Catlin Estates Ltd & Anor v Carter Jonas (a firm)

A professional surveyor undertaking a full design and contract-administration service remains responsible for design, inspection, coordination and integration unless responsibility is clearly transferred with the client’s agreement. Contractual exclusions concerning a contractor’s operational methods do not remove responsibility for inadequate design or failure to inspect and administer the works effectively.

Damages for defective building work ordinarily reflect the reasonable cost of reinstatement where that represents a genuine loss. The claimant cannot recover a disproportionate sum for a merely technical breach or obtain an uncovenanted profit. A family or intra-group transfer does not necessarily prevent recovery where the contracting party retains title or claims for the loss suffered within the relevant arrangement.

Catlin Estates Ltd engaged Carter Jonas to design, administer and inspect the construction of a substantial shooting lodge. The project suffered from design defects, inadequate workmanship, water ingress, defective fireplaces, flooding and other construction problems.

Carter Jonas argued that responsibility for structural engineering and contractors’ work had been transferred, that Catlin Estates lacked standing after agreeing to sell the lodge to Mr Stephen Catlin, that the losses were nominal or disproportionate, and that Mr Catlin’s alternative claim under the Defective Premises Act 1972 was unavailable.

The court determined responsibility under the professional services contract, the effect of the sale arrangement, the statutory claim, the appropriate measure of damages, the remedial scheme, and Carter Jonas’s counterclaim.

1. Responsibility under the contract. Carter Jonas had undertaken a full design service, periodic inspection and contract administration. Its engagement of Robert T Horne & Partners did not transfer responsibility for structural design because the client had not agreed to that change. Carter Jonas retained responsibility for directing and integrating specialist work and for identifying defects reasonably discoverable by periodic inspection (paras [305]-[319]).
2. The contractual provisions concerning specialists and contractors did not exclude responsibility for inadequate design, ineffective inspection, deficient coordination or failures to exercise the contract-administration powers. The surveyor was required to communicate the design clearly and unambiguously. In the circumstances, accurate and complete drawings were reasonably necessary; reliance on general British Standards without adequate drawings was insufficient (paras [324]-[342]).
3. The court found substantial design and construction failures, including the wrong breather membrane, inadequate cavity widths and detailing, absence of a vapour control layer, defective fireplaces and ventilation, inadequate basement tanking, defective roofing, windows, services and car park specification. Carter Jonas’s contention that later contractor works caused the principal defects was rejected. The fundamental problems were largely defects of design requiring substantial remedial work (paras [343]-[460], [521]-[523]).
4. Standing and third-party loss. Under section 22(1) of the Land Registration Act 1925, legal title remained with Catlin Estates until registration. The sale agreement therefore did not prevent Catlin Estates from suing. The family arrangement also fell within the exceptional principle permitting recovery of loss suffered by another member of the family group, with accountability for the damages recovered (paras [258]-[277]).
5. Mr Catlin’s claim under section 1 of the Defective Premises Act 1972 was statute-barred. The statutory duty arose while the work was being carried out, so the cause of action could accrue before completion and the six-year period ran from the relevant breach. The court nevertheless held that the statutory claim, had it been in time, would not necessarily have prevented a contractual claim through Catlin Estates (paras [291]-[304]).
6. Damages. The governing question was whether the proposed remedial work represented a genuine loss or merely a technical breach used to secure an uncovenanted profit. Considering the persistent water ingress, exposed site, defective envelope, inadequate membrane and cavity construction, Scheme 3, costing £403,390, was reasonably necessary. The court rejected both the more expensive third-skin scheme and Carter Jonas’s modest alternative (paras [282]-[290], [561]-[570]).
7. The late professional-fees claim was admitted procedurally but failed on its merits because the additional design work was undertaken before liability and the appropriate remedial scheme had been determined. Carter Jonas’s counterclaim failed because the relevant fee was neither properly demanded under the contract nor recoverable on a quantum meruit (paras [531]-[559]).
8. Judgment was entered for Catlin Estates in the sum of £487,772. The conference-centre claim and professional-fees claim were rejected, as was Carter Jonas’s counterclaim (paras [571]-[573]).