| Date | 5 March 1997 |
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| Judgment | H L Smith Construction Ltd -v- W S Harvey (Decorators) plc ORB 16th December 1996, 5 Bliss 4 |
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| The Issue | Liability for damage to sub contractor's works. |
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| Implication |
Clauses providing for sub contractor protection of the works may place extremely onerous obligations upon the sub contractor and may be construed as an absolute obligation to remedy any damage howsoever arising. |
printThe unamended standard forms of sub contract and works contract for use with the JCT forms have a well recognised scheme for dealing with liability for damage to the works. The general approach is to consider damage arising under three different situations and attribute risk as follows; 1. Damage caused by any of the insured matters, where the employer or main contractor will be liable. 2. Caused by any negligence, omission or default of the main contractor or any other sub contractor, where the main contractor will be responsible. 3. Caused to materials or goods which have been fully, finally and properly incorporated into the works but before practical completion of the sub contract works, where again the main contractor will be responsible. In all other situations the sub contractor will be held to be liable to make good any damage occurring to the works, prior to practical completion. It should be mentioned, of course, that the FCEC blue form of sub contract for use with the ICE conditions treats these matters quite differently and puts the sub contractor on risk for damage to its works until the main contract works have been substantial completed, unless the schedule to the contract states the contrary. So much for the standard forms. It is common in the industry for sub contract documents to place requirements on the sub contractor for protection of the works until practical completion of the sub contract works, or indeed until practical completion of the main contract works. The objective from the main contractor's perspective is to shift the delicate balance of risk intended in the unamended form, such that when damage occurs the main contractor can argue that it is due to a sub contractor's failure to protect. The main contractor will avoid having to become embroiled in difficult arguments as to whether the relevant work has been fully, finally and properly incorporated. These issues were examined in the recent case of H L Smith Construction -v- W S Harvey (Decorators) plc. Smith was a works package contractor on the substantial Vauxhall Cross office development in London on which Laing were the management contractors. Harvey were sub contractors to Smith for decorating works. The works contract conditions were amended to provide; "the works contractor shall provide all necessary protection of the work and of all items on the site during the progress of the execution of the works and thereafter shall leave adequate protective materials in position on practical completion of the works when instructed to do so by the management contractor". These provisions were further elaborated in the general preliminaries to the contract where it was stated that; "the works contractor will be held entirely responsible for the adequacy of the protection afforded and he shall make good or re-execute any damage to work at his own expense". Smith argued that the obligation upon their sub contractor was absolute and required them to make good any damage regardless of who might have caused the damage. Harvey disagreed with this interpretation of the sub contract, arguing that their obligation as sub contractor was limited to taking all reasonable steps to protect its work. On this point an Arbitrator had found in their favour. However, when this was appealed to the High Court the Judge was of the view that the Arbitrator was in error in placing the emphasis that he did upon the concept of "reasonableness". He said that the issue was to construe the sub contract as to its allocation of risk of damage to the works as between Harvey and Smith. His Honour Judge John Lloyd QC was satisfied that the works contract was clear in its terms. It required Harvey to provide all necessary protection for the works. The clauses of the works contract thus imposed an obligation of protecting the works firmly and squarely upon Harvey. Dismissing the notion of "reasonableness" he said "this is a commercial contract and the allocation of risk is a matter for commercial men". Sub contractors will therefore be wise to consider carefully clauses which require them to provide protection of the works, particularly where the provisions create obligations to make good any damage howsoever caused. This must be all the more so where the works are specialist high quality finishes or, for example, expensive control systems. The protection required might involve untold cost. Sub contractors should argue that the risk of damage is best placed with those parties who remain responsible for managing the site. This, of course, is not the sub contractor who has moved to another part of the works, or who indeed may, at the time of damage, have left the site entirely.
CJ-9709
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