West & Anor v Ian Finlay & Associates (A Firm)

A construction professional is liable for loss caused by negligent design, inspection or coordination, but damages must reflect what would probably have happened if reasonable care had been exercised. The claimant must ordinarily establish the counterfactual construction outcome, including any credit for costs that would have been incurred and any betterment. Where a defendant has been proved to be in breach and the loss is of a kind likely to result, the defendant may bear the evidential burden of showing that the loss would probably have occurred in any event. Reasonable remedial choices will generally be recoverable where they respond proportionately to the information reasonably available at the time. A contractual limitation or net contribution clause is construed in context, and ambiguity in a consumer contract is resolved in the consumer’s favour.

The claim arose from the refurbishment of the claimants’ house. They alleged that the defendant architect negligently failed to advise on damp proofing, designed inadequate waterproofing, failed to inspect defective mechanical and electrical installations, failed to ensure that services designs were checked, and failed to secure appropriate Building Control approval.

Extensive damp, defective services and other defects emerged after completion. The claimants moved out, commissioned investigations and carried out remedial works. The defendant disputed causation, mitigation, betterment, the appropriate remedial scheme and the effect of a net contribution clause. The central issues were the breaches established, the counterfactual consequences of competent performance, the recoverable remedial and consequential loss, and the construction of the contractual clause.

1. Liability and causation. The defendant was in breach by failing to discuss damp-proofing options, by providing inadequate waterproofing details for the lowered floor slabs and wall interfaces, by failing to inspect or coordinate the M&E works properly, and by failing to ensure that the contractor’s M&E calculations and drawings were submitted to the services engineer. The defendant was not liable for the defective floor slabs merely because the defects existed: the evidence did not establish that a reasonably competent architect should have detected them.
2. Counterfactual loss. Following Cooperative Group Ltd v John Allen Associates Ltd [2010] EWHC 2300 (TCC), the court assessed what would probably have happened had proper care been exercised. The claimants would probably have accepted localised damp repairs in 2006, but the full tanking adopted after extensive damp appeared in 2007 was a reasonable remedial response. The defendant was liable for the reasonable costs flowing from that response, subject to credits for localised repairs, betterment and avoided expenditure.
3. Proof of inevitable loss. Applying the reasoning in Phethean-Hubble v Coles [2012] EWCA Civ 349, the defendant had not shown that the contractor would inevitably have failed to complete or rectify the works if the defendant had acted competently. The M&E defects and associated delay were therefore recoverable, subject to a six-week delay credit.
4. Remedial delay and mitigation. The claimants acted reasonably in instructing experts, selecting a contractor and storing the kitchen on site in the difficult circumstances. The defendant was liable for part of the delay caused by disagreement between experts about tanking, but not for all of it. The cost of replacing the kitchen was recoverable because the decision to store it on site did not break causation and negligent storage was not proved.
5. Contractual clause. The net contribution clause was, at minimum, ambiguous. Under regulation 7(2) of the Unfair Terms in Consumer Contracts Regulations 1999, it had to be construed in the claimants’ favour. Properly understood in context, it did not limit liability for loss attributable to the main contractor, Armour. The court rejected the contention that the term was unfair under regulation 5(1).
6. Outcome. Liability was established for the principal damp-proofing, M&E and Building Control losses, but not for the floor slabs, terrace guarding, purge-ventilation loss or various unproved and betterment items. The parties were directed to agree the recoverable sum, with further directions if agreement proved impossible. Interest was awarded on actual expenditure at 7 per cent over base, and general damages were awarded for inconvenience, distress and discomfort.