Rabilizirov v A2 Dominion London Ltd & Ors

On an appeal from a specialist Technology and Construction Court decision, the appellate court must review rather than rehear the case. It should respect findings of fact and evaluative judgments based on technical evidence, and should not cherry-pick evidence or substitute its own assessment. A subcontractor’s breach may remain an effective cause of loss despite later acts or omissions by the contractor or employer. A novus actus interveniens requires conduct so wholly unreasonable or overwhelming that it eclipses the original wrongdoing. For remoteness, the type of loss must be foreseeable, although its extent need not be.

The claimant, an under-lessee of a newly constructed commercial building, suffered loss because defective tanking allowed continuing water ingress. The first and second defendants settled the claimant’s claims and pursued indemnity claims against the main contractor, Durkan Limited, which in turn pursued Ground Construction Limited, the subcontractor responsible for the tanking.

HHJ Bailey held that the subcontract terms incorporated the DOM/2 indemnity and that Ground Construction was liable for remedial works and loss of rent. Ground Construction appealed, challenging incorporation, causation, mitigation and remoteness.

1. Appeal dismissed. The trial judge directed himself correctly in law and made findings of fact open to him on the evidence. There was no proper basis for interference.
2. Under CPR 52.21(1) and CPR 52.21(3), the appeal was a review, not a rehearing. The specialist nature of the Technology and Construction Court, the technical evidence, the evaluative character of the findings and the judge’s advantage in assessing the whole evidence required particular caution. The approach in Yorkshire Water Services Ltd v Taylor Woodrow Construction Northern Ltd [2005] EWCA Civ 894 was applicable.
3. The DOM/2 terms governed the whole contractual relationship, not merely the physical performance of the works. The indemnity in paragraph 5.1.2 was sufficiently wide to cover liability caused by Ground Construction’s breach. Paragraph 5.2 addressed a distinct situation and did not deprive paragraph 5.1.2 of practical effect. The indemnity could operate where Ground Construction’s breach remained an effective cause despite another contributing cause: ENE Kos 1 Ltd v Petroleo Brasileiro SA (No 2) [2012] UKSC 17.
4. A contractor’s failure to identify or remedy a subcontractor’s defect can in principle amount to a novus actus interveniens, but such a case is rare and fact-sensitive. The later conduct must be so wholly unreasonable or of such overwhelming impact that it eclipses the subcontractor’s wrongdoing. The judge was entitled to conclude that no novus actus had occurred: Borealis AB v Geogas Trading SA [2011] 1 Lloyd’s Rep 482.
5. The mitigation issue was whether reasonable steps had been taken, not whether the ingress had been cured. The standard was not high because the defendant was an admitted wrongdoer: Banco de Portugal v Waterlow [1932] AC 452.
6. Loss of use of commercial premises was the foreseeable type of loss resulting from defective waterproofing. The fact that the loss was greater because a mezzanine was contemplated did not make it too remote. The type of damage, rather than its precise extent, had to be foreseeable: Sanders v Williams [2002] EWCA Civ 673.

• High Court (Queen’s Bench Division) — Ground Construction Limited appealed the judgment of HHJ Bailey sitting in the County Court at Central London. The appeal was dismissed.