By an agreement under seal dated 13 November 1995, Sir Robert McAlpine (Holdings) and Sir Robert McAlpine gave the claimant a warranty for the works. How Engineering, the M & E subcontractor, also provided a warranty. How subcontracted the supply and installation of the insulation for the pipework to Southern. Practical completion was certified on 20 September 1996, and the claimant assumed the responsibility for providing horizontal pipework on each floor and connecting it to the vertical air conditioning pipework provided by Sir Robert McAlpine. The claimant had brought proceedings against Sir Robert McAlpine and Holdings maintaining that there had been a leak in the vertical chilled water pipe. A survey undertaken in July 2006 revealed condensation running down the insulation allegedly because of poor insulation and vapour seals, and there was extensive corrosion. The claimant alleged that Sir Robert McAlpine and Holdings had failed to apply the thermal insulation and vapour barrier correctly or in accordance with the contract. The claimant removed and replaced the vertical pipework at a cost of £3.5m.
The claimants sued McAlpine in contract because they and How had provided warranties that they would perform their respective works properly. How sued Southern for breach of duty of care in tort owed to Southern and for a contribution in relation to the duty of care in tort owed to the claimants. The judge had already decided that Southern owed a concurrent duty of care in tort to How. There were remaining issues between the parties as to the existence and extent of breaches of contract or negligence and whether any action in negligence was barred by limitation. The cause of the condensation and whether the claimants had acted reasonably in replacing rather than repairing also fell to be determined.
McAlpine and How accepted that theirs was a back-to-back contractual relationship, so that if McAlpine were liable for breach of contract and damages, it was entitled to a 100% indemnity from How.
From the evidence, the court was unable to infer that there was necessarily such extensive bad workmanship which had caused significant corrosion. Suspicion was not enough. It had been open to Linklaters and their consultants and experts to investigate the cause. Linklaters had failed to prove on the balance of probabilities that McAlpine and How were liable for the corrosion in the basement and undercroft areas.
The judge was clear that How had always known that the specification for the vertical riser chilled water insulation was going to be difficult to achieve. This was why it had asked for a change request in August 1995. When this was refused, it had been incumbent on How to undertake fail-safe measures to ensure that a double vapour barrier had been achieved throughout the heights of the pipes and at all points. It had undertaken to do this and use first class workmanship, doing what was necessary to achieve this. How had failed to do so.
How had been responsible for all the design and detailed decisions about what insulation should go around the pipe support and joint areas. It had not been proved on the balance of probabilities that Southern had been responsible for such decisions. Since Southern did not have a design responsibility, it could not be liable for a breach of duty of care. There was some careless workmanship by Southern, but it had not been proved on the balance of probabilities that these deficiencies had led to any appreciable dampness penetrating through to the pipework. In addition, there was no expressed expert evidence that Southern had fallen below the standard of a reasonably careful insulation contractor.
The judge was satisfied that, on the balance of probabilities, McAlpine and How were in breach of their warranties, and that these breaches had caused excessive corrosion in the pipework, but not in relation to the insulation to the pipework in the plant room and undercrofts. Southern had not breached any duty of care in tort owed to How or Linklaters.
The court accepted Linklater’s evidence that it would be difficult to remove all the corrosion from the pipework in situ because of access problems. The air conditioning was in use all day every day because of the extensive use of computers and other high energy equipment. Consequently, a remedial scheme which necessitated the closing down of the riser pipes would have had a real impact on the business. Linklaters had been entitled to expect that, if McAlpine and How had performed their contracts properly, the pipework would hardly have been corroded at all. Reinstatement was not possible without replacement since the pipework was badly corroded. Linklaters had been advised by experts that replacement was required. There had been no good reason for them to ignore this advice.
Linklaters Business Services v Sir Robert McAlpine Ltd., Sir Robert
McAlpine Holdings, How Engineering Services Ltd., How Group Ltd. and Southern Insulation (Medway) Ltd.,  EWHC 2931 (TCC)
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