England and Wales High Court (Technology and Construction Court) Decisions

(trading as The Premier Pump & Tank Company)

Plaintiff

- and -

Defendant

Case number: 1996 ORB 268

Dates of Judgments: 10 June 1998, 20 July 1998, 31 July1998

1. The Plaintiff, as sub-contractor to the Defendant, installed the pipework for a petrol filling station. The Defendant was responsible for the concrete supporting and surrounding the pipework. The pipework developed leaks and had to be replaced. The parties had agreed that the replacement works be carried out, reserving their positions as to the expense, for which each sought to make the other liable. The current trial was of liability only. In substance the only issue was whether the pipes failed because of faulty workmanship by the Plaintiff or because of the acts or omissions of the Defendant. Held: (i) the failure was caused equally by the defaults of the Plaintiff and the Defendant; (ii) there was no rule of law which prevented effect from being given to that finding; (iii) the Defendant should pay one third of the Plaintiff's costs of the trial.

2. The text of the judgments approved by the Judge is as follows.

1. In 1991 Tesco opened a superstore at Cleethorpes, Humberside, which included a petrol filling station. The filling station was completed on 10 October but unfortunately by early December customers were complaining of water contamination of the petrol. Some pipes were replaced in March 1992 but leaks continued to develop and in the spring of 1993 the whole of the so-called "suction" pipework carrying fuel from the storage tanks to the outlet stands was taken up and replaced, without cost to Tesco.

2. The Defendant was the main contractor for the construction of the superstore and the Plaintiff was its subcontractor for the supply and installation of the storage tanks and pipework at the filling station. Each blames the other for the faults which developed and contends that the other must bear the full cost of the remedial works.

3. The contract to construct the superstore was originally obtained by a company called J A Elliott, but in March 1991 it was placed in administrative receivership and the contract was novated to the Defendant by an agreement dated 22 may 1991. The design, supply and installation of fuel tanks, pipework and pump fittings for the filling station was sub-contracted to the Plaintiff.

4. Work under the sub-contract commenced on 21 June 1991 and was completed on 10 October 1991.

5. The complaints from customers in early December 1991 already mentioned led to investigations, and they resulted in an order from the Defendant to the Plaintiff dated 27 February 1992 to break out and replace a limited number of pipes. That work was done, starting on 2 March and lasting two weeks. The Plaintiff's charges for it are part of its claim in this action.

6. The continuing evidence of leaks into or out of pipes which had not been replaced in March 1992 led to further investigations in December 1992, and they resulted in a request by the Defendant, by letters dated 25 February and 4 March 1993, for the replacement of the remaining pipes by the Plaintiff. There were presumably negotiations between the parties, but the details of those negotiations were not in evidence. What, as I understand it, is not in dispute is that the Plaintiff provided a quotation for the work, which was accepted by the Defendant without prejudice to the issue which party was responsible for the cost of the work. That work commenced on 15 March 1993 and took about four weeks. The price of it is another (and the largest) part of the Plaintiff's claim.

7. There is a third element in the Plaintiff's claim, for additional work outside the sub-contract but unrelated to the problem with the pipes. I was told nothing more about it and it played no part in the trial before me.

8. The Defendant counterclaims for the cost of supervising the Plaintiff's remedial works.

9. By order of His Honour Judge Richard Havery QC, made on 2 February 1998, the trial before me was a trial of liability alone.

10. Although the action and counterclaim are in form claims for work done and services rendered in 1992 and 1993 there is, as I understand it, no complaint on either side as to performance or price so far as that work is concerned, indeed I heard no evidence or argument about it.

11. The practical outcome of the above history, as understood by the parties, was that the trial before me was essentially confined to an inquiry into the questions (i) what was, in physical and technical terms, the cause of the failure of the pipework, and (ii) whose fault, as between the Plaintiff and the Defendant, was it. In response to a question raised by me during the trial as to the result if the outcome turned on onus the closing written submissions pay helpful attention to that point, but another possibility to which I briefly referred in passing, without making any specific request for submissions, has understandably not been investigated in any depth, namely the consequences of a finding (if made) that the faults of both parties contributed to the failure. I must return, if necessary, to the consequences of that state of affairs.

12. Fuel (petrol and diesel oil, but I shall follow the evidence in using "petrol" to include both) is delivered to the filling station by tankers, which discharge at a "delivery fill point", separated from the pump islands by a forecourt, under which are the storage tanks at a depth of some four metres. This action is not concerned with the delivery fill point or, for the most part, with the pipes leading from it to the tanks. From the tanks further pipes take the petrol to the pumps at which customers fill their vehicle tanks. It was these pipes which failed. They were referred to as "suction pipes", because when the pump served by one of them is in action the pressure inside that pipe is reduced below atmospheric pressure so that the air at atmospheric pressure in the storage tank will push petrol up against the hydraulic head to the pump.

13. The suction pipes are laid to a continuous fall from the pumps down to the storage tanks, so that they can be drained by gravity when required. To prevent such drainage in ordinary use there is a non-return valve at the intake end of the pipe by the storage tank. The outlet end of the pipe at the pump also is sealed when not in use. It is a curious feature of this arrangement, which I understand to be that generally employed, that no pressure relief device is incorporated; when not in use the suction pipe is a sealed system. It is therefore subject to unrelieved pressure fluctuations, in particular from temperature changes. There was evidence from Mr Owen of the Plaintiff company, which I accept, that in consequence pressure in the system can in extreme conditions rise to such a level as to crush the float in the pump float chamber. The only relief, albeit not apparently designed as such, is that the nozzle valve will leak at an overpressure put by Mr Owen at "in excess of 45 psi" (3 bar) in his witness statement and at "about 6 bar" in answer to me.

14. The suction lines are 2" galvanised steel pipes with screwed joints. The screw threads can be parallel or tapered. It is common ground that in order to obtain a leak-proof joint the male thread should be tapered. The female thread can be tapered or parallel. It might be thought that it would always be tapered, because then the threads would exactly marry over their full length of contact when engaged, but in practice it is commonly parallel because a tapered/tapered joint tends for that very reason to lock at its fully engaged position, with little or no tolerance for over-tightening or under-tightening. Although that would be ideal if the only consideration were the efficacy of the seal it takes no account of the fact that nearly all joints are in pipes which incorporate or are connected to an elbow. The two arms of the elbow must each point in the right direction and there must be enough tolerance in the tightening of the joints at and between the elbows to enable that to be achieved. A tapered/parallel joint permits that tolerance, but at the cost of reducing the length of the zone of exact "marriage" to a theoretical zero or, judging by the specimens exhibited or photographed, a practical three to six threads.

15. Pipes are supplied in lengths of 6.5 metres, with factory-cut threads at each end, but they can hardly ever be installed complete. In most cases they will have to be cut to size and the cut end threaded on site. Some pipes, as laid, will have come from the middle of the original lengths and have two site-cut ends. Factory-cut threads are in general of high standard, both as to the profile and uniformity of the thread and as to compliance with the specified dimensions. It is not usually possible to attain the same standards in cutting threads on site. In particular wear of the dies or attempted compensatory adjustments may result in "overcutting" (in the case of a male thread the removal of too little metal, leaving too large an effective diameter) or "undercutting" (the converse) - I shall use the words in that sense, which seems to be that usual in the trade, although it is the opposite of what one might expect and is sometimes reversed, even by professionals. There may also be occasional small-scale "tearing" of metal in place of a clean cut. However, site-cut threads should be perfectly capable of producing an effective sealed joint, and usually do so.

16. To obtain a leak-proof seal pipework contractors do not rely solely on well-made and well-fitting joints; a sealing compound is also applied to the threads so as to fill any spaces there may be. The Plaintiff used a traditional jointing compound called "Litharge and Glycerine", comprising lead monoxide and glycerine BP. It was perfectly usual and proper at the time to do so. it is applied as a paste and when properly mixed and applied "cures" or sets within 24 hours to form a hard and brittle seal. Once it has set the joint cannot be unscrewed unless the seal is broken, which if intentional requires a blow such as that from a heavy club hammer. Once such a seal is broken any movement of the joint tends progressively to degrade the compound to a grey powder.

17. In order to obtain the necessary fall, as described at the beginning of paragraph 13 above, the pipes are initially laid and jointed while supported at the right level above the trench bottom on bricks. Once the joints have set the bricks are replaced by "spots" or "haunches" of concrete. Immediately before and after this "spotting" the joints are all accessible and at that stage the pipework is subjected to the first of two pressure tests by the local Petroleum Officer, an official with statutory responsibilities for the oversight and licensing of installations for the storage and supply of petrol. This test involves applying interior pressure of about 10 psi (0.7 bar) to each pipeline for 30 minutes, during which time there should be no loss of pressure as recorded by gauges. While the pipeline is under pressure soapy water is applied to each joint, which should reveal any leak, even if too slow to cause a detectable fall in the gauge reading. In the present case that happened on 25 July 1991 and no leaks were detected.

18. After the first test the pipes are concreted in, except at the tank end, where there are man chambers, and at the pump island end, where connections need to be made in due course. The excavation is then backfilled and compacted and finally paved with a surface layer of concrete. At that stage, before the pumps themselves are connected, there is a second test by the Petroleum Officer of the same kind as the first, except that the soapy water part of the test cannot be carried out at the buried joints. In the present case the pipes all passed the second test, except that one line would sustain no pressure at all and was taken out of use by being bypassed.

19. Under the terms of the contract and subcontract here the Plaintiff did all the pipework and the Defendant all the concrete work, backfilling and compacting but the Plaintiff had a responsibility to supervise the encasement of the pipes in concrete.

20. I must in due course consider the question what was the cause of the failure, but at this stage I anticipate that discussion to the extent of observing that on the evidence, or lack of it, I find that a far from straightforward task. It was in the apprehension that that might be so that I asked for submissions on the onus of proof.

21. It is always an unattractive result to have to reach a decision in reliance on onus, but it would in my view be particularly unfortunate in the present case. The parties took the eminently sensible and responsible course of agreeing that the remedial work should be done first and the issue of liability left over, it being common ground that it must lie between them. In those circumstances the rationale which places the onus of proof on the initiator of a dispute or the party making a positive assertion is irrelevant, and it would be lamentable if success and failure should turn on the accident of who is plaintiff and who defendant or on the fine detail of pleading, or if the prospect of future arrangements of a similar kind should be frustrated by jockeying for position in those respects.

22. Despite the strength of those impulses I must and do remind myself of the fact that there is a balance to be held between the duty to endeavour to reach a conclusion and the duty not to manufacture one without adequate grounds. It is expressed in the judgments of the Court of Appeal in Morris v London Iron and Steel Co Ltd [1987] 2 All E R as follows:

6. That there may be some discernible differences of emphasis among these extracts themselves suggests the difficulty of achieving that balance and implies that a measure of personal judgment is necessarily involved in the endeavour.

23. That is not, however, the end of the matter. The discussion so far presupposes the existence and, I think, a particular mode of application of another principle: that in order to find any alleged cause of an event proved to the civil standard it is necessary to find it more likely that it was the cause than not; it is not sufficient that it is the least unlikely cause of those propounded. I fully accept that principle, but it is necessary to examine its scope and how it applies in different situations. Where competing causes are mutually exclusive but not necessarily together exhaustive it means that each must individually be judged by that test and wholly discarded if it fails to pass, so that at the end none may survive, leaving the issue to be decided on onus. Where, however, the competing causes may in principle concur the possibility that more than one may have contributed and been necessary cannot be excluded, despite the fact that none of the parties may be advancing it. Their agreement, express or tacit, that between them their theories exhaust the possibilities may, moreover, in those circumstances (and certainly if the court finds that that is right) entail that the only realistic alternative to a clearcut decision in favour of one cause or the other is a finding of joint causation rather than one that no cause is proved. In my view that is the position here. No cause other than defective jointing by the Plaintiff or defective groundworks by the Defendant has been canvassed or is realistically conceivable, but there is no reason in principle why each should not have occurred to a degree insufficient to cause the leaks in the absence of the other.

24. If this were a merely academic exercise the next step might well be to examine the question of the consequences of joint causation. But it is not, and that question has not yet arisen and may not arise. Moreover, it has not yet been argued. I consider, therefore, that at this point I should turn to the evidence and make my findings of fact on the matters in dispute.

25. The main weight of the Defendant's case for a finding that the cause of the leaks was defective jointing rested on the condition of one joint, exhibit P8, recovered from the site by the Defendant when the main remedial work was done in 1993. I must return to that, but shall first deal with a separate piece of factual evidence relied upon in support.

26. Until the trial it had been common ground, and the Defendant's pleaded case, that the defects were "finally cured" by the 1993 repairs, after which there was no further leakage. At the opening of the trial the Defendant obtained leave to call an additional witness, Kenneth Adams, to give evidence of having carried out repair work in September 1993 to tanks 3 and 4, which were suffering from entry of water. He found defective joints where rise pipes connected to the tank lids. One on each tank was the fill pipe and the other housed a gauge connected to a probe running down into the tank. None of these joints had been sealed with Litharge; all employed PTFE tape.

27. I accept Mr Adams' evidence, but its implications depend on whether these were the Plaintiff's joints, as to which the position was confused, no doubt in part because of the late stage at which the point emerged. It would appear that in the normal course the joints for the gauge risers would have been made when the gauges were installed by the makers, Veder-Root, and I find no evidence that they were the Plaintiff's. As to the fill pipe joints, on the one hand they would in the ordinary course have been part of the Plaintiff's original work, and there was no evidence of replacement by anyone else. On the other hand, despite this new evidence, it remained the Defendant's case, put to the Plaintiff's witnesses in cross-examination, that the Plaintiff used Litharge on this job for open joints such as these (wrongly, as the Defendant suggested) as well as for buried ones. The Plaintiff's witnesses were unclear on the issue, defending the practice rather than disputing the fact, and the Petroleum Officer equally had no clear recollection. In my view the greater likelihood is that the fill pipe joints replaced by Mr Adams were the Plaintiff's, and I so find.

28. I return to P8. It was the only joint from the original installation in evidence. It was one of four pieces of pipe retrieved from the site in March 1993 by the Defendant's site manager, Mr Furbank, and taken back to the Defendant's head office in the boot of his car. It next features in the evidence when the Defendant's expert witness, Mr Whitney, had a section cut out by a machinist in his department and the cut fact "dressed", or smoothed off. I have examined it and there are enlarged photographs of the cut face. It consists of a tapered male thread screwed into a parallel female thread. The male has been somewhat undercut or overtightened, or both, so that it has been screwed further into the socket than if correctly made. The result is that the terminal perimeter of the socket, although reinforced by a curved flange, has been forced slightly out over the beginning of the uncut section of pipe, opening up visible gaps between the male and female for the first three or four threads from that end. The male, obviously site-cut, also has the tip of one thread broken off in that section. The next thread may have a very slight gap on one face, but that is difficult to assess. The remainder of the joint, some six threads long, is to my eye a tight fit, although as prepared for photography the curved boundary, or line of contact, between the two pieces of metal is plainly seen, both in the photographs and on direct inspection. There is no visible sealing compound between the threads, but I am satisfied that any which had been there would in any event have disappeared in the course of preparation of the exhibit.

29. There were a number of other pieces of pipework in evidence, including a trial joint, also tapered/parallel but factory-cut, which had been severely over-tightened by Mr Whitney and had a quite close similarity to P8. The exhibit which was chiefly relied upon by the Defendant by way of comparison with P8, however, was P9. P9 was also tapered/parallel and factory-cut, but was put forward as having been correctly tightened. No sealing compound had been used. In P9 it is the first four threads, counting from the open end of the socket, which are a tight fit. The last three or four display visible gaps and, as in P8, there is one intermediate thread more difficult to evaluate. The line of contact is visible in the photographs throughout but almost impossible to detect with the naked eye on the exhibit in the region of tightest fit.

30. There had been no test of P8 or any other joint recovered from site, nor of P9 or any other trial joint, for resistance to penetration by petrol or water.

31. The Defendant's case was that P8 was defective, that its defects would make it fail in use, so as to permit the entry of water or escape of petrol, and that it must be taken to be representative of the Plaintiff's joints.

32. P8 was clearly not a properly made joint, in that the end of the socket had been forced over the uncut portion of the pipe, opening a gap in the next few threads. It does not follow from that alone that it would leak, and the Defendant's grounds for alleging that it would have done so require examination. The first was Mr Whitney's opinion that the threads should marry at the outer end of the socket rather than at the inner end. Of course they should, but that does not establish that if they do marry sufficiently closely and for a sufficient number of turns at or near the inner end they will nevertheless leak, nor do I see why they should. When Mr Whitney was asked how it mattered whether the threads were in contact at the outer or inner end he replied that the outer end of the socket was reinforced. He did not explain what difference that made and I can see none. I therefore reject that ground.

33. The second ground was that the threads did not in fact engage sufficiently closely. It is of course true that that is what a common-sense theory would lead one to expect as the result of an undercut tapered male thread, most markedly at its outer end (the inner end of the socket), but common sense is not always a safe guide and theory must be tested by observation. Inspection of P8 itself and the photographs discloses no perceptible variation of fit over the last six threads, and Mr Whitney's own captions to the photographs attribute that to distortion (that is a stretching outwards) of that part of the pipe wall, which is indeed visible in the photographs by reference to a straight edge. How that can have occurred was not explored and is not for me to speculate upon; there was certainly no suggestion, and therefore no exploration of the possibility in evidence, that an outward distortion along the line of the section would be compensated for by an inward one elsewhere on the circumference of the joint, nor do I see any sign that that has happened.

34. There remains under that head, therefore, only the question whether any significance should be attached to the very slight difference as between P8 and P9 in the prominence of the visible boundary, or line of contact, between pipe and socket in the region of best fit, a difference more apparent in the exhibits themselves than in the photographs. In my judgment it would be wrong to attach any significance to that difference, for two reasons. In the first place P8 had, as I accept on the Plaintiff's evidence, been coated with the Litharge sealant before tightening, whereas P9 was tightened dry. They were not therefore directly comparable in that respect. Secondly it was clear from other exhibits that the nature and extent of the "dressing" of the sections after being cut made a very material difference to their appearance, and I am not satisfied that P8 and P9 had been treated identically, especially since Mr Whitney had dressed P9 himself but left P8 to someone else.

35. As to whether P8 can be taken to be representative, the evidence was that the same pair of fitters did all the pipework on this job and that the senior fitter of such a team of two would keep his "own" die-cutting machine and dies in his van. Dies gradually wear, but an unadjusted worn die will tend to over-cut, not undercut; undercutting tends to occur when a worn die is slightly over adjusted. If that is what happened here there is absolutely no evidence whether it occurred early or late in the contract or before it began, or as to the relative rate of wear, so there is no knowing how typical P8 is.

36. I conclude that although so much attention was focused on it the condition of P8 does not go very far towards resolving this dispute. It shows that the Plaintiff's fitters were capable of making a defective joint, but does not establish that such a joint would leak, without more.

37. That is the extent of the direct evidence on this issue. The Plaintiff relied on evidence, which I accept, that there had been no failure in any of the other similar installations which it had carried out over many years. I take that into account, but it cannot be of great weight. More specifically there was evidence, which I also accept, that the same fitters as were employed here were simultaneously engaged in similar pipework for a similar filling station at Grimsby, and would have been using the same equipment. There has been no failure or complaint there. Against that, and also a matter on which the Defendant relied in its own right, neither of those fitters was called as a witness by the Plaintiff, nor was there any evidence that they were unavailable. I see no reason not to draw the normal inference that if their evidence would have helped the Plaintiff they would have been called.

38. In support of its case against the Plaintiff the Defendant also relied on one point as going to show that the leaks could not solely have been caused by its activities. This was that some of the earliest leaks seem to have occurred in positions unaffected by the encasement of the pipework or the compaction of infill. Reliance was placed on minutes taken by Ms Raymakers of Tesco of a meeting on 7 January 1992 at which, out of seven "problems", two include "petrol in chamber" (meaning one of the man chambers) and in one of those and two others the action taken was to renew a socket either on the tank lid or in the chamber wall. Mr Robinson of the Plaintiff was at that meeting and received the minutes, which he did not challenge - indeed he described Ms Raymakers, who of course was a neutral so far as this issue was concerned, as "very intelligent". In cross-examination Mr Furbank accepted a suggestion that these faults occurred "in the chamber walls or just outside", but when he was pressed with the suggestion that none of them was exposed he said that one of them was: "Remake socket on tank lid". As to that last item the Defendant's point must in my view be valid, but as to the others it does not carry matters much further, because movement of or vibration in a buried pipe could be transmitted to and affect the elbow joint in or just outside the chamber wall, even if that joint itself was not encased.

39. Two defects in the Defendant's works were alleged by the Plaintiff and relied upon as causing the joint failures. The first was poor compaction, and resultant weakness, of the concrete used to "spot" and encase the pipes. The second was the use of excessively heavy equipment to compact the fill.

40. There was evidence, which I accept, that some of the concrete was not of good quality or was not well compacted, and indeed the samples put in evidence by the defendant itself as exhibit D3 contained numerous voids. No doubt it was therefore weaker than fully compacted concrete of the same specification. The difficulty about this limb of the Plaintiff's case, however, is the lack of any credible mechanism by which it could of itself have led to the failure of the joints. One of the most obvious characteristics of concrete is its brittleness. If it fails it does so by fracture. If a steel member is too weak it will bend and may cause harm in that way. Concrete is not like that. It either breaks or it does not. If it is weaker than it should be but in the event does not break then its weakness has not as such caused any damage. There was simply no evidence here of fractures in the concrete such as could have broken joints in the pipework. The Plaintiff carried out the 1993 works and was in a position to have such evidence available if there was any. As an independent complaint this allegation therefore fails.

41. The concrete was, however, the medium through which any forces generated by the compaction of infill reached the pipework. Since it remained unbroken it transmitted vibrations and impacts. Any weakness would no doubt increase such small "give" as concrete has to less transient stresses. I therefore turn to the allegations about compaction of the fill.

42. As to that it is common ground that extra care should be taken in compacting fill over pipework, in particular by using lighter equipment than elsewhere. In order to achieve adequate compaction with lighter equipment it will be necessary to have thinner layers, or more passes of the compactor, or both. The work therefore takes longer. Mr Furbank accepted that the contract was running behind time at this stage.

43. On 12 March 1993 the Defendant's solicitors replied to a letter from Tesco's solicitors complaining of the leaking fuel lines and stating that they were attributed by the Plaintiff to "poor concrete support". As part of their response to that the Defendant's solicitors wrote:

(The reference to a BW6.SS was a clerical error for BW60S.)

44. Mr Furbank accepted that he briefed the writer of that letter with that information. His evidence was, however, that it was wrong. In his witness statement, signed on 22 February 1998, he stated that the Bomag 120 was used for the roadways and car park, but that on the petrol station forecourt they used a small pedestrian roller and a vibrating plate. "The Bomag 120 was not used on the forecourt because it was too big and heavy." In cross-examination he stated that he marked off the area where the pipes were by road pins and, he believed, tapes. The plate was used inside and the 60S (the pedestrian roller) on the rest of the forecourt. He had consulted the employers' engineers about the type of fill and method of consolidation and they would have specified the thickness of layers and a minimum imposed load, but not a maximum.

45. Mr Furbank's deputy, Mr Rycroft, also gave evidence. He was in charge when Mr Furbank was not there. His witness statement, dated 18 February 1998, states that the fill material on the forecourt was compacted "using a small pedestrian roller and (I believe) a vibrating plate". The doubt implicit in the parenthesis is in my view significant. In cross-examination, moreover, he said that he was not involved in any discussions as to how the compaction should be carried out and would not know how thick were the layers or how many passes were used. He could not remember in any detail where the different sorts of equipment were used - "in the whole site, but not specifically". Asked whether he recalled pins and bunting he replied "Vaguely".

46. I find that the position was as set out in the letter of 12 March 1993. Mr Furbank is much more likely to have been right then than when giving evidence five years later. I did not find him an impressive witness. Mr Rycroft was notably unwilling to commit himself to anything specific in support of Mr Furbank's evidence.

47. There was no satisfactory evidence, and in particular none from the Plaintiff's expert witnesses, as to the extent of the damage or overstress which the equipment actually used might be expected to cause to the pipework, as compared with that which should have been used.

48. That was the direct evidence. There was also the fact that one line failed completely at the test after encasement and infilling had occurred, although it had passed the earlier test. In my view the proper inference is that it was damaged by the Defendant's activities. It does not feature in the present claim but casts some further light on the Defendant's standards of workmanship.

49. The result is that there is evidence of defective work by both the Plaintiff and the Defendant, but apart from the joints in the man chambers referred to in paragraphs 27 and 38 and the failed line mentioned in paragraph 48 nothing pointing clearly to either as the sole cause of any particular leak.

50. There is indeed one important feature of the case which in my view goes further, and excludes the likelihood that a preponderant number of the leaks which occurred were solely caused by either party. I refer to the test results. The purpose of the tests was precisely to disclose any detectable leaks, and it would be surprising if the results obtained could have been achieved if there had been any widespread defects in jointing sufficient of themselves to cause failures. Equally damage from the Defendant's activities, if capable alone of causing leaks in otherwise sound joints, would have been expected to manifest itself in failures at the second test, as indeed in one case it did.

51. It must also be remembered that although Tesco naturally treated this as a general failure there were in truth a finite number of individual points at which leaks occurred. I do not know, and it will now never be known, how many there were, where each was, or what was the cause or precise combination of causes in each instance. Some may have resulted from faulty jointing alone and some from impact or vibration damage alone. For the reasons I have given it is probable that the majority arose from a combination of those causes in varying proportions.

52. However, for the reasons given in paragraph 23, I believe that that exhausts the possibilities and that there was no other, unconsidered, cause beyond those already canvassed. It is therefore necessary to return to the problem of joint causation left over in paragraph 24.

53. If it were open to me to treat this as a contribution issue I should without hesitation find the parties equally responsible, and accordingly order that they contribute equally. On general principles of justice it seems to me highly desirable that that should be the result. The question is whether it can be. That has not been argued, and if necessary must be. Meanwhile I make some brief provisional observations.

54. Relative contributions can be assessed if a defence of contributory negligence is pleaded. As I understand it none is raised here, and perhaps none could have been. The Plaintiff's claim is simply for the price of work done, contractually or on a quantum meruit. Although nominally there is a plea of breach of contract the only breach alleged is simply the non-payment for the work. The Defence and Counterclaim relies on terms of the original sub-contract, including an implied obligation to exercise reasonable care and skill, but no breach of that term is pleaded. The Reply and Defence to Counterclaim in essence simply joins issue.

55. Contribution can also be ordered under the Civil Liability (Contribution) Act 1978, but that also is not pleaded and the obstacles to doing so are perhaps even more formidable. In the first place section 1(1) requires that both parties must be liable to a third in respect of the same damage. In this case the Defendant may well have been liable to Tesco, but the Plaintiff had no contract with Tesco and no obvious tort liability either. Secondly I came to the conclusion in George Stow & Co Ltd v Walter Lawrence Construction Ltd (1992) 40 ConLR 57 that in order to found a claim under the Act the claimant must have made (or have agreed to make or been ordered to make) a relevant payment, and that for that purpose payments to his own employees for work done are not relevant (pages 132, 135).

56. A third possibility sometimes available, not strictly involving contribution but achieving the same end, is to conclude that, on a true analysis, the damage in question is not a single item jointly caused but many separate items, some caused by each of the parties. The scope for that here is very limited, at best, in the light of my conclusions in paragraphs 49 to 51 above.

57. Another approach is to examine the true nature and effect of the agreement between the parties under which the 1993 remedial works were done. Did it inescapably require the Plaintiff to be paid in full or not at all for those remedial works, depending on the outcome of litigation, or did it envisage, expressly or impliedly, that there might be some intermediate result?

58. All this assumes that joint causation is not in itself a ground for apportionment; if it were then no problem would arise. Certainly remoteness, the other side of the coin of causation, has normally been dealt with on an "all or nothing" basis; it has been assumed that either the plaintiff's conduct breaks the chain or it does not. It may, however, be arguable that there is no absolute rule to that effect. The Calliope [1970] P 172 is usually cited as an authority on contributory negligence, but in the two paragraphs at pages 181H to 182D Brandon J is perhaps grounding his decision on general principles of causation as well as on the statute, and independently of it.

59. The parties should please consider this judgment before it is formally handed down, so that when it is they will be able to make submissions as to any further argument or applications which may be necessary.

60. On 10 June 1998 I handed down the above judgment and heard further submissions on the questions raised in paragraphs 53 to 59. For ease of reference I continue the paragraph numbering from that judgment in preference to starting afresh.

61. Before turning to the question whether there is any jurisdiction to give effect by some means, in the substance of the formal judgment to be entered, to my finding that the failure of the pipework was jointly and equally caused by defaults on the part of the Plaintiff and the Defendant, I should deal with two preliminary matters.

62. The first relates to the last two sentences of paragraph 37 above. The first of those sentences correctly reflected the evidence and submissions before me at the trial and I have not, therefore, altered it. I was, however, informed by Mr Ramsden on the appointment to hand the judgment down that one of the fitters had died before trial. Mr Stansfield accepts that that is so, and indeed that although that fact had not come to his attention when he made his submissions it could have been discovered from documents disclosed by the Plaintiff. It is right, therefore, to record those facts and to indicate that my comment, and the inference drawn, should be understood as relating only to one of the two fitters. Subject to that qualification they stand, and my conclusions are not affected.

63. The second matter concerns the relationship between the issues tried before me and the four elements of claim and counterclaim identified in paragraphs 5 to 8 above. One, as stated in paragraph 7, played no part in the trial, and it was not suggested at the hearing on 10 June that it will be affected by any judgment now entered. Most of the evidence and argument at trial were expressly or tacitly concerned with the Plaintiff's claim for the cost of the 1993 remedial works (paragraph 6). As to the counterclaim (paragraph 8) it was, as I understand it, accepted on both sides on 10 June that if I have jurisdiction to "apportion" (using that word untechnically) the paragraph 6 claim, then the same apportionment would apply to the counterclaim, without prejudice to arguments as to the quantum of each element, which have not yet been heard. If, however, I have no such jurisdiction, so that there have to be "all or nothing" decisions on both, then different considerations apply to each and the results may therefore not be the same. The 1992 works (paragraph 5), however, were carried out on a different basis. They were ordered during the contractual maintenance period and were not the subject of any reservation on either side of the parties' positions as to liability, such as occurred before the 1993 works. Although Mr Ramsden made no formal concession he did not advance any argument why the cost of those works should be recoverable from the Defendant, and in my judgment it is not.

64. Each party maintained as its primary submission that on the findings made in my first judgment it should wholly succeed, at least in relation to the cost of the 1993 remedial work carried out by the Plaintiff (the Defendant did not, I think, argue so strongly that it must on that basis succeed on its counterclaim for supervision of those works).

65. The Plaintiff's case for judgment in its favour for the full amount of its claim was that it had done the remedial works, that the only pleaded defence to its claim was the allegation that the need for them was caused by its breach of the original contract in making faulty joints and that the Defendant had failed to prove that they were wholly or predominantly the result of such a breach or breaches. Mr Ramsden further submitted that the governing document in the exchange immediately preceding the commencement of the 1993 works was the final letter from the Plaintiff dated 10 March 1993, which on this point reads:

9. Mr Ramsden said that "agreement in relation to costs incurred" related only to price, not liability.

66. The Defendant's primary case was that the 1993 remedial works, like those in 1992 (and despite the prior expiration of the maintenance period), were carried out under the provisions of the Defendant's standard condition 2, by which latent defects were to be satisfactorily remedied without charge.

67. I find both of those arguments deeply unattractive, not merely because they would prevent me from doing what seems to me to be obvious justice according to the merits in the instant case (sometimes that has to be accepted as the price of certainty or principle or in obedience to statute or authority) but because each is based on a highly artificial and unrealistic analysis and reconstruction of the facts. If I must choose between them then I shall, but before accepting that I am forced into that position I propose to re-examine the alternatives in the light of the further submissions of the parties. I shall do so in the same order as in my first judgment.

68. As was pointed out in paragraph 54 above contributory negligence had not been pleaded on either side. At the hearing on 10 June Mr Stansfield applied for leave to re-re-amend the Defence and Counterclaim in such a way as to raise that plea. I refused leave for reasons which I gave orally at the time. In the circumstances neither party could or did seek to argue that that avenue was open, and I agree that it is not.

69. The Civil Liability (Contribution) Act 1978, again, is not pleaded, as pointed out in paragraph 55 above, and in this instance there was no application on either side to amend to do so. Nor was there any submission that the Act applied, and for the reasons already given I do not consider that it does.

70. It was not suggested by either party that I could or should resile from the findings made in paragraphs 49 to 51 above in order to achieve the desired result in the manner contemplated in paragraph 56. I agree that that provides no overall solution and I do not consider it either helpful or evidentially supportable to try to apply it to some small proportion of the unknown number of sources of leakage.

71. I next raised, in paragraph 57, the question what was the true nature and effect of the agreement between the parties under which the 1993 remedial works were done. It was agreed at the hearing on 10 June that for this purpose the relevant evidence was the correspondence between the parties leading up to those works, which was in the trial bundles but had not been referred to at the trial in March and April. It was also agreed that I could take that evidence into account.

72. I was invited to start reading at 27 February 1992. The exchange of letters at that stage concerned the 1992 works and its only significance for the 1993 works is in my view the negative one that it does not contain any reservation on either side as to liability for the cost.

73. After the recurrence of problems there was a tripartite correspondence between Tesco, the Plaintiff and the Defendant in December 1992 which did not, in my view, bear on the issue which I am considering. Then, on 6 January 1993, the Defendant wrote to the Plaintiff with a copy of a letter from Tesco requiring the super-unleaded suction line to pumps 11 and 12 to be excavated and investigated. Having referred to that letter the Defendant continued:

11. Please note that this instruction is given without prejudice to our contractual position.

74. By 25 February 1993 Tesco was requiring that all the suction lines be exposed and replaced and on that date the Defendant wrote to the Plaintiff with that information and continued:

12. It is clear that the fuel lines are defective and are not reasonably fit for their intended use.

13. Please accept this letter as an instruction to make good the defects to the fuel lines without expense to ourselves by exposing and replacing the complete Petrol Filling Station forecourt suction lines within a reasonable time.

14. Would you please confirm to us by return that you will carry out these works as quickly as possible at your own expense .... .

75. The Plaintiff replied on 3 March disputing liability at some length and continuing:

15. We understand that Tesco require the work to be undertaken quickly and we are capable of completing the task to our original suggestion, or to any revised plans.

16. We would be prepared to commence work on the site, following discussions with you and your client concerning method statements etc., Without Prejudice to our above stated position and belief that we are not in any way responsible for the problems identified.

17. We would thus be seeking to recover our costs incurred in the exercise, combined with the costs identified in our original invoice for work undertaken in January - March 1992.

76. The material part of the Defendant's response, dated 4 March 1993, was as follows:

18. Bearing in mind the urgency of the situation and to prevent further possible consequential costs being incurred by our mutual Client we require you to proceed with the remedial works, as necessary, without prejudice to our own opinion as to who is responsible for this defective workmanship.

77. The Plaintiff replied on 10 March confirming that it would be commencing work on site on Monday 15 March 1993. Later in the letter is the sentence quoted in paragraph 65 above. As I understand it work indeed began on 15 March and that was the last letter before that event. The Defendant, however, did respond to it on 30 March, while the works were in progress, as follows:

19. Whilst we note your comments regarding liability for the remedial works and subsequent costs we would re-emphasise the point made in our letter dated 4.3.93 that we require you to proceed with these remedial works without prejudice to our own opinion as to who is responsible for this defect.

78. The first question is whether there was a fresh contract or whether the work was done either (i) pursuant to the Plaintiff's obligations under the original sub-contract or (ii) outside any binding contractual relationship. The Defendant's letter of 25 February 1993 was certainly an attempt to achieve situation (i) but in my judgment it failed; the Plaintiff refused to accept that basis by its letter of 3 March and the Defendant at least acquiesced in that refusal by its response. The rather more difficult issue is whether there was or was not then a new concluded contract.

79. The requisites of a contract are agreement, usually in the form of offer and acceptance, consideration and intention to create legal relations. In my view the exchange of letters on 3 and 4 March 1993 satisfied the first of those requisites. Although the terms as to specification, time and price do not appear from the extracts quoted above it is not suggested on either side, as I understand it, that any of them was not certain or ascertainable. There was express concurrence that the work was to be done "without prejudice" to the parties' repective positions on liability. Some term must clearly be implied as to how that issue was to be resolved, but without prejudging the question how far such a term extended it clearly contemplated that in the absence of agreement or other means of resolution it would be done by litigation, as is now happening. There is no difficulty about consideration; on the Plaintiff's side it was the execution of the work and on the Defendant's it was (leaving aside the possibility of apportionment) payment of the price if the Defendant were liable and the discharge of the Plaintiff's liability if it were responsible. As to the intention to create legal relations the parties were trading companies negotiating at arm's length; it is unthinkable that either would have regarded the other as free to walk away before performance or after incomplete performance without legal liability for breach of contract.

80. I do not regard the sentence quoted in paragraph 65 above from the Plaintiff's letter of 10 March as preventing the conclusion that there was a contract. The Plaintiff was simply reiterating its own stance on the liability issue, not resiling from or repudiating the concluded bargain that the work should be done "without prejudice" to that issue, and the "agreement" which it was urging that the parties should "rapidly reach" was one which would resolve that issue. The Defendant's response of 30 March was in my judgment correct in taking essentially that view on the first point, albeit without making any progress on the second.

81. In the event, neither party argued for an implied term enabling liability to be apportioned; Mr Ramsden never advanced such an argument and Mr Stansfield, who had developed one at some length in his written submissions, abandoned it at the oral hearing. In rejecting even the possibility of such a term, however, I believe that they both fell into two errors, or perhaps a single error by two routes. The first was to assume that no implied term about the resolution of the issue of liability was needed at all. As I have indicated in paragraph 79 above I do not see how that can be right; the express term that the work was to be done "without prejudice" to the issue of liability, without more, entails either that there was no contract at all for lack of certainty, which I reject, or that a term must be implied as to the means of resolution of that issue. If there must be such a term then its content must be ascertained by applying the appropriate test; the question cannot just be ignored. The second error was to assume that there could be an implied term only if the "Moorcock" test were satisfied. As Lord Wilberforce pointed out in Liverpool City Council v Irwin [1977] AC 239, there are three discernible varieties or shades of implication, of which that usually associated with The Moorcock (1889) 14 PD 64 is the second ([1977] AC at pages 253F to 254B). The first, that of established usage, is of no application here. Without excluding the possibility that the "Moorcock" test, if applicable, might here be met, it seems to me that this, like the Liverpool CC case itself, is rather in Lord Wilberforce's third category (he calls it the fourth, but that is because he has considered and rejected another one on the way) - cases where the court "is simply concerned to establish what the contract is, the parties not having themselves fully stated the terms" (page 254A).

82. As to what is the appropriate test Lord Wilberforce described it as "[what] the nature of the contract itself implicitly requires, no more, no less: a test, in other words, of necessity" (page 254F). Lord Cross's criterion was that the insertion of the term should be "necessary to give - as it is put - 'business efficacy' to the contract" (page 258B). Lord Salmon implicitly adopted and applied a quotation from a judgment of Lord Goddard CJ that there should be "such a necessary implication that the court can have no doubt what covenant or undertaking they ought to write into the agreement" (page 262H). Lord Edmund-Davies said: "The touchstone is always necessity and not merely reasonableness" (page 266C). Lord Fraser did not articulate a test.

83. When one comes to apply such a test here two points need to be made. The first is that what is necessary is plainly not to be assessed too strictly, as is apparent both from the paraphrases in the above quotations and from the application of the test to the facts in the Liverpool CC case itself; the "necessity" of implying a landlord's obligation for the repair and maintenance of the common parts of a block of flats was pragmatic and purposive rather than absolute or ineluctable. The second is that a test of necessity is most readily and helpfully applied when deciding whether an implied term on the relevant topic should be "inserted" (Lord Cross) or "written in" (Lord Salmon) at all. In this case I have already passed that stage; the necessity (even in the strictest sense) for some implied term as to how the issue of liability is to be resolved is indeed obvious. In some cases at least, of which I believe this is one, necessity may not point the way quite so clearly at the stage of giving detailed content to such a term. To the extent to which necessity of itself does not compellingly lead to one or another of possible forms the court, in "[establishing] what the contract is" (in Lord Wilberforce's words, but my emphasis) is inevitably deciding what in all the circumstances it fairly should be if it is to be effective for its apparent purpose.

84. Approaching the matter on that basis I ask myself first what are the candidates. Neither party's submissions directly address that question, but it seems to me that both by implication treat the issue of liability as one to be resolved in the same way as if it had arisen under, and by the machinery of, the original works sub-contract. That might have occurred, I suppose, by a claim by the Defendant for breach of contract by defective workmanship, or by a challenge by the Plaintiff to the validity of a condition 2 notice or instruction. There may be other possibilities, and the onus of proof or the impact of the law as to causation of damage might have differed with the procedure adopted - that may, indeed, be the underlying cause of the parties' conflicting submissions as to which of them has won. It is certainly the submission of both, although with opposite conclusions, that the result would on my findings of fact have been wholly in favour of one or the other.

85. That is a possible form of the term, and one with the initial attraction that it relates back to the unresolved dispute which led to the "agreement to differ" reflected in the words "without prejudice". It has, however, two difficuties, both of which may be aspects of one underlying problem. The first is that in the exchange of correspondence creating the contract the parties plainly assumed symmetrical postures, necessitating a neutral means of resolution of the dispute between them, not one which by some rule of onus or causation loads the scales one way or the other. The second is that there is no sufficient reason for preferring one hypothetical form of proceedings on the sub-contract to another. My provisional view is that if the tacit assumption that under that form of the implied term no apportionment is possible is correct those difficulties outweigh its attractions and it should be rejected. If, however, that assumption is incorrect the same problems may not arise.

86. An alternative form of the term is that the issue of liability was to be determined in accordance with [the extent of the relative] responsibility [of each party] for the damage to Tesco which had necessitated the remedial works that were being undertaken. I place some words in square brackets because their inclusion may give the impression of presupposing apportionment and their exclusion that of presupposing entire liability on one side or the other but the intention and, in my view, true effect of either version is the same and allows for either result.

87. My provisional view is that that form of the term is to be preferred. It does not suffer from the difficulties of the other and is in my judgment well fitted to achieve the manifest object of the contract without going beyond what is necessary for that purpose. The differences, however, may be academic if the assumption referred to at the end of paragraph 85 above is false. Moreover there is at present no pleading of any implied term, and although the court has jurisdiction under Order 20, rule 8(1), of its own motion to order any document to be amended for the purpose of determining the real question in controversy between the parties I am clear that I should not exercise that power without giving them the opportunity of addressing me on the point. I therefore turn to examine the validity of the assumption in favour of exclusive liability, since if it is inapplicable here the precise form of the implied term may be of little or no moment.

88. Although I have referred to both onus and causation in paragraphs 84 and 85 above, and although some of the submissions to me on 10 June were couched in terms of the former, I am satisfied that it plays no part in the resolution of this case in the light of the considerations set out in paragraph 23 above and in a situation in which I have made findings of fact without recourse to concepts of onus. That leaves causation.

89. I start from the discussion in paragraph 58 above. The further submissions did not build on my brief reference to the general jurisprudential background, so I go straight to the authorities before returning to what little I have to add about principle.

90. The Calliope [1970] P 172 concerned damage caused to the vessel of that name in groundings attributable partly to her own negligent manoeuvres and partly to the fact that she had earlier been damaged in a collision for which the blame lay in part on the other vessel involved. Brandon J, was pressed with what he described as "the weight of a long line of maritime cases on consequential damage in which the all-or-nothing approach has consistently been adopted" (page 184G). The passage to which I referred in paragraph 58 is as follows:

20. Looking at the question from the point of view of principle, I cannot see any logical reason for denying to the court the right to apportion, or sub-apportion, liability in the circumstances contemplated. Where all relevant negligence on both sides precedes the original casualty, the fact that A's negligence occurs later than B's negligence, and possibly in a different place, does not prevent an apportionment of liability for such casualty. The view that it did was enshrined in the so-called last-opportunity rule, which is, to this extent, dead and buried. I find it difficult to see why, as a matter of principle, it should make any difference that, in relation a particular part of the damage arising, or alleged to arise, from the casualty, the later negligence should follow rather than precede the casualty itself. Why should later negligence of B before the casualty be held not necessarily to break the chain of causation, but later negligence of his after the casualty be held necessarily to do so?

21. I should have thought that the court should ask itself the same questions in relation to each head of damage in dispute, namely, was the damage caused by the negligence of A or B or both; and if both, how should blame be divided .... (181H to 182C).

91. On further reflection I have come to the conclusion that that can have no direct application. It was a claim in tort in which statutory apportionment for contributory negligence admittedly applied in relation to the initial collision damage and the issue was whether it should extend to the "consequential damage" subsequently suffered. Its interest and value lie in the forceful expression by an eminent judge of the view that in principle concurrent causation should be capable of being reflected in apportionment of damage and in his reluctance to accept that apparently inveterate practice to the contrary, unless strictly binding, should prevent him from giving effect to that principle.

92. I am indebted to Mr Ramsden and Mr Stansfield for drawing to my attention Tennant Radiant Heat Ltd v Warrington Development Corporation [1988] 1 EGLR 41. There a roof had collapsed under an accumulation of rainwater because of blocked outlets. The blockages were in part attributable to breach of repairing covenants by the plaintiff lessee and in part to nuisance and negligence on the part of the defendant lessor. After reaching those conclusions Dillon LJ turned to the question of their effect in law and, having rejected the possibility of apportionment for contributory negligence, continued:

22. More importantly, however, for present purposes, the archaic and draconian rule of the common law which the 1945 Act was passed to override also has no application to the present case, since that rule had no relevance to a claim in, or in my judgment to a breach of, contract which was not also itself tortious.

23. The problem which this court faces, on claim and counterclaim alike, is in my judgment a problem of causation of damage. On the claim, the question is how far the damage to its goods which the lessee has suffered was caused by the corporation's negligence notwithstanding the lessee's own breach of covenant. On the counterclaim, the question is how far the damage to the corporation's building which the corporation has suffered was caused by the lessee's breach of covenant, notwithstanding the corporation's own negligence. The effect is that on each question, apportionment is permissible. This is the same result as the 1945 Act would produce, but it is not reached through the Act, because the obstacle which the 1945 Act was passed to override is not there on either claim or counterclaim in the present case (page 44A-C).

24. He apportioned liability on claim and counterclaim as to 90% to the lessor and 10% to the lessee.

93. Croom-Johnson LJ, who agreed with the proposed apportionment and order, also held that the 1945 Act as to contributory negligence had no application and continued:

28. Caulfield J agreed with both judgments and added nothing.

94. That decision is binding on me, if not distinguishable. The only apparent distinguishing feature is that the causative conduct on each side was independently actionable, whereas here the contributory default of the Defendant was not of itself actionable at the suit of the Plaintiff. On the one hand the appeal judges do on their face confine themselves to the situation before them in that respect, but on the other it is not clear on what principle the rule should be different on the facts before me.

95. That case was referred to at the end of a long judgment of the Court of Appeal (May, Ralph Gibson and Bingham LJJ) in Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd [1990] 1 QB 818. The facts were complex and of no similarity or relevance to those here. The court had given its reasons for allowing the appeal and had noted that in the circumstances it was unnecessary to consider at any length issues of causation and apportionment under the 1945 Act which had arisen below, but had said that had it agreed with the trial judge on the basic issue of liability it would also have agreed with him that no apportionment could arise under the Act. The judgment continues:

96. That is clearly intended to be a warning against following the Tennant case uncritically but is itself plainly obiter, and it is therefore not entirely clear to me where it leaves a first-instance judge who is bound to follow Tennant unless it can be distinguished, which in my view can be done only rather artificially and unsatisfactorily, since the crucial justification there for apportionment seems to have been not reciprocal liability (which might rather have been a reason for set-off) but the fact that on both claim and counterclaim the concurrent cause arose not from the act of a third party but from that of the claimant itself.

97. The need for "substantial argument" can, I apprehend, arise only because of the implicit assumption, referred to in paragraph 58 above, that in contract the only causation issue is the "all or nothing" question of remoteness. I have not, however, been referred to any binding authority for that as a proposition of law. McGregor on Damages, 16th edition, suggests that "the principles applied in the corresponding tort cases should apply; this is on the whole borne out by the few existing cases" (paragraph 242). The difficulty which I find in that is that in tort the topic is dominated by negligence and that contributory negligence is now regulated by statute. Where, as here, the statute does not apply, recourse to the pre-statutory state of the common law of tort, comprising an absolute defence of contributory negligence modified by a "last opportunity" escape route, seems no more instructive or helpful to me than it did to Brandon J in The Calliope or to the Court of Appeal in the Tennant case.

98. I can summarise the position, as it seems to me, as follows. By way of authority the Tennant case entitles me to apportion, and indeed binds me to do so unless distinguishable. To distinguish it would in my view be unsatisfactory as elevating irrelevant differences into determinative criteria, even if I were tempted to depart from it in order to do justice in the present case, which I am not. If it is wrong it should be overruled by a court competent to do so or shown to be devoid of authority under one of the recognised exceptions to the rule in Young v Bristol Aeroplane Co [1944] KB 718. By way of principle I find myself in a somewhat similar position to that of Brandon J in The Calliope; there seems to be an inveterate practice or understanding, supported inferentially by the dictum in the Bank of Nova Scotia case, against the jurisdiction to apportion which is to my mind required in order to do justice. Like him, and with the same diffidence but without any other hesitation, I believe that I should assert and exercise it.

99. Since I have reached that conclusion it may not be necessary to rule substantively on the question of implied term or the associated pleading issue, both left over in paragraphs 85 to 87 above, but I should be assisted by submissions, when this supplementary judgment is handed down, as to whether I should do so, and if so to what effect.

100. That completes my reconsideration of the bases for apportionment canvassed in paragraphs 54 to 58 above. Three further possibilities were raised by Mr Ramsden. The first was contractual set-off. That, however, relied on a term in the sub-contract for the original installation and related to sums falling due on either side under that sub-contract. I have held that the 1993 remedial work was not executed in pursuance of the sub-contract or on its terms.

101. The second was the doctrine of abatement, but as summarised by Mr Ramsden (I think by way of quotation from one of the leading authorities) that is a right to reduce the price by "showing how much less the subject-matter of the action was worth by reason of the breach of contract". Here the "subject-matter of the action" was the remedial works, the value of which was independent of the Defendant's default in carrying out the original contract works, even if that default was a breach of the Plaintiff's sub-contract (as distinct from the Defendant's main contract with Tesco), which was not alleged and seems unlikely.

102. The third was equitable set-off. Mr Ramsden cited Bank of Boston Connecticut v European Grain and Shipping Ltd [1989] AC 1056. The issue there was whether a charterer could set off in equity a claim to recover damages from the shipowner for repudiatory breach of the charterparty against the owner's right to freight accruing due before termination. At pages 1101E to 1103H Lord Brandon summarised the nature, origins and basis of the defence of equitable set-off. I do not think I need quote from that summary, because what is clear is that the whole discussion is concerned with cross-claims arising out of the same contract. Here the Plaintiff claims the price of the remedial works and there is no cross-claim complaining of its execution of those works.

103. For the sake of completeness I mention two further possible bases for apportionment which have occurred or been suggested to me, but not adopted.

104. The first is mitigation, which I refer to because in McGregor on Damages it is treated in conjunction with remoteness and contributory negligence as one of a connected and often overlapping trio of limiting factors. It was not suggested on either side that mitigation could be of any relevance here, no doubt for the reason, with which I agree, that the doctrine of mitigation relates only to the acts or omissions of a party occurring after and with knowledge of the other's breach.

105. The second is that since, as I have found, the original work of each party was defective, each should have borne the cost of taking out and replacing its own part of the forecourt works. That might well have been an equitable solution, and if the facts had been as they now are, including the agreement that the remedial work should be done "without prejudice" to liability, but with the one difference that each party carried out its own original part of the work, then it would no doubt have been arguable that in that situation the appropriate implied term would have been that unless either could establish that the failure of the system was the sole responsibility of the other the cost of the remedial work should lie where it fell. On the facts before me, however, an implied term which achieved an equivalent result would in my view go well beyond what was necessary, would be implausibly complex to formulate and could not realistically be imputed to the parties.

106. As in the case of my first judgment, the parties should please consider the terms of this supplementary judgment before it is handed down and exchange and lodge notes of any submissions to be made.

107. The above supplementary judgment was handed down on 20 July 1998. As before I continue the paragraph numbering so that all the judgments to date can be issued as a single document.

108. Both parties, as I understand it, accept the position as to the four elements of claim and counterclaim set out in paragraph 63 above, and counsel will agree a minute of order accordingly for the assistance of my clerk in the preparation of the certificate of trial.

109. Neither party applied for leave to amend to plead an implied term, and both submitted that it was neither necessary nor appropriate for me to exercise my power under Order 20, rule 8(1), to amend the pleadings in view of my decision on causation in paragraphs 88 to 99 above. Moreover neither party applied for leave to appeal any of my findings of fact.

110. Nevertheless there is an appeal as of right on law. It is therefore possible that there will be such an appeal on one side or both, and one possible outcome of such an appeal is that the Court of Appeal will hold that I am wrong in my conclusions under the heading of "Causation" but right, in whole or in part, in those on the subject of implied terms. I therefore consider that I should record that but for my decision on the effect in law of my finding on causation I would have directed under Order 20, rule 8(1), that the Statement of Claim be amended by inserting as paragraph 19A the following:

30. I have already found that there was such an express term, and in the circumstances which I am now postulating I should have found that there was such an implied term.

111. Mr Ramsden, for the Plaintiff, submits that the effect of my judgment is that the Plaintiff will inevitably recover a substantial net money judgment, with costs, and that it should therefore have the costs of the trial which I have conducted, since there has as yet been no payment into court by the Defendant. That argument, in my view, presupposes that the approach to costs should be the same as if there had been a single trial of liability and quantum in the course of which, the evidence on liability having been heard first, the judge had made his findings on that issue before resuming the trial to hear the evidence on damages, leaving issues of costs to the end.

112. Mr Stansfield, for the Defendant, submits that each party should bear its own costs of the trial, since the issue was which party was responsible for the necessity of carrying out the 1993 remedial works, and each has been equally successful or unsuccessful. That argument presupposes that the trial should be treated as a discrete episode, the costs of which should follow the event.

113. In my judgment the issue of costs essentially centres on those competing ways of viewing the nature of the trial on liability. Before turning to consider that issue I address two matters which arose out of the way in which the argument developed, but which seem to me to be less central. The first is that Mr Ramsden's submission explicitly assumes foreknowledge of the outcome of the trial on quantum in the present action, to the extent at least that the balance will be in the Plaintiff's favour. I do not believe that that matters for two reasons, one of principle and one specific to the facts of this case. The reason of principle is that the logic of Mr Ramsden's argument, if otherwise sound, is that if there were any doubt as to the outcome on quantum the order should simply be "costs in cause". The factual reason is that although Mr Stansfield made no formal concession I did not understand him to suggest that there is any realistic ground for doubting Mr Ramsden's assertion as to the outcome, and from what I know of the circumstances I can see none.

114. The second preliminary matter is that Mr Stansfield's written submissions were concerned to establish that there should not be separate orders on claim and counterclaim and to cite authorities to that effect. Since Mr Ramsden did not, in the event, seek such an order and I do not contemplate making one, and since none of those authorities dealt with the situation before me of a split trial, I do not think I need go through them in this judgment.

115. I therefore turn to evaluate the competing submissions. It is desirable to recall first the basis of the jurisdiction which I am being asked to exercise and the terms and effect of the relevant rules.

116. By section 51(1)(b) of the Supreme Court Act 1981, so far as material:

117. The material provisions of the Rules of the Supreme Court for present purposes are to be found in Orders 33 and 62, and are as follows:

r.3(3) If the Court in the exercise of its discretion sees fit to make any order as to the costs of any proceedings, the Court shall order the costs to follow the event, except when it appears to the Court that in the circumstances of the case some other order should be made as to the whole or any part of the costs.

33. O.62, r.9(1) The Court in exercising its discretion as to costs shall take into account -

118. I was not referred in argument to any authorities bearing directly on the issue before me, but I am aware of two which may cast some light on it. The first is Surrey Heath Borough Council v Lovell Construction Ltd (1990) 48 BLR 108. In that case Judge Fox-Andrews QC, in this court, had tried preliminary issues of law on assumed facts and had ordered the plaintiff to pay two thirds of the costs of the hearing of those issues to each defendant. There were an appeal and a cross-appeal on substantive issues, but also an appeal against that costs order, as to which Dillon LJ, with whom Ralph Gibson and Stuart-Smith LJJ agreed, said:

34. It is not in dispute on this appeal that a judge who has decided preliminary issues has (unless he is going to make no order as to costs) three courses before him in relation to the costs of the trial of the preliminary issues, viz:

(i) he may make those costs costs in the cause; or

(ii) he may reserve the costs to the trial; or

(iii) subject to the points in issue on this appeal, he may award the costs, or a proportion of the costs, to one or other party.

35. To make the costs costs in the cause is not, however, satisfactory to a defendant if as a result of the defendant's success on certain of the preliminary issues, very important parts of the claim will go out of the cause and will not be pursued to trial.

36. To reserve the costs to the trial may be necessary in some cases, eg if there has already been a payment into court. But it can have its disadvantages, particularly if - as is not the case here - the judge who tried the preliminary issues may not himself be the trial judge. It is not mandatory that the costs of preliminary issues be reserved to the trial judge.

37. As to the third alternative, the objection is not to the judge having decided to make an immediate order as to the costs, but to the particular order which he decided to make, which is said to be wrong in principle.

38. In his short judgment on costs the judge directed himself at the end as follows:

41. That appears to be in general accord with the direction in Order 62, rule 3(3) .... . (pages 121, 122)

42. Mr Fernyhough [for the plaintiff] accepts that a payment into court is not directly appropriate in respect of a trial of preliminary issues, which is concerned to decide issues of law on assumed facts, and is not concerned with figures. (page 124)

.... if the judge who has tried preliminary issues wants to make an immediate award of costs (under alternative (iii) above) instead of reserving the costs to the trial or making them costs in the cause, he should be entitled, in my judgment, to regard the trial of the preliminary issues as being a separate "event" on its own for the purposes of Order 62, rule 3(3). (page 124)

43. Applying these general principles, and bearing in mind that payment into court is not appropriate in relation to a trial of preliminary issues of law on assumed facts, considered as an "event" on its own, I am of the view that Judge Fox-Andrews did not misdirect himself in the passage I have read from his judgment. (page 125)

119. The second case is Copthorne Hotel (Newcastle) Ltd v Arup Associates (1996) 58 Con LR 105, in which I had to deal with applications for costs following a trial in which liability and the measure of damages, but not quantification of those damages, were in issue in relation to one of four categories of dispute in a large and complex piece of construction industry litigation. The plaintiff had lost that trial. The defendant applied for costs, on the basis of its victory in that trial, and the plaintiff submitted that costs should be reserved. I was not told that there was no payment into court, nor that there was such a payment stated to be in respect of the cause or causes of action dealt with at the trial, it being common ground that had either of those situations obtained I could properly have been, and would have been, told. In obedience to Order 22, rule 7, I was not told, one way or the other, whether there had been any general payment into court. I reserved the costs on the basis that it was possible that there had been a payment into court which at the appropriate moment would be revealed and should be taken into account on issues of costs, including possibly those of the trial in question, and that the Surrey Heath case was distinguishable as being the trial of a pure question of law on assumed facts, in respect of which the Court of Appeal had held that payment into court was not appropriate, and moreover that:

120. I take into account the general principles appearing from the judgment of the Court of Appeal in the Surrey Heath case, but also the fact that in the exercise of a discretionary jurisdiction the particular way in which the discretion has been exercised in reported cases is merely illustrative, not determinative.

121. The situation before me is in some ways intermediate between those in the Surrey Heath and Copthorne Hotel cases. The trial was not one of pure law on assumed facts, but on the other hand, although ostensibly a trial of the general issue of liability, it was in the words of paragraph 11 above:

As in Surrey Heath there was here no payment into court or Calderbank offer, but whereas the Court of Appeal there proceeded on the footing that there could not have been such a payment I see no reason why here it was not open to each party to make some relevant payment in or offer, whether by a payment in against the claim or counterclaim, separately or taking the other into account, or by a Calderbank offer as to proportionate liability or, by the party expecting to overtop the opposing claim or counterclaim, of willingness to accept a net sum. Unlike the Copthorne Hotel case there is no need to reserve costs because of the possibility of a payment into court, since I know that there has been none, nor is that what either party seeks.

122. I derive from the Surrey Heath case the principle that a "judge who has tried preliminary issues .... [is] entitled .... to regard the trial of the preliminary issues as being a separate 'event' on its own for the purposes of Order 62, rule 3(3)". I therefore can, and in my view should, have regard to the "event" of the trial before me, as to which I accept Mr Stansfield's submission that it should properly be regarded as a tie. I do not, however, think it just to treat that as the only relevant consideration on the facts of this case. In addition to those already referred to in this and my earlier judgments it is material that the postponement of the trial of issues other than liability was not a decision taken early in the interlocutory proceedings as a deliberate exercise in case management, giving the parties plenty of time in which to consider all the implications of such a split, including potential liability for costs and the availability of protective measures against such liability. What happened, as I understand it, was that, a single trial date and estimate having been fixed at the outset in the usual way, it became apparent not long before the date fixed that the estimate was too short for a full trial but could accommodate one on liability only, which was accordingly directed by consent.

123. I have taken into account all the relevant circumstances, as set out in this and my two earlier judgments. Having done so I have, subject to one reservation, concluded that the order which in the exercise of my discretion I should make is that the Defendant should in any event pay one third of the Plaintiff's costs of the trial of the issues of liability. In reaching that conclusion I bear in mind that if the costs incurred by the parties are approximately equal the outcome will be that that the combined costs, on the standard basis, of the trial will be borne in the ratio of about two to one as between Defendant and Plaintiff.

124. The reservation is that although I mentioned the Surrey Heath and Copthorne Hotel cases during argument and attempted a very brief summary from memory they were not produced or addressed in counsel's submissions. In all other respects there was full argument and I do not consider it necessary or desirable to re-open the matter at large, but if either party wishes to make any further submissions confined to comment on the significance of those cases I am open to receive and consider them. In all the circumstances I direct that if that is to happen notice and written submissions or an outline must be filed and served before the end of this term; otherwise this judgment will stand and the order for costs will be entered accordingly.

31 July 1998 There having been no notices or submissions under paragraph 124 above the above judgment as to costs is today released for publication.