Igloo Regeneration (General Partner) Ltd & Ors v Powell Williams Partnership

This case involves allegations of professional negligence by the Claimants who were institutional purchasers of historical mill buildings in Leeds in Yorkshire following their engagement of the Defendant surveyors and engineers to survey those buildings prior to purchase. There is on analysis a relatively narrow primary issue of liability which revolves around whether the Defendant should have recognised that three cracked brick piers were or might well be subject to compression failure with the issue narrowing even further as to whether the Defendant should have done calculations which would or might have revealed at least a real risk of compression failure.

The proceedings are concerned with a building known as Marshall Mills which together with another building known as Marshall Court, Marshall Street, Leeds were acquired in the name of the first-named Claimant on 16 June 2003. As the name implies, the main building known as Marshall Mills was historically a mill building.

Marshall Mills is now a U-shaped building which surrounds a courtyard and fronts on to Marshall Street on the east side with two wings to the building on the north and south side. This case is most directly concerned with the south elevation of the south wing. The buildings including what came to be known as Marshall Court were built for an industrialist, John Marshall, the son of a draper, who set up flax yarning factories and mills mostly in the Leeds, Barnsley and Shrewsbury areas, employing hundreds of workers; he was extremely successful and was one of the first millionaires of the Industrial Revolution. The north wing was built first in about 1817 and the four storey south wing (Mill D) was completed in late 1827 although, following a fire, it had two stories added in 1830 or 1831 when the linking eastern building was also added. The south wing is thus six stories high and its south elevation fronts onto Union Place. It comprises brickwork facades with 12 sets of 12 windows at each storey and some 13 or 14 piers of brickwork in between. Internally, jack arch masonry floors are supported on inverted cast iron beams which span (north-south) between internal cast iron cylindrical columns and the external masonry walls. The roof was a cast iron structure composed of principle rafters, angle braces, curved collars and king posts. On the north elevation of the south wing there were two original full height brick buttresses at the eastern end; these were probably provided to provide additional support for heavy machinery located on that side of the building. It is clear historically that the floors throughout the building were used at least during Victorian times by spinning machinery and frames and for the storage of products. By the time that John Marshall died in 1845, Marshall Mill was the largest mill in the country. The family firm continued using the mills with reducing success until 1886 when the firm closed down. Multiple occupation followed with different owners and much of it came into the ownership of Marshall Mills Ltd (“the Vendor”) which was to sell the premises to the First Claimant.

Substantial refurbishment at Marshall Mills took place primarily between 1997 and 1999 with a view to the provision of office accommodation. Work included some reconstruction of the ground floor piers along the north elevation of the south wing; photographs reveal that darker and stronger bricks than the original were used, albeit that it would not be obvious from an external visual inspection that the piers had been wholly re-constructed as opposed simply to being re-faced, let alone enlarged. Work to the shell of the building was carried out by a company called Ellmore Construction. Consultant engineers Venn White Associates were later retained in about 1999 to 2001 to provide structural engineering advice and other services in relation to tenant requirements which included the provision of a new computer server room at the fifth floor level and the provision of mobile storage at first floor level as well as structural work at second floor level. They also addressed a pier on the western end of the northern elevation to the side of a newly created entrance which showed signs of distress which was strengthened by wrapping steel bands around the pier which was also increased in size. A similar exercise was done on one of the piers on the southern elevation of the north wing.

I will not in this chapter of the judgment set out in detail the content of the advice and the reports provided by the Defendant, which will be set out later. I will refer to the Claimants generically as “Igloo” before returning to considering the relevance of the different entities.

By early 2003, Marshall Mills and Marshall Court were tenanted. The Vendor had decided to sell its premises. Discussions were held between Mr Chris Brown of Igloo Regeneration Limited (“IRL”) (Third Claimant) and the Vendor and it was agreed that the Vendor would initially treat for a period of two months only with Igloo regarding the potential sale. It suffices to say that Igloo was extremely interested in purchasing the premises. It appears that the price being discussed at least by the Vendor was £16.4 million.

To that end, Mr Roberts of IRL contacted Powell Williams Partnership ("PWP"), the Defendant, with a view to PWP providing a building survey of the Marshall Mills and related premises. On 27 February 2003, Mr Roberts e-mailed PWP asking for a quotation, briefly describing the premises and setting out Igloo’s requirements:

“A building survey is required to establish the current condition of the building’s structure, fabric and services and the future liabilities to the building’s owner arising therefrom.

The Building Survey Report should include comments upon the roof, walls and roof structures to the building where accessible. Where no access is possible…conclusions should be drawn from the condition of adjacent structure and finishes…”

It was later explained by e-mail on 3 March 2003 that the surveyor would need to provide "a costed schedule of Planned Preventive Maintenance".

On 3 March 2003 PWP’s Mr Williams, a chartered surveyor, responded with a quotation, setting out what he understood the brief was:

“The purpose of our report is to bring to Igloo Regeneration’s attention any substantial defects or wants of repair likely to affect your freehold ownership of the property and it will not therefore provide a detailed description of the internal accommodation nor internal finishes.

It will not be our intention to refer to each and every defect within the property, but rather give a more general assessment of its overall condition. We will draw to your attention any significant matters which may give rise to concern within the foreseeable future and will compile a Schedule containing items of planned preventative maintenance for a duration of 15 years…

You will appreciate it will not be practical or possible to carry out a comprehensive inspection of those parts of the property which are covered or inaccessible and we will therefore be unable to state that defects do not exist in those parts which are unexposed, inaccessible or incapable of inspection…

Our inspection will be undertaken by members of our building surveying department and our report will therefore only comment on the structural aspects of the property as commensurate with a building surveyor’s inspection. Should we consider that detailed structural engineers investigation and report is required following our inspection then recommendations will be provided for our structural engineer’s appointment…

Finally, we would draw to your attention that the report will be confidential to Igloo Regeneration and for the sole use. Consequently no liability will be accepted to any third party with respect to the whole or any part of its content."

A few days later, Mr Roberts asked for a further quotation to survey the (relatively) adjacent building, Marshall Court. On 17 March 2003, Mr Williams replied increasing the quotation to £6,250 to cover that survey work as well.

On 8 April 2003, Mr Roberts accepted the revised quotation by e-mail to Mr Williams, confirming PWP’s “appointment to undertake the building surveying survey…as per your quote of 3^rd March…"; the understanding was that a preliminary report would be provided by the end of the following week.

Mr Williams, accompanied by a colleague, Mr Hunter, visited the site on 15 and 16 April 2003. Mr Hunter took a number of what turned out to be useful and informative photographs. No material damage or distress was noticed on most of the south wing but a number of the photographs of Piers 10, 11 and 12 towards the western end of the southern elevation of the south wing showed cracking in the piers at ground floor level between the tops and bottoms of the adjacent windows. Pier 11 was the worst with a crack line running from about two or three bricks up from the window sill level to a height of about four brick courses below the top of the adjacent windows; the crack seems to be at its greatest width about 3 mm wide. There was even less cracking on Pier 10 with a crack (up to about 2 mm wide) apparently starting some four or five brick courses up from the sill level and ending some 11 or 12 brick courses down from the top of the window (the windows being some 5 to 6 feet in height). There are no photographs of the cracking on Pier 12 but it is likely that it was less in length and width than on the other two. The cracking did not go down to the ground or up above the window heads. Mr Williams and Mr Hunt met and had some discussions with the Vendor and were told that the Vendor’s engineers, Shepherd Gilmour, were to inspect the cracking and report.

Mr Roberts and Mr Brown of Igloo clearly were hoping to complete the transaction by as early as about 8 May 2003 and there was some keenness to ensure that the various professionals retained by Igloo moved reasonably promptly. Thus it was that on 17 April 2003 Mr Williams sent in (subject to later amendments) the first draft of the "Summary of Principal Considerations" chapter of his report in advance of the rest. He referred to the cracking on the three piers which he diagnosed as being of recent origin and which he thought might be associated with the increased loadings created by a large safe and the server room at the 5th floor level. He referred to the fact that significant areas of external brickwork had been partially taken down elsewhere and rebuilt with brickwork being tied back to retained brickwork and he called for details of the works undertaken in this regard to be obtained from the Vendor. Mr Williams recommended that the Vendor should be requested to provide details of and confirmation that an assessment of the loading capacity for the floor, cast-iron columns and wall structures was carried out prior to the office conversion and that all related documents to loadings should be obtained from the Vendor.

Meanwhile, Igloo had secured an environmental report from White Young Green Environmental who reported in early May 2003 that overall the site in terms of environmental risk was “Moderate to High”.

On 6 May 2003, Mr Williams sent to Mr Roberts of Igloo a detailed list of further information and documents which were required in relation to what had happened in relation to all the earlier works including the “engineer’s report on cracking noted to the three brick piers on south elevation at ground floor level” as well as previous load capacity assessments for the floors and walls. In this context, Mr Roberts of Igloo wrote to the Vendor by e-mail on 6 May 2003 (copied to Mr Williams) asking for much of this further information and seeking for instance "exact details…in respect of wall-tie stabilisation works to Marshall Mill" and in relation to the cracks to the three piers on the south elevation "copies of [Vendor’s structural engineers’] report and recommendations arising should be obtained for further consideration prior to exchange of contracts", as well as information about "what checks were made by a structural engineer to assess the tenant’s proposals for these concentrated for loadings at 5^th floor level prior to the installation".

A meeting was arranged between Mr Williams (and others) and Mr Wright of the Vendor on 8 May 2003. Mr Wright indicated that much of the information was held by the original contractors, Ellmore. Some limited documents were provided. A copy of a recent quotation from MPI (see below) was also provided and Mr Williams was told that Shepherd Gilmour would send a detailed letter report on the cause of the cracking to the three brick piers in question. The MPI quotation dated 7 May 2003 and addressed to Shepherd Gilmour was for £1,551 and offered to provide 12 wall-tie anchors to each of the three affected piers, reinforce the mortar with stainless steel spiral bars and rake out cracks and re-point. This was effectively concerned with tying back the outer leaf of brickwork which was believed to have moved out somewhat from the internal brickwork.

In a second letter dated 15 May 2003 Mr Williams advised Mr Roberts as follows:

“I would recommend the following steps be implemented forthwith…The appointment of our in-house Structural Engineers to review information to be supplied and which is awaited from Sheppard Gilmour in respect of the cracking on the South elevation of the South Mill. (See item 3 of my letter of yesterday) This is required in order to establish the cause of cracking and the adequacy of remedials put forward by Sheppard Gilmore and MPI structural and remedial solutions.”

He also wrote:

“I enquired of Mr White as to what assessment had been made of the potential overloading of the office floor structure and consequently the enclosure walls due to the positioning of a safe, mobile racking, and a server room within the upper floors which corresponded with the vicinity of the cracking. Mr White dismissed this stating that in his opinion only a routine repair was required, where portions of the external envelope have parted from the inner brick courses, as set out in the MPI Structural Remedial Solutions quote of 7^th May.”

On 15 May 2003 and following a meeting the previous week between the Vendor, Mr Brown, various representatives of Igloo and him, Mr Williams sent correspondence received from the architects and structural engineers at the relevant time (showing that Hilti ties had been put in place to tie back the outer leaf on the north elevation of the south wing) The correspondence included a letter from Michael Heal Associates, the structural engineers at the time dated 28 May 1998 which stated:

“...we would confirm that it is our opinion that the existing main body of the brickwork is able to perform its loadbearing function, but the external leaf does require remedial tying to the internal leaf to continue this performance”.

On 16 May 2003 Mr Williams sent a second draft of his survey report to Mr Roberts. He said that the cracking had been drawn to the Vendor’s attention during his inspection and that he had been provided with a quote from MPI for remedial work of £1,551 (ex VAT). He also stated that he had discussed these proposals with Mr White who had been instructed by the Vendor to prepare a report on the cause of cracking. He then continued:

“Mr White confirmed that he would forward a copy of his report to Powell Williams Partnership together with copies of drawings, which set out the strengthening which has reportedly been implemented within the floor structure beneath the safe, mobile racking and U.P.S. within the server room to accommodate the same. The information when received by our own in-house structural engineer must be assessed against their adequacy and that of the proposed repair prior to exchange of contracts.”

Mr Roberts accepted Mr Williams’ recommendations and PWP’s in-house structural engineer, Mr Rudd, did this exercise so far as possible before exchange of contracts.

By email dated 18 May 2003 Mr Roberts asked PWP to address its report to the Fund and not to IRL and to invoice the Fund rather than IRL. PWP complied with these requests.

By an email to Mr Roberts of 22 May 2003, Mr Williams confirmed that Mr Rudd had agreed with Mr White that the minor works suggested by MPI be carried out “as a holding measure”. However, he also stated:

“...again, in brief [Mr Rudd] has confirmed that he is not unduly concerned with regard to all of the items raised....with the exception of the cracking upon the South Elevation to the South wing of Marshall Mills. As I explained on Tuesday evening, he has agreed with Charlie White of Sheppard Gilmore that the proposed remedial ties are installed as a holding measure at a cost of £1551 ex VAT although this may prove to be an appropriate solution subject to the implementation of a monitoring regime over approximately a 12 month period with regular inspections. If it is found that the movement continues to occur and the brickwork deteriorates further, then more intrusive investigation and consequently remedial repairs will be required. We therefore suggest that the figure of £20,000 ex VAT is retained within the Planned Maintenance Schedule as it may still be required, subject to the monitoring process. You will need to consider how this is catered for within the Sale and Purchase Agreement as, whilst Mike Rudd does not believe that the Tenants additional loads which were catered for by Landlords strengthening works, are the cause of the cracking, he confirmed that this cannot be ruled out…”

The letter also emphasised that the Vendor seemed to hold the mistaken belief that the MPI works were a complete solution despite the fact that Mr Rudd had explained that this was not necessarily the case. At this stage it was suggested that the figure of £20,000 be retained for future remedial work. This was based upon the conclusions which the Defendants had reasonably drawn from their inspection.

On 23 May 2003, Mr Williams sent through to Mr Roberts and Mr Brown of Igloo Mr Rudd’s letter report confirming that PWP was trying to ascertain from the local authority Building Control officer whether a floor load capacity evaluation was undertaken by the Vendor. I set out below the detail of this letter but in relation to the three cracked piers in the south wing Mr Rudd concluded that the outer face of the brickwork was “subject to external lateral movement consistent with separation of the outer face of brickwork from the inner courses” but there was no visible internal distress albeit that the internal walls were masked by dry lining. He believed that the tenants’ requirements within the floors have not increased the load on the piers significantly but he could not rule this out without further monitoring. Although he classified the extent of the cracking to the piers "as being moderate to severe" this had occurred "within the very recent past" but it was "reasonable to assume therefore that there is potentially something significant occurring within this localised area of the property to cause the distress now evident". He recommended that the piers should be monitored to ascertain their performance before deciding upon an appropriate repair or strengthening, albeit that immediate replacement or temporary propping was not required. He broadly went along with the repair proposed by MPI and Shepherd Gilmour but called for monitoring thereafter at 1, 2, 3, 6, 9, 12 and 15 months. He advised "that the provisional sum figure of £20,000 [be] set aside for the strengthening of piers” which could "only be clarified following the monitoring exercise". He had been unable to establish whether a floor load capacity check had been carried out but he believed that it was reasonable to conclude that the floors were "performing satisfactorily in supporting loads associated with such use" albeit that this could not be categorically confirmed.

On 29 May 2003, Mr Williams e-mailed Mr Brown of Igloo attaching a schedule of works to be undertaken by the Vendor. There was some discussion about the Vendor being responsible for the monitoring of the cracks, albeit later in early June the Vendor made it clear that it would be Igloo’s responsibility. Contact had been made with Building Control by PWP and little of use obtained (at least in relation to the current dispute).

On 12 June 2003, Mr Brown produced a report in its final form which recommended the purchase of Marshall Mills and Marshall Court as well as an option on certain adjacent freehold land for the sum of £16,071,186. The figures showed an internal rate of return averaging 11.83% or more potentially if a new development was carried out. The report was addressed to Morley Fund Managers, the Fund’s manager. It expressly referred to the PWP report. Paragraph 3.4 refers to the "recent cracking…investigated by structural engineers" whose view was "that this is probably a minor continuation of historic movement which will require a minor repair (service charge recoverable) and ongoing monitoring". Whilst this was not a wholly accurate summary of what PWP had said, I have no doubt that the IRL relied upon what PWP had advised them in relation to the purchase of Marshall Mills. Authority was provided either on the same or the following day to permit the purchase which was to be in the name of General Partner. There was no evidence, written or documentary, as to the basis upon which the Fund or the Fund manager made any decision.

On 16 June 2003, contracts were exchanged for the sale of the freehold of Marshall Mills and Marshall Court with General Partner being named as the Buyer. In relation to Marshall Mills, this was largely on a caveat emptor basis, albeit that it was subject to the leases already entered into. Prior to this or shortly thereafter however, the Vendor had procured the execution of the brickwork repairs on Piers 10, 11 and 12 on the south elevation of the south wing by MPI.

Thereafter, PWP produced for Igloo its final Condition Survey Report running to 66 pages with amendments in red. Mr Williams said in evidence and I accept that so far as is material everything which was said in this report had either been communicated orally or in writing to Mr Roberts and/or Mr Brown before the exchange of contracts. Some revisions were made however to reflect what had or had not been said or done over the previous few weeks. I will set out below the relevant parts of this report.

In late July 2003, Mr Rudd of PWP contacted Mr White of Shepherd Gilmour about monitoring the repaired piers and asked him to provide additional monitoring points in relation to the previous cracking. This arose because Mr Williams on his own initiative had asked him to do so on 24 July 2003, intending himself on the following day to talk to Mr Roberts about it. PWP was to be retained by Igloo to provide engineering and other services in relation to Marshall Court and so it was envisaged that PWP would be visiting the site from time to time. Mr White wrote back to Mr Rudd in the following terms:

“The repairs to the three piers on the south elevation of the south wing…where the outer skin of brickwork was bowing outwards and cracking have now been completed. The work involves installing ‘Cintec’ anchors to tie the bricks back to the pier and the provision of stainless steel bed joint reinforcement across the cracks.

As you requested during our discussions on site about the repairs we have installed monitoring studs across vertical cracks in each of the piers and also as you subsequently requested across the cracked window cill.

We enclose a copy of our initial readings of the monitoring studs together with a copy of sketch M01 showing their location.

We would propose to read the studs initially in two weeks time.

As the mill is no longer owned by Marshall Mill Ltd could you please confirm who our client is for this work.”

Mr Williams told Mr Rudd said he would raise this with Mr Roberts when he met him on 1 September 2003 but that in the meanwhile he should avoid the topic of fees for Shepherd Gilmour until further notice.

By letter dated 9 September 2003, Shepherd Gilmour provided Mr Rudd with the first readings which showed very slight increases in the width of cracks between 0.06 and 0.19 mm. Mr Rudd wrote back to Shepherd Gilmour on 15 September 2003 suggesting that the monitoring regime was increased to monthly intervals "to ascertain if there is any concern regarding the rate of increase and hence deterioration in overall condition of the relative piers” going on that should "there be a dramatic change in the crack widths we would be pleased if you could contact this office so that we can arrange a mutual inspection as soon as possible."

On 17 September 2003, Mr Williams wrote to Mr Roberts at Igloo enclosing the July and September letters to and from Shepherd Gilmour, saying:

“With regard to the cracking of brickwork to the [south] elevation…you will see that it is apparent that movement is still ongoing…

Having spoken with Mike Rudd, it would appear that the matter may not have been resolved by the installation of the remedial ties. Mike Rudd as per his letter has suggested that if the position deteriorates further a meeting should be held in order that proposals for remedy can be considered and agreed.

…following our discussions, I confirm that Igloo are prepared to accept responsibility for payment of fees to Shepherd Gilmour, in order that their reports and recommendations made within correspondence to date can be relied upon by Igloo. I shall therefore be writing to Mr White to confirm this point requesting that all correspondence received to date can be re-addressed for the benefit of Igloo…”

On 29 September 2003, Shepherd Gilmour wrote to Mr Rudd enclosing further monitoring readings which indicated that there had been no movement at two of the four locations and 0.03 and 0.06 mm on the other two. On 30 September 2003 Mr Rudd wrote to Shepherd Gilmour confirming that additional studs should be installed to monitor the condition of the vertical face of the piers. On 9 October 2003 Shepherd Gilmour carried out some further readings which showed either no movement (at two locations) or apparent minor reductions in crack size at other locations. On 28 October 2003, Mr Williams of PWP confirmed that Shepherd Gilmour’s client for the purposes of the monitoring exercises and related invoicing was to be General Partner. An invoice followed from Shepherd Gilmour on 31 October 2003 addressed to General Partner care of PWP for the July, September and October readings; this was passed onto General Partner several weeks later.

On 21 December 2003, Shepherd Gilmour sent monitoring results on the three piers to Mr Rudd showed some increases of fractions of millimetres in the cracking on some of the cracks with reductions and no difference on others. Mr Rudd wrote on the letter a note to Mr Williams: "cracks keep moving-can we touch base”. Shepherd Gilmour invoiced General Partner care of PWP on 31 December 2003 with a reminder that they had not been paid for their October invoice. Mr Williams replied on 2 February 2004 that he was concerned that Shepherd Gilmour had not provided "any opinion…whether or not the structure is deteriorating, and if so whether increased periods of monitoring are required" asking for a letter expressing an opinion. On the same day, he wrote to Mr Roberts of Igloo with the latest invoice, asking him to secure payment for it and the earlier unpaid invoice; he sent a copy of his letter to Shepherd Gilmour. Shepherd Gilmour chased payments for these two invoices on 18 February 2004 through Livingcity. Mr White of Shepherd Gilmour replied to Mr Williams’ letter of 2 February 2004 on 24 February enclosing the latest monitoring results from 23 February and invoice saying:

“We consider that there are no significant signs of on-going structural movement to the piers. Our one concern is that there is a minor bulge on the right hand jamb of the right hand pier where the crack width has increased by 0.4mm over the last two months.

We would propose to measure the cracks again in two month’s time and if there were no significant change then we would propose to leave it for a further six months before taking any readings.”

Mr White did not refer to an increased crack width of 0.86 mm on the left hand jamb of the central pier. Mr White chased PWP for the still unpaid October and December invoices for monitoring on 12 March 2004, which Mr Williams followed up on 19 March 2004 with Mr Roberts. Mr White was becoming increasingly concerned about non-payment and again contacted Livingcity on 2 and 14 April and also in June 2004.

In January 2004, Igloo had retained a firm CNP as its surveyors to handle maintenance and building issues. As a management meeting on 29 June 2004 attended by Mr Roberts, Mr Atkins of Livingcity and representatives of CNP, CNP was asked to contact Shepherd Gilmour "to obtain an update on the monitoring of the movement of the South Wing elevation". What had effectively happened was that Shepherd Gilmour was clearly not prepared to continue monitoring when its modest bills for this work remained unpaid.

There seems to have been little or no urgency in following up this monitoring update. CNP wrote to Mr Roberts on 30 September 2004 reporting on its review of the Planned Preventative Maintenance Schedule originally prepared by PWP, saying amongst other things:

“The single largest item of repair highlighted within the 2003 year is a provisional sum of £20,000 for structural repairs to the south elevation of the south wing. Following consultation with Mr Charles White, of Shepherd Gilmour, it is our understanding that any movement in recent months has been minimal and is most likely attributable to thermal movement as opposed to possible overloadings of upper floors. We are currently seeking further written clarification of this matter and would recommend that ongoing monitoring of this elevation is maintained."

The reality is that there had been no monitoring since February 2004 and Mr Roberts ignored or overlooked the advice of ongoing monitoring was maintained. Whether CNP had actually spoken to Mr White or simply read the correspondence (and drawn some provisional conclusions) is unclear. CNP followed this letter with another on 23 November 2004 to Mr Atkins (copied to Mr Roberts) indicating that the £20,000 for repairs to the south wing on the south elevation had been omitted but that an amount had been included for the continued appointment of a structural engineer to monitor the condition of the cracking to the south wing. Monitoring was to be included on a continuing basis until 2014 at the rate of £750 per year (which seems to have involved an allowance for at least monthly monitoring). This does not appear to have been actioned subject to what happened in June 2005.

Again little happened although CNP wrote to Mr Roberts on 7 April 2005 saying that it would liaise with Shepherd Gilmour to confirm that ongoing monitoring words were being continued and to obtain all reported recordings carried out to date. There was obviously an appreciation by all concerned that monitoring should be continued. CNP wrote to Mr White of Shepherd Gilmour on 15 June 2005 recording the conversation that morning "that no monitoring has been undertaken in recent months" and asking for a quotation for the re-commencement of monitoring. He recorded from conversations "some time ago" Shepherd Gilmour’s opinion "that the cracking is largely attributable to minor thermal movement as previous movement recorded was not deemed significant"; this was copied to Mr Simmons of Igloo who had taken on Mr Roberts’ role. Mr White replied on 16 June 2005 stating that the last readings had been in February 2004 and suggested that cracks were measured at intervals of three months. He referred to the previous history of late payment. On 17 June 2005 CNP wrote to Mr Atkins (copied to Messrs Simmons and Mr Roberts) asking confirmation that Shepherd Gilmour was to be instructed. Mr Atkins replied on 27 June 2005 authorising the instruction of Shepherd Gilmour. On 29 June 2005 CNP instructed Shepherd Gilmour to undertake the structural monitoring and reporting.

What then happened is that Shepherd Gilmour carried out monitoring on 30 June 2005 which recorded significant and serious increases in crack sizes. On the left hand jamb of Pier 10 cracking had increased by 26.09 mm (over an inch) and elsewhere by up to 1.05mm; the left hand jamb on Pier 12 had increased by 9.52 mm and elsewhere by up to 3.08 mm; Pier 11 cracks had increased by up to 1 mm. The documents recording these readings were obtained later by or on behalf of the Claimants from Shepherd Gilmour and I have no doubt that the documents are genuine and record the readings actually taken. The engineering experts accepted that these increases in crack width were consistent with the compression failure that they both accept was occurring in fact. It is inconceivable that these cracks at least in one place over 1 inch wide were not seen by CNP, Livingcity and indeed by representatives of Igloo. Nothing however was done about them and no further monitoring was carried out by Shepherd Gilmour, as must have been known by Igloo representatives as well as CNP and Livingcity.

In late 2006, representatives of CNP and Mr Atkins of Livingcity finally realised that there was something very seriously wrong with these three piers but little or no urgency was displayed, notwithstanding that a detailed inspection associated with mastic work was carried out by CNP on the south elevation in September 2006. It was left to a Mr Pentreath of Martin Stockley Associates ("MSA"), who were engineers engaged on other work in the area, to e-mail Mr Simmons on 22 January 2007 as follows:

“During our recent site walkover on the Holbeck site at Leeds we noticed that there is a problem with an area of brickwork to the south elevation of the Marshall Mill building. The brickwork is cracking/spalling/bulging quite badly at one localised area, though the reasons for this were not clear to us. Refer to attached photos.

We saw some ‘tell tales’ fixed to the masonry and so assumed that this problem is being dealt with. However we felt a professional responsibility to draw this to your attention hence this e-mail."

Mr Simmons passed this on to CNP and Mr Atkins suggesting using MSA in place of Shepherd Gilmour. CNP suggested however that Shepherd Gilmour be retained.

Shepherd Gilmour’s immediate response on 31 January 2007 was to say that the "structural distress with cracking and local bulging" on two of the piers was "significant and far worse than when we last inspected the wall" and recommended that "remedial action is now urgently required”. Later that day Mr White wrote quoting for inspecting, reporting, designing remedial work and site inspections and saying:

“The problem is that it would take considerable temporary propping to remove and rebuild a pier and the approach we have adopted twice in the past with the previous owners…was to wrap the pier with steelwork, build an outer skin of brickwork and fill in between with concrete. This does however leave projecting piers both internally and externally which as it is a Listed Building may require Listed Building Consent…”

CNP on behalf of Igloo instructed Mr White to proceed on 5 February 2007 to inspect and report for £600 as well as produce a detailed remedial work design for the sum of £1,200. On 7 February 2007, Mr White who had been in touch with the tenants (the Health and Safety Executive) reported to CNP that there were clear signs of distress internally as well as externally. It was his view that "urgent action is required to prop some of the beams at the ground, first and second floors to take some of the load off the piers". To that end he procured a proposal from a specialist scaffolding company to provide such propping and this company was required to and did install these props in late February 2007.

Shepherd Gilmour produced a structural appraisal dated 26 February 2007. Mr White noted that there was structural distress to the three piers, what he described as "crushing at the top of the wall” at ground floor level and some "very slight cracking" at first and second floor levels. He referred to the two ground floor piers on the north elevation of the south wing and the south elevation of the north wing which under his direction had been strengthened by wrapping steel bands around them "to resist the bursting forces and increasing the size of the piers". He said that the three piers on the south side of south elevation were now "showing similar signs of significant structural distress", saying that the Cintec anchor work had been installed because "it was thought that the cracking may just be the result of the outer brick skin beginning to peel away from the brickwork behind"; however, the "further structural movement that has occurred shows that the structural movement is more serious and requires significant repairs”. The recommended propping had ensured that "the piers now have a factor of safety greater than 1.0 and has gained some time to carry out permanent repairs." He concluded that "the cracking of the piers is due to crushing failure of the brickwork possibly coupled with fracture of the headers tying the brickwork together." He identified the options for repair as wrapping "the piers in steel bands to resist the bursting forces and increase the size of the piers as was done previously" or "to remove the four ground floor windows [adjacent to the piers] and in fill them with new load-bearing brickwork". He identified that both options would require Listed Building Consent. Attached photographs show that there was substantial cracking within the internal finishes behind the affected piers.

Notwithstanding the propping, the cracking appeared to be getting progressively worse as noted by Shepherd Gilmour in a letter dated 19 March 2007 to CNP and a more robust and substantial temporary support was suggested. By this stage, Igloo was becoming somewhat disillusioned with Shepherd Gilmour and approached Mr Broster of MSA with a view to retaining him and his firm. His first task was to review what Shepherd Gilmour had done and concluded to date. In an e-mail dated 20 April 2007 to Mr Simmons, Mr Broster said that "fundamentally there needs to be an understanding as to why this progression in the damage is occurring" and criticised Shepherd Gilmour for not providing an opinion as to the basis of its view that there was a crushing failure of the brickwork. He raised the question as to why the current "bursting of the brick piers" had "recently manifested in this way" and why the adjacent piers did not show any signs of distress. Until this was addressed, he suggested that it would be premature to set about permanent repairs. He raised the following questions:

“Why is the damage to the piers limited to certain areas only?

Why has the damage [been] relatively recent? The building is 170 years old, and would have [been] designed for floor leading more significant than the current office use (we assume).

Has the possibility of ironwork within the pier causing corrosion and therefore bursting the pier, being investigated/ruled out?

If there is a crushing failure of the piers, the suggestion being from an overload from the floors, why was this not addressed when the building was converted in 1999-2001?"

MSA quoted by e-mail to Mr Simmons on 26 April 2007 with a projected programme in three stages with the first stage leading to a summary report with conclusions and recommendations within six weeks. This was provisionally accepted on 2 May 2007 by Mr Simmons. Meanwhile and on the same day, Shepherd Gilmour (whose services had not yet been dispensed with) applied for planning permission for repairs on two bases, namely infilling four windows and the steel band solution; it was later confirmed that the Historic Building Officer and English Heritage had approved these in principle and indeed on 26 July 2007 Leeds City Council granted full planning permission for the brick infilling option. However, on 3 May 2007 Mr Simmons e-mailed Shepherd Gilmour saying that there were "some issues that we are not totally happy with" and that the "permanent solution does need some further work"; Igloo proposed to appoint MSA. There followed an overlap period whilst both continued to work on the project.

MSA did a calculation on 11 May 2007 about what the stress from the dead and live loads might be; it needed substantial correction by a checking engineer. By 14 May 2007, Mr White of Shepherd Gilmour informed CNP that the piers were continuing to deteriorate and that he would like to instruct additional scaffolding to provide them with the lateral restraint. This appears to have been instituted by the end of May 2007. Unsurprisingly, the HSE as tenant of the affected floors notified the possibility of the claim for interference.

On 21 May 2007 MSA produced what it called a "Handover Report" saying that the "distress to the piers appears to be consistent with crushing failure of the existing pier brickwork”. It said based on preliminary assessments that although "the stress levels are relatively low, they do appear to be high enough to crush particularly weak brickwork"; it added that it was possible that the "distress may be caused, or exacerbated by, corrosion and associated expansion of embedded ferrous metal work within pier bodies". It said that the distress was not apparently consistent with foundation movement or settlement.

By 22 June 2007 and for the first time, there was similar cracking forming on Pier 9. At the suggestion of MSA, a firm called Ceram Building Technology visited on 27 June 2007 in connection with quoting for compression tests on the bricks and brickwork.

Perhaps presciently, Mr Simmons wrote to MSA on 28 June 2007 asking: "is there any way we can get to a solution more quickly?" He explained that Igloo needed to get the problem resolved quickly and that the time related costs and potential claim from the HSE were growing. This was prescient because it was to take well over a year before any substantive remedial works were initiated. An engineer from MSA opened up some plasterboard behind Pier 10 on 4 July 2007 and found the internal face of the brickwork to be "in very poor condition with loose sections of masonry held up by plasterboard framing". On 6 July 2007, MSA produced details of preparatory works required to enable the installation of a temporary concrete jacket to the brick piers. Quotations were obtained including from a company called Bullen Conservation Ltd, whose quotation, albeit not the lowest, was recommended on 23 July 2007 by MSA for acceptance. By the end of July 2007, Mr Simmons was asking MSA for an overall budget because he had "no idea where we are at the moment" and he needed "to get a handle on what's involved so far".

Meanwhile MSA was seeking to secure a ground investigation and a drainage survey a specification for which was provided in early August 2007. The drainage survey was done in early August 2007 which revealed some unrelated problems with the drainage such as open joints and the like.

On 3 September 2007, MSA noted in an e-mail that on the internal face of the affected piers "the masonry has moved against itself as it has crushed". On 12 September 2007 MSA presented to Mr Simmons it's "overall strategy for the repair works" involving four stages, Understanding Failure and Context and Temporary Works, Feasibility Design Proposals, Detailed Design and Construction. Interestingly no projected programme was given for the last three phases. On 20 September 2007 geotechnical engineers reported on the site investigation which concluded that "the failure of the brickwork has [not] occurred through foundation failure or settlement"; this would always have seemed to be the likely result so far as MSA was concerned.

On 2 October 2007 MSA produced a "Structural Appraisal Report". There is a particularly graphic description and photograph of the internal side of the distressed Pier 10. It notes that there was "no evidence of any strengthening of the piers having being carried [out] when the building was heightened (in about 1830), which added a further two floors to the load on the piers”. It set out an assessment of the current loading regime on a typical pier of 2.5 kN/m² over six floors and compressive stresses in the masonry. It referred to the discovery of the cill voids, which were voids left in the brickwork when new windows and window cills were renewed possibly in the 1990s. The conclusions were that there may have been an increase over the historic loads by the current uses and that the creation of the cill voids "appears to have compromised the structural integrity of some of the ground floor piers by reducing their cross sectional area" going on to say that this "coupled with even a marginal increase in imposed loading to which the floors are subjected could be enough to trigger the onset of structural failure…[and that this] could have effectively used up any factor of safety applied to the original design and hence leaving the piers at risk of failure should the load be increased in the future." Recommendations included more surveying of the building and testing some of the masonry; the report went on to say that an appropriate repair solution would be developed in relation to Piers 9 to 12 but that once "further investigations around the building are complete, the adequacy of the building as a whole for its current use of office space can be assessed…[and that this] will enable us to generate a suite of proposals to ensure the long-term stability of the structure".

Shortly thereafter and again presciently, Mr Simmons once more raised the question of the time being taken saying that they urgently needed "to conclude the investigation/recommendation for solving the current problem piers – it is costing us money all the time in fees and scaffolding costs and the rising claim from HSE”.

On 2 November 2007, MSA produced a "Repair Options Appraisal" which considered "the adequacy of the South Wing as a whole for its current use as office space". This report recommended wholesale replacement of Piers 9 to 12 and what was called "intervention to protect the south wing as a whole". These “intervention works”, whose concept was at this stage in its infancy, were to involve the installation of substantial steelwork behind the piers and in the centre of the building to carry loads from above down into the ground.

On 9 January 2008, MSA sought quotations for the repair of the four brickwork piers in question; this would involve the installation of a propping scheme to support the full building load above ground level whilst the piers were re-constructed. It was envisaged that the building would remain occupied by tenants whilst the repairs were carried out. Detailed drawings were provided. Coincidentally, on 11 January 2008, Shepherd Gilmour’s planning application for the strengthening and rebuilding of larger piers was turned down by Leeds City Council, which was unsurprising since this was not an option which was any longer being pursued. Only two of the six tenderers returned tenders.

In reporting by e-mail to Mr Roberts on 7 February 2008, MSA updated him on the fact that further negotiations were proceeding with the two tenderers who had submitted tenders and explained that the "focus for February is to refine our proposals for the upgrading of the South block frame". Matters were falling behind a programme produced by MSA in November 2007 which had envisaged that the repair of the four piers would commence with propping in the last week in February 2008.

On 15 February 2008, MSA provided a table comparing the two quotations which demonstrated that Bullen was lowest in price at £96,931.66; Bullen had allowed in their quotation dated 1 February 2008 for piling to support the props. However MSA considered that there was "no clear favourite between the tenderers when all factors are considered" particularly given that the second tenderer’s programme was significantly shorter.

On 29 February 2008, MSA produced a sketch illustrating five options for the "intervention works" previously referred to as involving "upgrading". These variously showed the provision of new foundations internally within the building litigated near the outside walls and in the middle of the building supporting upper floors.

By 7 March 2008 Mr Roberts had indicated that Igloo wished to proceed with Bullen for the pier repairs. But MSA were “awaiting clarification of final details on Bullen’s price, following receipt of which we will be advising them of their imminent appointment". It was however only in mid-March 2008 that brick samples were taken for testing. By 16 April 2008 MSA was suggesting in an e-mail to Mr Roberts that it was awaiting his further instruction given that that there was a "need for repair works to commence as soon as possible". On 27 June 2008 Mr Broster of MSA wrote to Mr Roberts saying that this "works contract is currently awaiting Client instruction to proceed".

Further design work was done by MSA on the "intervention" proposals culminating in an e-mail dated 16 May 2008 which proposed three options but recommended that new structural elements should be installed over three floors levels to strengthen the structure “adequately for a full office imposed load allowance of 2.5kN/m² + 1kN/m² for partitions". MSA sought prices from contractors in June 2008 but Mr Roberts wanted to know in his e-mail to MSA of 16 June 2008 in effect whether the intervention works were worth it; he asked whether "market-tested budgeting" had been progressed. In July 2008 MSA reported on prices received for the three options.

It is clear by this stage and indeed before that there were essentially two sets of permanent work which were being considered. The first which had been the subject matter of the quotation in January 2008 from Bullen related to the restoration of the four piers to the state they would have been in but for the compression failures which had occurred there. The second set of works which was clearly not then or indeed later pursued as a matter of urgency was the improvement of the loading capacity of the building to bring it up to current full office standards. It is also the case that MSA had been asked to consider chimney repairs (which had nothing to do with this litigation) which were costed at some £114,000 in an e-mail from Mr Roberts dated 20 June 2008.

In July 2008, MSA proceeded to secure a further quotation for the four piers from Bullen having produced more documentation including a substantial Contract Information document as well as further drawings; this Contract Information document was revised on at least three later occasions by MSA. There was no attempt to obtain competitive quotations. By this time a provisional decision had been made to use Bullen irrespective of what its new price would be (presumably within reason). A "Pre-Contract” meeting was held on 18 July 2008 with representatives of Bullen, MSA and Igloo amongst others present. There followed more detailed discussions about what sort of piling should be provided as there had been some change of mind. It is unlikely that Igloo was told that there might be a material increase in the likely cost of the works because it wrote an e-mail on 14 August 2008 indicating that they would cost "in the region of £100k". MSA had approached the specialist piling company Van Elle who provided a sub-contract quotation to Bullen on 8 September 2008 for £27,000. Unsurprisingly, Bullen’s quotation several weeks later came in at nearly £160,000 which was over £60,000 more than their previous quotation. It was only in September 2008 however that MSA produced a piling specification.

On 2 October 2008 Igloo sent a "letter of intent" to Bullen for the pier repair works in effect to get things moving. Within days, the proprietor of Bullen was indicating that he wanted to re-negotiate, which an MSA employee noted on 11 October as seeming to be "reasonable". Work started about 10 days later. Bullen re-quoted on 30 November 2008 in the sum of £173,881.

It is not unfair to say that the period between about January 2007 and the commencement of the brickwork repair works was characterised by a lack of urgency and direction. There has been no valid explanation as to why this urgent work either did or needed to take 22 months to start.

Essentially, the propping involved piling both internally and externally with concrete pile caps above ground. On the pile caps substantial steel beams were placed on top of which hydraulic props were located which in effect were interconnected through the walls to take off the loads from the brickwork above. This was to enable the lower brickwork to be replaced with stronger engineering type bricks, albeit faced with old-fashioned bricks and therefore the props and then the pile caps were removed.

In about October 2008, MSA on behalf of Igloo sought listed building consent for the "intervention works". This was granted just before Christmas 2008. In January 2009, MSA produced an “Implementation Strategy” for these works. It became apparent that it was probably impractical to carry out these works without relocating some of the HSE staff. In March 2009 MSA finalised the specifications and potential draft contract for the intervention works.

It was only on 9 January and 19 January 2009 respectively that General Partner finalised and executed its agreements with MSA and Bullen. In the latter case the contract sum was £173,881.47. On the latter day, MSA certified that the piers had been rebuilt in accordance with the contract and Section 1 of this work was practically complete on 19 December 2008.

On 21 April 2009 MSA produced a Structural Repairs Cost Summary which identified a total sum of £466,589 for the repair of piers 9-12. It is noteworthy that a not insignificant part of this cost was time related and associated with the fact that the project from inception in about February 2007 had taken just under two years to complete.

Nothing much happened in relation to the actual implementation of the intervention works for a considerable period of time which was said in Igloo’s half yearly review of 2009 to be "due to time needed to finalise design solutions and agree arrangements with the HSE for relocation." There clearly was no urgency for these works so far as the need for the works being done was concerned. This lack of urgency continued through to 2011 with negotiations with the HSE continuing about relocation; part of these negotiations revolved around whether HSE even wished to continue being a tenant of all parts of the premises demised to it. Eventually, HSE was to vacate in or about May 2011

On 23 December 2010, MSA submitted a report on an inspection of the south wing piers which showed that nine piers were inspected internally and all piers externally. They were all found to be in good condition although the internal face of pier 8 was demonstrating cracking less than 1 mm running down 16 courses of masonry, albeit that the external face was in good condition.

The intervention works were to commence in about June 2011.

The initial draft Summary of Condition report of 17 April 2003 from Mr Williams stated:

“5.05

Significant areas of external brickwork have been partially taken down and rebuilt to many of the elevations to the main building, as part of the external refurbishment process. We understand from discussion with the vendor on the site, that the new areas of brickwork were tied back to the retained brickwork utilising proprietary fixings in order to maintain the integrity of the overall wall thickness.

Specific details such as specifications, drawings and the like of the works undertaken in this regard should be obtained from the vendor, along with details of the exact areas where wall tie stabilisation works were undertaken. Whilst there is currently no visual evidence to indicate that failure of the rebuilt brickwork has occurred, we make such recommendations merely as a precautionary step in view of the extent of the elevations, which have been repaired in this way.

5.06

Vertical cracks within 3 No brick piers upon the south elevation are visible at ground floor level, which appear recent in origin. The cracking in this area appears to be as a result of separation of the outer face of the brickwork from the inner courses, which may be associated with the increased loadings which are occurring in the vicinity due to the installation we believe by the tenant of a large safe and server room at 5^th floor level.

Following discussions with the vendor on site, we understand that the vendor’s structural engineers are to inspect this area and report. Copies of reports and recommendations arising should be obtained from the vendor for further consideration prior to exchange of contracts. The vendor should also provide evidence of what checks were made by a structural engineer, to assess the tenant’s proposals for these concentrated floor loadings at 5^th floor level prior to their installation.

We would anticipate that localised rebuilding and tying in of the enclosure walls would be necessary in these areas in order to stabilise the wall construction.

Your legal representative should consider this point against the repairing covenants within the relevant lease in order to establish responsibility for repair and if strengthening of the floor and wall structure is necessary due to the tenants’ requirements, then they would be responsible for the costs of implementation of the same.

5.12

The vendor should be requested to provide details of and confirmation that an assessment of the loading capacity for the floor, cast iron columns and wall structures was carried out prior to conversion to office use, along with confirmation of the maximum allowable loadings following the assessment.

Typically, buildings of this type are only capable of accommodating loadings comparable to modern office buildings following implementation of such an assessment and implementation of strengthening of the main components. In addition to assessment of the general permissible floor loading the vendor should also provide confirmation that the structure has been assessed in the tenants installation of safe and server equipment within the Ananova demise and ruling storage units within the HSE areas. The live loading of the storage units should also have been considered. Assessment of the tenants’ loadings should have been considered in conjunction with any license for alterations applications. Such documents should be obtained from the vendor."

The letter dated 23 May 2003 from Mr Rudd contained materially the following:

“…I confirm I visited site on the 20 May 2003 to review the 5 No. structural related issues identified within the Summary of Principal Considerations and to meet with the Vendor’s engineering representative Mr C White of Shepherd Gilmour Partnership.

As a result of my visit I comment on the structural issues as follows:-

3)

Cracking to Piers – South Wing

Item 5.07 of PWP’s Summary of Principal Considerations highlighted evidence of fresh cracking within 3 No. ground floor piers located to the southern elevation of the south wing…

My inspection of the condition of the piers revealed that the outer face of the brickwork was being subject to external lateral movement consistent with separation of the outer face from the inner courses. I would record that internal inspections failed to revealed [sic] any corresponding distress however this may be masked due to the recent refurbishment of the property which incorporated the addition of dry lining concealing the internal face of external walls.

Queries were raised by PWP’s building surveyors regarding the potential for this distress to have been caused by additional leading imposed upon the piers from the installation by respective tenants of:

a)

A UPS and server run at fifth floor level.

b)

Heavily loaded mobile racking at ground and first floor level.

c)

A large safe.

I understand that the installation of these areas necessitated the strengthening of the existing Mill floor by Shepherd Gilmour.

As a result of visual inspections carried out by myself at floor levels 5, 2, 1 and ground I would record that there is no visible internal distress consistent with the distress evident within the piers at ground floor level however again I would record that the internal face of the walls is masked by the adoption of a dry lining system

As a result of my internal inspections I believe that the percentage load increase imparted upon the piers at ground floor level is nominal compared to the existing self weight load imposed upon the piers as a result of the height of this elevation and corresponding thickness of brickwork. As a result, my initial assessment is that I do not believe the incorporation of the Tenant’s requirements within the floors to this area of the building have significantly increased the load of the piers and therefore contributed to the defects now evident, however without the benefit of the further monitoring suggested then this cannot be ruled out at this stage.

The extent of the cracking within the piers would be classified as moderate to severe and in discussions with the Vendor it is clear that they have occurred within the very recent past. It is reasonable to assume therefore that there is potentially something significant occurring within this localised area of the property to cause the distress now evident.

However the true nature and magnitude of the cracking cannot be established from a single visual inspection and I believe that the condition of the piers should be monitored within the short to medium term future to ascertain their performance prior to determining and concluding the remedial repair or strengthening strategy. Furthermore, whilst the cracks are moderate to severe in magnitude there is no evidence to suggest that they require immediate replacement or propping to ensure the overall structural performance of the building.

In discussions with the Vendor and Shepherd Gilmour Partnership I acknowledge receipt of a quotation provided by MPI Structural and Remedial Solutions Ltd for the installation of remedial repair anchors and bed joint reinforcement. Having reviewed the condition of the brickwork within the pier I am concerned at this stage to simply accept this as a permanent repair solution. My concern principally revolves around the adherence of the anchors within the outer face bricks which were observed to be friable and could simply be crumbled with the fingers of one’s hand. As a result of my concerns the following strategy has been agreed with Shepherd Gilmour:

(i)

The piers are to be repaired immediately through the installation of repair anchors and bed joint reinforcement as contained within MPI Structural Repair Ltd quotation dated 7May 2003.

(ii)

Following completion of these repair works the condition of the piers are to be monitored at 1, 2, 3, 6, 9, 12 and 15 months through the fixing of monitoring points to both the face of the brickwork and the return window reveals so that the crack widths can be monitored and the bulging of the outer leaf brickwork established.

(iii)

Following the completion of the monitoring exercise, a decision can then be clarified as to whether the wall tie repair works have been successful or whether further additional strengthening or replacement works are required to the piers. I would record however that during the monitoring period should evidence be established that the piers are exhibiting substantial additional distress then the implementation of repair or strengthening works may be required as soon as possible.

As a result of this strategy therefore I would advise that the provisional sum figure of £20,000.00 set aside for the strengthening of the piers is retained as an item, which may be required to be expended during the short-term life of the property. This can only be clarified following the monitoring exercise. With regard to the details of the monitoring I confirm that I am awaiting detailed proposals from Shepherd Gilmour.”

5)

Floor Load Capacity

Item 5.10 of PWP’s Summary of Principal Considerations recommended that the vendor be requested to provide details and confirmation that an assessment of the loading capacity for the floor, cast iron columns and wall structures were carried out prior to conversion to office use. I confirmed in discussion with Shepherd Gilmour that this exercise has not been carried out by them as the conversion work at the mill was undertaken as a separate project prior to their involvement.

We have subsequently made efforts to contact the consultant engineer’s commissioned by the vendor during the refurbishment of mill premises – (i.e. Michael Heal Associates). Despite numerous attempts we have not been able to contact Heal Associates and conclude therefore that they have either relocated their offices or have ceased trading. We will contact Mike Mannix to verify this point. As a result therefore we are unable to establish whether a floor load capacity check has been carried out.

During our inspection of the interior we noted that ceilings within these floors were typically emulsion painted plastered soffits of the original jack arch floor construction and revealed little or no evidence of any fresh structural distress within Marshall Mills to the floor structure. It would be reasonable to conclude therefore that the floors are performing satisfactorily in supporting loads associated with such use. However at this stage from a single visual inspection we cannot categorically confirm that this will be the case in the long term future.

In discussions with the vendor we understand that they have no documentary evidence available which stipulates the actual load capacity of the respective jack arch floors and we have been unable to verify the same from the original engineer due to circumstances highlighted above.

However we believe that as part of the Building Regulations Approval process for the refurbishment scheme, this exercise would have been carried out. We are endeavouring to obtain clarification from Mr David Aitkin, the Local Authority Building Control officer, via their archive records as to whether a load capacity check was carried out for the mill floors and if so the result of such a process.

In the event of this information becoming available we would be able to compare the capacity of the floors and associated structure against the existing and future use of the mill as a modern office facility. This would be beneficial in both the present acquisition process and any subsequent disposal process by Igloo and, enable the landlord to verify that the density of occupation and associated storage of any existing or proposed tenants would not overload the structure.

If we were unable to obtain details of the floor loading from the building control officer then you should consider whether it is commercially imperative that the load capacities of the floors are established. This would necessitate a detailed physical investigation into the floor elements including floor beam depth, cast iron column thickness and foundations. PWP can undertake these works subject to further instruction. However at this moment in time the emphasis should be placed on ascertaining whether archive records are available.”

The report which was finalised after exchange of contracts and which contained advice previously given orally or in writing materially stated as follows:

“2.00

LIMITATIONS

…The purpose of our Report is to bring to your attention the main defects likely to affect your Freehold ownership…We have not referred to each and every defect within the report but rather [have] given a more general assessment of its overall condition…

We have drawn to your attention within this Report any significant matters, which may give rise to concern within the foreseeable future, and have compiled a schedule containing items of planned preventative maintenance or duration of 15 years within the appendices of this Report…

We were not at this stage to carry out a comprehensive inspection of those parts of the property, which were covered or inaccessible, and we are therefore unable to state that defects do not exist in those parts, which are unexposed, in accessible or incapable of inspection…

4.00

CONCLUSION

…During our investigations into the background of the development, it has become apparent that there is a significant quantity of information, which is outstanding in respect of Planning, Listed Building and Building Control Consents. Subject to your investment strategy of the premises, we suggest that details of the same be obtained for your records from the relevant statutory authorities and/or consultants involved with the process, following completion as the Vendor has been unable to provide such details…

To conclude therefore, whilst we are unable to give an unreserved recommendation to acquire the site, we would recommend that subject to your assessment of the implications of our findings against the purchase price and the inclusion of mechanisms within the sale and purchase agreement as referred to within this Report, then we see no reason why you should not continue with your negotiations to acquire the site.

5.01

SUMMARY OF PRINCIPAL CONSIDERATIONS

5.04

Following publication of our draft Principal considerations, we visited the offices of Ellmore [C]onstruction the principal contractor who had been engaged by Marshall Mills Ltd to undertake the refurbishment process during 1997/99…

5.05

We would suggest that you consider approaching Ellmore Construction and the Architect and Engineer referred to above and obtain a package of construction information sufficient to illustrate the principal items of work undertaken as part of the English Heritage grant aided repair scheme, together with key elements of information which formed the basis of Building Control, Planning and Listed building Conservation applications and consents and any conditions associated…

5.07

Significant areas of external brickwork had been partially taken down and rebuilt to many of the elevations to the main Mill building, as part of the English Heritage grant aided works during the external refurbishment process. We understand from discussion with the vendor on site and Mr [Ellmore] that areas of the bonded brickwork were tied back to the retained brickwork utilising proprietary Chemical fix fixings manufactured by Hilti fixings…in order to maintain integrity of the overall wall thickness.

The brickwork enclosure walls to the areas where, we understand from our discussion with Mr Ellmore such ties have been utilised were found to be in generally satisfactory condition. Mr Ellmore has forwarded copies of purchase orders from Hilti for the supply of such fixings, together with correspondence from Michael [Heal] commenting on the extent and nature of works carried out…The remedial proposals put forward by Hilti were undertaken by Ellmore [C]onstruction and we understand from our meeting with the vendor, that neither warranties nor guarantees are available in respect of these works and this was confirmed by Ellmore [C]onstruction. Within the areas reviewed during our inspection the associated walls, which had been the subject of repair, as described above, were found to be in generally satisfactory condition.

5.08

Vertical cracks within 3 No. Brick piers upon the south elevation are visible at ground floor level, which appeared to be of recent origin and are consistent with the separation of the outer face of the brickwork from the inner courses. Following our recommendation and further instructions from David Roberts our M. Rudd (Structural Engineer) inspected this element of construction and his detailed findings are contained within the Letter of 23^rd May 2003…

The installation of remedial wall ties, as a holding procedure followed by the monitoring process of the brickwork should be put in place [immediately]. If the deterioration continues and further investigation reveals that it is a result of the Tenants installations (Server room, mobile racking or safe), then it may be construed that the Vendor as Landlord has not complied with its obligation when installing strengthening to accommodate the Tenants fit out. The Tenants may therefore resist contributing towards the cost of repairs under the service charge arrangements if found to be necessary.

Consequently we would recommend that a provisional sum figure of £20,000.00 ex vat and professional fees be set aside for the strengthening of piers, which may need to be expended during the short-term life of the property if the deterioration of the piers continues. This can only be clarified following the monitoring exercise. You will need to consider how this is catered for within the Sale and Purchase Agreement…

5.39

The Vendor has confirmed that listed Building consent had not been obtained for…the installation of Strengthening brick piers to the South face of the North wing and North face of the South wing. We have spoken with a Mr Richard Taylor the Local Conservation Officer who confirmed that subject to the circumstances surrounding the proposals and particulars of Listed Building, then…the installation of Brick piers where affecting the appearance of the building would require listed building consent…

10.03…(d) Within our initial draft principal considerations issued, we recommended that the vendor should be requested to provide details and confirmation that an assessment of the loading capacity for the floor, cast-iron columns and wall structures was carried out prior to conversion to office use, along with confirmation of the maximum allowable loading following such an assessment. During the meeting the 8th May 2003, the vendor upon request confirmed that they did not have any of this information.

Our Mr Rudd has commented on the matter within his letter of 23^rd May 2003 (see appendices) to which we would refer you [at] this juncture. Following issuing this letter, we were unable to establish whether Building Control possesses any such information and we would recommend that you consider whether it is commercially imperative that the load capacities of the floors are established, for your future benefit in assessing current or future Tenants occupational requirements. This would necessitate a detailed physical investigation into the floor elements including floor beam depth, cast iron columns thickness and foundations…”

The Claimants’ factual witnesses, none of whom deliberately gave misleading evidence, were:

The Defendant’s witnesses of fact were:

The experts were:

In relation to the engineering experts, I found that Mr Brown was very much more authoritative and indeed confident in his evidence on the key matters in issue; he was much more experienced in pre-purchase engineering surveys than Mr Lovell. So far as Mr Lovell was concerned, although of course I do not hold against him his lack of experience as an expert, my views about him may be attributable at least in part to that inexperience; he had very little experience of comparable survey work in his practice. I felt strongly that in the giving of his evidence he was (at least) over enthusiastic in his clients’ cause although I do not go quite as far as to say that he was deliberately or even consciously “partisan” (as suggested by PWP’s Counsel). I have formed the very strong view that Mr Lovell has had to "row back" in many respects from what he agreed, without any or much qualification, in the first engineering experts’ Joint Statement. The Second Joint Statement reads in context in places like an almost desperate attempt by Mr Lovell to qualify or at least explain away previous concessions. Even when giving evidence, he attempted to downplay the importance of the cill voids as being the trigger or cause of the compression failure; I felt that he was doing this because he had to accept that PWP could not be professionally criticised for failing to know about the (concealed) cill voids. In contrast, Mr Brown was clearly much more experienced both in the giving of expert evidence but also in pre-acquisition surveys. He was a "strong" witness who spoke with confidence. I found him to be, simply, much more credible than Mr Lovell.

So far as the quantity surveying experts were concerned, again Mr Frood suffered from a lack of experience as an expert witness, albeit that all experts have to have a first case. He did not apparently consider it necessary at least initially to comply with his own instructions to cost not only what his client was putting forward but also what the Defendant was suggesting. In relation to what has been called Option 0 (which is the primary quantification basis relied upon by the Claimants), his report and indeed initially his evidence lacked transparency. He did not consider that it was necessary to explain in his report or in the Joint Statements how he had calculated or assessed the Option 0 figures; he was at least unwittingly reluctant to explain even in evidence how these figures were reached. I suggested to him that they could simply be “say” figures (intelligent guesses) but he was initially reluctant even to accept that. He later did accept that they were "say" figures but about the relative 12^th hour and in the hours leading up to him actually giving evidence he highlighted that they were based on two London projects. After I called for a more sensible explanation of the pricing of Option 0 by reference to the more specific heads of work likely to be required, extraordinarily Mr Frood appeared to produce very detailed figures but he was forced to concede that all that he had done was (in some unexplained and only non-transparent way) to pro rata his original figures; this explained why, notwithstanding the production of some very detailed figures against specific items of work he got to exactly the same figure as he had previously on the "say" basis. To this vague and unexplained quantification he then added 20% for contingencies which is not obviously justifiable. This part of his evidence was simply wholly unconvincing. The reality is that his Option 0 valuation which was the main valuation relied upon by the Claimant was little more than a guess as to what he might have said in about May 2003 might be involved cost-wise for the very generally described work covered by Option 0; that was and is extremely unsatisfactory. Another important aspect of lack of transparency was Mr Frood’s insistence on using his own firm’s database in circumstances in which it could not and would not be made available to the Defendant’s expert. Whilst a number of large quantity surveying firms perfectly properly use their own databases to estimate or assess likely costs on building projects, it is unsatisfactory if they are used by a litigation expert unless full access is given to their database to the other parties’ quantum experts. Mr Renaudon on the other hand was an extremely decent, straight, open, experienced, hands-on and "old school" quantity surveying expert who thoroughly knew his job and was very impressive. I have no doubt that, where they differed, I much preferred the evidence of Mr Renaudon.

These proceedings have taken too long a time to come to trial. The Claimants issued the claim on 7 April 2009 originally and misguidedly in the Chancery Division in the Chester District Registry. Pleadings were exchanged and the case was allocated to the TCC list in January 2011. Disclosure followed in the autumn of 2011 and Amended Particulars of Claim were served on 19 March 2012. Structural engineer experts had exchanged their initial reports and the judge ordered that written questions should be put to and answered by them. The trial was listed for 10 days in November 2012 but on the first day of the trial the Chester judge decided to transfer the case to the TCC in Manchester listing it for trial on 7 May 2013 for 12 days. HHJ Raynor QC gave directions in February 2013 but due to insuperable listing difficulties and after liaison with the TCC in London he transferred it to London on 4 March 2013. When the matter came before me on a pre-trial review on 17 April 2013, I decided that this was at most an 8 day case and listed it accordingly. The trial started on 13 May 2013 and the evidence was concluded within eight days.

The pleadings are not unduly complicated. The Particulars of Claim plead that Igloo Regeneration (General Partner) Ltd (“General Partner”) entered into the contract to purchase Marshall Mills on behalf of Igloo Regeneration Partnership ("the Fund") as the general partner of the Fund and that the property was transferred into its name and eventually into the name of Igloo Regeneration (Nominee) Ltd ("Nominee"). It goes on to assert that Igloo Regeneration Limited (“IRL") on behalf the Fund (in effect as agents) employed PWP. An implied term is pleaded that PWP would act with the skill and care to be expected of a firm of reasonably competent chartered building surveyors, project managers and civil and structural engineers. A duty of care in tort is also pleaded as being owed by PWP to IRL and the Fund.

Eight heads of want of care are pleaded against PWP in Paragraph 24. The first two primarily relate to a failure to refer to or adequately to review Mr White’s report but, as there was no report as such from Mr White prior to the purchase of the premises by Igloo, these allegations are no longer material and, indeed, have not been pressed by the Claimants. The primary allegation is that PWP "in the light of…their inspection of the building and [their own observations of the cracking and external lateral movement]…ought to have identified the possibility of compression failure of brick piers 10, 11 and 12 because of the inadequate strength of the piers to withhold the load applied to them". The pleading goes on that PWP:

The causation case is that if all the proper advice had been given Mr Roberts would have instructed PWP to open up the piers and carry out further investigations which would have revealed that the piers were suffering from substantial failure throughout and needed replacement or strengthening. Whether or not intrusive investigations were permitted, General Partner for the Fund would have withdrawn from the transaction or would have proceeded at a price reduced by the costs of the requisite remedial works. Damages are claimed either simply on the current cost of remedial and strengthening works or on a capital diminution basis, it being said that it is the Fund which has suffered the loss, alternatively General Partner or Nominee.

The Re-Re-Amended Defence apart from pleading various historical facts denies that any duties were owed to Partner or Nominee. Reliance is based on specific parts of Mr Rudd’s letter of 23 May 2003. It is asserted that Mr Rudd was aware of the possibility of compression failure but was equally aware of other potential causes of cracking. It is said that there was no visible evidence of compression failure and that it was reasonable to conclude that the cause of cracking and any remedial work required could only be determined once further monitoring had been carried out. Negligence is denied. It said that the remedial works should have been able to be carried out for a sum no greater than £30,000, £75,000, £100,000 or less than the sum they were carried out for. It is said that the Claimants “caused and/or contributed to and/or failed to mitigate the alleged or any losses suffered by them by failing to ensure that prompt and immediate investigation was undertaken into the cause of further cracking in 2003 and/or 2004 and/or 2005 and/or failed to continue to carry out the monitoring recommended by the Defendants and to properly carry out any remedial work required". It is asserted that if this had been done the piers could have been strengthened for £20,000 and Piers 8 and 9 would not have become damaged or required repair. Specific issue is taken to this in the Amended Reply.

It was a disappointing feature of the case that there was what some might call a "disconnect" between the experts on each side and in each discipline. They were permitted to exchange a number (up to 5) addendum reports in report or letter form, which is not a practice to be encouraged as it adds to the cost and to the complication of any given case; supplementary reports may be necessary but not generally because the whole idea of the experts producing joint statements listing what is agreed and disagreed is to enable the experts to deal in their main reports only with what is not agreed. Examination of the voluminous second joint statement of the engineer experts reveals what is essentially a running debate on numerous points which is almost like a long and partly repetitive pleading; it was not helpful. It also revealed as was confirmed by Mr Brown in oral evidence that by this stage the two experts had fallen out with each other, which again was not satisfactory. The quantum expert statements were not particularly helpful because they seem to have largely incorporated almost verbatim what was in their reports; it was surprising (and unusual) that there was such little agreement on the figures.

As the experts have accepted, the South Wing is not from a loading perspective complicated. Broadly, the dead loads (the weight of the roof, floors, walls and fixtures) and the live loads (transient such as people, furniture, snow on the roof and the like) are carried to a large extent down through the external brick walls to the foundations; in this case also some floor loads were carried on cast iron columns in the centre of floors down to their own foundations. The brickwork in the external walls was, unsurprisingly, thicker at the bottom than at the top. Where there are windows in the external walls, the loads are carried around them within the brickwork and downwards. The load path is thus concentrated within the brick piers between the windows. Usually but generally load is uniformly distributed within brickwork so that if for instance there is one ton of load coming onto 1 m² of brickwork, the load will be spread across that square metre. However, if one removes some of the brickwork above and leaves in effect a hole, then the load must go around the hole and it will become more concentrated on the lower brickwork on the lower edge of the hole. That is in effect what happened here when the window cills were replaced probably in the late 1990s and substantial holes (the cill voids) left within the upper brickwork, albeit hidden from view. This led to a reduction in the cross-sectional area of the piers available to resist the applied load.

It is axiomatic in professional negligence cases that the relevant professional is required to exercise the skill and care to be expected of an ordinary competent professional in that field. Such a professional will be liable for damage caused by his or her advice if such advice was such as “no member of the profession who was reasonably well-informed and competent would have given" (see e.g. Lord Diplock in Saif Ali v Sidney Mitchell & Co [1989] AC 198 (at page 218D, referred to in one of the cited cases). One can also add the observation that the tenor and the content of the advice can often legitimately be pitched at a level which is consonant with the type of client with whom the professional is dealing. Thus, to a highly experienced commercial client, a professional may not need to spell out everything which might need to be spelt out to a clearly inexperienced client. The extent to which this is applicable will be illuminated by the expert evidence in any given case as well as by the factual evidence as to how the advice was read and understood. Furthermore, as was elegantly put by Mr Justice Megarry in Duchess of Argyll v Beuselinck [1972] 2 Lloyd’s Rep 172 at page 185:

“…hindsight is no touchstone of negligence. The standard of care to be expected of a professional man must be based on the events as they occur, in prospect and not in retrospect."

It is also obvious and well established that merely because a professional person including a surveyor gets something wrong does not mean that he or she is negligent, albeit to found a case in professional negligence it will almost invariably be necessary to prove that there was a causative error or omission. The authoritative Jackson & Powell on Professional Negligence (Seventh Edition) gives some examples in relation to engineers and surveyors at Paragraph 9-268:

“The authorities illustrate that a survey will not, necessarily, reveal all defects even if competently carried out. In Trizec Equities v Ellis-Don Management Services Ltd, a claim against geotechnical engineers failed on the basis that the ground conditions encountered were unforeseen and unforeseeable with the result that the engineers had not acted negligently when designing the foundations of a substantial office complex. In Hilton Canada v SNC Lavalin, the defendant engineers were engaged to carry out a “due diligence” survey of a hotel in which the claimant was contemplating taking an equity stake. The judge found that the extent of the engineers' obligations was to “determine if major defects were to be found and to assess the general condition of the building”. He found that the engineers were not negligent in discovering that the steel structure of the hotel suffered from significant corrosion on the basis that there were no signs which should have alerted the engineers, undertaking a visual inspection, to the existence of the problem. In Berwick v Wickens Holdings Ltd, the claimant was the widow of a workman who was killed when the building upon which he was working collapsed. She brought a claim against the structural engineers who had been engaged by the building contractor to survey the building before refurbishment works commenced. It was held that the building was originally constructed in a manner “so remote from acceptable building practice as to be beyond reasonable expectation”. Bell J. held that the engineers had carried out proper investigations before advising the contractor that the building was safe; the collapse of the building was not foreseeable upon the information reasonably available to them and accordingly they had not been negligent. ”

I will now turn to the issues, some of which can be taken more shortly than others. The first is: was a duty of care owed by Ds to C1 and/or C2 in addition to IRL and the Fund? There is no doubt that a duty of care was owed through one legal route or another to IRL and the Fund. As a matter of fact, the Fund was the prime mover and investor in the Marshall Mills and Marshall Court acquisition; that is clear from all the formal documentation. It is a limited partnership registered under the Limited Partnerships Act 1907 whose members were General Partner and various Norwich Union/Aviva related institutions. As a limited partnership, it legally functions as a partnership rather than having some separate corporate persona. By the Fund’s participation in this litigation, in effect all the partners are parties. The Fund acted through General Partner as recognised by Section 4 of the 1907 Act. It is clear from the Partnership Deed that General Partner had wide authority from the other partners to enter into agreements in connection with the partnership business which it is accepted could properly include property acquisition. It had authority to arrange for Marshall Mill to be held by nominees and to execute and to enter into the contract to purchase Marshall Mill. Simply being one of the partners, it was not strictly necessary that General Partner should be a separate claimant in these proceedings.

So far as IRL is concerned, it was the Property Development Manager with obligations to provide various services including the introduction of development opportunities and properties for purchase and the evaluation of possible developments. One of the "Services" to be provided under its appointment dated 17 November 2000 included "undertaking the initial appointment and coordination of consultants including agreeing the outline terms of appointment by way of letter of appointment" (see Schedule 1) and instructing "surveyors to carry out a survey" of the property in question. IRL clearly had authority under its formal appointment to engage PWP to do exactly what PWP was engaged to do.

I have no doubt and accept as a fact that IRL was acting in effect as an agent for and on behalf of the Fund when it approached and initially retained PWP. Although the evidence is not wholly clear, I accept, just on the balance of probabilities, that there was some sufficient intimation to PWP before its retainer came into effect that IRL was acting in that capacity. This is in effect partly corroborated by PWP’s unqualified acceptance that it should address its report to the Fund.

Assuming that the above is correct, the contract of retainer was between PWP and the Fund. A duty of care both contractual and tortious was owed by PWP to the Fund and in effect to each of the partners albeit only in their capacity as partners; such a duty of care was thus owed to General Partner. It follows that no duty was owed to IRL because it was simply an agent. Furthermore, no duty contractually, let alone tortiously, was owed to Nominee because it was never mutually anticipated by PWP and the Fund that such a duty would be owed to a company, whose existence was not known of at any material time by PWP and whose involvement only came about many months after PWP’s engagement and by reason of some unexplained corporate decision that it should become a part owner of the site.

Issue 2 is only relevant if a duty was owed to General Partner or Nominee and concerns whether any such duty owed by the Defendant to General Partner and/or Nominee was effectively excluded. It is common ground that the retainer contract between the Fund and PWP contained the words in PWP’s quotation letter of 3 March 2003 that "the report will be confidential to Igloo Regeneration and for their sole use" and that consequently "no liability will be accepted to any third party with respect to the whole or any part of its content". “Igloo Regeneration” in this context was the Fund which was a partnership and therefore in their capacity as partners all the partners, including General Partner, were owed the requisite contractual and tortious duties; they cannot be "third parties". Nominee, although associated with the Fund was not a partner and would properly be classified as a third party. It is not that liability would be excluded in relation to Nominee; it would simply be the case that no duties were owed by PWP to Nominee and for that reason there is no liability.

The next issue involves consideration of what the scope of the retainer was or became. The retainer is contained in or evidenced by Mr Roberts’ enquiry e-mail of 27 February 2003, Mr Williams quotation letter of 3 March 2003 and Mr Roberts acceptance e-mail of 8 April 2003. So far as is material to this case, the scope was:

This scope was expanded in effect by agreement following the recommendation by Mr Williams for the involvement of Mr Rudd "to review information to be supplied…from Shepherd Gilmour in respect of the cracking on the South Elevation of the South Mill" in order "to establish the cause of cracking and the adequacy of" the remedial works put forward by that firm and MPI.

What PWP in general and Mr Rudd in particular actually did or said would not as such expand the contractual scope of the retainer. The ambit of the duties in the context of this particular case as to what was actually required to be said and done is largely a matter of engineering and surveying practice, which is to be determined primarily by the expert evidence. Counsel for Igloo chose to address this issue by reference largely to what might reasonably be expected of a competent (engineering) surveyor at a pre-purchase stage; I however consider that it is more appropriate to consider that in the context of the alleged breaches of duty.

I now turn to consider the issue, which is paramount in this case, namely whether or not PWP acted in breach of its duty to exercise reasonable care and skill. There are certain key facts to which importance must be attached (mostly based on what the engineering experts agreed):

These factors are important because the Court must consider the position as at May 2003 and the picture and evidence that were presented, available and discernible to Mr Rudd. Obviously, there was the cracking to the three piers which must conceivably have been attributable to one or more factors. There was however no or certainly no discernible cracking or distress on the inside, albeit the inside was clad with dry lining which concealed (and was intended to conceal) the brickwork. This position is to be contrasted with the very visible damage to the dry lining which had occurred and was obvious by February 2007. Next, there is nothing in reality to suggest that there had been a material increase in loading on the walls either in any event or such as to explain the cracking. Indeed the experts expressly agreed that Mr Rudd "reasonably considered that there was no significant increase in load on the piers due to the recent change in building use and the introduction of the fifth floor server room" (Paragraph 5.5 of the second joint statement). Thirdly, albeit not necessarily in order of importance, this building had stood for over 170 years without any obvious or serious structural failure. Fourthly, the cracking in relative terms occupied an extremely small proportion of the overall brickwork on the south elevation; put another way, this was a relatively few square feet of cracked brickwork out of some thousands of square feet on that elevation, affecting only parts of 3 out of 14 piers and that only at ground floor level adjacent to the windows. Fifth, there was some physical evidence on the north elevation that, probably in the 1990s, there had been some re-construction of external brickwork to five piers but it was not apparent that they had been increased in size; there was additionally one pier which had been enlarged and strengthened with steel sections, albeit that that was adjacent to a newly created doorway; there was however no visible sign of cracking or distress in these reconstructed areas. Sixth, as Mr Rudd said in evidence which I accept (Day 5 page 660), there was no observable movement within the floors (supported by the piers) and there were no radial cracks around the cill and window head openings or misalignment within the horizontal bed joints of the brickwork; these would all be signs (if present) of possible compression failure.

The reality is that there was no obvious physical sign from which a competent engineer could readily conclude what the cause of the cracking was. The experts agreed (Paragraph 5.5 of the joint statement) that it was reasonable for an engineering surveyor to "rule out compression failure as a result of increased loading". Both engineer experts accepted that compression failure was very rare in a building such as this. That left or leaves two other causes of the cracking, frost damage and internal steel corrosion. Either of these would at least explain a particularly localised problem but one could not readily determine whether these were the causes without significantly more work, such as in the case of steel corrosion opening up the piers to see if there was steel present. So far as compression from some other factor, there was no other obvious factor. It is now known, some years after the survey, that the work in the 1990s (in all probability) had led to the creation of substantial voids within the brickwork which in fact led to the compression problem but neither expert can or does criticise PWP for failing to be aware of that very much concealed fact. There was nothing to suggest to a competent engineering surveyor that compression failure was anything other than a remote possibility. The other explanations were more likely.

As became apparent as the trial went on, the primary area of complaint from Igloo and its engineering expert in the professional context was that because there was distress in the form of the cracking, any competent engineer surveyor in Mr Rudd’s position in May 2003 should have carried out calculations which, it is said, would have shown that compression failure was a more likely or realistic explanation for the cracking and, almost coincidentally, would have shown that the building was under-designed by 2003 standards in the context of modern office type loadings. Here, the lines were clearly and firmly drawn between the parties with Mr Lovell adamant that such calculations should have been carried out and Mr Brown firmly of the view that they need not have been and that in any event they would have been meaningless. Mr Rudd in his evidence was particularly emphatic about this. He said (Day 5 page 662 and following) that he did consider whether it would be necessary to carry out calculations but he said that it was "a very, very misguided approach to try and substantiate the cause of the cracking through retrospectively applying theoretical calculations"; there "would be too many unknowns" and "you do not know the strength of the bricks and you do not know the historical loading that it has been subject to". He said that it was "not uncommon in a building of this type and age, whereby, if you apply theory to it, you cannot prove that it stands up". He said that a calculation would be a “very, very poor way of trying to diagnose his defect" and that there "are just too many assumptions that you would end up putting in". He said that:

“I do not need to have a check and say, "Tick box, do I need to do a calculation on this?" I am doing a survey. I am an experienced engineer. I am looking at this; the execution of a calculation to me would…just be redundant."

This evidence was given with a firm and measured conviction that was wholly credible. This approach was firmly supported by Mr Brown (the Defendant’s engineering expert) as one which reasonably competent engineering surveyors could and would often adopt.

A very substantial amount of technical guidance documentation was deployed by Mr Lovell and the Claimants to seek to demonstrate in effect that an engineer in Mr Rudd’s position in May 2003 would and should invariably have done calculations. The main document relied upon was the "Appraisal of existing structures" (2nd edition 1996 The Institution of Structural Engineers (“ISE”)). The Forward to the first edition highlighted that:

“The art of appraisal of structures is different from design. In design the forces followed the choice of form and the analysis follows that. In appraisal the engineer is left face-to-face with an existing structure of the definable qualities and must determine its condition and suitability of use. This is not an easy task. In defining the structure’s qualities the engineer may gain from the experience of other engineers’ methods, available testing procedures and current developments in analytical techniques, and this report hopes to assist him."

The report recognises that "it is only intended for use as a guide" and it "is not intended to provide the definitive approach in any situation, as in all circumstances the party best placed to decide on the appropriate course of action will be the engineer undertaking the particular project" (Paragraph 1.1).

Paragraph 1.2 identifies that appraisal "is checking the adequacy of an existing structure" and highlights that appraisal is necessary for a variety of reasons such as purchase, change of use, defects and accidental or fire damage”. It goes on to say that experience "in the appraisal of the buildings has led to the development of methods of assessing the strength and serviceability of existing construction…[and that these] require consideration of the levels of safety appropriate to the use of the construction; the assessment of loading; the methods for determining the strength of the structure, its components and constituent materials; and derivation of suitable methods for calculating structural behaviour."

Paragraph 1.3, entitled "Principles" highlights the fact that "structural appraisal is a different activity to structural design" and that this "is aimed at assessing the real condition of an existing structure". Questions to be answered will usually be "is the structure adequately safe now and will it remain so in the future? Can it be used for its intended purpose and can it continue to be in the future?" The document goes on:

“There is no absolute measure of adequate safety and even less of serviceability. There does, however, exist a generally accepted level of safety provided by design and construction in accordance with current regulations and codes of practice. This level of safety provides a useful datum, but when assessing existing structures, engineering judgment takes precedence over compliance with the detailed clauses of Codes of Practice for structural design."

There follows a discussion about the difference between the design process and the appraisal process:

“Implicit in design are conservative assumptions that may be upper- or lower-bound values inherent in the design equations and neglect in analysis of such realities as infill walls and 3-dimensional behaviour. Such conservative assumptions have influenced judgment about the overall factors of safety that have become considered appropriate.

Conventional design prejudges the variabilities of loads and materials. It reduces the problem to its simplest form, prescribing, where possible, parameters and factors in order that values can be obtained from the strength and load side of the equations to answer the question ‘Is the structure adequately safe?’

The approach of appraisal has to be quite different because one is seeking to assess the real condition of the built structure. It involves interpreting records, observations and measurements obtained directly from the structure. This means that the information obtained includes the actual condition and the variability of the structure as opposed to what the designer assumed.”

The next chapter is entitled “Procedure” and in Paragraph 2.2 headed "Responsibilities" reference is made to the duty to exercise reasonable skill and care followed by this:

“The engineer should:

•

remain objective at all time…

•

avoid playing too safe in the appraisal or giving undue thought to personal responsibilities rather than the client’s best interests”.

Paragraph 4 is headed "The appraisal process" and contains the following:

“4.1

General

Structural appraisal is a different activity in design. It is aimed at assessing the real condition and adequacy of an existing structure.

The adequacy of the structure is assessed by the exercise of engineering judgement on information obtained from the study of drawings and calculations, and of the results of surveys, inspections and possibly testing. Each of these activities should be taken no further than is necessary for a conclusion can be reached…

Codes of Practice are intended for use with materials and construction methods of their day…

The importance of assessing loads adequately is vital, especially if there is a risk of overloading arising from change of use…

If the engineer is satisfied that the structure has already been subjected to a high proportion of its design load without physical distress, then the structure should be assumed to be serviceable even if it does not comply with Code requirements. The guiding principles should be: ‘If it works, leave it alone’. Past performance may, however, not always be a satisfactory guide, as many deterioration mechanisms are progressive, whilst others are self-limiting…

The extent to which any of these issues are considered will depend on the brief given. In all surveys the engineer should be forward-thinking when making his assessments. Obvious hazards should be reported…

4.2

The path of appraisal

The part of appraisal is cyclical (see Figs 1, 2, and 3). It leads to a series of assessments of the strength and future serviceability of the structure…

There are three stages:

(a)

A preliminary, broad assessment of apparent physical condition, robustness and strength of the structure, including simple calculations where necessary. If these checks are satisfactory no further investigation is required. If these checks indicate a dangerous situation, some temporary safety measure may have to be taken, pending further investigation…

The flow charts (Figs 1, 2, and 3) illustrate the path of appraisal. They will not apply to all appraisals, and they may not be complete in some situations. There will obviously be occasions when deviations from the sequence will be justified. For example, when a member shows visible signs of distress, a simple check on this member should be carried out first…

4.3

The initial stage (see Fig 1)

The information to hand should be studied and analysed. Initial checks on possible mechanisms of failure, load-bearing capacity and margins of safety should be made. These should be partly qualitative and partly by very simple calculations. In particular, the inherent stability, robustness and adequacy of the structure should be examined.

It is important that the appraising engineer does not rely too much on calculations, partly because those [involve] methods of analysis intended for design of new structures: a balance between calculation and judgment based on experience must be struck, and the proportion of each will vary from case to case.

If during the first inspection some element of the structure looks inadequate or shows signs of distress, the engineer should first assess how significant the signs are. He should consider how failure might occur and what warning, if any, there would be of impending collapse…

In such preliminary calculation there is little to choose between partial factor or working load methods, so long as the corresponding permissible stresses have the necessary factors of safety built into them. Alternatively one can make approximate calculations of overall factors and safety by comparing the likely ranges of load-induced member forces with the probable levels of corresponding member strengths. Whichever approach is used, it is essential that it is used consistently…

When the aim is to arrive at the order of overstress in service or, say, the effect of severe section loss through corrosion, simple but conservative estimates should be made of the actual loads and the calculated stresses compared not only with the normal permissible working stresses, but also with the ‘ultimate ’ values…”

Figure 1 shows interconnected boxes the first of which is: "Study documentation, received from clients, etc., then carry out initial inspection identifying nature of construction". An arrow from that box leads to the next box which contains the following question: "Are any parts visibly in distress?" If the answer is "Yes" the arrow takes one onto a box which says "Simple calculations of suspect parts, using estimated, actual loads".

Whilst a pre-purchase engineering survey involves an appraisal of the existing structure in question, the context of the current case is a survey by an engineer of an existing building. Engineering judgement "takes precedence" in the case of older buildings which have stood for many years over current Codes of Practice. There were of course no formal Codes of Practice in the 1820s when the building was designed and built. Mr Lovell initially accepted that there was "relevant technical guidance to indicate that defects in historic buildings, where there is no significant change of loading, can be diagnosed without the need for calculations” (Paragraph 6.1 of the First and Second Joint Statements). This was expressly qualified by him that “to understand the impact of the separation of the outer leaf on the in the brickwork Mike Rudd should have either undertaken or recommended intrusive investigation or preparation of simple stress calculations”, these being “recommended in some of the relevant technical guidance”. He goes on to say and accept that calculations do not always form part of an appraisal and that judgment is required and must be applied in the light of all the available evidence. He accepted in cross-examination most of the substantive quotations from the ISE Appraisal of existing structures document referred to above and a number of other propositions by reference to various other publications:

Both Mr Lovell and Mr Brown accepted that what was required was the exercise of engineering judgment in a case like this. Where essentially they differ was where that exercise would or should lead to. For instance, Mr Lovell was insistent that Figure 1 in the ISE Appraisal document could only lead an engineer in this case to carry out calculations; his thought process was that the cracking in the three piers was "distress" and if one follows the "arrow" that leads to the "calculation" box. Mr Brown said that in effect Figure 1 was not to be considered in such strict mechanical terms and that the engineer carrying out the appraisal needed to be satisfied that the distress was likely to have some structural significance ("Where visible cracking appears to be excessively affecting structural capacity” - Third Addendum Report); this was because he or she can have regard to the overall "robustness and strength of the structure" (having regard to Paragraph 4.2 of the ISE Appraisal document) and the ability of existing structural components to support load as justifying the view that calculations would not be necessary. In my view, based on the evidence, the application of engineering judgment does not require in any absolute terms that an engineering surveyor must always do calculations just because there is some crack damage in the building being surveyed.

Having reviewed all the evidence, I have absolutely no doubt that PWP in general and Mr Rudd in particular can not be criticised as falling below the requisite standard of care in this case. As indicated earlier, I found Mr Rudd to be a most convincing and honest witness and his intelligent but pragmatic approach chimes well with the expert evidence given by Mr Brown. I am satisfied on the balance of probabilities that in doing and saying what they did and said for or in connection with their survey and their reporting Mr Williams and Mr Brown did exercise all the reasonable care and skill to be expected of surveyors retained to do what PWP was retained for. My reasons for this conclusion are as follows, in so far as not set out above or elsewhere:

There are still however some residual complaints which are pleaded against PWP. The first is that PWP is said not to have "referred to the report prepared by Mr White" of Shepherd Gilmour (Paragraph 24(1) of the Amended Particulars of Claim). There was no such report produced by Shepherd Gilmour at least to PWP and indeed it is unlikely that there was in any event such a report, given that Shepherd Gilmour opened their files to the Claimants or their solicitors and no such report has emerged. It is correct that Mr Williams in a letter dated 15 May 2003 to Mr Roberts did say that Mr White had said that he would forward a copy of his “report” to Mr Williams. However either Mr White never had or never produced such a report or he was misleading Mr Williams into thinking that his report was on its way; I would not want to find that it was the latter. The allegation therefore that it was negligent not to have referred to a non-existent report is spurious. To be fair to Counsel for the Claimants, this allegation was not pressed with any discernible vigour. This allegation partly depends upon what Mr White might have said in this “report” and I can make no finding as to this save that it is unlikely that he would have diagnosed compression.

The second complaint (Paragraph 24(2) is the Amended Particulars of Claim) is in two parts. The first part is incomprehensible: “…if…the Defendants obtained a copy of the report and reviewed it, they failed to do so adequately or at all." There was no such report. It may well be that the Claimants are confused with the "structural appraisal" produced by Shepherd Gilmour almost 3 years later in February 2007 and assume that something similar was produced in May 2003. It was not and probably would not have been. The second part of the complaint in this paragraph relates to the fact that historically in about 1830 or 1831 two additional floors were added by the Marshall family. It is said that it was negligent that the Defendant did not pick up on this. I am wholly satisfied that it was not negligent not specifically to pick up on this fact. The reality is that the building even with its increased height had stood apparently successfully and without major or obvious structural failure in the brickwork for 170 years; the addition, 170 years before, of two additional storeys can not as such have caused the compression failure starting in about 2003 because, if it was a significant factor, it would have manifested itself not only very much earlier historically but also in all the piers.

The third and fourth complaints (Paragraphs 24(3) and (4)) relate to the alleged failure to appreciate that the cause of the cracking was compression failure. I have dealt with this above.

The fifth complaint 24(4A) is as follows:

“The Defendants should have advised that a preliminary assessment of the loading capacity should be carried out on the information available (in which event they would have been instructed to carry it out) and/or have carried out such a preliminary assessment. If they had done so, this would have revealed a significant likelihood that the stress on the piers was far in excess of an acceptable level, that the piers were unsafe and in need of temporary propping, and that strengthening works were required.”

This complaint largely revolves around the alleged failure to produce a calculation of the loads on the brick piers and those piers’ capacity to withstand those loads. However, it also encompasses a complaint that the Defendant failed to appreciate that irrespective of the compression problem the piers could not accommodate loadings and capacities envisaged by current British Standards such that, judged by those Standards, the piers would not accommodate loadings to be expected from office use. No pleading point was taken about this.

The primary concentration of the Claimants’ case as advanced at the trial was based on the alleged failure on the part of Mr Rudd to carry out calculations, which has been addressed above, with there being no negligence on the part of PWP in that regard

Current British Standards, for instance BS6399-1:1996 - Loading for buildings, Part 1: Code of Practice for Dead and Imposed Loads to provide guidance on floor loadings considered appropriate for different building uses - will generally be used in the construction of new buildings or in substantial refurbishment of old buildings. Usually, in the case of general office use, allowances of 2.5kN/mm² plus 1.0kN/mm² for partitions are used in the calculations as a uniformly distributed load which is intended to provide an upper bound load allowance which will cover the majority of offices and allow the design to be undertaken without knowledge of specific partitions, desks or shelving arrangements. However, the reality is that in most office configurations significantly less actual loads are applied. For instance in the paper "Structural floor loading and raised floor specification for office buildings” published by Stanhope plc in 2004 mostly significantly lower loads are identified. Thus for instance, 0.36 kN/mm², 0.85kN/mm² and1.37 kN/mm² are identified for administrative offices, dealing floors and presentation rooms respectively. Mr Brown said, and I accept, that the offices at Marshall Mills broadly fall into the administrative office type classification. This suggests that the British Standard allowances are very substantially in excess of the likely actual loads to be expected from office floors. They are only comprehensible on the basis that, understandably, very large factors of safety are built into these loadings.

So far as floor and wall loadings are concerned, in my view, based on the evidence overall, PWP can not be criticised as negligent here:

The next complaint is that PWP should have recommended intrusive investigations into the external cracking, namely a "letterbox" opening through the dry lining finishes covering the internal faces of the relevant brick piers. "Letterbox" is a slight misnomer because a gap of about 500mm square or more would need to be created. I found that Mr Lovell was unconvincing about this aspect of the case; on the one hand, he seemed to suggest that, if he was right that Mr Rudd should have done the calculations, intrusive investigations need not have been recommended but on the other hand he seemed reluctant to answer questions about whether the competent engineering surveyor should have carried out or recommended an intrusive investigation given a hypothesis that he or she was not negligent in not carrying out calculations. Mr Brown in effect said that an engineering surveyor in Mr Rudd’s position could not be criticised for failing to recommend intrusive investigations because they are rarely tolerated as part of a pre-purchase survey and because it was not incompetent of him to have disregarded compression as a significantly likely cause of the external cracking. There was also evidence from Mr Williams and Mr Rudd (which I accept) that there clearly was a time pressure in any event because Igloo had been given a two-month period by the Vendor for exclusive negotiation and that time was going to be concluded in early or mid June 2003; it therefore followed that, even if intrusive investigation was recommended, it was extremely unlikely that it could be done (which would have required negotiation and discussion with and possibly compensation payable to the occupying tenants) within the time available following Mr Rudd’s letter report of 23 May 2003; Mr Brown said that such investigation is often not recommended by reason of the usual difficulties associated with tenants’ disruption. In my judgment, Igloo has simply not established on a balance of probabilities that PWP was in breach of duty in failing to recommend intrusive investigation.

The next complaint is that PWP endorsed the MPI work and recommended monitoring and that it was careless to do so. It follows in logic that, if PWP was not negligent for failing to appreciate that there was or might well be a compression failure occurring to or in the three piers, it was not in breach of duty for going along with the remedial works which the Vendor was apparently going to do in any event at its own expense. The MPI work had a good chance of success if the problem had been caused by frost; the outer leaf of brickwork would be tied back to the remainder of the brickwork and some of the lost strength recovered at the very least. If the problem was caused by metal corrosion, the MPI work would not be successful but would do no harm. Monitoring of cracks is mentioned as a sensible thing to do in a number of technical guidance documents. I accept Mr Brown’s evidence about this and find in consequence that there was no negligence on the part of PWP in this context.

The final separate complaint relates to alleged negligence in relation to Mr Rudd’s advice that "whilst the cracks are moderate to severe in magnitude there is no evidence to suggest that they require immediate replacement or temporary propping to ensure the overall structural performance of the building" and that £20,000 should be set aside for the strengthening of the piers. In strict terms, the first part of the advice was not actually wrong: it took arguably almost 4 years before it got to that stage or more probably about 20-24 months. The advice however in any event was not negligent if, as here, Mr Rudd had considered with due care the problems associated with the cracking and had effectively formed the view that it was unlikely to be associated with compression failure. If the problem was associated with frost or metal corrosion, the advice was proper advice to give.

As for the £20,000 allowance figure, in my judgment based on the evidence, this was a realistic allowance, albeit that it was a provisional sum figure. Mr Rudd said, and I accept, that it was based on a figure obtained from Mr White of Shepherd Gilmour of £6,500 per pier, this relating to what he was told was the cost of the pier reinforcement on the north elevation of the south wing. If the problem had been frost damage, apart possibly from some cosmetic work, the MPI work would have sufficed. There has been no suggestion that the allowance would have been inadequate if the problem had been caused by internal metal corrosion. Because there had been some historical re-construction on the northern elevation, a provisional sum which allowed for some re-construction of the three affected piers at ground floor level (which appeared to have worked on the northern elevation) was not something which could be said to have stemmed from a negligent recommendation. I take into account the fact known to PWP (and indeed referred to in the reports) that remedial works to other piers on the north side of the south wing had been done during the earlier works in the 1990s and then later under the direction of Mr White several years before the purchase; these works had, at least apparently, been successful, there being no material signs of damage or distress there. There would be no obvious reason to think that comparable works involving some reconstruction of the ground floor piers would not suffice for the three affected piers on the south elevation.

Overall, I find that breach of duty (contractual or tortious) has not been established on the evidence or positively that PWP failed to exercise the reasonable care and skill to be expected of surveyors (and engineers) in connection with their inspections, advice and reporting in relation to Marshall Mills. It is noteworthy that the other two sets of engineers involved (Michael Heal’s in the 1990s and Venn White in the several years before the purchase) clearly did not consider that there was any risk of compression failure. For instance Michael Heal view was expressed to be that the main body of brickwork was able to perform its load-bearing function and only remedial tying to the internal leaf of brickwork was required. Mr White clearly (albeit by inference) also thought that there was a localised problem which could be addressed (as before) with a tying back solution. This is at least not inconsistent with my findings.

In the light of the above findings it is not strictly necessary to address the other issues of causation, contributory negligence and quantum, However, out of deference to the arguments and evidence that was put before the Court, I will summarise briefly what my findings would have been.

So far as causation is concerned, it is necessary to proceed on the assumption that there was a breach of duty on the part of PWP (contrary to my findings above). I would in any event have found it difficult (even if I had accepted the thrust of what Mr Lovell was saying on controversial matters) to find more than that PWP was negligent for failing to highlight that there was something more than a remote possibility of there being a compression failure. This is because the calculations (which he said should have been done) would in any event have been theoretical and have, at best, pointed to a risk of a compression mechanism being present. On that basis, the careful advice would have been to this effect: there is a risk of compression failure which PWP can not quantify but which it can not exclude, albeit that compression is a rare or vary rare failure mechanism. Mr Roberts in particular addressed in evidence what would have happened if that advice had been given and he, pragmatically, said that he would have asked what it would cost to repair; depending on that cost and whether or not the Vendor would have reduced the asking price either by all or say half of the cost, the transaction may or may not have gone ahead.

There were some evidential clues as to what Igloo would have done if advised that up to, say, £100,000 might have been needed to be spent on dealing with a (realistically) possible compression problem. The first is that Igloo did not seek a reduction in the purchase price to reflect the £20,000 provisional sum figure put forward by PWP in relation to the cracks to the three brick piers on the south elevation; this may have been because Mr Brown thought that the costs expended might be recovered from tenants under service charge arrangements. Secondly, there was evidence that the true value of the property being purchased was some £16.4 million (being the figure put forward by Igloo’s own valuers at the time (GVA Grimley), albeit that a lower figure than that was negotiated; put another way, Igloo’s perception must have been that it was saving nearly £300,000 overall. Thirdly, there was undoubtedly a perception that in addition to the current value there was a significant development potential over part of the site. Fourthly, Igloo was aware from its report from White Young Green who carried out a pre-purchase environmental study for Igloo that this firm identified a "Moderate" risk assessment associated with current and historical users of the site and surrounding area (reflecting contaminants) and recommended an intrusive ground investigation; notwithstanding this, Igloo went ahead with the purchase. Fifthly, the property market was buoyant and rising. Sixthly £100,000 represents about 0.6% of the valuation, which is relatively small. Next, both Mr Brown and Mr Roberts accepted that they were aware that the cause of the cracking had not been definitively established (for example Mr Brown Day 2 page 178) before they purchased and so as qualified surveyors must have been aware that there was some risk associated with this. Mr Brown accepted in evidence that £30,000 would not have affected "the deal going ahead" (day 2 page 201) and that £50,000 "was starting to get to the breakpoint" although it "would depend on how much negotiation we achieved with the vendor". All these factors would have led me to the conclusion that I was not satisfied that the Claimants would not have gone ahead with the purchase even if it had been advised that the costs of remedial work to deal with the cracking could be as much as £100,000 and even if little or no further reduction on the purchase price could have been secured.

Having reviewed all the evidence, I would have found that at the outside no more than about £20,000-£40,000 would have needed to have been recommended as possibly being required to accommodate even a compression problem looked at as at May or June 2003. These figures are based on the evidence and costings of Mr Renaudon and represent a range between Mr Brown’s Options B and C and Mr Lovell’s Option 0 (strengthening to piers 10, 11 and 12 at ground floor level) and making some allowance for associated professional fees and possible tenant disruption. It is more than likely that this would have made no difference to Igloo’s decision to go ahead with the purchase at the price which it in fact had negotiated.

In any event, I would have found that there was no reliance and therefore no causative link between any negligence relating to a failure to advise that the building could not accommodate (with an adequate factor of safety) modern office loadings and any remedial works associated with such work. Mr Roberts unequivocally accepted in evidence that Igloo accepted the risk of whether or not more modern floor loadings for institutional leasehold use could be accommodated at Marshall Mills. This was a proper concession to make given the clear advice received from PWP. It must be remembered that both Mr Roberts and Mr Brown of Igloo were trained and qualified surveyors at the time and undoubtedly fell into the class of intelligent and well-informed clients who could and could be expected to read, understand and appreciate the ramifications of what they were being advised by PWP in this context.

Turning to the issue of contributory negligence, I would have found that this issue was irrelevant for the reason that, as ultimately accepted by both parties’ Counsel, the proper measure of damage in this case is the capital diminution or the difference between the true value as at the date of purchase in June 2003 and the value assuming that there was a perceived and real risk of there being a compression related problem associated with the brick piers. That figure would be whatever it is and would be unaffected by what Igloo did or did not do over the following years. If I had had to make findings about this issue and if damages had to be assessed on the basis of the eventual remedial work and related costs and losses, I would have found that Igloo was contributorily negligent in failing to do anything about facts of which it must have been aware. Notwithstanding clear advice both from PWP initially and Shepherd Gilmour that monitoring should continue Igloo knew and must have known that it was not being continued as from February 2004 when they became aware of the last monitoring results and they knew that the further monitoring which Shepherd Gilmour were again retained to provide in June 2005 was not being continued. Secondly, I am satisfied that representatives of Igloo must have been aware by no later than June 2005 (and probably before) that the cracking to Piers 10, 11 and 12 had worsened substantially; as indicated earlier in this judgment, it is likely that the cracking did deteriorate significantly between early 2004 and late 2006 and that the Shepherd Gilmour readings for June 2005 are likely to be accurate; they showed that at least one crack had opened by more than an inch and another crack by just over 9 mm; that was serious damage which it should have been obvious to anyone concerned with the management of buildings needed to be considered by competent engineers. I would have formed the view that the Igloo representatives (employees) who did walk around the site on a regular basis must have seen this and, notwithstanding their property management experience, they simply did nothing about it. I attach no particular blame to any individual and it may be that the right hand did not know what the left hand was doing in that the people who must have seen the cracking might have thought that it was being monitored whilst the other people must have known that it was not being monitored. As a matter of fact, I would have found that the remedial works necessary to address problems visible by the beginning of 2005 (which is when I would have found that the cracking had probably visibly and obviously deteriorated such that Igloo should have picked up on the fact that there had been no monitoring and that it was sufficiently serious to demand attention) would have been significantly less in scope than was eventually required.

Capital diminution is the appropriate measure of damages because, in simple terms, Igloo acquired the property (based on its case) at a cost less than it was actually worth. In any event, I would have reduced the damages awarded (if any) by at least £20,000 to reflect the amount which Igloo knew from the PWP reports needed to be set aside to deal, as necessary with the cracking problem on the south elevation, no reduction in the purchase price then being sought or obtained.

I have not referred above in my assessment of the witnesses to Mr Cullimore, the valuation expert retained by the Claimants. Unfortunately I have to say that I did not find him to be an entirely satisfactory expert for two main reasons, although he was an honest person. The first is that he was not truly independent because he and his firm have been valuing the property since 2003 on a quarterly basis, doubtless on a commercial basis. Secondly, he was particularly unconvincing about the basis of his valuations over the years when he said that he did not take into account the defects that had come to light with the property. He said in evidence that this was because the remedial works costs were included in the accounts of the Fund; however, there was no disclosure at all about this and there is no hint in the valuation reports produced by him or his firm that this was the basis of valuation. I would have expected him expressly to have qualified his valuations or at least have noted that the valuation assumed no defects. He said that he was aware of the defects at the time of his valuations in 2007 and following. He was unconvincing in his evidence that the purchase price best reflected the market value. This property was never openly marketed and the market at the time was particularly buoyant. Unusually for a valuation expert, no effort was made by Mr Cullimore to point to any comparable in Yorkshire let alone in Leeds.

The only approach of Mr Cullimore which I can accept is his opinion that the reasonable costs of and occasioned by remaining works can be reflected in the actual value assuming that there were defects which should have been but were not adequately reported by the Defendant; this was not, as an approach, seriously challenged by the Defendant. The problem however is that I am not satisfied on the balance of probabilities that the true value of the property assuming no significant risk of compression failure was the £16,071,186 purchase price. The best evidence about value assuming no compression risk would have been the apparently sensible. professional and reasoned report from GVA Grimley to IRL dated 15 May 2003 which did analyse rental values, comparables, planning potential, the quality of the tenants, service charges likely to be available, supply and demand, investment market overview, internal rates of return and the like to produce a value of £16.4 million as "fully supportable". I would therefore have found that the true value assuming no compression problem or risk at the south wing was £16.4 million which would have had the effect on the quantum of reducing the Claimants’ entitlement by some £329,000 in addition to the £20,000 referred to above.

I do accept that there would need to be added to the remedial work costs an allowance for professional fees and possible tenant disruption. Mr Cullimore allowed just over £150,000 to be added for professional fees, statutory fees and site surveys which comes to just under 18% on Mr Frood’s figure for Option 0; that would be too high in my judgment but 15% would be justified. He adds an additional £210,000 for reinstatement of tenant space and tenant disruption which is in my judgment much too high. The vast bulk of these actual or estimated costs relates to the disruptive "intervention" works and to the fact that they are based on or related to the actual remedial schemes which were unnecessarily extended over an excessive period. The fact that the initial strengthening works took almost 2 years to complete with, unsurprisingly, consequential and extended tenant disruption would simply not have been taken into account in assessing what the capital diminution was as at mid-2003. There was no reasonable or realistic explanation as to why the whole process took almost 2 years when, in my judgment, properly planned and coordinated it would and could reasonably be expected to have taken no more than, say, about eight months whilst the problem was investigated, design solutions resolved upon, planning consents secured and the work done.

It is therefore likely that there would have been little or nothing by way of damages available to the Claimants even if it had succeeded on liability. Their quantum claim was further undermined by the fact that a very substantial part of the Claimants’ quantum included for the "intervention works" which I would have found could not properly be recovered through a capital diminution claim or otherwise. This is because I have no doubt that the real reason for these intervention works was not for safety purposes but to bring the south wing up to full modern office standards in terms of loading capacity for offices in respect of which clear and in any event non-negligent advice was given and in respect of which the Claimants clearly accepted the risk that the building may not have had that capacity as at the date of purchase. For instance, even on Mr Frood’s figures (which I would not have accepted) for Option 0 (the option primarily put forward by the Claimants) quantum would have been reduced by at least £164,000 on any account and for the other Options 1, 2 and 3 by a comparable amount.

I say above “at least” because the capital diminution would have had to have been based on the amount by which the value without a compression failure risk was reduced to reflect that risk. Whilst one can see that the value could well be reduced to reflect that risk, it is only the risk as opposed to the probability or certainty that there was a compression failure problem which would go to reduce the value. The question then arises as to whether one reduces the value by the total cost of the remedial works which would be necessary to put right the compression problem or by a (lesser) allowance to reflect merely the risk; in my view it would be the latter. What would therefore reflect the risk would be very much closer to Mr Brown’s Option B or C, albeit with the quantum adjusted upwards to reflect professional fees and possible tenant disruption. Damages based on those Options would have produced a nil capital diminution.

In any event, as indicated earlier in this judgment, I found Mr Frood (whether due to inexperience, his instructions or otherwise) to be unconvincing and I preferred the evidence of Mr Renaudon, whose costings I would have accepted rather than Mr Frood’s. For instance, on Option 0, Mr Renaudon’s figure was £203,751.44 which included £82,547.19 (at least) for the intervention works.

There is to be judgement for the Defendant and the Claimants’ claims are dismissed.