Cases - Bovis Lend Lease Ltd v RD Fire Protection

Record details

Name

Bovis Lend Lease Ltd v RD Fire Protection

Date

(2003)

Citation

89 Con L R 169

Keywords

Construction claim - loss and expense claim - JCT Standard Form - damages - liquidated damages - Biggin v Permanite - settlement - reasonableness of settlement - evidence - quantification of damages - expert evidence - expert evidence as to reasonableness of settlement

Summary

This case concerned fire protection and dry lining works in relation to the construction of a shopping centre in Glasgow pursuant to a JCT Standard Form of Building Contract With Contractor's Design, 1981 edition. The main contract was between the claimant developer and Braehead Glasgow Ltd, and the contract sum was substantial, in excess of £180m. Disputes over the payment of loss and expense and the leyving of liquidated damages occurred between Braehead and the claimant, which were the subject of a settlement agreement in January 2002. The developer sought to recover part of the sums paid out under the settlement agreement from the defendant, who had carried out a small proportion of the fire protection works.

In reviewing the authorities, HHJ Thornton QC deduced the following conclusions from Biggin v Permanite and subsequent cases:

• The Biggin v Permanite principles apply if a claim is for an indemnity or for breach of contract, and whether or not liability was admitted under a settlement agreement.
• The rationale behind those principles is that a defendant will be taken to have foreseen that liability to a third party might arise out of his breach of contract, and that the liability may lead to compromise.
• The settlement figure paid to compromise the third party claim represents the upper limit of what may be recovered from a defendant. Any sum in excess of this would represent a profit to the claimant. The Biggin v Permanite principles are principles of evidence as well as rules concerning the quantification of damages. even if the claimant decided to prove its claim in the usual manner as opposed to relying on a settlement, the settlement would operate as a 'ceiling'.
• The claimant need only prove that his settlement was reasonable, without establishing in detail the extent and quantum of the third party claim.
• Expert or professional evidence which the claimant took into account in deciding to compromise the third party claim may be adduced to establish reasonableness.
• Breach on the part of the defendant must be established, as well as the causal link between the defendant's breaches and the claimant's breaches towards the third party.
• If the amount paid under the settlement was unreasonable, it would provide no evidential foundation to establish the claimant's loss. However, it would still operate as a 'ceiling' to limit recovery.
• The tribunal must establish what part of an overall settlement of a multi-party or multi-issue dispute is attributable to the relevant breaches of contract of each defendant.