Tesco v Constain - Thomson Reuters

2003 WL 21729349 Page 772003 WL 21729349 (QBD (T&CC)), [2003] EWHC 1487(Publication page references are not available for this document.)such representations Costain assumed a duty ofcare to Tesco the scope of which extended tocompensating Tesco for the consequences of thefire stopping and inhibiting measures which shouldhave been there being absent. I emphasise that I donot at this stage make any finding as to what firestopping and inhibiting measures should have beenpresent. That is a matter to be determined in thesecond round of this action. However, it does seemto me obvious that Costain knew that Tesco wouldbe likely to rely, and intended Tesco to rely, uponthe terms of its reports in deciding what, if any,steps needed to be taken to provide fire protectionat the Store. Whether Tesco did actually rely uponthe terms of the reports is again a matter for thesecond round of the action. All I am indicating atpresent is that in my judgment the scope of the dutyof care which Costain assumed in writing theletters dated 19 October 1993 and 27 May 1994was one which extended to compensating Tesco forthe consequences of any fire which occurred at theStore which consequences would have beenavoided if the terms of the reports had beenaccurate, on the assumptions that they were not infact accurate and that reasonable care was not takenin making them.252. While, as I have indicated, it seems to methat the duty of care which Costain assumed bywriting the letters dated 19 October 1993 and 27May 1994 extended to liability for theconsequences of any fire which consequenceswould not have been suffered had the terms of thereports in the letters been accurate, that is not theonly liability which Costain would have incurred asa result of a breach of its duty of care in relation toeither letter. Adopting the basic comparisonanalysis explained by Lord Nicholls in NykreditMortgage Bank Plc v. Edward Erdman Group Ltd.,on the assumption that Tesco relied on the twoletters, what it did in reliance upon them in the firstinstance was not cause fire protection works to beundertaken at the Store in 1993 or 1994. If,contrary to the findings which I have alreadyindicated, Costain owed a duty of care to Tesco toundertake the provision of the necessary workswithout cost to Tesco, Tesco would probably havebeen put to some trouble and expense in chasingCostain to carry out the necessary works and tosome disruption to its trading activities at the Store,and cost, while the works were carried out,assuming that Costain was in fact prepared toundertake the works in question. If Costain was notobliged to carry out the appropriate works withoutcost to Tesco, as I have found, Tesco would havehad to fund the cost of the works itself. That wouldalso have been the case, at least in the first instance,if Costain was in fact obliged to carry out theworks, but declined to do so. The probability isthat, in whichever way Tesco was going to sustainexpense, the amount of that expense would at somepoint have been greater as a result of the passing oftime and general inflation, than it would have beenif incurred in 1993, following receipt of a nonnegligentreport in a letter of about 19 October1993, or 1994, following receipt of a non-negligentreport in a letter of about 27 May 1994. Whetherthere would in fact have been such an increase incost, and, if so, when it would have occurred, arematters to be decided in the second round of thisaction. However, in principle, if there would havebeen such increase in cost the date at which itoccurred is the date at which a cause of actionwould have accrued in respect of the letter of 19October 1993 or the letter of 27 May 1994, as thecase may be. That is the answer to Issues 12 and13.The Other Costain Company Issue253. During the course of the hearing of thepreliminary issues Tesco discontinued its claimsagainst the Other Costain Company. That seems tome to have been a belated recognition of the plainfact that the claims against the Other CostainCompany were unsustainable as a matter of law. Itseems to me to be elementary that the rights of athird party, such as Tesco, against Costain couldnot in law be prejudiced by the terms of the CostainAgreement, to which it was not a party, and that,equally, it could obtain no rights under thatagreement.The PHJ Contract Issues254. The terms in which Issue 15 is expressed aresomewhat misleading in relation to the point whichMr. Coulson and Mr. Holwill on behalf of PHJactually wanted decided. As Mr. Coulson explainedthe point orally, all it amounted to was whether, indetermining the quality of the performance requiredof PHJ of its obligations in respect of design underthe PHJ Agreement, it was appropriate to haveregard to the fact that it was actually doing itsdesign work for an experienced building contractor,Costain, and it was always envisaged that it wouldbe doing its design work for an experiencedcontractor. This relatively straightforward anduncontroversial point was complicated not only bythe somewhat unclear terms in which Issue 15 wasframed, but also by a concern on the part of Mr.Coulson to seek to have the mantra "design andbuild contractor" included in the answer. Hispreferred answer to Issue 15 as put forward duringCopr. © West 2004 No Claim to Orig. Govt. Works