| Date | 7 October 1998 |
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| Judgment | Sainsbury -v- Broadway Malyan and Ernest Green Partnership Ltd, ORB 31 July 1998 |
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| The Issue | Assessment of damages in contribution proceedings and "loss of chance" in causation. |
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| Implication |
Loss of chance can be deployed as an argument to reduce the measure of damages in cases where the connection between the breach and the loss depends upon the chance of the occurrence of an intervening event. |
printIn last week's article I considered the case of Sainsbury, Broadway Malyan and Ernest Green Partnership in which the provisions of the Civil Liability (Contribution) Act 1978 were examined. Having decided that the structural engineer was not negligent in failing to warn the architect where the latter's design was in breach of the fire regulations, his Honour Judge Humphrey Lloyd QC nevertheless went on to consider the apportionment of damages which might otherwise apply. In December 1993 a supermarket in Chichester had been destroyed by a fire started in the store areas. Sainsbury claimed that the fire had spread to the sales area because the architect, Broadway Malyan, had failed in its design to provide sufficient fire protection to the wall separating the two areas. Having settled that claim, Broadway Malyan in turn sought a contribution from the client's structural engineer, Ernest Green. Ernest Green argued that the true measure of Sainsbury's claim was one which would be assessed on the basis of a "loss of chance". It argued that the available evidence showed that if the compartment wall had been adequately designed, the fire brigade would have had no more than a 50% chance of containing the fire at the compartment wall and preventing its spread to the sales area of the superstore. Accordingly a reasonable settlement of the claim would have been one which reflected that 50% chance. Counsel for Ernest Green argued that the settlement between Sainsbury and its architect, Broadway Malyan, had failed to take into account such a consideration, and could not therefore be treated as a true measure of damages in third party proceedings. Judge Lloyd agreed that the 1978 Act provided for a contribution from third parties towards any payment in bona fide settlement or compromise of a claim in respect of any damage recognised at law and reasonably measured according to law. He concluded therefore that Ernest Green were entitled to call into question the reasonableness of the settlement. The 1951 case of Biggin and Co Ltd -v- Permanite Ltd was cited. In this case it was held "if, upon the evidence, the Judge is satisfied that the damages would be somewhere around the figure to which the Plaintiff had settled, he would be justified in awarding the settlement figure. The Plaintiffs must establish a prima facie case that the settlement was a reasonable one. If the Defendants fail to shake that case the amount of the settlement can properly be awarded as damages." Judge Lloyd commented that the test is an objective one. In his view, the fact that settlement was reached following legal advice would be irrelevant. Judge Lloyd concluded that he had no doubt that Sainsbury's case was indeed for a loss of chance. He considered that there could be no doubt that if there had been a compartment wall, the fire brigade would have had a significant measurable chance of holding the fire at the wall and saving the sales area. This was a matter of direct relevance to the causation of damage and must therefore be taken into account in the assessment. Considering the available evidence with regard to the spread of the fire, including the construction of the roof itself, Judge Lloyd assessed the chance that the sales area would have been saved at 35%. This meant that the settlement obtained between Sainsbury and Broadway Malyan, which had not taken account of the "loss of chance", was prima facie not a reasonable settlement. Accordingly a further reduction in the claimed amount to arrive at an appropriate contribution from Ernest Green would include a reduction of 65%. As discussed in my article last week Judge Lloyd had already considered the question of the amount of contribution which Ernest Green, the structural engineer, could be expected to make in circumstances such as this. He had likened the role of the structural engineer in relation to the design of the fire protection of the compartment wall, to that of the relationship between an architect and a clerk of works, where the apportionment might be 80% to 20%. It was also clear that the architect had failed to be specific when submitting drawings to the engineer as to the comments it sought in respect of fire protection. Accordingly Judge Lloyd had assessed the apportionment at 12.5% to the structural engineer and 87.5% to the architect. In conclusion, in assessing the contribution which might be payable by the third party structural engineer, it was not appropriate to look at the settlement which had been obtained between Sainsbury and its architect. Instead Sainsbury's claim would be examined and reduced under specific heads of claim in accordance with the evidence. A further reduction was to be made in respect of contributory negligence on the part of Sainsbury. The resultant figure would then require to be reduced by 65% to take account of the "loss of chance", and by a further 87.5% to take account of the proportional responsibility of the architect.
CJ-9836
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