Law Report: Subcontractor is judged liable for fire damage to Uppark House: National Trust v Haden Young Ltd. Court of Appeal (Lord Justice Nourse, Lord Justice Russell and Lord Justice Henry). 26 July 1994.

The fact that the employer was required, under one clause of a JCT standard building contract, to insure against fire damage to the property while work was being carried out, did not relieve the contractor, and therefore a subcontractor engaged on the same terms, from liability to the employer, under another clause, for fire damage to the property caused by the negligence of the subcontractor's workmen.

The Court of Appeal dismissed an appeal by the defendant, Haden Young Ltd, and affirmed the decision of Mr Justice Otton in April 1993, that it was liable in damages for negligence in respect of a fire, on the 30 August 1989, at Uppark House, South Harting, West Sussex, which destroyed much of the building and most of its contents. The estimated cost of reconstruction was pounds 20m.

The action was brought by the National Trust, which acquired the 17th- century house by gift of its owner in 1954, and opened large parts of it to public view, other parts remaining occupied by the owner's family. In 1989, the Trust decided to carry out extensive repairs, including renewal of lead roofing. The main contractor was a local company, Midhurst & Fernhurst Buildings Ltd (MFB), while Haden Young was the specialist subcontractor for the roof work.

Haden Young admitted before trial that the fire was caused by the negligence of two of its employees, but nevertheless contended that it was relieved from liability under the contractual arrangements in force.

Kenneth Rokison QC and Richard P Gray QC (Kennedys) for Haden Young; Jonathan R Playford QC and Andrew Prynne (Davies Arnold Cooper) for the Trust.

LORD JUSTICE NOURSE said the main contract between the Trust and MFB was written in the JCT standard form for minor building works (January 1987 revision). There was no written subcontract between MFB and Haden Young, which was content to proceed on the footing that it would carry out the works specified in the relevant sections of the main contract subject to the terms and conditions therein contained.

Under cl 6.2, 'the contractor shall be liable for . . . any injury or damage whatsoever to any property real or personal (other than injury or damage to the works) insofar as such injury or damage arises out of or in the course of . . . the carrying out of the works and . . . is due to any negligence . . . of the contractor, his servants or agents, or of any person employed or engaged by the contractor'. It also provided that the contractor should take out insurance against such liability and cause any subcontractor to do so too. Under cl 6.3B, 'the employer (the Trust) shall in the joint names of employer and contractor insure against loss or damage to the existing structures (together with the contents. . .) and to the works . . . by fire. . .' If cl 6.2 was read on its own, it was clear that the contractor became liable to the employer for the loss in respect of the damage to the house and contents. The damage was to property real or personal, it arose in the course of the carrying out of the works, and it was caused by the negligence of a person engaged on part of the works.

But Haden Young argued that when cl 6.2 was read with cl 6.3B, the contractor was not intended to be liable for damage to the existing structures and their contents by fire, even if the fire was caused by the contractor's or a subcontractor's own negligence. That was an impossible construction. Clause 6.2 imposed liability on the contractor for damage caused to any real or personal property (other than the works) by his own or a subcontractor's negligence. The liability was unlimited and the requirement to insure against it ancillary.

In contrast, cl 6.3B required the employer to insure specific property, namely the existing structures and their contents, and the works and materials, against specific risks. More significantly, it said nothing about liability, and the only basis for suggesting it was intended to limit that which had been declared to be unlimited, was the probability that the employer's insurance would cover a fire caused negligently by the contractor or subcontractor.

That was no basis for doing such violence to the terms of cl 6.2. It only meant there was a potential overlap between the two provisions, with the employer's recoverable damages under cl 6.2 being liable to be reduced by the amount recoverable under the insurance, or vice versa. It went no further.

LORD JUSTICE RUSSELL and LORD JUSTICE HENRY agreed.

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