatt had information (or believed) that Mr Powell had been in prison for, amongst other things, driving offences and realised, from that fact, that Mr Powell might not have been insured and deliberately refrained from asking questions. For that reason alone, the appeal in relation to the First Claimant was allowed.

The position in relation to the First Claimant more generally is different from and more complex than that in relation to the Third Claimant. The fact that he had not been truthful about the events of the evening or as to his consumption of alcohol would not of itself amount to the possession of information from which he realised that Anthony Powell might not be insured. Similarly, the fact that the First Claimant had not told the truth when he claimed that Anthony Powell had told him the car was “legit” would be relevant to an assessment of his credibility. There were also the facts referred to by judge, namely that Jamie Whyatt knew that Anthony Powell had had a number of cars but had no job or apparently any means to pay insurance.

Ultimately, however, the judge needed to identify what information existed, and which the First Claimant had, and from which he realised that Anthony Powell might not be insured. The reality is, it seems, that the judge considered that all the matters referred to were relevant in assessing the First Claimant's credibility in deciding whether or not he knew that Anthony Powell had been to prison for driving offences. He simply assumed that such information existed (when there was no evidence it did) and addressed his attention to the question of whether the First Claimant knew that information. Given the absence of evidence that Anthony Powell had such convictions, the findings of fact made by the judge stop short of establishing that there was such information in existence. For those reasons, the appeal in relation to the First Claimant was allowed.

The position in relation to the Second Claimant, Gary Rees, is different again. He gave evidence that he believed that Anthony Powell had gone to prison for robbery and driving offences. Given that finding, there would have been a legitimate basis for concluding that he had information from which he believed that Anthony Powell might not have been insured and deliberately did not ask questions. There are, however, particular features of this case which, on balance, lead me to conclude that there has been a procedural shortcoming in the trial below which means that it would be unjust to allow such a finding to stand on the evidence. First, Gary Rees did give evidence that he assumed that Anthony Powell had insurance and never asked himself whether he did. Even if he believed that Anthony Powell had been imprisoned for driving offences, and even if that would cause a reasonable person to make inquiries, that would not be sufficient to enable the MIB to rely upon the exception if, in fact, Gary Rees genuinely but negligently failed to make inquiries and simply assumed that the driver must be insured.

The judge did not address this issue. Secondly, the judge was influenced by the fact that he did not believe Gary Rees when he said that he was told after the accident about Anthony Powell's driving convictions. The difficulty with that conclusion is that the judge based it on the statement that he believed the Second Claimant had given to the police in December 2013 (about 8 months after the accident). If, as seems likely, the judge was referring to the statement dated 9 December 2013, that was a statement taken by the MIB, it was not read back to Gary Rees (who was 16 and had difficulty reading) and was not adopted by him in his evidence in chief. The statement to the police, the contents of which Gary Rees did confirm were true, does not refer to any convictions on the part of Anthony Powell and was given much earlier than December 2013. In the circumstances, the failure to address the direct evidence of Gary Rees' knowledge at the time of the accident, particularly when set against the assessment of Gary Rees' evidence by reference to a statement not accepted by him as true, and given the background of the absence of actual evidence of any convictions for driving resulting in imprisonment, does amount to such an irregularity in the trial as would make it unjust to allow the finding that Gary Rees ought to have known that the vehicle was not insured to stand. The appeal of the Second Claimant was allowed.

In the circumstances, that part of the order recording that the court had determined as a preliminary issue that each Claimant ought to have known that the vehicle was being used without there being in force in relation to its use such a contract of insurance as would comply with Part IV of the Act will be set aside.

The appeal is allowed and the determination that each of the Claimants ought to have known that the vehicle in which they were travelling was not insured will be set aside. That issue will be remitted to the county court to be re-heard and re-determined.

  

 

Baker v KTM Sportmotorcycle UK Ltd and Anor (2017) CA

The appellant motorcycle manufacturer appealed against a finding that it was liable for personal injuries caused to the respondent.

The respondent had bought one of the manufacturer's two year old second hand motorcycles from a dealer. It was fully serviced and had low mileage.

The respondent was thrown from the motorcycle and sustained serious personal injuries when the front brake seized. He brought a claim against the manufacturer alleging that his injuries had been caused by a defect in the bike contrary to the Consumer Protection Act 1987.

The manufacturer contended there was no mechanical issue but that there had been a failure to maintain the motorcycle. The respondent’s evidence was that he had regularly maintained the motorcycle and the respondent's expert gave evidence that deposits found on the motorcycle were consistent with galvanic corrosion. The judge found that galvanic corrosion was the probable cause of the brake seizure due to a defect with the motorcycle and upheld the respondent's claim.

On appeal the manufacturer submitted that the judge was wrong to find that there was a defect in the motorcycle and that it was the result of faulty construction or manufacture. It was argued that the trial judge had failed to take account of the absence of any evidence from the previous owner regarding his maintenance of the motorcycle and that the respondent had to identify the defect responsible for the brake seizing.

HELD: There was no need for the respondent to plead a specific defect.

The judge had found that the motorcycle had been serviced and was in excellent condition at the time of the respondent's purchase so the previous owner's evidence was irrelevant.

There was galvanic corrosion where there ought not to have been and there must have been a defect in the design or manufacturing process for galvanic corrosion to have occurred.

The judge had been entitled to infer that there must have been a defect in the braking system on the motorcycle and in those circumstances and the respondent did not need to identify the defect.

Appeal dismissed


Veronica Ann Bussey v Anglia Heating Ltd (2017)

The claimant widow sought damages from her late husband’s former employer for negligence or breach of statutory duty following his death from mesothelioma.

The deceased had worked for the defendant in the 1960s as a plumber. The claimant case was that he had developed mesothelioma due to his exposure to asbestos during the course of his employment.

In Williams v University of Birmingham [2011] EWCA Civ 1242, the Court of Appeal had held that the correct test for breach of duty, where there was more than de minimis exposure, was whether the degree of actual exposure made it reasonably foreseeable to a defendant that as a result of its conduct a claimant would be exposed to the risk of contracting mesothelioma, based on knowledge at the time. In that case it was held that the best guide to what was an acceptable or unacceptable level of exposure was that set out in the Factory Inspectorate Technical Data Note (TDN) 13 of 1970, which gave guidance on the concentration of asbestos dust which was likely to lead to prosecution and the levels which would be regarded as too high.

The claimant submitted that the decision in Williams should not be followed as it was per incuriam in deciding that TDN 13 was the relevant standard by which foreseeability of injury was to be assessed. Per incuriam is a court decision made which ignores a contradictory statute or binding authority, and therefore wrongly decided and of no force.

HELD: The claimant's argument could not be accepted.

A first instance judge could not hold that a Court of Appeal decision was reached per incuriam. That was a matter for that court. If the claimant sought to argue that Williams was wrongly decided, she had to put that argument to the Court of Appeal or the Supreme Court.

Having concluded that the claimant had failed to prove that the levels of the deceased's exposure to asbestos exceeded those set out in TDN 13, the court was bound by the logic in Williams to hold that she had failed to prove that the defendant had been negligent.


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