Royal Brompton Hospital National Health Service Trust v Watkins Gray International (UK)

For contribution under the Civil Liability (Contribution) Act 1978, the parties must be liable in respect of the same damage, not merely loss measured by reference to the same financial figures. Wrongly certifying an extension of time may impair an employer’s bargaining position and prospects of recovering from the contractor. That impairment is distinct from the contractor’s underlying liability for delay, overpayment or loss and expense. A professional adviser and contractor are liable for the same damage where negligent supervision permits defective work to remain in the building, but not where negligent certification weakens the employer’s ability to enforce contractual claims. The measure of damages may depend on the sums claimed against the contractor, without making the damage identical.

The respondent hospital brought professional negligence and breach of contract claims against its architects arising from major building works. The hospital had settled arbitration proceedings with the contractor, Taylor Woodrow, concerning delay, extensions of time, loss and expense and liquidated damages.

The architects commenced Part 20 proceedings seeking contribution from the contractor under section 1(1) of the Civil Liability (Contribution) Act 1978. The Technology and Construction Court held that the contractor and architects were not liable in respect of the same damage and struck out the claim. The appeal concerned whether that conclusion was plainly and obviously correct on the pleaded case.

1. Appeal dismissed. The strike-out order was upheld, with costs. Permission to appeal was refused.
2. Under sections 1(1) and 6(1) of the Civil Liability (Contribution) Act 1978, contribution requires liability in respect of the same damage. The distinction is between the damage sustained and the damages awarded as financial compensation for it.
3. The pleaded damage caused by the architects’ allegedly negligent certificates was impairment of the hospital’s bargaining position and ability to obtain full financial recompense from the contractor. The damage caused by the contractor’s breach was delay in completion and the resulting consequences for the hospital’s use of the building. Those were different kinds of damage.
4. The fact that the architects’ damages would be quantified by reference to the contractor’s claims did not make the damage the same. The architects’ liability concerned the difference between the hospital’s position with properly issued certificates and its weakened position after the negligent certificates. The damage occurred when the certificates altered that position, although its financial quantification depended on later events.
5. The court distinguished defective-work cases. Where negligent supervision allowed defective workmanship to remain, the defective building could constitute the same damage for which both contractor and architect were liable. That analysis did not apply to wrongful certification of extensions of time.
6. Stuart-Smith LJ treated Birse Construction Ltd v Haiste Ltd as supporting the distinction between physical defects and consequential financial loss. Friends Provident Life Office v Hillier Parker May & Rowden concerned whether a liability was in respect of damage, rather than whether it was in respect of the same damage, and did not determine the issue on appeal. Ward LJ agreed with the result while expressing reservations about the narrower approach. Buxton LJ agreed with Stuart-Smith LJ’s reasons.

• Court of Appeal (Civil Division): appeal from the Technology and Construction Court, where HH Judge Hicks QC struck out the Third Party Notice and dismissed the Part 20 claim on 23 July 1999. Appeal dismissed with costs.