Pmp Electrical Services Ltd v Henley Homes (East) LLP

A claimant alleging deceit or negligent misrepresentation must prove reliance on the relevant representation and loss caused by that reliance. A claimant cannot recover losses arising from continued litigation where the evidence shows that the representation did not influence the conduct in question. In a construction contract, supplying materials that do not comply with an express technical and manufacturer specification is a breach. Compliance cannot be established by showing that substituted materials have similar functionality where the specification serves distinct safety purposes.

The claimant electrical subcontractor supplied and installed cable for a residential development. The contract specification required BS6724 multi-core armoured cable from specified manufacturers. The claimant instead supplied cheaper BS5467 cable and was paid in advance as though the specified cable had been supplied.

After testing failures, the defendant replaced the cable. A project manager later sent the claimant a forged report apparently attributing defects to the cable. The claimant alleged that the defendant had thereby deceived it into defending a supplier’s claim and incurring settlement and legal costs. It also alleged that waterlogged ground conditions caused the cable failure and that the defendant had failed to preserve samples.

The issues were whether the claimant relied on the alleged representation, whether the defendant caused recoverable loss, whether the original cable failed because of the site conditions, and whether the claimant had complied with the contractual specification.

1. Deceit and reliance. The claim was dismissed. The claimant failed to prove that it relied on the forged report or that the report caused any loss. The claimant’s conduct after receiving the report, including continuing to defend the supplier’s claim after its falsity had been exposed, showed that the report had not induced the relevant conduct. The principle identified in Downs v Chappell (1997) 1 WLR 433 required the claimant to establish inducement and detriment.
2. Cable failure and ground conditions. The court rejected the allegation that waterlogged conduits caused the original cable to fail. BS6724 cable was water resistant and the replacement cable passed the required tests when laid in the same general ground conditions. Any failure caused by moisture ingress was not shown to result from flooding.
3. Specification and substitution. The claimant had supplied BS5467 rather than the specified BS6724 cable. The distinction was legally and practically material. BS6724 had low-smoke, zero-halogen sheathing suitable for residential common parts, whereas BS5467 did not meet the specified safety requirements. The claimant also failed to comply with the requirements concerning manufacture and specified suppliers. No effective permission to substitute the cable had been proved.
4. Preservation and access to evidence. The claimant was not denied a fair opportunity to obtain samples or test the cable. The disappearance of the cable was not shown to have resulted from any deliberate conduct by the defendant or to have been intended to defeat the claim.
5. The claims, including the claims based on alleged deceit, negligent statements and misrepresentation, were dismissed.

Not stated in the judgment.