[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Power Magnetics and Electronic Systems Ltd. v Wood Goldstraw & Yorath & Ors [2002] EWHC 2912 (TCC) (22 October 2002) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2002/2912.html Cite as: [2002] EWHC 2912 (TCC)

[New search] [Printable RTF version] [Help]

IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
BIRMINGHAM DISTRICT REGISTRY
TECHNOLOGY AND CONSTRUCTION COURT

		Birmingham Civil Justice Centre 33 Bull Street Birmingham B4 6DS
		22 October 2002

 

1. The claimant company was formed as a vehicle for a management buy-out ("MBO") team. The MBO was of the business of Thorn Automation ("Automation") itself a division of Thorn EMI Electronics Ltd ("Electronics") a wholly-owned subsidiary of Thorn EMI plc ("Thorn EMI"). It now runs the business it purchased.
2. The first defendant ("WGY") is a firm of quantity surveyors. The second and third defendants, to whom I shall refer as A & J, are partners in a firm of structural engineers.
3. In November 1994, Electronics sold the business of Automation to Thorn EMI. The latter sold the Automation business to the claimant on 15 December 1994. The business included land and buildings at a site in Rugeley, Staffordshire, the assets and liabilities of Automation and other rights such as intellectual property rights.
4. The claimant's claim is for negligent misstatement, in November 1994, by WGY and A & J with respect to a report prepared by WGY and A & J in July 1994. The claimant's case is that the July 1994 report failed to point out the presence or suspected presence of dangerous asbestos in the ceiling voids of an office building. The claimant claims to have incurred a cost of about £175,000 in treating and removing the asbestos in 1998. The claimant contends that, if it had known of the asbestos and that work would have cost so much, it would have negotiated a price reduction on the purchase of the business or an indemnity against the cost of the work which would be required. Alternatively, the claimant says that it would not have proceeded with the acquisition until the asbestos had been removed.
5. The claimant claims loss based on the diminution in value. This is now pleaded as being the difference between the price paid for the business of Automation and the price which would have been paid had the claimant been properly advised. The claimant's case is that this is equal to the costs incurred in 1998 in removing or repairing the asbestos. Alternatively, the claimant puts its case on the basis of the loss of opportunity to negotiate a reduction in the purchase price of the business.

Background

6. The buildings at the Rugeley site included an office building, built in about 1960. A limpet asbestos spray had been used to coat the castellated steel beams in the ceiling voids at ground and first floor level of the office building. This was intended to act as fire protection. In addition, asbestos lagging had been used on the pipework contained in the ceiling voids. This was intended to act as insulation.
7. The asbestos which had been used contained a significant amount of amosite or "brown" asbestos, now known to be extremely dangerous owing to its friability, that is, its relative softness and the ease with which its fibres can become airborne. The friability of amosite asbestos increases with age and when it is disturbed.
8. The office areas in the building in question featured a suspended "ISORA" ceiling system. Light fittings hung beneath the suspended ceiling. In about 1983, a second suspended ceiling was put in place beneath the first. The upper, original ISORA suspended ceiling was set at 160 mm below the beams. It incorporated a lay-in grid with translucent ceiling panels of 1000 mm square. The lower, later suspended ceiling also incorporated a lay-in grid, with ceiling panels of 600 m square. This was set at 155 mm below the upper ceiling.
9. In early 1994 employees of Automation formed an MBO team and began to work towards an MBO. They engaged KPMG and Kent Jones & Done (KJD) solicitors to assist. 3i agreed to provide venture capital, of approximately 80% of the purchase price for the business. Royal Bank of Scotland (RBS) provided funding for the MBO team. Heads of terms were agreed on 5 August 1994. The MBO was completed in December 1994.
10. In late 1997 the claimant decided to install new cabling in the offices. At an early stage the presence of asbestos was identified in the ground and first floor ceiling voids of the office building. The asbestos was found to be in a disturbed and damaged condition. In January 1998 the claimant instructed DMW Environmental Consultants (DMW) to carry out an asbestos survey. DMW reported on 10 January 1998 that the asbestos was in a friable condition and recommended that it be removed under controlled conditions. They were instructed to prepare a specification and oversee the removal work. The claimant engaged contractors, B W Davies, to remove the asbestos. Work was carried out. This included removing the ISORA tiles of the upper suspended ceiling, but the metal grids in which those tiles had been fixed were not removed. The lower suspended ceiling, installed in 1983, remains.
11. In 1994 Mr Sheldon was the managing director of Automation and was leading the MBO team. He has since left the claimant.
12. Mr Sammons had worked in Automation's accounts department from August 1979. By 1986 he had been promoted to financial controller with responsibility for all aspects of financial control and reporting within Automation. He became finance director. He was a member of the MBO team. He is now the claimant's financial director.
13. Mr Taylor joined Automation in about 1988. He was the personnel manager. Mr Taylor was a member of the MBO team.
14. Mr Langdown was the Operations Executive at the Rugeley site. He had overall responsibility for the site and all manufacturing activities. Mr Langdown was a member of the MBO team. He has now retired.
15. Mr Bowen has been employed at the Rugeley site since 1967 (with a gap of about one year). In 1980 or 1981, he was appointed Automation's safety and training advisor. For the next ten years or so he held various positions in the personnel and training department. From 1988, he reported to Mr Taylor. In 1990, Mr Bowen was appointed Automation's site services manager for the Rugeley site.

Defendants' reports

16. In January 1994 Mr Sheldon asked Mr Langdown to obtain a report on the buildings on the site with a view to establishing the potential long-term maintenance costs.
17. I have heard evidence from Mr Langdown, and Mr Bowen of the claimant, from Mr John Lawton, then a partner in WGY (and now retired) and Mr Whitfield a partner in A & J. I conclude that Mr Langdown asked Mr Bowen to make arrangements for a report to be obtained. Mr Bowen knew that WGY had carried out some work for them before, in connection with the buildings at Rugeley. He contacted Mr Lawton in November 1993 and asked him whether he would prepare a maintenance schedule for the factory. Mr Lawton said he could do so, but only in respect of the fabric of the buildings. Someone else would have to consider the structure. Mr Lawton approached Mr Whitfield of A & J who agreed to become involved.
18. I accept the evidence of Mr Lawton and Mr Whitfield who both recall meeting Mr Bowen at the Rugeley site on 18 January 1994. I believe that their recollection is more accurate than Mr Bowen's. Further, Mr Whitfield's recollection is supported by his diary entry for 18 January 1994 which shows an appointment made for him to meet Mr Lawton and together to visit Rugeley. In addition, there is reference in Mr Lawton's letter to Mr Bowen dated 27 January 1994 to that meeting on 18 January 1994. ]
19. At that meeting it was agreed that Mr Lawton was to inspect all basic brickwork, the roof coverings, doors, windows, ceilings and floors which might require basic builder's work; Mr Whitfield was to report separately on the structural elements of the buildings. Mr Bowen, Mr Lawton and Mr Whitfield all believed that the purpose of the inspection and report was to determine the scope of ordinary factory maintenance.
20. Following the meeting on 18 January, Mr Whitfield wrote to Mr Lawton as follows:

"Further to our visit to the above premises we confirm our professional fees for the Structural Appraisal would be £2500 plus VAT…

Our fees allow for a detailed inspection of all structural elements where accessible and three copies of our final report which would include photographs where considered necessary and recommendations for any remedial works required.

We understand that means of access would be made available to us by the client together with general layout drawings for reference.

We enclose a copy of part of a typical report carried out on behalf of another client as a sample."

21. On 27 January 1994, Mr Lawton of WGY wrote to Mr Bowen as follows:

"Re fabric/structural report to factory and offices - Rugeley site.

Further to our meeting of 18 January, we offer as a joint "package" with A & J the following services:-

Generally

To identify with related budget costings a maintenance schedule, conditioned on a 15- year life expectation of the structures and building fabric of the factory and office buildings, excluding all mechanical and electrical services and installations.

Structurally

Detailed inspection of all structural elements where accessible and three copies of the final report which includes photographs where considered necessary and recommendations for any remedial works required.

Access to all areas including roofs to be made available for inspection, together with an attendant with ladders, crawl boards and the like. Any defective asbestos or unsafe roofs where close detail is required would be visually surveyed from the nearest safe vantage point."

Mr Lawton quoted a price of £9,000 plus VAT.

22. It can be seen that the paragraph in Mr Lawton's letter to Mr Bowen under the side heading "Structurally" simply repeats the text of the relevant section in Mr Whitfield's letter to Mr Lawton.
23. It is common ground that the reference to "defective asbestos or unsafe roofs" in Mr Lawton's letter is a reference to roofs made of corrugated asbestos sheeting. It is not a reference to the asbestos in the ceiling voids the subject of these proceedings and is not relevant to these proceedings.
24. There appears to have been no further contact between Automation and either Mr Whitfield or A & J until June 1994 when Mr Sheldon asked Mr Bowen to arrange for WGY and A & J to undertake work. In June 1994, Mr Bowen arranged for an internal purchase request to be prepared. This shows that the scope of service to be obtained from WGY was "to carry out a fabric/structural report to factory and offices on the Rugeley site all as per your quotation dated 27 January 1994" at a price of £9,000. Mr Bowen signed that request. It was countersigned by Mr Langdown, the relevant director, and was further countersigned by Mr Sheldon on 27 June 1994.
25. Automation sent WGY a purchase order dated 5 July 1994. The scope of the purchase order was stated to be "to carry out a fabric/structural report to factory and offices on the Rugeley site all as per your quotation dated 27 January 1994" for the agreed price of £9,000.
26. Both Mr Whitfield and Mr Lawton attended at the Rugeley site. They worked separately. Mr Lawton visited frequently over a three or four week period making his inspection. Mr Whitfield also visited on a number of occasions.
27. Mr Lawton sent his report to Mr Bowen by letter dated 1 August 1994 stating:

"Re Fabric report

Enclosed two copies of the fabric report with budget costings, which is independent of the structural report being prepared by A & J which you will receive direct from the Structural Engineers. …"

28. The document which Mr Lawton prepared is just over 150 pages long. The title is "Report on the fabric of buildings 1994". The introduction to the WGY report states as follows:

"The following contains a written report based on a visual inspection on the present condition of the fabric of the factory, office… [etc] at [the Rugeley site].

This inspection was carried out from the ground and roofs which were accessible from ladders…

The objective of this report is to identify with related budget costings, a priority based maintenance schedule for the next 10 to 20 years.

Extent of report:- building fabric and structures of the aforementioned buildings excluding electrical, heating, lifts and other mechanical and electrical services, drains, pavings, fences and site works."

In the following pages, WGY set out what they describe as a "projected maintenance schedule" for each of five main areas, of which one was the office building. The document identifies areas where WGY recommends that work be carried out, by reference to a priority rating system, namely: A. Immediate; B. To be carried out 1 - 2 years; C. Cosmetic; D. Ongoing maintenance.

29. A & J sent their report separately and directly to Automation. Their document was called "Report on structural inspection of buildings". The first page of A & J's report states:

"Introduction

Instructions were given by the client to carry out a visual inspection of the structural elements of the main production building together with its ancillary buildings including …. offices.

Inspection

The inspection was carried out during the month of July 1994, the weather was dry and sunny.

Only visible and accessible elements were covered. All inspections being made from ground level or roof level externally.

No drainage has been tested or foundations inspected so no comment can be made on their suitability or otherwise."

30. Neither Mr Lawton nor Mr Whitfield looked in the ceiling void in the office building. Neither was aware of the presence of asbestos. Neither report made reference to the presence or suspected presence of asbestos in the ceiling voids in the office building, or other deleterious material. Neither report recommended that specialist advice be taken as to the possible presence of asbestos.

Asbestos

31. Mr Cotterell, a Chartered Building Surveyor, with Messrs Bickerdike Allen and Partners, was jointly instructed as an expert to give his opinion on the asbestos risk. Mr Cotterell did not give evidence at trial. None of the parties takes issue with his report.
32. Mr Cotterell inspected the office building. He reviewed relevant photographs, papers and witness statements, including from Mr Williams of DMW. Mr Cotterell concluded as follows:

In January 1998 the sprayed asbestos was in an unsatisfactory condition, in that it was friable and unsealed where it had been damaged/disturbed.

In January 1998 the asbestos lagging to pipework was in an unsatisfactory condition.

Some asbestos debris must have been removed prior to January 1998.

The sprayed asbestos particularly and the asbestos lagging to pipework was in an unsatisfactory condition in 1994.

The asbestos should have been repaired and sealed, enclosed or removed under controlled conditions prior to 1994.

The recognised procedure for dealing with asbestos materials in 1994 was to seal (encapsulate) or enclose them.

The addition of the lower suspended ceiling, constructed in 1983, did not satisfy the requirements at the time for an imperforate and airtight construction, to deny further access to voids, for making and keeping a paper record of work or for provision of warning notices.

Mr Cotterell also sets out in detail the history of the use of asbestos as fire protection, development of the understanding of its dangers and relevant guidance and legislation. These include the Health & Safety at Work etc Act 1974 and various regulations made thereunder, between 1983 and 1992.

Scope of WGY's and A & J's duty to Automation

33. The claimant's case is that both WGY and A & J failed to exercise care and skill in that they did not inspect within the ceiling void and did not discover and report on the presence or suspected presence of damaged asbestos, or advise that specialist advice be sought.
34. Curiously, Mr Bowen did not point out to either Mr Lawton or Mr Whitfield that they should take care if they looked into the ceiling void because asbestos was present, although he knew well that it was there and that it was dangerous. (See later section of this judgment dealing with pre-1994 knowledge of asbestos). Neither Mr Lawton nor Mr Whitfield was offered access to the voids. Mr Whitfield brought his own ladder. Automation provided ladders to Mr Lawton when he asked for them, eg so that he could get on to the roof.
35. Neither Mr Lawton nor Mr Whitfield considered that detection of asbestos or commenting on the quality or nature of fire protection would be within the scope of the work he was to undertake.
36. Mr Lawton was not confident that, in 1994, he would have recognised limpet spray asbestos, but he would have recognised asbestos lagging on pipes. Had he seen asbestos of the type found in the ceiling voids, he would have suspected it as being asbestos. If he had seen or suspected asbestos coating to the structural beams, he would have felt obliged to refer to it in his report and would have recommended that an investigation be made by a specialist firm.
37. Mr Lawton said in evidence that he told Mr Bowen in January 1994 that he would not be looking into the ceiling voids. Mr Bowen's recollection of the events in 1994 was not clear. Mr Bowen did not remember the meeting in January 1994, let alone Mr Lawton making any such comment. Mr Lawton did not, however, mention in his letter of 27 January 1994 that inspection of voids would be an exception to the investigation he would carry out. I am not persuaded that, after this passage of time, Mr Lawton's recollection as to this point is accurate. In any event, if Mr Lawton had wanted to exclude investigation above the suspended ceiling, he should have made that clear in his letter or otherwise clarified this before he undertook his work. He did not do so. WGY's letter of 27 January 1994 suggested that they and A & J would cover all aspects of the building except the M & E Services. The description of work is broad: to identify….the structures and building fabric..". The wording of the letter does not suggest that any particular part of the buildings would be excluded. By inference, the only areas which would be excluded would be those which were not accessible.
38. Automation's purchase order of July 1994 does not suggest that Automation understood that there would be exclusions other than those specifically identified in Mr Lawton's letter. It was not clear from the documents that an area as extensive as the ceiling voids was to be excluded.
39. The report itself describes its extent as "building fabric and structures". In the report, Mr Lawton stated that WGY had not inspected the area above the suspended ceiling in the factory, but there was no such comment in relation to the office building ceiling. In giving evidence at trial Mr Lawton said that he had intended that a paragraph to that effect be included in the report in relation to the office ceiling, but the paragraph was omitted by mistake. I accept his evidence on that point. However, that was not a matter which Automation or the claimant could have known about before trial. In my judgment, it does not assist WGY. A & J in their report did not say they had not looked above the suspended ceilings. The inference was that neither WGY nor A & J had excluded the office building ceiling void from their investigation.
40. Expert evidence at trial was given by Mr Renaudon and Mr Guerrier, both quantity surveyors, for the claimant and WGY respectively, and by Mr Hodkinson and Mr Skilton, both structural engineers, for the claimant and A & J, respectively.
41. Mr Renaudon and Mr Guerrier agreed that, with a ladder, accessibility to the ceiling voids in 1994 would not have been difficult. The panels in the lower suspended ceiling were loose fitting and could easily be lifted slightly and slid sideways to allow a person to put head and shoulders through the aperture and into the gap above the lower ceiling. A similar exercise could have been carried out with the loose-fitting panels in the upper ceiling. Mr Hodkinson shared Mr Renaudon's and Mr Guerrier's view. Only Mr Skilton was of the opinion that safe access by ladder was not feasible.
42. However, Mr Bowen himself had, prior to mid 1994, without difficulty gained access to the void above the upper ceiling. Mr Langdown did so in January 1998 by means of a step ladder.
43. I accept that, in 1994, head and shoulders access to the ceiling void above the upper ceiling grid was feasible and could have been undertaken safely from a ladder. Structural engineers would normally carry a torch and a ladder of sufficient length to have permitted a person to gain head and shoulders access to the void. Quantity surveyors would not normally take such a ladder with them, but it was not disputed that, if Mr Lawton had asked, Mr Bowen would have lent Mr Lawton a suitable ladder or steps.
44. In issue is whether the limpet asbestos fell within the definition of fabric or structure. So far as the claimant is concerned, it matters not whether there is any difference. The claimant's case is that, between them, WGY and A & J had an obligation to Automation to carry out a detailed inspection of all areas, ie both structure and fabric. As between WGY and A & J, however, WGY contends that any identification was within the scope of an investigation into structure and thus A & J's responsibility, whereas A & J say that falls within the meaning of fabric and was thus WGY's responsibility.
45. The experts have tried to assist with this issue. Mr Renaudon and Mr Guerrier were unable to agree on the distinction (if any) between the terms "fabric" and "structure" but they were able to agree that any distinction would be "highly technical and subjective". They have tried to assist the Court by referring to definitions in dictionaries and use of the terms in professional literature. Mr Hodkinson and Mr Skilton were similarly unable to offer a clear and generally recognised distinction. Accordingly, no clear picture emerges as to a generally understood meaning whether (a) as between building professionals or (b) by members of the public. Mr Hodkinson and Mr Skilton agree that, unless otherwise agreed with the client, a structural inspection would normally involve the engineer in viewing areas of roof, columns, bracing and load-bearing masonry, where accessible.
46. Further there is no common ground on this point between the quantity surveyors on the one hand and the structural engineers on the other. The former consider that limpet spray on structural beams falls within the definition of structure whereas the latter are of the opinion that such asbestos does not fall within the definition of structural elements of a building.
47. The experts have strained to put an abstract definition on the words "fabric" and "structure". The dictionary definitions do not assist. It is not appropriate, here, to attempt to find an abstract definition. I construe the scope of the work which WGY and A & J were to undertake by reference to the contemporaneous discussions and correspondence, and with the assistance of the experts. In all the circumstances, I conclude that Automation would have been entitled to assume that the WGY and A & J reports between them covered all aspects of the building fabric and structure, except for those matters which the reports made clear were expressly excluded. In circumstances where I have found that the ceiling voids were accessible, these were not expressly excluded but fell within the scope of the areas which the defendants were to inspect. So far as Automation was concerned, WGY and A&J between them thus had an obligation to look above the suspended ceilings and within the voids.

WGY

48. The WGY July 1994 document is frequently referred to as "report" or "reports". The claimant seeks to suggest that use of these words is, of itself, conclusive as to the nature of what was produced. For example, Miss Smith relies on the description which Mr Lawton himself applied to the document he prepared. The title page states "Report on the fabric of buildings". Mr Lawton's letter of 1 August 1994 refers to a "fabric report". Miss Smith submits that, in offering to produce a "Fabric/Structural Report", WGY were preparing more than a costed maintenance schedule. The claimant relies on WGY's frequent use of the word "report" in support of its case that the document which WGY believed it was producing and did in fact produce was more than a costed maintenance schedule. That approach is too simplistic. What is significant is not what a document is called but (a) what WGY agreed to produce and (b) the scope and objective set out in the report itself. One must consider the terms of WGY's quotation and of Automation's purchase order, and also the description used within WGY's report of the purpose and aim of the reports.
49. The scope and objective of the WGY document are set out clearly in the report itself. I have set these out earlier. WGY's document does not look like a survey. On its face, it does not go beyond being a maintenance schedule. Although the report makes occasional references to matters which are strictly within the remit of a structural survey, that does not, in my judgement, change its essential character or thereby expand its scope.
50. In my judgement, WGY, as agreed, prepared a costed maintenance schedule, not a building survey. The scope of WGY's duty to Automation is to be considered in that light.
51. Mr Renaudon and Mr Guerrier disagree on the question whether it was necessary for a head and shoulders inspection to be carried out by a quantity surveyor to fulfil the duty which WGY had undertaken. Mr Renaudon's opinion is that a reasonably competent quantity surveyor would have carried out a head and shoulders inspection of the ceiling voids. Mr Guerrier's opinion is that a costed maintenance schedule would normally be based only on visual inspection and not on detailed investigation. A quantity surveyor making an investigation for such a schedule would not normally examine above suspended ceilings. WGY contend that, while Mr Guerrier has considered the duties required of a reasonably competent quantity surveyor preparing a costed maintenance schedule, Mr Renaudon has adopted a broader approach, taking as his standard a surveyor undertaking a building survey. In my judgement, the evidence of Mr Renaudon on this point is to be preferred in the circumstances as I find them to be. Here, the brief was to advise the client as to what it was likely to have to spend on maintenance over a defined period of time. Only limited areas had been excluded. The client had a legitimate expectation that the consequent report would identify areas which might require attention. Areas above the suspended ceilings may well have required attention within the period which Mr Lawton in his report said he had considered, namely the following 10-20 years. In my judgement, to accept that Mr Lawton's inspection should have included the voids is not to impose on WGY/Mr Lawton a greater obligation than would be owed by a surveyor carrying out an inspection for a costed maintenance schedule.
52. Mr Renaudon and Mr Guerrier agreed that, with access to the ceiling void, the presence of limpet spray asbestos on the steel beams would have been visible, and that a reasonably competent quantity surveyor in the position of Mr Lawton of WGY would have recognised it and would have noted its presence in the report. Further, because of the health and safety implications, he would have advised that specialist environmental consultants be engaged.
53. I conclude that WGY had a duty to Automation to make a head and shoulders inspection of the voids. In circumstances where Mr Lawton chose to carry out no such inspection, he should have so stated in his report. I conclude also, on the basis of the opinion shared by Mr Renaudon and Mr Guerrier, that WGY also owed Automation a duty to report the concern that must have followed such inspection, namely that asbestos might be present and should be investigated. As WGY failed to do this, they were in breach of their duty to Automation.
54. In reaching that conclusion I bear in mind that Mr Renaudon accepted in cross examination that a clear statement to the effect that WGY had not looked in the ceiling void would have been a sufficient discharge of WGY's/ Mr Lawton's obligations to Automation. There is force in Mr Phipps' submission that, while failure to make reference to the fact that WGY had not looked in the voids might be capable of amounting to negligence, on the basis of Mr Renaudon's evidence that would not have been causative of any loss. Although that is an attractive point, it does not reflect the overall thrust of the quantity surveyor experts' reports and the agreement they reached on a number of matters, to which I have already referred. I therefore do not place reliance on it.

A&J

55. So far as A & J are concerned, the claimant puts its case in a similar way to that against WGY. It contends that A & J owed to Automation a duty to exercise the care and skill of a reasonably competent structural engineer in carrying out the work in accordance with the brief. This involved primarily a duty to carry out a proper inspection and to report on the structure of the building. This included a duty to inspect within the ceiling voids and a duty to identify any defects or deleterious materials (whether known or suspected) in the property.
56. Mr Hodkinson and Mr Skilton agree that a structural inspection by an engineer would, unless agreed otherwise with the client, involve the engineer viewing areas of roof, floors, columns, bracing and load-bearing masonry where accessible. Many parts of the structure of a building are normally hidden. Frequently, therefore, a structural engineer is able to detect possible structural defects only by reference to clues. Here, however, parts of the structural steel are visible in the voids, as are parts of the concrete floors. I prefer the evidence of Mr Hodkinson that a reasonably competent structural engineer in the circumstances which obtained here would have undertaken a limited inspection above the suspended ceilings to see whether there were matters giving rise to concern regarding the structure of the building, and would do so even if there was no clue as to or other evidence of possible structural defects. Indeed, Mr Skilton does not seriously challenge that. Mr Skilton's reservations were concerned largely with his perception as to the access to the voids. They agreed that an engineer should attempt to view a representative sample of structural elements, including areas of roof, floors and so on, where accessible.
57. Mr Hodkinson and Mr Skilton agree that the limpet spray asbestos on the beams would probably have been visible to a surveyor or engineer inspecting the ceiling voids in 1994. They agree that a reasonably competent structural engineer might not have had the technical expertise to be able to identify a sprayed material as being asbestos based. They agree, however, that had a head and shoulders inspection been carried out, and had the engineer observed damaged asbestos, the report should have made reference to it and the need for attention to be given to it. Mr Hodkinson was of the opinion that if a sprayed material other than decorative paint had been found in a 1960s building, then a reasonably competent engineer would have suspected that it might be asbestos based and either made further enquiries or recommended calling in a specialist. Mr Skilton disagreed, on the ground that with such a wide range of sprayed materials in use, a conclusion that this was or might be asbestos could not be drawn. I prefer Mr Hodkinson's evidence on this point, because I believe that he has considered this issue more objectively than Mr Skilton. In circumstances where Mr Cotterell's evidence is that damaged asbestos would have been easily visible in 1994, it follows that a structural engineer who did a head and shoulders inspection would have seen it, and this would have given rise to the duty to report it.
58. Mr Hodkinson and Mr Skilton agree that, since asbestos is not part of the load-bearing structure, but considered to be part of the fabric of the building, reporting on its presence was a matter for WGY not A & J.
59. I conclude that A & J were required to carry out a "structural appraisal" involving a "detailed inspection of all structural elements". They were required to exercise the care and skill of a reasonably competent firm of structural engineers in so doing. They did not seek to limit the scope of their duty by any caveats other than "accessibility". The best way to inspect structural elements such as roof members and concrete floors is to look in the ceiling voids, one of the few places where structures are not covered up and can thus be seen. In the circumstances, A & J had a duty to Automation (1) to make a head and shoulders inspection of the voids and (2) to report their concerns that asbestos might be present and should be investigated. As A&J failed to do this, they were in breach of their duty to Automation.
60. As between WGY and A&J, if there is a distinction between structure and fabric, it is a fine one. Because of the substantive findings I make and conclusions I reach as to the merits of the claimant's claim, there is no need for me to determine this point and I decline to do so.
61. Relevant events prior to early 1994
62. The burden is on the defendants to prove that the MBO team knew of the presence of asbestos. The claimant goes further and submits that the defendants must establish that the MBO team, in their capacity as members of the MBO team, knew of it.
63. None of the members of the MBO team who gave evidence accepted that he was aware of the presence of asbestos in the ceiling voids when they negotiated and completed the MBO. Both Mr Langdown and Mr Sammons said they were not aware of it until January 1998. I did not hear evidence from Mr Taylor or Mr Sheldon.
64. I accept Mr Bowen's evidence that he was not aware of the MBO until he, with other employees, was informed of it, in December 1994 at the time of completion.
65. Mr Bowen became aware of the presence of the limpet spray asbestos coating on the steel beams in the early 1980s. Maintenance staff had been working in the void and alerted Mr Bowen. He brought in Elgar Phosphors & Chemicals Ltd. In their report dated 29 October 1981, Elgar confirmed the presence of amosite asbestos on the steelwork forming the main structure of the office building. They reported that, under normal circumstances a health hazard due to asbestos did not exist, but would exist whenever ceiling panels were removed to facilitate maintenance work within the void. They made recommendations as to operators' safety during maintenance work carried out in the voids and suggested that Automation try to use the ceiling space as little as possible.
66. Mr Bowen wrote a memo dated 5 January 1983 addressed to a number of people, including Mr Bloomfield, who at that time was responsible for maintenance of the office building. This memo referred to a meeting held the previous day at which those attending had discussed possible risks for some members of staff of exposure to asbestos fibres. The memo included a recommendation that staff so affected be x-rayed and undergo continuing medical monitoring, and also practical steps to be taken if work were to be carried out in the voids (e.g. use of respirators). In that memo Mr Bowen refers to the fact that Mr Bloomfield was costing both complete removal of the amosite coating and re-sealing of coated surfaces and other protection. Mr Bowen then sent a memo to Mr Bloomfield dated 13 January 1983 confirming arrangements for five members of staff to be x-rayed and setting out detailed recommendations for methods of working within the ceiling voids.
67. On 19 January 1983, Mr Bloomfield circulated a memo to a number of people, including Mr Bowen, stating:

Asbestos – Standing Instruction

"Further to our recent meeting where we discussed asbestos contaminated areas and the procedure that could be adopted to deal with the problem. Please find attached copy of standing instruction which has now been issued to all maintenance persons involved in this work".

68. The standing instruction to which Mr Bloomfield's memo referred was dated 14 January 1983 and headed "Maintenance department work in areas with disturbance of asbestos". It set out the procedures which all maintenance personnel had to observe "when working in any areas that are likely to contain asbestos dust, particularly the voids above the ceilings in the main office block".
69. Automation contracted with Wiland Limited in April 1983 to install the lower suspended ceiling. The intention was to encapsulate the original ceiling and the voids and to treat surfaces. Automation wanted a barrier to prevent fall out of asbestos fibres and to be able substantially to reduce the need to go into the voids for maintenance. Mr Little-Jones, a director of Wiland, worked with Mr Bloomfield. Wiland personnel worked alongside members of the Automation maintenance team.
70. Elgar were called in again in November 1983 apparently by Mr Bloomfield. They took air samples. They reported numerous areas where coating had been damaged and loose asbestos could be seen, including on the upper surface of the ceiling panels. They suggested that Automation should consider either removing the asbestos or repairing damaged areas and resealing it by encapsulation.
71. In 1983, 1984, 1986 and 1988 members of the maintenance team were x-rayed to identify any possible areas for concern. None was found. Thereafter, no action was taken so far as the ceiling voids were concerned, until 1998.
72. Mr Bowen knew of the presence of asbestos and that it was dangerous. Mr Bowen reported to Mr Taylor. Mr Bowen confirmed that Mr Taylor, in his capacity as head of personnel, knew about the standing instruction of 19 January 1983. Mr Taylor must have known that members of his staff were undergoing regular x-rays to monitor for asbestos-related illnesses. These began just after Mr Taylor had entered the department. A matter of that sort is not normally common place or routine. There is no suggestion that such monitoring was common within the industry. It is hard to imagine that a matter of that sort would not have been known to Mr Taylor (indeed that it would not have come to the attention of Automation's board, which of course included members of the MBO team.)
73. In 1993 Automation arranged for David Lord Engineering Limited to install a new central heating system in the offices. David Lord identified old pipework between the boiler house and the office building, which was lagged with asbestos. They recommended that it be removed. Mr Bowen instructed them to do so. Mr Bowen prepared an internal purchase order request for the work. This was dated 14 July 1993. It identified the work to be carried out as wrapping and removal of redundant pipework and asbestos "and carry out a full environmental clean." Mr Langdown countersigned the request. Mr Langdown accepted that he must have known that asbestos lagging had been found in that location, although he does not recall that. His attention was thus directed, at that stage, both to the presence of asbestos in a part of the buildings on the Rugeley site and to the need to focus on an "environmental clean". However, no general survey of asbestos was carried out following that information. While it cannot be inferred from this that Mr Langdown had actual knowledge of the asbestos in the voids, his reaction (namely, not to take any action beyond the limited work in relation to the boiler house pipework) is significant when considering the response which the claimant says it/the MBO team would have made had they learned of the presence of asbestos in late 1994. Incidentally, it is curious that, although David Lord did not need access to the ceiling voids, Mr Bowen nevertheless told them about the presence of asbestos coating to the steel beams in the voids and warned them not to damage it.
74. Mr Wyatt was the claimant's IT manager. He prepared a report dated 23 June 1997. This was a four-page report setting out his proposal for a project to update cabling within the office block. The report explained the desirability of replacing existing cabling as opposed to repairing and adding to existing cabling. The report contained the following section: -

"Health and Safety

The second approach [i.e. full replacement] eliminates the need to repeatedly enter the ceiling voids to run cables through an environment containing asbestos."

Mr Wyatt recommended full replacement, at an estimated cost of over £100,000.

75. As is clear from Mr Wyatt's report of 23 June 1997, he was, at that time, aware of the presence of asbestos in the voids. It is not clear how he gained that knowledge. Mr Wyatt discussed the proposals with Mr Sammons, by then Finance Director of the claimant. Mr Sammons confirmed that he had read Mr Wyatt's report carefully. It is of course likely that Mr Sammons did consider Mr Wyatt's detailed proposals, involving, as they did, substantial expenditure. Mr Sammons' evidence was that he did not recall seeing the reference to asbestos in Mr Wyatt's report, although that reference is clear and unambiguous. The inference must be that Mr Sammons already knew about the presence of asbestos and believed that no action was needed so far as asbestos was concerned, possibly because he believed that it had been rendered safe by the work in 1983. Even if Mr Sammons had not known already that the asbestos was there, it is curious that Mr Sammons took no action on reading a report which made specific reference to "an environment containing asbestos" in an extensive area above the offices.
76. In all the circumstances, I conclude that two members of the MBO team, Mr Taylor and Mr Sammons, probably did know that there was potentially dangerous asbestos in the roof before the MBO deal was completed in December 1994. Further, they knew that it was potentially dangerous-why else would Automation have attempted to encapsulate it, have warned staff about entering the voids or have sent employees for X-rays? In my judgment, that knowledge is sufficient to preclude the claimant from succeeding in its claim. In my judgment, it matters not that Mr Sammons or Mr Taylor may not have known in November 1994 that the asbestos was actually damaged and needed to be removed. I reject the suggestion that they had somehow to have been aware of it in their capacity as members of the MBO team. They were negotiating to buy a business which included land and buildings. They knew that the roof was in a poor condition. They had all worked in the buildings for some years. They applied all of that knowledge when deciding not to have a full survey of the buildings or a contamination survey carried out (see post) and when considering what information was important to them when deciding at what price to buy the business.
77. However, in case (contrary to my view) it be found or accepted that, notwithstanding that knowledge, the defendants should nevertheless have drawn the MBO team's/claimant's attention to the presence of the asbestos and advised them to obtain further specialist advice, I deal with other issues.
78. As I have found that Mr Taylor and Mr Sammons had knowledge, and that knowledge was not confined to Mr Bowen, Mr Bloomfield and members of the maintenance staff, it is not necessary for me to determine whether Mr Bowen could be said to have been acting as agent for Automation, the MBO team or the claimant, whether the claimant stepped into Automation's shoes and, if so, whether the claimant takes with equities.

MBO Negotiations and Agreement

79. Thorn EMI Plc decided to concentrate on its music and rental businesses and to divest itself of other interests including the Automation business. In early 1994, Thorn invited offers for the Automation business. A tender/auction document was prepared and circulated. The response was disappointing. There were fewer interested parties than had been hoped and initial bids were lower than had been expected. The Automation business was primarily one of heavy engineering and defence, both of which sectors were in decline in the UK.
80. It appears that members of the management team were encouraged to make an MBO proposal (though I have no detail of this).
81. Mr Pandit had been Finance Director of the division including Automation. He was appointed to manage the divestment programme for Thorn EMI and he conducted the negotiations on their behalf. Mr Sheldon led negotiations for the MBO team and Mr Sammons also played a prominent role. Negotiations between Mr Pandit on one hand and the MBO team and 3i on the other were amicable. Mr Sammons said that Mr Pandit had been scrupulously fair.
82. The MBO team relied heavily on advice from 3i (who provided about 80% of the funding for the acquisition) and from KPMG. I have not heard evidence from either.
83. There is little evidence as to the course of negotiations between early 1994 (when it was suggested to various senior employees of Automation that they might consider an MBO) and August 1994. It appears that the MBO team put a preliminary offer to Thorn EMI in March 1994. They produced a business plan and proposal for finance in August 1994. Thorn EMI decided to accept the MBO team's proposal as it offered Thorn EMI the best deal. Heads of terms were agreed on 5 August 1994 whereby the MBO team agreed to purchase the Automation business for £9.25 million. It was hoped that the deal would be completed in September 1994. In the event, the acquisition was not completed until December 1994.
84. KJD's work was led by a corporate partner, Mr Dawes. Mr McBride, at that time an assistant solicitor in KJD's property department, dealt with the property aspects of the deal. Mr McBride corresponded with Rowe and Maw, solicitors for the vendor, about property matters. Mr McBride sent Rowe & Maw enquiries concerning the land and buildings. Rowe & Maw replied on 6 October 1994 "In view of the fact that your clients are in actual occupation of the property, it seems inappropriate for me to answer your Enquiries". However, Rowe & Maw sent some information which, they surmised, had probably been prepared by the MBO team anyway. Further correspondence ensued between Mr McBride and Rowe & Maw during October & November in which Mr McBride tried, unsuccessfully, to persuade Thorn EMI to give warranties in respect of the property and land. By letter dated 2 November 1994, Rowe & Maw said

"I would reiterate that, in view of the knowledge of the property which the purchaser has, in view of the replies to enquires which have been given…. my clients are not prepared to give any Property Warranties, and this will have to be accepted by your clients".

85. This was firmly repeated in Rowe & Maw's letter of 14 November 1994. In fact, Thorn EMI did not give any relevant property warranties.
86. Mr McBride was told by the MBO team that a "structural survey" had been carried out. On 19 October 1994 Mr Sheldon sent Mr McBride what Mr Sheldon described as "Structural Survey Report". In fact, he sent copies of the WGY and A&J reports. Mr McBride's evidence was that he received the reports. He read them, did not take copies, and returned them to Mr Sheldon.
87. On 20 October 1994 Mr McBride sent Mr Sheldon a detailed letter summarising important matters concerning the land and buildings. He referred to an adjacent landfill site. He warned Mr Sheldon of the dangers of contamination of land.
88. The MBO team did not commission their own full survey of the buildings, nor did they commission any specialist reports to deal with land contamination or deleterious materials in the buildings. Mr McBride did not offer any advice to the MBO team as to whether or not the WGY and A&J reports were adequate for the team's purposes; there is no evidence of any discussion at all between KJD and the team on this point. It was in fact Mr Dawes who asked Mr McBride to write to WGY and A & J asking them to confirm that the MBO team/new company could rely on their reports.
89. Mr McBride wrote to WGY and A & J by letters both dated 22 October 1994 in the same terms, as follows:

"We act for the management buy out team in relation to the purchase of certain assets from Thorn EMI Electronics Limited which includes land and buildings at the above mentioned site.

We refer you to the above mentioned report prepared by you in July of this year and would be pleased if you would specifically confirm that the report may be relied upon by our client management buy out team and/or the new company into which the property will be transferred as if the report had been originally prepared for those parties."

90. A & J replied to KJD on 2 November 1994 as follows:

"We are in receipt of your letter dated 27 October 1994 with regards to the above survey recently carried out by ourselves.

We confirm that we stand by our report and consider it as being factual at the time of the inspection providing it is read in conjunction with Messrs Wood Goldstraw and Yorath's report which was produced at the same time."

91. Mr Lawton for WGY replied to KJD on 3 November as follows:

"We are in receipt of your letter, dated 7 October 1994 with regards to the fabric survey recently carried out by ourselves for [Automation].

We confirm that we stand by this report and consider it as being factual at the date of inspection, providing it is read in conjunction with the structural report produced by Messrs A & J Structural Design Ltd, which was conducted at the same time.

The report is complete with the exception of a small number of sensitive locations on the factory that were inaccessible at the time of inspection; we shall, however, inspect these areas in the near future with an escort provided by the Clients. Any resultant findings will be added to the original report."

(It is common ground that the sensitive areas to which Mr Lawton referred in this letter do not include the ceiling voids).

92. KJD wrote to A & J on 3 November and to WGY on 4 November 1994 pressing for letters in more specific terms. On 10 November 1994 Mr McBride of KJD spoke to Mr Lawton by telephone. They discussed the letter which Mr McBride wanted WGY to write. It is clear from the note of this telephone conversation that Mr Lawton did not have a clear understanding of what Mr McBride wanted or why. Mr McBride's note records that he explained to Mr Lawton "that we were not questioning the report itself but that we want to rely on it".
93. A & J wrote to KJD a letter dated 10 November:

"We are in receipt of your letter dated 3 November 1994 and are pleased to confirm that the report may be relied upon by whoever is involved in the buy out. The proviso of the contents of our letter dated 2 November with regards to the condition at time of inspection still stands.

Please note however that an indefinite re-use of the report in the future would possibly not be permitted by our Professional Indemnity insurers".

94. WGY wrote to KJD on 15 November 1994:

"Further to your letter of 4 November 1994, as far as we are concerned, our report describing the condition of the fabric of the buildings, as inspected in July of this year, remains the same whoever the owners of this property are.

It should be noted that failure to carry out immediate repairs as recommended in the report, which could lead to greater expense, would be the liability of the subsequent owners."

95. Mr McBride wrote to Mr Lawton on 15 November. He enclosed a copy of the letter which A & J had written.
96. On 21 November 1994 Mr McBride spoke to Mr Langdown, to ask him how WGY and A & J had been engaged. He wanted to know if any particular terms of engagement applied. Mr McBride's note records that Mr Langdown referred to having been asked "to get [a] structural survey done"; then that a "structural maintenance programme" had been prepared; no terms of engagement applied. Mr Langdown subsequently sent Mr McBride a copy of Mr Lawton's letter to Mr Bowen dated 27 January 1994.
97. WGY wrote to Mr McBride again on 21 November 1994, using similar wording to the A & J letter, as follows:

"Further to our letter dated 15 November 1994, the report may be relied upon whoever may be involved in the buy out of this property.

Indefinite re-use of this report in the future would not be permitted by our Professional Indemnity Insurers."

98. I refer to the correspondence passing between KJD and WGY on one hand and A & J on the other as the reliance correspondence. This is the correspondence on which the claimant's claim is based.
99. A significant meeting, in the course of the negotiations, was held on 4 November 1994. This was attended by Mr Pandit for Thorn EMI and by Mr Sheldon and Mr Sammons for the MBO team, Mr Stevenson of 3i of the MBO team, together with advisers. At that meeting, a number of significant matters were agreed. Thorn EMI agreed not to seek release in respect of some existing substantial performance guarantees and bonds it had given in respect of contracts which the claimant took over on acquisition of the Automation business, and also agreed to provide an indemnity to bankers in respect of future bonds and guarantees up to £1.1 million. Mr Pandit agreed adjustments totalling £91,241 to reflect potential liabilities including potential liquidated damages claims. In addition, Mr Pandit agreed that Thorn EMI would retain the burden of any risks on a substantial contract with Mannesman and an MOD contract. The price initially agreed, of £9.75 million, was reduced by negotiation to £8.251 million.
100. The sum of £8.251 million was paid to Thorn EMI on 15 December 1994. It was allocated as to

£385,000	for the buildings
£8,000	for the land
£384,010	for the good will
£4	for the intellectual property rights
£1	for the assignment of various rights against third parties
£1	for other assets

One of the heads of terms, and a provision which was carried through into the purchase agreement, was that the purchase price should increase or decrease by any difference in the book value of the net trading assets at completion from a figure of £7.835 million. That was effected in early 1995, when a refund of £88,000 was paid by Thorn EMI.

101. 3i financed 80% of the acquisition and the MBO team (through Royal Bank of Scotland, RBS) the remaining 20%. The consideration for the purchase of the business was reduced to £8.75 million. For the purposes of the MBO and in the light of Thorn EMI's internal approach to accounting, land and buildings were accorded their net book value plus the value of various items of capital expenditure, namely £8,000 for the land and £385,000 for the buildings. These were not the true open market values. The figures may have represented the historic net book values plus some additional capital expenditure on refurbishment and improvements carried out shortly before the Automation business was put up for sale.
102. In December 1994 RBS instructed Mr Eldridge of Henry Butcher & Co to carry out a survey and inspection of land and buildings at Rugeley. He reported on 7 December 1994. In his opinion, in December 1994, the open market value of the land and buildings, for existing use, was £1.5 million.
103. The claimant's case is that, if they had known of the presence of asbestos, of its dangers and that its removal would have cost as much as £175,000, they would have insisted on a reduction in the purchase price, or completed at the agreed price but subject to confirmation that Thorn EMI would reimburse the cost of the work once undertaken. If Thorn EMI had not been willing to agree either course, the MBO team would have refused to complete. Automation would then have had no alternative but to carry out the work themselves because it was necessary for health and safety reasons that the problem be addressed immediately. I deal with this issue on the artificial assumption (and contrary to my finding) that the MBO team were not aware of the presence of potentially dangerous asbestos.
104. It is clear that the negotiations, which appear to have continued from early 1994 until August 1994 took longer than Mr Pandit and the MBO team had hoped. However, by August 1994, when heads of terms were signed, the MBO had become a distinct possibility. I accept that, by late November 1994, given the amount of investment in time, and probably money, in the project which the MBO team had made, it is likely that they would have been unwilling to have drawn back from the deal.
105. Mr Pandit's evidence was that the most important feature for Thorn EMI of any disposal was the overall price paid for the business. He was not concerned about the allocation of the overall price between different categories of asset. The MBO of Automation was a small transaction. The Automation business was under performing and Thorn EMI wanted to dispose of it. There was no other serious contender to purchase the business. If the MBO had not proceeded, Mr Pandit's evidence was that Thorn might have had to close the business or might have been able to sell off individual parts of the business. The latter course would have represented a cost to Thorn EMI. The probability is that the MBO deal represented the best way forward for Thorn EMI, even if it were necessary to agree a reduction in the purchase price. Mr Pandit confirms that Thorn EMI would not have walked away from the deal. Even at £175,000, the cost of work would have represented only 2% of the sale price. Mr Pandit recognised that, while a sum of that size was not a large sum to Thorn EMI, it was a large sum for a small and effectively new organisation.
106. Mr Pandit was clear that Thorn EMI would not have been willing to agree to an uncosted obligation to indemnify the purchaser in respect of the cost of asbestos removal. That seems plausible to me. Thorn EMI would have been reluctant to delay completion for the period it would have taken for work to be carried out. However, Mr Pandit would have been sympathetic to the MBO team's position as he believed that they would not have factored into their initial offer the cost of removal. He might have been sympathetic to a suggestion that the price be reduced. Thorn EMI might have had to bear the bulk of the cost of the work. But Mr Pandit would not have wanted to negotiate a reduction in the price without estimates for the work which would be needed. His preference would have been for Thorn EMI to pay the cost of remedial work against invoices subject to approval of estimates and monitoring of work and costs.
107. On balance, I accept that if the circumstances had been that Mr Pandit believed that the presence of potentially dangerous asbestos was discovered in November 1994 and had not been known to the MBO team before then, and that they had not allowed in their calculations for the cost of remedial work, then estimates of the likely cost of necessary remedial work could and would have been obtained. Mr Pandit would have agreed to reduce the purchase price by the whole of the most reasonable estimate.

The scope of the duty of care owed to the claimant by WGY and A & J

108. The reliance correspondence is the source of the tortious obligation. There was a contractual relationship between Automation and WGY but probably no contractual relationship between Automation and A & J. No issue arises from this.
109. It is not disputed that it was not until October 1994 that WGY and A & J learned of the proposed MBO. The claimant accepts that their duty to the claimant does not arise until November 1994, the date of the reliance correspondence. Both WGY and A & J acknowledge that, by reason of the reliance correspondence, they owe a duty of care to the claimant. At issue is the scope of that duty. The claimant submits that WGY and A & J both owed a duty to the claimant which was in like terms to the duty they owed to Automation. Further, Miss Smith submits that, as both WGY and A & J knew of the MBO, both also assumed a responsibility to the claimant to report any matters which might affect negotiations for the acquisition and/or the timing of completion. The claimant's case is that the reliance correspondence specifies that the information is required in the context of an MBO. Mr Lawton and Mr Whitfield not only knew that the advice was required in the context of the MBO but also must have appreciated that the MBO team would rely on the advice when considering the value of the business and that the MBO team would be relying on that advice without further enquiry. In all the circumstances, the defendants assumed responsibility to the claimant by reason of the reliance correspondence as purchaser of the business for the content of their fabric report. The claimant relies on Hedley Byrne v Heller [1964] AC 465 and Henderson v Merrett Syndicates [1995] 2 AC 145).
110. Alternatively, the claimant submits that WGY accepted a duty to the claimant that was independent of its duty to Automation. On its face, WGY's report was clearly something more than a costed maintenance schedule. Further, in making reference to the report in the reliance correspondence, WGY gave the claimant no reason to suppose that it had prepared a maintenance schedule only - the words "maintenance schedule" do not appear in the correspondence. Instead, reference is made to "fabric survey", "report" and "report describing the condition of the fabric of the buildings". Thus in relying upon the report, the claimant was entitled to assume that it was what it was said to be and that all inspections appropriate to such a report had been carried out. This assumption was further bolstered by the comment in WGY's letter dated 3 November 1994 that the report was "complete with the exception of a small number of sensitive locations on the factory that were inaccessible at the time of inspection". The clear inference is that inspection of all other accessible areas had been carried out.
111. The defendants' case is that the purpose for which the claimant claims to have relied on the report, i.e. negotiation of the price of the business, was not within the scope of the duty of care owed by the defendants. The claimant was therefore not entitled to rely upon the report for that purpose. Further, the damage allegedly suffered by the claimant does not fall within the scope of the duty of care.
112. I have been referred to Lord Oliver's test in Caparo v Dickman [1990] 2 AC 605:

"(i) the advice is required for a purpose particularly specified or generally described which is made known, either actually or inferentially, to the adviser at the time the advice is given

the adviser knows, either actually or inferentially, that his advice will be communicated to the advisee, either specifically or as a member of an ascertainable class, in order that it should be used by the advisee for that purpose.

it is known either actually or inferentially that the advice so communicated is likely to be acted upon by the advisee for that purpose without independent inquiry

it is so acted upon by the advisee to his detriment"

In Caparo Lord Bridge said at 621 (after reviewing authorities)

"The salient feature of all these cases is that the defendant giving advice or information was fully aware of the nature of the transaction which the plaintiff had in contemplation, knew that the advice or information would be communicated to him directly or indirectly and knew that it was very likely that the plaintiff would rely on that advice or information in deciding whether or not to engage in the transaction in contemplation".

113. I am also referred to ADT Ltd v BDO Binder Hamlyn (1996) BCC 808. In that case, ADT recovered damages from BDO Binder Hamlyn in relation to a statement made to a director of ADT by a partner of Binders at a meeting held in connection with accounts of BSG which Binders had audited. ADT was at the time in the final stages of negotiations to purchase BSG. The case is analogous to the present in some respects: ADT was seeking to rely upon audit work which had already been performed by the defendant for a third party, and asked the defendant whether it stood by the audit of the accounts; the defendant confirmed that it did. However, in the ADT case, the defendant was fully aware of the nature of the very transaction which ADT had in contemplation, the precise purpose for which ADT required their confirmation and that the giving of the confirmation was the 'final hurdle' which was necessary to be cleared if the deal was to proceed. ADT in fact relied upon the giving of the confirmation in proceeding with the acquisition of BSG, at least at the price already agreed in principle. After reviewing the authorities, May J summarised the task which he had to perform as follows:

'I conceive from these cases that I have to inquire whether, objectively and in fairness, Binders through Mr Bishop [the partner who attended the relevant meeting] are to be taken to have assumed responsibility to ADT for the reliability of the advice or information which he gave. In this context, Binders undoubtedly professed accounting and specifically auditing skills. It is relevant to consider whether Mr Bishop, being fully aware of the nature of the very transaction which ADT had in contemplation, took it upon himself to give information or advice directly to ADT knowing the purpose for which they required it and knowing that they would place reliance upon it without independent inquiry; whether the information or advice was negligent. Further, I do not find it helpful, as the defendants suggest, to see the responsibility which Binders are said to have assumed in this case as the giving of an absolute warranty. Rather they gave information or advice in the form of a statement. It was upon ADT's case a misstatement arising from Binders' negligent conduct of the 1989 audit. They are thereby said to have assumed a professional responsibility for the statement that the accounts showed a true and fair view of the state of the affairs of the group. In my view, there is no conceptual difficulty in finding that the duty arising from such an assumption of responsibility was broken because the statement was a misstatement on account of historic want of care. No more would a banker giving a reference avoid liability because he was giving without further investigation on his part the identical reference to Inquirer B which Inquirer B knew that he had previously given to Inquirer A. In my judgment, in each case the extent of the duty is to be determined by the extent of the responsibility taken to be assumed. It some cases it may be no more than a duty to answer honestly. In this case, however, Mr Bishop stood by the accounts and thereby assumed responsibility to ADT for the professional competence with which they had been prepared.

114. In ADT, the claimant made clear the purpose for which the confirmation sought was to be used. That element, however, is absent here. The precise purpose was not made clear to the defendants. They were told that the confirmation was sought in the context of the MBO. The onus was on the MBO team/claimant, through KJD, to have explained clearly that the purpose of relying on the reports was so that the MBO team could, without further enquiry, rely on those reports in order to decide the appropriate price to pay for the Automation business. That was not done. The defendants were not told that the MBO team/claimant were considering the value of the business or of the property. They were not told that the contents of the reports might impact on the values of business or property. They were not told that those values might impact on the negotiations about the price to be paid for the business. I have no doubt that neither Mr Lawton nor Mr Whitfield understood that those were the purposes for which their confirmation was sought. Neither had a firm grasp as to the purpose of KJD's requests. This is clear from the whole of the reliance correspondence. Further, it is clear from Mr Lawton's letter of 15 November 1994 that he believed that the enquiry was limited to items requiring maintenance and the timing and cost of any necessary work.
115. The natural construction of the reliance letters is that the MBO team wanted to use the report for the purposes of and in connection with ongoing repairs to the building, not for the purposes of negotiating the acquisition price for the business. On the true construction of the reliance correspondence as a whole, neither WGY nor A & J confirmed that the claimant could rely upon the report for the purpose of determining the value of the building or the business, or of deciding whether to proceed with the acquisition of the business, or at what price. Without knowledge of the specific purpose for which its confirmation was required, neither WGY nor A & J owed the claimant a duty of care in relation to any reliance by the MBO team/claimant on the confirmation for this purpose, or in relation to damage suffered as a result of such reliance. Caparo is authority for the proposition that the particular purpose for which the information is to be used must be made clear. Here, however, that was not done. The defendants did not know the purpose for which the MBO team/claimant intended to use the reports. I am not persuaded that the defendants should have realised that the MBO team/claimant intended to use the reports for the purpose of determining the terms of its purchase of the business. The claimant cannot satisfy the tests set out in Caparo. The defendants were not "fully aware" that the MBO team would rely on their confirmation or their reports when deciding what price to pay for the business, as Lord Bridge in Caparo envisaged would be necessary, nor should they have been so aware. This case is very different from the circumstances in ADT, itself probably a high water mark in claims of this nature. It is curious that the claimant seeks to impose this understanding on the defendants yet the claimant itself did not decide, until the first day of the trial, that the purpose of the reliance correspondence was connected with the purchase of the business and not of the building.
116. I accept that the defendants' duty to the claimant was to avoid giving inaccurate information. In a claim for negligent misstatement, the aim is to restore the claimant to the position that he would have been in if the negligent misstatement had not been made. Here, the claimant is seeking relief by reference to what it claims the position would have been if the information received had been accurate. That is a warranty claim. There is no basis for such a claim here.
117. In all the circumstances, it follows that the loss claimed is not within the scope of the duty of care owed to the claimant. The claimant's claim would therefore fail for those reasons.
118. I reject Miss Smith's submission that the defendants owed a greater or additional duty to the claimant that they owed to Automation. The reliance correspondence on its face went no further than confirmation of the accuracy of the reports. Further, there was, here, no clear, unequivocal and express wording to the effect that the defendants acknowledged that the MBO team were not obtaining their own surveys of the buildings and that they relied on the reports (1) as giving full and accurate information as to the condition of the buildings, akin to that available on a full survey and (2) for the purposes of negotiating the price for the business. In those circumstances, to impose an additional or greater duty would take this case beyond the limits set by Caparo and other authorities.
119. The claimant accepts that the type of damage suffered must be foreseeable to the defendants if the claimant is to succeed in its claim - see Caparo at 627D and South Australia Asset Management Corporation v York Montague Limited [1997] AC 191 at 212. The claimant submits that both WGY and A & J could reasonably have foreseen the type of damage that it would suffer by reason of the content of the reliance correspondence. In circumstances where WGY and A & J were informed that a third party involved in an MBO wanted to rely on their reports, it was (or ought to have been) obvious that a failure to provide accurate information in those reports (and in particular a failure to identify a serious defect and thus a probable substantial cost) might lead to the loss of a chance to negotiate a better deal in the MBO, alternatively a loss by reason of the diminution in value of the business. The MBO team/the claimant wanted to rely on the report to show potential costs arising by reason of necessary remedial works. The clear inference in all the circumstances was that, if the reports were inaccurate and failed to disclose a defect which would necessitate substantial expenditure, this might affect the negotiations and/or the value of the business.
120. I reject that submission. As I have set out above, it is not possible here to make out an inference that the MBO team/claimant would rely on the defendants' confirmation when deciding what price to pay for the business. That category of loss was not reasonably foreseeable to the defendants. Even if the defendants had been concerned with valuation issues at all, these would have been concerned only with the buildings which they inspected. The claimant's case, now, is that that value is of no relevance. In my judgment, the damages now claimed by the claimant are too remote. The claimant's claim would therefore fail for those reasons.
121. I accept Ms Padfield's submission that, on the true construction, the reliance correspondence did not amount to a statement by the defendants that that they had exercised the skill and care of reasonably competent engineers but that their reports were factually correct at the time of inspection. The fact that there was asbestos in the voids did not render the reports factually incorrect. The statements made by the defendants in the reliance correspondence were narrower than those made by the accountants in the ADT case, in which Binders confirmed that they stood by the accounts and were thereby held to have assumed responsibility for the professional competence with which they had been prepared:
122. The claimant's pleaded case on duty of care alleges that WGY and A & J owed duties to the claimant relating not to the confirmation given in the reliance letters, but to the inspection and report carried out for Automation, which had been completed before the reliance correspondence was written. The claimant pleads that:

"In particular, [the defendants] owed to the claimant a duty:

to exercise the skill and care of a competent structural engineer, and to advise accurately and correctly as to the structure of the Property…

to report upon such matters as the presence, or possible presence, of dangerous and deleterious materials in the Property

to ensure factual accuracy of the report, and in particular that it did not omit any matters which ought properly to have been referred to therein"

123. I accept that, framed in this way, the duties for which the claimant contends impose obligations the fulfilment of which is, as a matter of fact, impossible, as they are historic duties owed (if at all) only to Automation. The only part of the claimant's pleaded case which does not suffer from this flaw is that which pleads a duty on the part of the defendants: "to report any matter which they knew or ought to have known would affect the decision to proceed with the acquisition or the sum paid upon acquisition of the Business." That is a positive duty to report to the claimant, which is inconsistent with a claim based on negligent misstatement. I should have concluded that, on those grounds, the claimant's case would have failed.

Reliance

124. Again, I deal with this issue on the artificial assumption that the MBO team did not know of the presence in the voids of potentially dangerous asbestos.
125. The claimant's case is that the MBO team/claimant actually relied upon the reports. The claimant entered into an acquisition agreement for the business believing that WGY and A & J had provided a fabric report and had inspected the structure and fabric of the building. In the circumstances, it believed that there were no additional substantial items of expenditure that needed to be taken into account in finalising the price of the business and no defects (that ought to have been identified on such an inspection) that were likely to necessitate such expenditure. Had either WGY or A & J identified in their reports the presence of asbestos, those matters would have been investigated immediately. The health and safety risks and statutory obligations were such that Automation would have addressed the issue as a matter of urgency. Action would have been taken.
126. Mr Langdown had looked through the reports when they were submitted in the summer of 1994. He discussed them with Mr Bowen. No immediate action was needed. Mr Langdown considered the cost implications of the figures and priority categorisations in the WGY report. He says he probably provided figures to Mr Sammons for the purposes of the proposed MBO, but no detail of this is available to me. There is no evidence as to how, if at all, the figures in the reports fed into the sum of £9.75m originally agreed for the business. 3i took the lead in the negotiations; it is not suggested that 3i had any knowledge of the defendants' reports or of the reliance correspondence, let alone relied on these.
127. So far as the reliance correspondence is concerned, there is no record that KJD showed Mr Sammons the letters or sent them to him. His evidence was that he thought that KJD might have told him about this correspondence before completion, but he did not recall having seen it. He could not say whether anyone discussed it with 3I or RBS. It was just an item on a long list of matters which KJD identified should be covered and which they advised him they had dealt with. I accept that, at best, Mr Sammons' evidence amounted to no more than speculation that he might have known about the reliance correspondence. It is not evidence of actual knowledge or reliance.
128. Mr Langdown knew nothing about the reliance correspondence. The claimant's case is that that is irrelevant - he relied upon the reports in any event. In circumstances where the negotiations were being conducted largely by Mr Sheldon and Mr Sammons, there was no need that he should know that a formal legal entitlement to rely existed. Mr Sammons had not read the whole of the defendants' reports, having left that to Mr Langdown. Mr Sammons did not discuss the defendants' reports with Mr Langdown. There is simply no evidence of actual reliance.
129. Reliance is an essential ingredient of the tort of negligence, "because otherwise the negligence will have no causative effect": per Lord Goff in Henderson v Merrett Syndicates Ltd. It is not sufficient for the claimant to establish that 'but for' the defendant's negligent misstatement in the reliance letters (however that is analysed), it would not have purchased the business, or would have purchased it at a lower price. To succeed, a claimant must establish that the negligent misstatement had a 'real or substantial effect' in inducing it to act as it did: see JEB Fasteners v Marks Bloom & Co [1983] 1 All ER 583, per Stephenson LJ at 589.
130. It is clear on the evidence that, in fact, the MBO team/the claimant did not rely on the reliance correspondence in negotiating the purchase price of the business or in proceeding to purchase at the agreed price. The reliance correspondence did not impact on the minds of any member of the MBO team. KJD dealt with the reliance correspondence on behalf of and as agents for the MBO team/the new company. While they were entitled so to act, it cannot be said that the comfort which the claimant claims to have been given by the reliance correspondence actually came to the attention of the MBO team or that they actually considered the comfort when deciding at what price to buy the business. A legal formality, an item on a long check list, which Mr Sammons could not even remember, cannot be categorised as information which was important to the MBO team/claimant or on which they actually relied.
131. In any event, I am not persuaded that the MBO team/claimant would have acted any differently had the defendants stated that no inspection of ceiling voids had taken place or that they did not know whether any hazardous or deleterious materials were present.
132. The claimant's case is that, if the presence of asbestos had been reported in mid 1994 or if it had been suggested that specialist advice be obtained, Mr Langdown and Mr Bowen would have arranged for a report to have been prepared. Work would have been carried out in 1994 with the same urgency, for the same reasons, as in 1998 and would have been funded by Automation prior to the MBO. If the asbestos problems had been identified later in the year, when completion of the MBO was imminent, the MBO team would have negotiated with Mr Pandit for a price reduction.
133. Nobody gave evidence to the effect that the transaction would have taken a different course had the defendants warned of the limitations on their inspection and reports or informed the MBO team/claimant that it was unable to exclude the possibility that there might be hazardous or deleterious materials in the voids. From the evidence I heard, I am not persuaded that Automation/the MBO team/the claimant would have taken urgent action even if the defendants' reports had stated that the presence of asbestos was suspected and recommended that further specialist investigation be carried out. Mr Bowen (at the very least) knew about it already. He knew that specialist advice had been obtained and steps taken to deal with any problem. In addition, when in 1993 asbestos lagging was identified on boiler house pipes, that did not cause Mr Langdown to enquire whether there might be a more widespread problem or cause Automation to investigate the full extent of possible asbestos, even though they already knew that there was asbestos in the voids. Further, when Mr Wyatt's 1997 report made mention of the presence of asbestos, with the obvious inference that access to the voids should if possible be avoided, no alarm bells rang; the claimant did not immediately take steps to investigate and deal with the problem.
134. I doubt whether Automation/the MBO team/claimant would have had a sense of urgency in relation to a problem identified in 1994 of which they were already aware. I reject, therefore, the claimant's submission that they would have taken urgent action either in mid 1994 on receipt of a report that suggested further specialist investigation or in November 1994 if either defendant in the reliance correspondence had stated in terms that no inspection of the voids had been made or that no investigation as to the presence of asbestos or other deleterious materials had been made.
135. In all, the claimant has not shown substantive reliance within the scope identified as necessary by JEB Fasteners.

Measure of damages and Quantum

136. Miss Smith submits that the most appropriate measure of loss is loss of opportunity to negotiate a reduction, alternatively diminution in value of the business calculated by reference to the impact of negotiations to reduce the value. There is no dispute between the parties as to how to approach a loss of opportunity claim. The defendants' case is that this is not a case where loss of opportunity is appropriate.
137. Miss Smith accepts that loss of opportunity is not the normal measure of loss in a case involving negligent building professionals. However, she submits that every case must be looked at on its own facts and that prima facie rules ought not to be applied indiscriminately to all cases without analysis as to whether their application is really appropriate. Miss Smith relies on County Personnel (Employment Agency) Ltd -v- Alan Pulver & Co [1987] 1 WLR 916 at 925 and Reeves -v- Thrings & Long [1996] PNLR 265. Miss Smith submits that, in the ordinary negligence action of the Watts -v- Morrow type, the key issue will be diminution in value of a property (usually a dwelling house). Evidence will be available as to the value of the property, both with and without defect. If the presence of the defect does not affect the value then there will be no loss. In these cases, loss of opportunity is not relevant because the assumption is made that where the presence of the defect does not affect the value, the vendor would not have been prepared to reduce the value in response to any attempt by the purchaser to negotiate. It is assumed that the vendor would not have taken less than the market value with the defect. Here, however, the court must consider an MBO and the purchase of a business. The real value of a business is a more nebulous concept than the value of a property, particularly where, as here, it was a business which had had little, if anything, in the way of acceptable offers.
138. The question whether the value of the business might have been reduced by reason of the discovery of asbestos in the ceiling void is thus extremely artificial if it is viewed as anything other than an assessment of the effect the discovery of the asbestos would have had on the negotiations between the parties. Miss Smith submits that the negotiated reduction on the price of the business can be viewed as "an additional recoverable benefit" that would have been obtained as a result of proper performance: Watts -v- Morrow [1991] 1 WLR 1421. Miss Smith submits that it would also be artificial to look to the value of the property itself, which was not accorded its market value for the purpose of the MBO. The evidence is that none of the parties involved in the MBO was concerned with the real value of the property. In reality, had the issue of asbestos been discovered and raised, the work would have had to be done in any event for health and safety reasons. Mr Pandit would not have considered it in the context of its effect on the value of the office building as an asset in the accounts. He would have negotiated with the MBO team over whether the cost of removing the asbestos ought to be taken into account in the overall purchase price of the business. The realistic question is what effect the discovery of asbestos would have had on the purchase price of the business. The claimant's case is that it would have been able to negotiate the purchase price down, so that its loss is either the loss of opportunity to engage in such negotiations or diminution in value of the business assessed by reference to the price that the claimant would have negotiated down to had the asbestos been discovered. This is because this price best represents the value of the business with the presence of asbestos at the time of sale.
139. The value of the lost opportunity and/or diminution in value can best be assessed by reference to the cost of repairs, because in negotiating a deduction the parties would have been concerned to reflect the cost of repairs. Miss Smith relies on Watts -v- Morrow at page 1435, Rushmer -v- Countrywide Surveyors (1994) Ltd [2000] PNLR 529, on Howard -v- Horne [1990] 1 EGLR 272 and the note in Jackson & Powell at 489, note 79. for support for the proposition that, in principle, one may look at the cost of repairs to determine the value of a claim for diminution in value. She submits that it is clear from Rushmer that loss of opportunity is not the appropriate measure of loss in a case concerning negligent building professionals. Here, the claimant would have sought to negotiate the price down and/or reach an accommodation with Automation which resulted in Automation bearing the cost of removal. Miss Smith relies on Allied Maples at page 1610 per Stuart-Smith LJ. There is a substantial chance that such negotiations would have resulted in Automation's agreeing to an accommodation which would have precluded the claimant from having to bear the costs of repair. The extent of such accommodation is determinative of the claimant's loss and the starting point should be the cost of repairs.
140. I conclude that the court will usually look at diminution in value. Watts -v- Morrow is clear authority for that. It appears that, while it is not uncommon for a claimant to argue for damages for loss of opportunity rather than diminution in value, it is rare for that to be the appropriate approach. I am not persuaded by Howard -v- Horne, which was decided before Watts v Morrow, or any other authority that it would have been right here to depart from the usual approach, namely to determine damages on the difference in value basis. I accept Mr Phipps' submission that, while a surveyor can readily foresee that his negligence may result in his mistaking the value of a property and therefore paying too much for it, the surveyor does not warrant the accuracy of his report. It is not generally any part of a surveyor's duty to preserve the full extent of his client's profits on a transaction. The profit arises not from the condition of the property but from the peculiarities of the negotiations between vendor and purchaser, to which the surveyor is not party. Here, the true market value could not have been ascertained by reference to the discount which Mr Pandit may, or may not, have allowed the MBO team.
141. Given my conclusions as to liability, it is not strictly necessary to deal with quantum, but it may be helpful if I record some relevant matters.
142. By order dated 25 July 2000, the court gave the parties permission to adduce evidence from a joint expert in respect of valuation. No such expert was appointed. None of the parties had adduced any expert evidence on quantum. Until the first day of trial, the claimant had claimed diminution in value of the building. On the first day of trial, the claimant sought permission to make further amendments to its statement of claim. Following the amendment, the claimant claims loss based on diminution in value of the business. The claimant's case is that the damage it has suffered is either loss of the opportunity to avoid having to pay for the remedial works to remove the asbestos, or the diminution in value of the business by reason of the substantial cost of repair which would have represented a liability to the business in 1994. Either way, the diminution in value is thus to be directly equated with the cost of repair.
143. Miss Smith acknowledges that the diminution in value approach is the norm but submits that the Automation business was unique, so that that approach is not appropriate. There is, however, no evidence to support that submission. The claimant has called no evidence to support its contention that unusual factors were present here. There is no evidence, for example, to suggest that there was no market in 1994 for the business. The Henry Butcher report shows that there was an open-market value for the land and buildings. There is nothing to suggest that it would not have been possible to have obtained expert evidence as to the value of the business, with and without asbestos in the office building.
144. The only evidence I have with respect to quantum relates to the cost of work in 1998. The claimant engaged Quatrix in December 1997 to install cabling in the office building. Mr Tipper of Quatrix visited site, then faxed the claimant on 5 December to refer to the asbestos-coated firewall and to express his concerns as to disturbance of the asbestos. Work began on 8 January 1998 but stopped on discovery of fibrous material. The contractors could not continue their work until the asbestos had been removed. Mr Langdown took the view that the asbestos had to be removed urgently. He considered that the asbestos presented a serious health and safety risk to employees in the office building; there was a risk that the offices might have to be shut.
145. The claimant approached DMW in January 1998. The evidence of Mr Williams of DMW was agreed (subject to exclusion of an opinion he expressed as to the likely cost of work in 1994). Mr Williams visited and investigated. He found it easy to access the gap between the suspended ceilings by use of steps which the claimant provided. He saw loose asbestos lying on the lower ceiling panels. He identified wide spread contamination. Urgent attention was needed. He concluded that it would not be possible to encapsulate the asbestos. It had to be removed. He recommended removal of the asbestos as soon as could be arranged. The work took about three months. Mr Williams put the total cost as £171,465 excluding VAT. In addition to the sum of £171,465, a figure of £174,618 has also been referred to. WGY, through solicitors, accepted that the claimant reasonably incurred a cost of £174,618 in 1998 in removal of asbestos, with the exception of KJD's fees which were included in that sum. But WGY's solicitors denied that that, or any, sum was recoverable. They reserved the right to comment on the method by which that sum had been calculated. In short, the actual cost of work in 1998 is not clear cut and has not been explored in detail.
146. The claimant has no direct evidence as to the cost of repairs in 1994. At lunchtime on the third day of trial (after the evidence of witnesses of fact had closed) Miss Smith sought permission to ask questions of the claimant's expert quantity surveyor Mr Renaudon about the likely cost of work in 1994. Mr Renaudon's report of evidence in these proceedings dealt with liability issues only. For the detailed reasons I gave at the time, I rejected that application.
147. Miss Smith invites me to apply RPI indices to the 1998 figures to arrive at the likely cost in 1994. I have not however been provided with any relevant indices, and in any event there is some uncertainty as to the 1998 figure.
148. I should have accepted Mr Phipps' submission as to the cost of work. I accept that the costs in 1998 are not necessarily evidence of costs in 1994. There is no evidence as to the precise extent of the damage to the asbestos in 1994, as opposed to 1998. Mr Cotterell's evidence is that the work commenced at the end of 1997 probably exacerbated the damage. Further, there is no evidence that the same work would have been carried out in 1994 as in 1998. The evidence indicated that there has been continually developing awareness of the problems of asbestos. Between late 1994 and early 1998, the approach to dealing with asbestos may well have changed, so that cost of treatment may not have simply risen or fallen in line with inflation. Accordingly, simple application of RPI indices would not have been appropriate.
149. Miss Smith submits that it would be unfair if the court were to conclude that the claimant had succeeded on liability but to refuse any remedy by reason of an absence of evidence. She submits that the court should do its best on the available evidence to arrive at an appropriate figure for damages. However, Miss Smith submits that where evaluation of damages is necessarily imprecise, because figures for 1994 are not available, the court should nevertheless do its best to arrive at a fair figure for damages; the court can take a broad brush approach in seeking to determine the loss and can legitimately come up with a conclusion doing the best it can. Once a claimant has established loss, it is not necessary for it to prove its loss down to the last penny. She submits that the court should take the 1998 figure and factor into that for inflation to arrive at a figure for 1994. She relies on Gerber Garment Technology Inc -v- Lectra Systems Ltd [1995] RPC 383. In that case, Jacob J dealt with quantification of damage in the case where a patentee manufacturer was entitled to damages for infringement. Given the difficulty of arriving at precise figures, he concluded that "the court should estimate what were the chances that a particular thing would have happened if there had been no infringement and reflect those chances in the amount of damages awarded. The court could do no better than reach a figure based on the general impression received from the evidence as a whole… I must on the facts form an estimate recognising that precision, or even near precision is impossible of attainment. I am in the world of "what would have been", not "what was". Miss Smith also refers to Ayobiojo -v- Megoldrick (unreported) CA 1998. In that case Evans LJ said:

"If a case for damages is made out, then the judge must assess the appropriate figure, doing the best that he or she can do on the evidence which is available.".

I accept that the court should try, where possible, to assess damages rather than leave a claimant who has succeeded on liability with no remedy. Here, however, the uncertainties as to the 1998 figure and the difficulties to which I have alluded in arriving at a figure for 1994 are such that I should not have felt able to make a fair assessment here.

150. Alternatively, Miss Smith submits that the court should order an enquiry into damages. On the final day of trial, the claimant made an open offer to the defendants to meet the cost of such enquiry (subject to any effective Part 36 offers and the like) thus removing that prejudice from the defendants. The defendants resist that proposal. Mr Phipps submits that the question of quantum cannot be divorced from that of liability: what the actual or estimated cost might have been in 1994 is a necessary ingredient in determining the likely outcome of the MBO negotiations.
151. Whilst the claimant's suggestion as to funding the cost of a further hearing would go a long way towards removing the prejudice to the defendants of another hearing, I nevertheless do not consider that would be appropriate. I accept that it would be difficult to consider the question of quantum in isolation as Miss Smith invites me to do. Without knowing the estimated cost of work in 1994, witnesses have not been able to say how they would have reacted. The conclusions I have reached as to Mr Pandit's response are based on the assumption that the cost would have been about £175,000, a substantial sum. If the estimated cost at that time was much lower than £175,000, that may well have affected Mr Pandit's view, indeed the view of the MBO team. Mr Pandit may have taken a tougher stance if the sum were lower; alternatively, he may have been more willing to concede the whole amount. Equally, the MBO team may not have held out for assistance with the whole sum if the estimates were lower. It is all speculation. The ground has already been substantially covered in this trial, so these points cannot realistically be put at a further hearing. I accept Mr Phipps' submission that quantum is not a discrete issue but is tightly bound up in the other issues. I should therefore have rejected the claimant's request for a further hearing.
152. In all the circumstances, the claimant's claims against both defendants fail.

Contributory negligence and issues between defendants

153. As I have concluded that, for a number of reasons, the claimant's claim fails, it is not necessary for me to deal with the issue of contributory negligence or to consider apportionment of liability between defendants.