Southern Insulation (Medway) Ltd v How Engineering Services Ltd & Ors

The court did not determine whether a specialist sub-sub-contractor owed a tortious duty of care for losses connected with construction defects or contribution liabilities. Where interlocutory appeals raise substantial legal issues, may require consideration by the Supreme Court, and risk delaying a trial involving potentially dispositive factual disputes, the Court of Appeal may decline to resolve those issues at that stage. The appeal in one action was dismissed, while the other was adjourned with liberty to restore. Costs were reserved.

Two related actions concerned corrosion to chilled water pipework at premises occupied by Linklaters Business Services. Southern Insulation, a specialist sub-sub-contractor, was alleged to have negligently clad the pipes. In the Linklaters action, the How companies sought a contribution under the Civil Liability (Contribution) Act 1978, relying on an alleged duty of care owed by Southern to Linklaters. In the How action, How Engineering sought damages from Southern for sums it might have to pay up the contractual chain.

Akenhead J refused Southern’s summary judgment and strike-out applications. He considered the Linklaters claim too fact-sensitive for interlocutory disposal and held in the How action that a duty of care existed on the assumed facts. Southern appealed both decisions. The central issue was whether the claims could be disposed of as a matter of law before trial.

1. Disposition. The appeal in the Linklaters action was dismissed. The appeal in the How action was adjourned, with liberty to restore it if that later became appropriate. The costs of both appeals were reserved to the trial judge.
2. Nature of the appeals. Both applications sought determination of preliminary questions concerning whether Southern owed a tortious duty of care to Linklaters or How in respect of the losses claimed. Southern argued that the Linklaters issue could be decided on the pleaded and assumed facts, and that Akenhead J had reached the wrong legal conclusion in the How action.
3. Reason for declining substantive determination. The court regarded the issues as substantial and potentially requiring consideration by the Supreme Court. Determining them before trial could, at considerable cost, defer the trial of two actions. One action contained liabilities unaffected by the appeals, and both involved factual disputes which might themselves prove dispositive.
4. Effect of the orders. The court therefore adopted the proposed procedural disposal after counsel had taken instructions and raised no objection. It did not finally determine the underlying duty-of-care questions or endorse a definitive appellate rule on them.

• Technology and Construction Court, Queen’s Bench Division: Akenhead J refused Southern’s applications for summary judgment or strike out in reserved judgments dated 21 May 2010 and 23 July 2010.
• Court of Appeal (Civil Division): The appeal in the Linklaters action was dismissed. The appeal in the How action was adjourned with liberty to restore. Costs were reserved to the trial judge.