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England and Wales High Court (Technology and Construction Court) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Harrison & Ors v Shepherd Homes Ltd & Ors [2010] EWHC 1398 (TCC) (08 January 2010) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2010/1398.html Cite as: [2010] EWHC 1398 (TCC) |
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QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Strand London WC2A 2LL |
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B e f o r e :
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MR AND MRS HARRISON AND OTHERS |
Claimants |
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- and - |
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(1) SHEPHERD HOMES LIMITED (2) NATIONAL HOUSE BUILDING SCHEMES (3) NHBCBUILDING CONTROL SERVICES |
Defendants |
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Tel No: 020 7422 6131 Fax No: 020 7422 6134
Web: www.merrillcorp.com/mls Email: [email protected]
(Official Shorthand Writers to the Court)
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Crown Copyright ©
MR JUSTICE RAMSEY:
Introduction
Background
(1) Section 2 provides obligations on SHL if the owner gives written notice of defects or damage in their house. Essentially, SHL has to put right any defect and damage at their own expense, if it is notified to them within the period of cover, which is two years from the insurance certificate.
(2) Section 3 provides obligations on NHBC to pay for or arrange for work to be carried out at their expense to put right damage caused by a relevant defect. It states that the owner must tell NHBC of their claim as soon as possible within the period of cover, which starts two years after the date shown on the insurance certificate and ends ten years after that date. Under this cover it states that NHBC will not pay for "anything which was or could have been reported [SHL] under section 2."
These proceedings
"In the light of the confirmation provided by our client in respect of the Section 3 Plots and the actions taken by NHBC to date in pursuance of its obligations in respect of those properties, therefore, we should be grateful for your confirmation of the following:
2.8.1 That the owners of properties other than the Section 3 Plots neither have nor make any claims against NHBC under or for any alleged breach of the Buildmark policy (such properties being dealt with by Shepherd);
2.8.2 That the owners of the Section 3 Plots do not currently allege or advance any claims in respect of breach of the relevant Buildmark policy on the part of NHBC.
2.8.3 If any owner of the Section 3 Plots does allege a breach on the part of NHBC of its obligations under the Buildmark policy:
(a) The names of the Claimant(s) wishing to pursue such a claim;
(b) The details of the property to which that claim relates;
(c) Full particulars of any alleged breach(es) on the part of NHBC and its obligations under the relevant Buildmark policy.
(d) The grounds relied upon in support of any such claim."
"NHBC is willing to accept your proposal on the claims made under section 2 of the Buildmark policy which have been settled with [SHL]. Therefore, we are willing to accept your proposal that the following Claimants discontinue their claims against both our clients on the basis that there is no order as to costs."
"In the meantime we must reserve all of our clients' rights including the right to apply to strike out all or part of your clients' proceedings pursuant to CPR Rule 3.4 on the grounds that your clients' statement of case discloses no reasonable grounds for bringing those claims. We also reserve our clients' right to apply for summary judgment on all or part of your clients' claims under CPR Part 24."
"12. The Claimant's primary claims are against SHL. SHL has so far failed or refused to compensate the Claimants for their loss save in respect of the following plots..."
which it referred to as "the Settled SHL Plots". They continued:
"13. Accordingly:
(1) The Claimants will not pursue Section 3 claims against NHBC in relation to the Settled SHL Plots unless they are affected by defects which were not remediated by SHL."
It should be noted that the Settled SHL Plots included both Section 2 Plots and Section 3 Plots as they have been described. The letter continued:
"(2) In relation to the remediated section 3 plots:
a. The Claimants will not pursue claims against NHBC for remedial works already completed satisfactorily, and section 3 costs already paid, but
b. the Claimants will pursue claims for legal cost;.
c. The Claimants reserve the right to claim in respect to any of the Remediated Section 3 Plots which are the subject of New Section 3 Claims.
d. all Claimants unreasonably affected by NHBC's remediation works reserve the right to claim for nuisance.
(3) The Claimants will not pursue Section 3 claims against NHBC in relation to SHL Plots for matters for which SHL has in principle accepted responsibility under Section 2. However, they will pursue Section 3 claims against NHBC in relation to SHL Plots, which are the subject of New Section 3 Claims.
(4) In regard to all unremediated Section 3 Plots the Claimants will continue to pursue against NHBC their claims under Section 3 of the Buildmark policy as per paragraph 23 of the Particulars of Claim (broken as alleged in paragraph 53) on the basis that it is liable to pay the full cost of remedial works (or to carry them out) and to pay for removals, storage, appropriate alternative accommodation and legal costs. At present NHBC has not done so."
"Your request for final confirmation from the claimants in respect to defects in Settled SHL Plots and Remediated Section 3 Plots cannot be answered conclusively until engineering investigations (including NHBC's ongoing drainage investigations), engineering consideration and indeed works by NHBC have been completed. This delay is the unavoidable consequence of the serious defects and damages in the homes and on the plots. Any strike-out application in relation to such issues would be premature. Further particulars will be provided as soon as possible."
The Application
(1) In relation to the claims made against SHL then SHL has accepted responsibility for certain plots, the section 2 plots, by appendix 1 to the defence, in respect of properties which the Claimants plead at appended H to the Particulars of Claim as being plots for which they gave notice to SHL. In such circumstances NHBC contend that the Claimants are not entitled to sue the NHBC for breach of section 3 of the Buildmark cover as section 3 excludes liability for anything which was or could have been reported to SHL under section 2.
(2) In relation to 11 of the section 2 properties, SHL has carried out remedial works and in relation to 9 of those properties the Claimants have settled with SHL. This is a further reason, she submitted, why the Claimant's proceedings against the NHBC should be struck out or summary judgment given for the NHBC.
(3) In relation to certain properties, claims said to have been made under section 3 of the Buildmark document were notified by some Claimants on 5 February 2007 and others on 30 August 2007. The NHBC investigated the claims and agreed with SHL a division between properties in May 2008. The NHBC proposed on 16 June 2008 to deal with the section 3 properties as follows:
(a) It proposed to carry out remedial works to six properties.
(b) It proposed taking over the monitoring of 11 other properties from SHL.
(c) It proposed carrying out monitoring of 21 further properties, in relation to which Jackson J had concluded in Encia litigation that the foundations were adequate.
(4) The NHBC has carried out remedial work to 7 properties as proposed in its letter of 16 June 2008 and one further plot, which they refer to as the remediated section 3 properties. In relation to those properties the work was completed and handed over to the relevant Claimants between 13 May 2009 and 7 October 2009. There was therefore, Miss Hannaford submitted, no breach of section 3 of the Buildmark document and the Claimants cannot hold proceedings over until such time as they decide whether the remedial works are satisfactory. Further, NHBC contend that the Claimants cannot reserve their rights to bring claims for nuisance or for drainage. In relation to the balance of the properties being dealt with under section 3 of the Buildmark document, she submitted that NHBC is monitoring those properties and there has been no breach of section 3. The joint statement of the experts instructed by the Claimants and SHL does not indicate that remedial work is necessary as a result of the monitoring.
"...It may be helpful to define as precisely as may be the nature of indemnity insurance. Expressions such as "to insure against" or to "save harmless from" loss may be capable of misleading. It seems to me that the best way to define an indemnity insurance is that it is an agreement by the insurer to confer on the insured a contractual right which, prima facie, comes into existence immediately when loss is suffered by the happening of an event insured against, to be put by the insurer into the same position in which the insured would have been had the event not occurred, but in no better position."
"During the period of insurance the insurers will pay to the insured the value of the property at the time of the happening of its destruction or the amount of such damage or at their option, reinstate or replace such property or any part thereof."
"I cannot conclude that those words have the effect of postponing the insurer's primary liability; They merely indicate the alternative ways in which that liability may be satisfied."
Decision
27 This is a case where matters have been proceeding on the basis that the claims by certain Claimants against SHL for 10 lead properties would be determined first. Therefore detailed particulars have not been ordered to be served. In addition, the proceedings against NHBC had been stayed until they were lifted for the purpose of this application. As Mr Bartlett submitted, if NHBC had wanted the case against it to be spelt out and progressed in these proceedings it could have done so. However, the purpose of the stay was so that matters could proceed in accordance with the Pre-Action Protocol for Construction and Engineering Disputes. The purpose of that protocol is, amongst other things, for a party to be provided with sufficient information to know the nature of the other party's case so that proceedings can be conducted efficiently.
"I accept that at common law a contract of indemnity gives rise to an action for unliquidated damages arising from the failure of the indemnifier to prevent the indemnified person from suffering damage, for example, for having to pay a third party. I also accept that, at common law, the cause of action does not (unless the contract provides otherwise) arise until the indemnified person can show actual loss – see Collinge v Heywood [1839] Ad & E 634. This is, as I understand it, because the promise of indemnity is simply a promise to hold the indemnified person harmless against a specified loss or expense. On this basis, no debt can arise before the loss is suffered or the expense incurred; however, once the loss is suffered or the expense incurred, the indemnifier is in breach of contract for having failed to hold the indemnified person harmless against the relevant loss and expense."
"(2) In so far as it is in plain intelligible language, the assessment of fairness of the term shall not relate – (a) to the definition of the main subject matter of the contract."