10 June 2011

Building works took a shine off tinsel-making business

The Message: An employer is not generally liable for the unlawful acts of an independent contractor.

The Case: The court considered which parties the claimant could sue and what damages could be recovered, for damage caused to manufacturing equipment by dust during building works in Tinseltime v Roberts and others.

In 2007, work on a roadbuilding scheme was carried out by Roberts in Clywd, which involved the demolition of part of a building called the Old Creamery. A company called Fountain of Youth occupied the other part, where it made tinsel and Christmas goods.

The project had been commissioned by the Welsh Assembly and organised by Denbighshire County Council, which had contracted the works to M & JT Davies. Part of the works had then been subcontracted to Roberts.

It was claimed that substantial dust entered the tinsel-making machinery, when Roberts was cutting concrete blocks on the adjacent land to infill openings in the dividing wall between the two parts of the building.

Fountain of Youth assigned its claim for damages for nuisance to Tinseltime before it ceased trading. The court had to consider whether Fountain of Youth had a valid claim and, if so, who that claim could be brought against and what damages could be recovered by Tinseltime. Because of the amount of damages it was claiming (£1.4m), Tinseltime had issued proceedings against the Welsh Assembly and the council as well as the contractors.

To bring a claim for nuisance, a party has to establish that it had a right to occupy the land in question. This normally involves having to establish a right to exclusive occupation.

Fountain of Youth had occupied its part of the Old Creamery under a licence made with "Peter Ridgway, of Fountain of Youth". The defendants argued that the licence was with Mr Ridgway, the person who ran Fountain of Youth, and not with Fountain of Youth itself.

However, the court held that the licence was intended to have been entered into with Fountain of Youth, so it had sufficient interest in the property. Tinseltime argued that it could sue all the defendants as they had all had a non-delegable duty because of the foreseeable danger that the works would cause damage to an adjoining property.

It accepted that, unless it controlled the works in some way, an employer would not normally be liable for negligence by its contractors, but argued the position was different when it came to nuisance.

The court held the law was no different for claims for nuisance. An employer could only be liable for acts by an independent contractor if it had some control over the works, or special circumstances existed.

Those were limited to exceptionally dangerous works or works to dividing structures, which did not apply in this case. Tinseltime could only sue the contractors and not the employers. It could sue M & JT Davies, as Roberts claimed he was a labour-only contractor and had been working under its control and instructions.

The court accepted that Tinseltime could claim for the costs of repairs to machinery that Fountain of Youth had incurred. However, the claim for loss of profits of £1.4m was for prospective losses and Fountain of Youth had not actually suffered any loss before it ceased trading. As it ceased trading for different reasons, it had no claim for loss of profits.

 

Summing up: Tinseltime v Roberts

  • Tinseltime was allowed to bring a nuisance claim on behalf of Fountain of Youth.
  • The damage to equipment was foreseeable.
  • However, the court found Fountain of Youth could not claim for £1.4m lost profits because it had not made the losses before it ceased trading.

 

First seen in Property Week, 10 June 2011.

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