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BCL Law Notes Restitution of Unjust Enrichment BCL Notes

Cooperative Retail Services V. Taylor Young Partnership Notes

Updated Cooperative Retail Services V. Taylor Young Partnership Notes

Restitution of Unjust Enrichment BCL Notes

Restitution of Unjust Enrichment BCL

Approximately 620 pages

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Cooperative Retail Services v. Taylor Young Partnership

Facts

On 16 March 1995 a fire occurred at a site in Rochdale where a new head office headquarters building was being constructed for Co-operative Retail Services Ltd (“CRS”). The building was extensively damaged, and CRS sustained loss for which they seek damages in this action. They allege that the fire resulted from negligence or breach of contract on the part of their architects, Taylor Young Partnership Ltd (“TYP”), and their mechanical and engineering consultants, Hoare Lea & Partners (“HLP”). TYP and HLP have joined as third parties the main contractors, Carillion Construction Ltd (formerly Wimpey Construction UK Ltd (“Wimpey”)), and the electrical sub-contractors, East Midlands Electricity Electrical Installations Services Ltd (trading as Hall Electrical (“Hall”)). TYP and HLP allege that the fire was caused by breaches of the main contract by Wimpey and by breaches by Hall of a warranty entered into by Hall with CRS and Wimpey.

TYP and HLP nevertheless claim that they are entitled to seek a contribution from Wimpey and Hall under section 1 of the Civil Liability (Contribution) Act 1978. They do so on the basis that Wimpey and Hall are liable to pay compensation to CRS in respect of the same damage as that for which they themselves are said to be liable.

Holding

Lord Hope

Exclusion under the Contract – Wimpey not under a “liability” to CSR

The effect of these clauses is that the contractor is not liable to pay compensation to the employer for loss and damage to the works which may have been caused by fire prior to the date of practical completion. Clause 20.3 excludes the contractor's liability for any such loss or damage, even though the fire was caused by his negligence, breach of statutory duty or default. Instead the funds necessary to pay for the restoration of the physical damage caused to the works by fire, including the associated professional fees, are to be provided by means of insurance under the joint names policy.

There is no doubt that both the main contract and the sub-contract contain provisions which have the effect in the clearest terms of excluding liability for damage to the works, work executed and site materials due to the negligence, breach of statutory duty, omission or default of the contractor and the sub-contractor respectively: see clause 20.3 of the main contract and clause 6.4 of the sub-contract. This has not been disputed by Mr Blackburn. It is also plain that the purpose of the all risks insurance which the contractor is required to take out and maintain in joint names of the employer, the contractor and the sub-contractors is to provide funds for the reinstatement of the works in the event of their being damaged up to and including the date when the certificate of practical completion is issued, whatever the cause of the fire. But the contractual scheme does not end there. For an understanding of its true effect it is necessary to pay close attention to the provisions of clause 22A.4, which deal with what is to happen in the event of loss or damage affecting work executed or any site materials occasioned by any one or more of the risks covered by the joint names policy.

On the one hand there is the position of the employer. He is not entitled to deduct anything from the sums payable to the contractor under or by virtue of the contract as compensation for any loss and damage which he has sustained due to the fire. This is so even if the fire was caused by the contractor's act or omission or default or by anyone else for whose acts, omissions or defaults he would otherwise be responsible. Clause 22A.4.2 provides that the occurrence of such loss or damage shall be disregarded in computing any amounts payable to the contractor under or by virtue of the contract. On the other hand there is the position of the contractor. Clause 22A.4.3 requires him with due diligence to restore the work that has been damaged by the fire, to replace or repair any site materials that have been lost or damaged by it and to proceed with the carrying out and completion of the works. Clause 22A.4.4 requires him to authorise the insurers to pay all moneys that are payable from the insurance in respect of the fire to the employer, who is required in his turn to use this money for the purpose of paying the contractor and the associated professional fees for the restoration work. Clause 22A.4.5 provides that the contractor is not to be entitled to any payment for the reinstatement work other than the moneys received under the insurance policy.

The position therefore is that there is no liability to pay compensation on either side. The employer has no claim for compensation against the contractor. All he can do is insist that the contractor must proceed with due diligence to carry...

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