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England and Wales High Court (Technology and Construction Court) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Pullman Foods Ltd v The Welsh Ministers & Anor [2020] EWHC 2521 (TCC) (23 September 2020) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2020/2521.html Cite as: [2020] EWHC 2521 (TCC) |
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BUSINESS AND PROPERTY COURTS IN WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
2 Park Street, Cardiff, CF10 1ET |
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B e f o r e :
sitting as a Judge of the High Court
____________________
PULLMAN FOODS LIMITED |
Claimant |
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- and - |
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THE WELSH MINISTERS -and- BFS GROUP LIMITED |
Defendant Third Party |
____________________
Emyr Jones (instructed by Hugh James) for the Defendant
Hearing dates: 17, 20, 21, 22, 27, 29 July 2020
____________________
Crown Copyright ©
Covid-19 Protocol: This judgment was handed down remotely by circulation to the parties' representatives by email and release to BAILII. The date and time for hand-down is deemed to be 11am on Wednesday 23 September 2020.
JUDGE KEYSER QC:
Introduction
The Facts
Background and the Lease
"(4) To obtain all necessary consents and approvals and to commence and within Twelve months from the date of these presents to complete upon the demised premises the following works namely:
(i) the first stage of a cold storage and distribution depot at an estimated value of Forty-five thousand pounds
(ii) the erection of fences on the Northern Eastern and Southern boundaries of the demised premises
(iii) an adequate septic tank for the disposal of waste effluent from the demised premises
the whole of such works to be in accordance with plans drawings and specifications to be previously submitted to and approved by the Board and to be executed to the satisfaction of the Docks Engineer of the Board's Swansea Docks and to the satisfaction of any Local or Public Authority having jurisdiction in the matter."
"(10) At the expiration or sooner determination of the said term quietly and peaceably to deliver up the demised premises leaving the same in good and substantial repair and condition to the satisfaction of the Board having first (if required by the Board to do so) removed any buildings or works and having made good to the satisfaction of the Board all damage occasioned to the demised premises by or in such removal."
The expression "the Board" was stated "where the context so admits [to] include the person for the time being entitled to the reversion immediately expectant on the determination of the term hereby created".
"Please also note that the Welsh Ministers (as your Landlord) will require the removal of any buildings on the Property by the end of the term and all damage to be made good in accordance with clause 2(10) of the Lease."
Site clearance
"From a review of the Site, it seemed to me to be a straightforward job and not a high-risk or high-value project. The Site consisted of two connected 'cold store' warehouse buildings and one office building (together, 'the Buildings'). The remainder of the Site was used for parking or other vehicular access. The Buildings sat upon concrete slabs but, from the proposed scope of the work Liston did not need to remove any of these slabs or other foundations and only had to demolish all structures down to slab level, meaning that the ground itself would not be disturbed."
"1) Site set up of welfare and perimeter security fencing
2) Cat B trained operatives will remove non-notifiable external ACMs
Room E1, External Office Building, Canopy Soffit, Warehouse, External Cladding, Edging and Gutter bracket, Cement Warehouse, Guttering, Cowling and Wastepipes
3) Room by Room operatives will also remove internal ACMs from office block
4) Operatives remove asbestos cement roof sheets from warehouse
5) Machine demolishes office block to top of ground floor slab
6) Machine shears down portal frame warehouse building
7) Any bolts and trip hazards trimmed/removed from floor slab and clear site."
"The site has been left in an unacceptable condition.
There is an unprotected excavation outside the site which is not backfilled. This blocks the footpath, no RAMS [risk and method statements] were submitted for works outside the site boundary.
There are numerous small pieces of asbestos visible in the debris around the site.
No base slabs have been removed, there are floor tiles visible on the slabs, this type of tile/adhesive usually test to contain asbestos.
Plasterboard piece are visible which should be treated as special waste.
Lighting columns are still in place, and various electrical fittings are visible."
Photographs were attached to the email to illustrate Mr Burgess's findings.
"In view of the Tenant's covenants contained in Clauses 2(7)(a) and 2(10) please ensure that the above issues are rectified with immediate effect to enable the cleared site to be handed back to the Welsh Ministers together with all necessary documentation evidencing compliance with the above mentioned covenants."
"At the meeting we discussed the need for the following to happen: an asbestos survey; for Solace to provide certificate documentation regarding disconnection of the electricity and water; for Solace to provide copies of the consignment notes and transfer notices for removal of asbestos from the Property; confirmation of HSE notification; a formal agreement to allow [Pullman] and their contractors/agents back on to the Property; that the base should be taken to level 1m below ground; further asbestos testing after further works; and electricity connection/lights[,] rubble [and] pallets to be removed."
The evidence in paragraph 29 of Mr Russell's witness statement was to materially similar effect. In an email to Mr Kaminaris on 10 March 2015, Mr Russell summarised the Welsh Government's complaints and continued:
"In the first instance we suggest that all the issues identified above are dealt with prior to any break-up of the slabs, for obvious reasons.
The first stage is therefore to remove all debris and ACMs from site and attend to the removal of other items such as plug in points, perimeter spots, steel beam etc.
Once the site is clean, a (sic) specialist contractors will carry out tests and provide certification that the site is clear of asbestos.
Thereafter the slabs will be addressed."
"Subject to clause 3 and clause 4, the Licensor permits the Licensee to occupy the Property for the Permitted Use for the Licence Period in common with the Licensor and all others authorised by the Licensor …"
The "Permitted Use" was defined as being "in order to undertake all necessary works required to comply with clause 2(10) of the Lease". The "Licence Period" was "the period from and including the date of this agreement until the date on which the licence is determined in accordance with clause 4"; in the event, that was until 24 April 2015. The following provisions of clause 3 are material:
"The Licensee agrees and undertakes
…
(c) not to use the Property other than for the Permitted Use;
…
(f) not to do or permit to be done on the Property anything which is illegal or which may be or become a nuisance (whether actionable or not), annoyance, inconvenience or disturbance to the Licensor or any owner or occupier of neighbouring property;
(g) save to the extent that the agreed works to be carried out at the Property may conflict with this clause, not to cause or permit to be caused any damage to
(i) the Property, or any neighbouring property; or
(ii) any property of the owners or occupiers of the Property, or any neighbouring property;
…
(k) to comply with all laws and with any reasonable requirements or recommendations or regulations of the Health and Safety Executive, local authority and the relevant suppliers relating to the supply of electricity, gas, water, sewage, telecommunications and date and other services and utilities to or from the Property;
…
(m) to leave the Property in a clean and tidy condition at the end of the Licence Period;
(n) to indemnify the Licensor and keep the Licensor indemnified against all losses, claims, demands, actions, proceedings, damages, costs, expenses or other liability in any way arising from
(i) this licence;
(ii) any breach of the Licensee's undertakings contained in clause 3;
(iii) the exercise of any rights given in clause 2; and/or
(iv) the Permitted Use
(o) to carry out any works to the Property in order to comply with clause 2(10) of the Lease in accordance with the method statement and risk assessment annexed to this agreement; and
(p) to provide the Licensor with an appropriate certificate from a professionally qualified person or company confirming that the Property is free from asbestos within 5 working days of (a) completion of the works to comply with clause 2(10) of the Lease or (b) termination of the licence (whichever is earlier)."
Clause 1.10 provided:
"An obligation on a party not to do something includes an obligation not to allow that thing to be done and an obligation to use best endeavours to prevent that thing being done by another person."
"The site is a former commercial building on an industrial estate. An asbestos survey was carried out which identified the presence of chrysotile in the form of asbestos cement roof sheets and wall sheets which required safe removal and disposal by a suitably trained non-licensed contractor. The material contains Chrysotile (white) asbestos fibres. The building has been demolished and majority of asbestos removed with a small amount of debris left on the floor slab. There is approximately 2 x bags of asbestos to be removed from the site. Uncontrolled removal of these materials could release asbestos fibres. The work methods and controls detailed in this plan of work will ensure that the asbestos fibre concentrations released will be reduced to less than <1F/cm³."
Section 4, "Work Methods", stated:
"All works will be carried out in an orderly and organized manner, so that the risk of any potential accident is minimized.
All parcelled waste will be placed directly into a waiting skip for disposal.
On completion the area will be thoroughly cleaned and checked to remove any residual asbestos."
Section 5, "Waste", stated:
"We anticipate the generation of approximately 2 x parcels of asbestos waste on the contract, which will be taken directly to a licensed transfer facility with all necessary documentation."
Section 7, "Method", stated:
"Operatives wearing laceless boots, type 5/6 cat 3 disposable overalls and Ori-nasal half masks with P3 filters will clean the floor slab section by section placing visible pieces of asbestos cement debris into a red asbestos waste bag (pre-labelled) by hand and sweeping all other debris into piles before placing into the red bag using a shovel and broom. Each section of floor slab will be mist sprayed using a solution of approved fibre suppressant prior to and during removals with the aid of a manually operated pressure/atomising advice [presumably, device].
Once full, the asbestos waste red bag will be swan necked, taped closed using duct tape, wiped down, and then this process repeated using a clear asbestos waste bag.
This operation will then repeat for the whole of the floor slab and any area on the perimeter that has any asbestos debris.
…
Once the area has been cleared and inspected by the supervisor and the client, a self-certification certificate will be issued to the client."
The document recorded that the work was expected to take four workmen two days to complete.
"I discovered partially buried asbestos cladding in the gravel strip (a 1-2 foot strip between the back of the former Buildings and the fence line). This was not an area where Liston had undertaken any works during Phase 1 [January/February 2015] or Phase 2 [April 2015]. It looked to me as though the cladding had been covered with a blue polythene weed barrier and approximately 100mm of gravel. On closer inspection, I surmised it was non-notifiable asbestos (it was a thin, hard board, whereas notifiable asbestos tends to be soft and pliable) and it had been there for many years as it was green and surrounded by a lot of weeds and moss etc."
In cross-examination, Mr McLean confirmed that he had not dug into the gravel to see the extent of the buried asbestos but had scraped the surface with his foot.
"Copy of photos from this morning.
The asbestos sheet is in gravel strip around the side and rear of where the cold stores were situated. It looks like it had a polythene weed barrier laid over it then 100mm of gravel."
Ms Bodsworth asked Mr McLean for an estimate of the cost of removing the GTA, and he replied by a further email, copied also to Mr Caesar and Mr Watson, at 5.40pm on 16 April:
"To return to site and clean the gravel strips of asbestos contamination and issue an inspection certificate please allow the sum of £8,875.00.
We would estimate there to be 25-30 Tonnes of waste in total and will take 4 days to carry out."
It is clear that the estimate of 25 to 30 tonnes was not confined to asbestos but included all of the surrounding gravel and soil that would have to be excavated in order to ensure the removal of the asbestos.
"What are you[r] obligations on the site. It would appear that the buried asbestos was from an original use (either previous demolition or just land filling). Did you construct the original building that has just been demolished or did you occupy an existing building?
Dealing with buried asbestos is expensive as highlighted in Tony's quote but it may be more extensive particularly if you find it under the slab."
At 11.35am Ms Bodsworth replied, again copying in Mr Caesar and Mr Russell:
"We took a ground lease originally -1 believe it was empty land.
I have discussed with Simon [Russell] and he believes it is our issue to deal with.
I could do with a steer and some advice from you as to what our next steps should be and how this is managed going forwards and who needs to be involved. It is clear that this is far from a straight forward demolition now."
"I understand that you may both be near to site today.
Len, it would be useful if you could report back verbally to Paul, as I believe the stage 1 [i.e. Phase 2] works (pre-slab breakup) are due to complete."
"We met with Paul [Caesar] on site on Friday and we now await confirmation all works are complete and we await confirmation that the site is now asbestos free."
"My client advises that further, partially buried, asbestos has been discovered on site. This prevents the certification of the site [that is, as being free of asbestos] and obviously stage 2 works [that is, the Phase 3 Works]. Indeed it may be that the methodology will have to be revised as the two cannot necessarily be carried out sequentially.
We also need to ascertain if the buried material pre-dates our client's liability."
The email did not confirm the precise location of the "partially buried" asbestos and did not attach any photographs. In cross-examination Mr Russell, while acknowledging that it would have been helpful to provide photographs, denied that he had deliberately withheld them; I accept that evidence, so far as this email goes.
"We would like to come to site and view the asbestos. Can you let me know what dates/times are suitable?"
"I have now had the opportunity to review matters with Paul Caesar of Wakemans and my client. You are of course very welcome to re-inspect, but I do not have access to keys or security arrangements. Please let me know what is required and the individuals concerned, and I will ascertain on your behalf. I understand that you were on site on Friday and, given this, do wonder what you consider may have changed since this time.
Given that further asbestos has been discovered and partially buried, there are concerns as to what may be further discovered under the surfaced areas. Prior to any further works it would seem prudent to investigate this. Wakemans are making further enquiries with the company that undertook the initial refurbishment and demolition survey in this regard.
To assist in this process we should be grateful if you would disclose any information within your possession relating to the nature of the land use prior to 1971 and any buildings that may have occupied the site prior to the lease been granted, together with the information on the presence or otherwise of asbestos on adjacent sites which have been demolished. In the alternative, if the works have not been undertaken by you, the parties responsible for demolition and site clearance.
…
We propose that no further works are undertaken until further research and investigations are carried out. Clearly my clients do not consider they can be held responsible for any contamination that predates the lease."
"There is clearly some concern that [Pullman] may potentially be asked be asked to remediate the land beyond the obligations imposed under the lease. My question regarding the previous use of the site was to ascertain whether the visible asbestos or, indeed, any contamination discovered under the slab/foundations or disturbed by its removal, may have preceded the 1972 lease. To my mind it is logical to differentiate between contamination arising from building materials utilised by the tenant under the lease and that which was in situ prior to the grant of the lease.
You say that neither you or (sic) ABP have any records. What would have happened to the original deeds I wonder? The lease clearly contemplated documenting the initial works and was a requirement for calculating compensation payments.
This being the case my clients feel it only prudent to investigate other potential avenues, such as planning, building regulation and other historical mapping sources.
I have advised [Pullman] that their responsibility is to yield up in accordance with the following:
? Removal of the Phase 1 Coldstore and distribution depot
? Strictly speaking removal of fences on North East and Southern boundaries (makes no sense)
? Removal of septic tank
? Removal of subsequent alterations to site.
Given where matters currently rest I think it would be beneficial if you could articulate what you require further and reference it to a site plan, presumably following your visit to site.
I did also ask if you could advise who was responsible for the demolition of the sites immediately adjacent to the subject site to ascertain what was encountered whilst doing these works?
The certification you have requested clearly cannot be provided at this stage and can only be provided after the stage 2 works. In turn my client does not consider further work can be undertaken until a full investigation of the potential extent of buried material has been carried out. Your further responses would therefore be appreciated as soon as possible."
"As advised previously, the WG [Welsh Government] has no historical information of the site. We have also checked with ABOP [i.e. the predecessor in title]. In regard to your request for information on neighbouring sites, whilst I am not in a position to comment on your clients site, as far as I am aware no other sites on SA1 have we found asbestos buried under the slabs after demolition.
Are you in a position to confirm our meeting of the 6th May on site to discuss taking this forward?"
"The meeting was constructive and we agreed the items that would need to be addressed, which I reported to [BFS] by email on 14 May 2015. No concerns about further buried asbestos alleged by Stenor materialised. The only work agreed which related to asbestos was for the safe removal and disposal of the ends of some asbestos cement cladding sheets which had become encased in concrete [that is, the shuttering asbestos]. This would have to be addressed before the slab itself could be removed. Other agreed work included (i) the prior testing of the slab insulation and tile adhesive (for the presence of ACMs), (ii) filling an interceptor, and (iii) the extraction and crushing of the three slabs, a low brick wall and the remaining hardstanding."
"The only asbestos I recall being shown or discussed at the meeting was the asbestos sheeting encased in the cement slab and the small pieces left still visible on top of the slab. I am confident that I was not told about or shown the GTA during this meeting. I have only recently become aware of the existence of the GTA … I am not aware of either Simon Russell or David Macnamara at Solace ever making reference in emails to me about a gravel strip on the site or asbestos under a polythene weed barrier."
"In general terms I would say the meeting with the Welsh Government (and their consultant) was constructive and relatively favourable.
Apart from re-securing the gate (and in this respect of this you will see that they have agreed to Solace retaining the keys to order) the agreed next actions are as follows:
1. Solace to prepare a brief scope of works which will be submitted to the Welsh Government for approval. David will do this and send copy to you. The scope of the works has been agreed by reference to an ordnance survey plan. From the site inspection it is readily apparent that the small wall and area of hard standing outside the footprint of the building forms part of the demise. This means this area together with the slabs of the frozen and other warehouse units, the offices and the hard surfaced yard will all need to be dug up.
2. They have however taken a lenient view on cleaning out and filling an interceptor and allowing the base to be crushed.
3. Samples were taken of the insulating material to the frozen warehouse slab and the adhesive to the tiled area within the previous office block. David is to have these analysed to ensure that they do not constitute notifiable waste.
4. Once the results of the analysis are known, and the Welsh government approves the scope of works, we can obtain quotations for the works.
5. A number of other pieces of information will be required and I will pass to David all the material that was copied to me by Wakemans. …"
(A similar understanding as to the scope of the required works was reflected in emails sent by Mr Macnamara to Ms Bodsworth on 19 June 2015; see below.)
"2.0 Asbestos Survey
2.1 Contractor to undertake a Type 3 Asbestos Survey prior to commencement of the works. Upon completion of the survey and confirmation of the result have been approved by the Contract Administrator only soft strip out will be allowed until the all clear has been given. On completion of the demolition works the contractor to issue a full Asbestos Register and appropriate documentation to comply with the Control of Asbestos Work Regulations 2006.
2.1.1 Insulation beneath floor slab to former cold store.
2.1.2 Adhesive/floor tile residues to former office floor slab.
2.1.3 Sheet ends of asbestos cement cladding cast within floor slab (as per sample 24 within attached asbestos survey)"
"5.0 WORKS[:] DEMOLITION & PREPARATION
Generally
5.1 All concrete floor slabs/hardstandings to be crushed to grade 6F1 and left on site.
5.2 Brick boundary wall to be removed.
5.3 Tarmacadam in front of front boundary wall to be removed.
5.4 Drainage interceptor to be cleaned out and filled.
5.5 All tenant's signage adjacent to gate to be removed.
5.6 Existing heras (sic) fencing to be made secure for duration of works (Welsh Government have agreed this can remain)."
The Conditions of Tender within the Specification of Works provided inter alia:
"3.4 All works shall be planned and undertaken with due consideration of the CDM Regulations and the Pre-construction Health and Safety Plan. …"
The Pre-Construction Health and Safety Information document accompanying the Specification of Works provided inter alia:
"2.3.1 Information flow: All parties are required to ensure that all information in their possession and that they produce is made available to others as soon as it becomes available. A document register is included in Appendix F and should be carried forward to the Construction Phase Plan and updated as the works progress.
2.3.2 Design Co-ordination: As set out in 2.1.5, all parties (including designers) are required to ensure that available information and designs are passed to others as soon as possible. To this end, all designers (including sub-contractors where appropriate) shall ensure that the designs are coordinated to eliminate any conflicts in respect of Health & Safety, sequencing or build ability."
"Please find attached annotated plan together with Asbestos Demolition Survey [i.e. the Wakemans Report].
Can you please arrange for asbestos contractor attend site asap and take samples/test the following:
- Insulation beneath floor slab to former cold store
- Adhesive/floor tile residues to former office floor slab
- Sheet ends of asbestos cement cladding cast within floor slab (as per sample 24 within attached asbestos survey).
If you can confirm your budget quote taking into account the above that would be appreciated. I will forward more detailed scope of works document later this week."
- In the north-west corner was a hatched area, to which the related text was: "Remove tarmacadam".
- Immediately to the south of that area was a line, to which the related text was: "Remove former brick wall".
- In the centre of the southern boundary of the cold-stores was a circled area, to which the related text, (containing a cross-reference to the Wakemans Report) was: "Sheet ends of asbestos cement cladding remaining in slab. Chrysotile sample 24".
- The eastern end of the cold-stores was hatched, and the related text read: "Insulation beneath slab".
- The text relating to the office block read: "Adhesive residues to former office floor slab".
"14. When I attended the Site, I saw clearly three concrete slabs arising out of level ground. The Site appeared tidy and was generally in a state that I would expect a site that had recently been the subject of demolition works to be in.
15. I noted one slab (underneath what I understood to be the former cold store) contained the broken ends of approximately 7 asbestos cladding sheets along a section of one side, consistent with the additional insulated concrete slab having been poured against cladding that was in place prior to the pour. Apart from this asbestos that was to be removed and which had already been discussed, I did not notice any other ACMs or other asbestos-related material at the Site.
…
19. The section of known asbestos cladding referred to in paragraph 15 was approximately 7 metres in length by approximately 250 millimetres in depth and was at ground level."
"The costs indicated include for the removal of all remaining asbestos cement sheets cast into the floor slab to the rear of the site (which is the buried asbestos) and the adhesive residues to the office tiled areas. The Welsh Government were only concerned about these two elements. They were not aware of any other buried asbestos."
Of course, the reason why the Welsh Government was "not aware of any other buried asbestos" was that Pullman, BFS and Mr Russell had not told it about the GTA. However, this email does suggest that Mr Macnamara too was ignorant of the GTA and that he, like the Welsh Government, thought that the only asbestos in issue was the shuttering asbestos. At all events, the contract for the Phase 3 Works was duly granted to Zenith on or about 19 June. Mr Chester did not actually see the Specification of Works, with its plan of the areas to be "demolished", until 25 June 2015. He does not appear to have regarded the plan as making a material difference to Zenith's commitments under the contract.
"Subject to Clauses 3 and 4, the Owner is to allow the Licensee to enter and remain on the Property for the purposes of conducting a Survey in accordance with the Method Statement only."
"Survey" was defined to mean: "A visual inspection of the Property". Clause 4.1.3 required the Licensee "to give to the Owner as soon as reasonably practicable copies of any reports or findings in respect of the state and condition of the Property arising out of the Survey."
"The results showed the insulation to be free from ACMs and the adhesive to contain only de minimis traces of ACMs, which made it appropriate for the three slabs to be broken up, crushed and spread over the Site."
Mr Chester's evidence was:
"The results were as expected. The known ACMs cast into one of the slabs could therefore be properly removed and the slabs, insulation and adhesive/floor tile residues could be safely broken up, crushed and distributed around the Site."
The survey and samples did not, of course, relate to the GTA.
"Subject to clause 3 and clause 4, the Licensor permits the Licensee to occupy the Property for the Permitted Use for the Licence Period in common with the Licensor and all others authorised by the Licensor …"
The definition of "Permitted Use" was:
"The breakup of all concrete floor slabs hardstanding brick boundary walls and foundations to previously demolished buildings and crushing to grade 6F with all arisings to remain in site and tenant's signage removed in order to comply with clause 2(10) of the Lease."
The "Licence Period" was "the period from and including 18 July 2015 until the date on which the licence is determined in accordance with clause 4"; in the event, that was until 6 August 2015. The following provisions of clause 3 are material:
"3.1 The Licensee agrees and undertakes
…
3.1.3 not to use the Property other than for the Permitted Use;
…
3.1.6 not to do or permit to be done on the Property anything which is illegal or which may be or become a nuisance (whether actionable or not), annoyance, inconvenience or disturbance to the Licensor or any owner or occupier of neighbouring property;
…
3.1.11 to comply with all laws and with any requirements or reasonable recommendations or regulations of the Health & Safety Executive, local authority and the relevant suppliers relating to the supply of electricity, gas, water, sewage, telecommunications and data and other services and utilities to or from the Property;
…
3.1.13 to leave the Property in a clean and tidy condition at the end of the Licence Period;
3.1.14 to indemnify the Licensor and keep the Licensor indemnified against all losses, claims, demands, actions, proceedings, damages, costs, expenses or other liability in any way arising from:
this licence;
3.1.14.1 any breach of the Licensee's undertakings contained in clause 3;
3.1.14.2 the exercise of any rights given in clause 2; and/or
3.2 the Permitted Use
3.2.1 to carry out any works to the Property in order to comply with clause 2(10) of the Lease in accordance with the method statement and risk assessment annexed to this agreement;
and".
I have set out clause 3.1.14 and clause 3.2 as they appear in the July Licence. Obviously, the formatting and numbering have gone awry. There can be no doubt but that the text ought to read:
"3.1.14 to indemnify the Licensor and keep the Licensor indemnified against all losses, claims, demands, actions, proceedings, damages, costs, expenses or other liability in any way arising from:
3.1.14.1 this licence;
3.1.14.2 any breach of the Licensee's undertakings contained in clause 3;
3.1.14.3 the exercise of any rights given in clause 2; and/or
3.1.14.4 the Permitted Use.
3.2 to carry out any works to the Property in order to comply with clause 2(10) of the Lease in accordance with the method statement and risk assessment annexed to this agreement."
Clause 1 contained a provision in identical terms to clause 1.10 of the April Licence.
"Staff will only be allowed to work with asbestos containing products providing they have received asbestos awareness training and that the products are asbestos containing cement products, textured coating and floor tiles. Any other asbestos containing materials must only be dealt with by HSE licensed operatives.
… A copy of the RAMS must be signed by all employees when working with asbestos. …
Staff working on asbestos materials will wear suitable disposable PPE and a mask rated to FFP3 as a minimum. Any waste, including PPE, will be double bagged and labelled as asbestos and removed to a licensed site.
Any staff who come across any material they believe to contain asbestos are instructed to stop work until it has been established exactly what the material is.
Any survey reports must be provided by the duty holder, the site foreman must ensure that the findings of the report are passed on to all who are working on the contract."
In cross-examination, Mr Chester accepted that "asbestos awareness training" was not a sufficient level of training to permit work on the removal of asbestos. However, he said that Walsgrave Contractors' workmen on the Site would have had the necessary qualifications. He accepted that he had not seen documentary evidence of those qualifications, but he said that he would have asked for the documents to be sent to Zenith's offices and would have been advised that they had been received; though he had no specific recollection of dealing with the matter and could name none of the workmen on site apart from the foreman.
"→ All asbestos containing materials—ACMs—will be double-bagged and sealed.
→ All ACMs will be removed by licensed waste contractors."
"We will look to carry out an inspection this week. I am advised that there appears to be a significant amount of rubbish, polystyrene, debris and metal left over the site. If this is the case we would want this removed but can confirm after our inspection.
I have not received the asbestos certificate which you need to provide. Can you advise when we can expect to receive this?"
"For info we were asked to crush three hardstandings, demolish a wall and part of the path to the site boundary. There are a few bits of steel bar on site, and some torn polythene sheeting.
I have not been asked to provide any asbestos certification so I can only assume this is being dealt with elsewhere."
"The site has not been left secured, the crushed material is not acceptable, all foam, reinforcement, cable and plastic should be removed and not spread over the site as at present. The petrol interceptor should be emptied and removed, at present this is unsafe given that the site is not secured.
I would also ensure that you obtain a certificate from a qualified person that there is no asbestos present in the crushed material. Also I would ask for copies of the asbestos transmittal notices from the contractor who carried out the crushing works.
At present WG will incur costs to clean up the site."
"Further to our discussion yesterday on the above we are still waiting to hear from Paul/your contractor that the works to remove the polystyrene, plastic, metal etc have taken place and the petrol interceptor has been filled in and the site secured.
It was agreed between us that once this is received we will inspect the site. You will also provide the WG with the transmittal notices to ensure that asbestos was removed from the site on the second demolition contract carried out by Solace. You will also provide us with copies of the analysis information on the tiles which were present on the slab. We will also want you to issue a statement saying that all asbestos encountered during demolition has been removed from site.
The WG will then take a view as to whether it deems the demolition works complete or not."
Having received no substantive reply to that email, Mr Kaminaris sent the email again on 7 September 2015 and forwarded it to Mr Macnamara, who took matters up with Mr Chester.
"Further to our telephone conversation, I am pleased to attach the following information as requested:
1. Consignment Note for removal of asbestos identified on site.
2. Consignment Note for hazardous waste removed from interceptor pits.
3. Consignment Notes for the additional slab removed from site found beneath the existing slabs identified on site.
4. Photograph of the filled pits.
We can confirm that our quotation was revised to include for taking and testing samples of suspected ACM's only which we confirmed could be crushed and left on site due to the low percentage of ACM's relative to the whole. We were subsequently instructed to remove these and we have incurred additional costs amounting to £1,130 to undertake this element of the work.
Also, we were instructed to remove 3 no. existing slabs from site. On doing so a further slab was found beneath one of these which was heavily re-enforced and insulated from the slab above. It was necessary to remove this slab and insulation from site to comply with your requirements. Regrettably as both yourself and I were away from work on Friday 31 July, this was further exasperated [exacerbated?] in our absence by an instruction to clear site that day regardless of the revised and agreed completion date of 6 August. The decision was taken immediately to remove the slab from site over that weekend to ensure site was clear for the Monday morning. In doing so we have incurred additional labour costs of £1,350 and waste removal costs of £1,470."
"Thanks for the information. I will liaise with Hyder on the information provided.
In view of the fact that you are not going to provide the WG with a certificate of Asbestos removal, could you confirm that all identified asbestos has been removed from site[?]"
Mr Macnamara replied on 18 September 2015:
"I can confirm that the remaining asbestos as identified when we all met on site (please see the attached plan) has been dealt with as agreed.
In this regard please see the attached e-mail from Zenith Contract Services Ltd.
Other than the slab removal no further intrusive investigations have been undertaken in other areas of the site."
"Thanks for confirming that all the visible asbestos has now been removed and disposed of correctly from site and that you have also completed all agreed works.
The WG has no further comments."
"This Early Warning is to advise the client of the asbestos found at the location of the old 3663 plot [i.e. the Site], as discussed on site, once the surface of the area had been disturbed clear signs of insulation and rubbish material was found, on further inspection, asbestos pieces are evident, once this was discovered, all works were stopped in this area, with all plant and operatives removed, we have taken a sample to be tested this morning, and have arranged for a sample to be taken away to identify the amount in the ground. Once carried out the report is expected to take 10 days due to the nature of the quantitive (sic) test."
"Please see attached photographs showing the slabs left in place, and the asbestos which is in the crushed material. All surface slabs should have been removed under the demolition contract.
There is much more asbestos in the crushed material than expected, this amount of asbestos mixed in with the crushed material is unacceptable and will be very expensive to remove."
"I am advised that following closer inspection of the [Site] it appears that the slabs have not been removed. Also, a considerable amount of asbestos has not been removed from site but mixed up with the crushed material – please see photos.
This is not acceptable and not what we agreed would constitute the demolition works by your contractor.
We need to meet on site urgently to discuss how you intend to rectify the above and ensure that you return the site back the WG in an acceptable condition."
Post-clearance Investigations
"The scope of the investigation was developed and agreed with [Alun Griffiths] and comprised excavation of an exploratory sampling grid by shallow trial pitting through the Asbestos Contaminated Made Ground Demolition Rubble to depths of circa 1.5m and deeper where necessary. Representative environmental samples were taken from the Demolition Rubble to characterise the material. The sampling was terminated at elevations thought to be below the demolition rubble within predemolition Made Ground or suspected reworked natural soils.
…
The entire site covers an area circa 100m x 50m, a 10m sample grid was agreed and [Alun Griffiths] surveyed a sampling grid extending 70m x 50m covering an area circa 3500m2 and encompassing 48 sample points.
…
Trial pits were located on a 10m sampling grid within a 70m x 50m area (3500m2), the grid was surveyed and erected by [Alun Griffiths] within the perimeter of the site. Environmental samples were collected at each grid point from at least three discrete sample depths, generally 2 samples were recovered from the demolition rubble and one from the pre-demolition made ground to characterise the materials present.
Under the instruction of [Alun Griffiths] where pre-demolition ground level was found to be obvious, as identified by the presence of pre-existing hard standing and concrete obstructions the sampling was restricted to the Demolition Rubble only and no sample was taken from the horizons below."
"Made Ground (MG) Capping generally comprised light brown slightly sandy silty sub-angular to sub-rounded fine to coarse GRAVEL of limestone brick and crushed concrete.
Made Ground (MG) Demolition Rubble generally comprised loose brown to black slightly silty sandy sub angular to sub-rounded fine to coarse GRAVEL of crushed concrete, sandstone and various lithologies with high cobble content and low boulder content and locally with 'rebar' present. Cobbles are angular to sub-rounded of concrete, brick and sandstone. Boulders are angular of concrete. Composition varied with increasing silt, clay or sand content at several points and locally contained inclusions of plastic, expanding foam and timber and locally with ACM distributed throughout it.
Made Ground (MG) Pre-Demolition generally comprised soft to firm green grey slightly gravelly sandy SILT/CLAY. Gravel is angular fine to coarse of brick and concrete. Locally Sand was identified at location F3 which is believed to represent a reworked natural deposit."
I regard the Made Ground Capping as corresponding broadly to the crushed material brought onto the Site by Alun Griffiths on 28 and 29 September 2015, and the Made Ground Demolition Rubble as corresponding broadly to the material that Zenith excavated and crushed and left on site in the course of the Phase 3 Works. The Apex Report recorded that the Made Ground Capping was confined to the western boundary of the Site; it was approximately 0.5m thick at a distance of approximately 15m from the western boundary, increasing to approximately 1m thick at 10m from the western boundary. The report observed that the distinction between Made Ground Demolition Rubble and Pre-Demolition Rubble was not always clear.
"The area of the site previously occupied by buildings was surfaced with a thin dressing of crushed demolition material; this was absent in the east of the site, where the ground surface appeared to have remained unchanged during the demolition process. Made Ground was encountered below the surface dressing (where present) across the site, containing significant amounts of concrete and brick. Suspected asbestos containing material (ACM) was observed in two of the 13 trial pits (TP9 at a depth of up to 0.5m bgl and TP10 at a depth of up to 0.6m bgl) as fragments of cement bonded asbestos sheet. Suspected ACM was also observed within the stockpiles of soil at the centre of the site; this stockpile is reportedly formed of excavated material from the planned on-site roadway. All suspected ACM observed during the on-site works was in the form of corrugated cement sheet fragments, up to approximately 200mm in length. Gross asbestos contamination, bundles of fibrous asbestos material, or caches of buried ACM were not observed during the investigation."
Paragraph 6.1 summarised the "analytical results":
"Laboratory analysis has confirmed the presence of asbestos in soil at the site. Potential asbestos was identified in 10 of the 21 samples submitted to the laboratory for asbestos screening. In each case asbestos was identified in the form of chrysotile; in addition, amosite was also identified in four samples. Of the ten samples that were scheduled for quantification analysis, asbestos was confirmed to be present in eight samples, ranging from <0.001% in TP2 and TP7 to 0.097% in TP8 (asbestos by weight of total dried sample).
The asbestos fibre types were identified by the laboratory as being chrysotile and amosite in the form of cement, insulating board and free fibres. Fibres, assumed by the laboratory (in a conservative scenario) to represent asbestos amphiboles, were present within the fine material (<2mm) in five of the quantified samples.
With the exception of trial pit TP13 at 0.4-0.6m bgl [below ground level], all analysed samples collected from the uppermost layer of Made Ground at depths of up to 0.7m bgl contained asbestos. Asbestos was identified in samples collected from deeper layers of Made Ground in trial pits TP1 at 1.0-1.2m bgl and TP13 at 2.0-2.2m bgl."
"In conclusion, the historical research has identified a number of land uses, prior to the occupation of the site by [Pullman] that may have used ACMs in building materials or involved importation of fill materials. It is known that buildings constructed with asbestos roofs were present adjacent to the site in 1929, and that these buildings were demolished.
The Ramboll Environ ground investigation has identified ACMs present at varying depths in the Made Ground underlying the site, including Made Ground materials beneath the former floor slab of the building previously occupied by [Pullman]. On the basis of these investigations we believe that it is reasonable to conclude that ACMs were present in soil at the site prior to [Pullman's] occupation of the site."
I note the careful way in which the final sentence of those conclusions is expressed.
Events after site clearance
"The results of the air monitoring (perimeter background monitoring) that has been undertaken each week has indicated that the level of asbestos fibres in the air is below the level of detection (<0.010 f/ml air) and this indicates that the control measures are satisfactory and the asbestos that is on the site poses no significant risk to adjacent residents.
It should be noted however that it is still recommended that the asbestos is removed from site as soon as practicable to reduce the risk to zero."
"In the case of E6, E7 and E8 the failure of the pre-existing tenant to demolish the building which as at the date of this Agreement is erected on part of E6, E7 and E8 the Vacant Possession Pre-Condition shall not prevent the Vacant Possession Pre-Condition from being satisfied and the Landlord shall as soon as possible following vacation by the pre-existing tenant procure that the building is demolished by the pre-existing tenant in accordance with clause 2 (10) of the lease of that part of E6, E7 and E8 known as E6 dated 8th November 1972 made between (1) British Transport Docks Board and (2) Abertawe Fresh and Frozen Foods Limited and in any event prior to the Completion Date Provided That if the pre-existing tenant does not so demolish the building in accordance with this clause 2.1.2 then the Landlord shall demolish the building itself and at its own expense prior to the Completion Date."
That provision did not (contrary to what appeared to be put to Mr Kaminaris in cross-examination) strictly make compliance with the tenant's covenant in clause 2(10) of the Lease a condition precedent to completion by UWTSD; rather it expressly provided that compliance was not a condition precedent. However, in the event of non-compliance by the tenant, clause 2.1.2 obliged the Welsh Government to carry out the necessary works; and clearly breach of that obligation might itself have significant contractual implications.
"The issue with plot E7 [this should read E6], i.e. asbestos having an adverse cost impact on the University, will not be revisited as the cost for WG to resolve is already too substantial, the valuation will not be reduced given level of remediation already incurred by WG."
The issue concerning the Site did not go away, however, and would resurface later in the year.
"The review of the Apex Drilling Services report identifies that visible ACMs were removed prior to laboratory analysis at the time of sampling. Therefore, the results issued by ALcontrol are not representative to the current site conditions—they are representative following the removal of visible ACMs."
"It is arguable that if the visible ACM was not removed prior to sampling and analysis a greater number of samples would have tested positive for asbestos."
"Although visible ACMs were picked from the samples themselves before they were sent for analysis, which would have decreased the percentage of samples which tested positive, it is unlikely that this would have affected whether free asbestos fibres were present in the samples.
No samples out of the ones quantified exceeded the Hazardous Waste threshold of 0.1% of asbestos w/w based on free fibres or bundles.
We would conclude therefore that the site contamination issue for the demolition rubble present on site is with the visible ACMs rather than free fibres."
In respect of the site walkthrough, the Redhills Report stated (section 4):
"During the walkthrough and visible inspection of the site area, visual ACMs were identifiable throughout the ground surface. All of the material observed was asbestos cement, apart from 1 location where a small fragment of Asbestos Insulating Board was identified. A total of 4 samples were taken, 2 of which tested positive for asbestos."
"Land remediation – Soil screening and picking of visible ACMs from the demolition rubble under suitably controlled conditions using a specialist asbestos removal contractor. The remaining demolition rubble would require validation for the presence of asbestos in soils through further inspections and testing. Following completion of a successful remediation strategy, we envisage that the waste should be able to be sent to landfill or removed as non-hazardous waste.
Alternatively, depending on any planning agreements for the proposed end use of the site, both the hazardous or non-hazardous material could be re-used on site. Any movement of hazardous waste around the site will require the use of a specialist asbestos contractor. Additionally, re-use of hazardous waste material on site would undoubtedly require restrictions on the depth buried and methods of sealing it to allow for safe future use of the land. For potential re-use a materials management plan validated by a qualified person would be required following CL:AIRE Development Industry Code of Practice."
"A specialist asbestos consultant has recommended WG initially completes a soil screening and pick of the visible asbestos under suitably controlled conditions using a specialist asbestos removal contractor. However, there is no guarantee that this will remediate the site to an acceptable level and a further budget will be required if test results following the remediation work indicates that further asbestos picks are required, or an alternative method of remediation is necessary to try and provide a 'clean site'.
An alternative method of remediation that has been investigated would be to remove an estimated 5000 m3 of contaminated soil to a specialist asbestos tip at an estimated cost of circa £1.85m.
The asbestos should have been removed by former tenant BFS Group Ltd under a demolition contract that they procured when they vacated the site. However, they are currently refusing to admit responsibility for its removal. WG has instructed lawyers to commence legal proceedings against the company to recover costs in dealing with the asbestos. Since this work will potentially be subject to litigation and insurance claims WG's approach to the remediation will demonstrate that it has tried to mitigate the cost of dealing with the asbestos.
This site is part of a larger land sale transaction to UWTSD and contracts have exchanged to dispose of the site. Once suitably remediated Plot E6 will be sold to the University at a consideration of £700,000 plus VAT. Until the remediation works are completed UWTSD will not complete on the land sale."
"WG has informed both Natural Resource Wales (NRW) and the Health & Safety Executive (HSE) of the asbestos found and immediately commenced containment works to ensure that no asbestos dust fibres are released into the air. This is currently costing WG circa £5.5k per month. …
External asbestos specialist consultant Redhills has undertaken a review of the soil testing contamination report. They advise that none of the samples out of the ones quantified exceed the Hazardous Waste threshold of 0.1% of asbestos w/w based on free fibres or bundles. They have concluded therefore that the site contamination issue for the demolition rubble present on site is with the visible ACM's rather than free fibres. Based on this analysis, they recommend that WG undertakes a soil screening and pick of visible asbestos under suitably controlled conditions using a specialist asbestos removal contractor. Redhills envisage that following the asbestos pick the soil should be able to be sent to landfill or removed as non-hazardous waste, or alternatively could be re-used on site. It should be noted that there is no guarantee that this method of remediation will provide WG with a 'clean site', and further validation for the presence of asbestos in soils through further inspections and testing will be required that may result in the need for further remediation work. A further paper will be submitted to PLT advising of the proposed next steps should the initial asbestos pick not prove successful and where necessary request further Ministerial approval.
Plot E6 is located in the residential Eastern Quarter of SA1. WG is concerned that whilst all necessary containment measures are being undertaken by WG to protect surrounding residents, continued delays in dealing with BFS Group Ltd could result in a significant period of time before the asbestos is finally removed. It is imperative that the contaminated material is removed from site at the earliest opportunity."
"The final cost of the screening option is therefore likely to exceed £1.3million.
Advice from other specialists suggests that the screening and picking method will not guarantee that the resultant material will comply with the safe level of asbestos due to the volume of fines released by the screening process. This approach therefore carries significant risk that the complete removal of the material may also be required.
Conclusions: On the basis of the comparative prices available, there is a potential saving of £300k against a risk of increasing costs by approximately £1.6m if the works included costs for complete removal. Complete removal offers certainty that the area will meet the necessary standard but there can be no such certainty that screening and picking will deliver the same result. It is also worth noting that no contractor will provide a fixed price for this work as certain elements are outside their control."
"2.3.2 The Landlord is carrying out certain remediation works to Plot E6 and will serve notice on the Tenant ('the Landlord's Notice') once those works have been completed.
2.3.3 The Tenant has a period of 40 Working Days from the date of service of the Landlord's Notice to undertake a site soil survey (which survey shall include (if appropriate) soil borings) and other trials and investigations in respect of Plot E6 making good all damage caused to Plot E6.
2.3.4 The Landlord shall use reasonable endeavours to procure that the contractor it has employed to undertake the remediation works referred to in clause 2.3.2 shall by no later than the Phase 2 Completion Date for Plot E6 provides a warranty to the Tenant in respect of those works."
Clause 7 of the deed of variation dealt with termination and provided in part:
"7.2 Following the expiry of the Phase 2 Draw Down Period [10 April 2017] either party will be entitled to end this Agreement in respect of Plot E6 if the Tenant has not served a Phase 2 Draw Down Notice [a notice confirming that the Tenant wants to complete the Plot Lease for the Plot] in respect of Plot E6 within the Phase 2 Draw Down Period by serving not less than 20 working days' written notice on the other. The provisions of this Agreement in respect of Plot E6 will then terminate and all liabilities of each party in relation thereto will end on the expiry of the notice period unless within the notice period the Tenant serves a Phase 2 Draw Down Notice in respect of Plot E6 on the Landlord. If the Tenant serves a Phase 2 Draw Down Notice in respect of Plot E6 on the Landlord pursuant to this clause the Completion Date for Plot E6 will be the date which is 21 days after the service of the Phase 2 Draw Down Notice in respect of Plot E6 or (in the event of the notice being served on the Landlord prior to the 10th April 2017) the 10th April 2017 whichever is the earlier and the Tenant will pay to the Landlord that part of the Phase 2 Purchase Price apportioned to Plot E6 on the Completion Date for Plot E6 or the Deferred Payment Date whichever is the later and if the Completion Date for Plot E6 is earlier than the Deferred Payment Date the Tenant will enter into a Legal Charge with the Landlord on that date in respect of Plot E6 only. The Legal Charge to be amended accordingly. Termination pursuant to this clause is without prejudice to any liability of the Tenant existing at the date of termination.
7.3 If the Lease of Plot E6 has not completed or a Phase 2 Draw Down Notice in respect of Plot E6 has not been served or if the provisions in this Agreement in respect of Plot E6 have not been terminated in accordance with clause 7.2 above the provisions of this Agreement in respect of Plot E6 will automatically terminate on 10 March 2018. Termination pursuant to this clause is without prejudice to any liability of the Tenant existing at the date of termination."
Accordingly, UWTSD was not unconditionally bound to take a lease of Plot E6. The reason for the special treatment of Plot E6 was clearly because it was known to be contaminated by asbestos and UWTSD wanted to satisfy itself as to the condition of the land before completing. In practical terms, it was up to the Welsh Government to do sufficient works to persuade UWTSD to proceed.
"Plot E6 is located in the residential Eastern Quarter of SA1. WG is concerned that whilst all necessary containment measures are being undertaken by WG to protect surrounding residents, continued delays in dealing with BFS Group Ltd could result in a significant period of time before the asbestos is finally removed. It is imperative that the contaminated material is removed from site at the earliest opportunity.
The delay in removing the asbestos has also prevented WG from constructing a large section of new highway/infrastructure under the Highway Finishing Contract 6. This has resulted in WG and our contractor reprogramming the Phase 6 Contract and the introduction of new work elements."
The risks attendant on the preferred remediation method were identified in section 3 of the paper:
"Until the works are complete the final cost can only be estimated at this stage. There is a possibility that costs may have to increase if any unforeseen circumstances arise.
WG will be liable to challenge during the legal process as to why it has not opted to undertake a less expensive option of remediating the site. However, on a risk based approach it is considered appropriate to pay an additional £300,000 plus VAT to ensure a greater certainty that the remediation works will be a success.
WG litigation lawyer has advised that it is acceptable to undertake the more expensive method of remediating the site if it is considered the most appropriate method."
Summary of the Welsh Government's Counterclaim
1) The probable source of the asbestos contamination identified in October 2015 was the GTA, which had been crushed and spread over the Site with other demolition rubble in the course of the Phase 3 Works.
2) Pullman's failure to remove the GTA and the concrete slabs (including the shuttering asbestos and the ACM adhesive) was a breach of clause 2(10) of the Lease.
3) BFS's failure to remove the GTA was a breach of its obligations under the April Licence.
4) BFS's failure to inform the Welsh Government and/or Zenith of the GTA and/or to fence it off and/or to apply signage to it, and its actions by its contractors in spreading it over the Site, was a breach both of the April Licence and of the July Licence.
The Welsh Government relies on a number of clauses of the April Licence and the July Licence. It also contends that BFS breached numerous obligations under the Control of Asbestos Regulations 2012 ("the 2012 Regulations") and that each such breach constituted a breach of the contractual obligation, in clause 3(k) of the April Licence and clause 3.1.11 of the July Licence, to comply with all laws.
5) The Welsh Government has incurred costs of £1,388,862.25 in respect of remediation works necessitated by the asbestos contamination.
6) Those costs are recoverable from Pullman and BFS as damages.
7) Those costs are also recoverable from BFS pursuant to the indemnities contained in the April Licence and the July Licence. The Welsh Government contends that questions of mitigation of damage do not arise in respect of the claim to an indemnity.
The source of the asbestos contamination
(i) Where did the asbestos come from?
(ii) Was the GTA on the Site before the commencement of the Lease?
"[Mr Robinson] suggests that given the location of the buried material adjacent to the rear corner of the cold store slab and the fact that it was situated close to the surface and covered in plastic sheeting and gravel, it is most likely that it was intentionally placed there after the slab was constructed. The buried sheeting may well have been placed there as off cuts and surplus during construction of the cold store or alternatively during the life of the cold store as damaged sheets were replaced.
The widespread distribution of small pieces of asbestos cement throughout the crushed demolition material spread over the site suggests that the material may well have passed through the crusher. The fact that the asbestos contamination is present in areas of the site where no work was done by Alun Griffiths such as the eastern side would suggest that it had already been spread over the site (by Zenith) prior to the arrival of Alan Griffiths."
And Ms Cleverley:
"[Ms Cleverley] considers the most likely origin of the partially buried asbestos described above was from historical buildings on or adjacent to the Property, which pre-dated the 1972 lease. The asbestos within building fabric used pre-1970s would unlikely have been treated differently to any other demolition materials at the time. The buildings shown on historical plans with corrugated asbestos roofs were demolished and the materials likely left within the near vicinity, hence the variety of demolition material identified in Made Ground across the site, including metal, brick, plastic, glass, wood etc.
These buried, asbestos-containing demolition materials were later excavated by Alun Griffiths (Contractors) Ltd, as instructed by the WG, mixed with other demolition materials and spread during the preparatory works within the western portion of the Property in September 2015."
"Given [the GTA's] location, proximity and alignment to the slab in the opinion of the author it is very likely that it was placed there after the slab was constructed. It is difficult to imagine how the slab could have been constructed with it so close by without tearing the sheet to pieces and breaking up the cement, mixing it with the soil."
Although Ms Cleverley suggested that there would be no good reason to bury asbestos debris around the south-west corner of the building, and Mr Hanham submitted that there was no obvious reason to excavate "in such a tight space (particularly on the western boundary) in order to create the trap", I see no mystery in the matter: the building was in the south-west corner of the Site, and the area of the GTA was a small strip of dead ground, out of the way of the useful area of the Site.
"[I]f it [the GTA] had been historical asbestos sheeting from prior to 1972 it is very unlikely that it would have been sheeted over and covered in gravel since at that time asbestos was still in its peak usage and such measures to make it safer would not usually have been taken."
(iii) Who spread the GTA?
a) Ms Cleverley referred to photographs that she said showed Alun Griffiths excavating in the south-west corner of the Site, the area where the GTA was located. In cross-examination, however, she accepted that the photographs showed not excavations but work for trial pits. Mr Hanham, however, submitted that the evidence showed that Alun Griffiths had carried out excavation works on the western and southern boundaries of the Site.
b) Ms Cleverley also observed that Liston and Zenith did not undertake excavations on the Site; their activities were limited to demolishing the buildings, breaking up ground slabs, and crushing concrete.
c) It was noted that the observations made at the Site between the completion of the Phase 3 Works and the discovery of asbestos by Alun Griffiths did not identify asbestos present within the demolition rubble, although other unacceptable debris, such as foam, metal and plastic, was identified. In particular, reference was made to Mr Burgess's witness statement, which states that "after a visual inspection with Peter Kaminaris on 14 August 2015, there did not appear to be any asbestos visible on the surface of the site." (Ms Cleverley also refers to Apex's photographic log from 17 August 2015, which she says show no evidence of the presence of asbestos at the surface. This point is not wholly lacking in force, but I bear in mind the agreement in the experts' joint statement that the photographs "are not sufficiently detailed to identify whether asbestos is present or not.")
d) Mr Hanham submitted that it was unlikely that Walsgrave's workmen would have disturbed and spread the GTA. If they disturbed it, they would inevitably have noticed the polythene laid over it. They could hardly have failed to notice that they were digging up a quantity of buried rubble, and if they had noticed it they would inevitably have investigated and stopped work. Any notion that they would deliberately have concealed the GTA is incredible.
e) Mr Hanham submitted that the size of the pieces of asbestos found in October 2015 was larger than the pieces of the material that had passed through the crusher. He relied on this in support of the conclusion that the asbestos was in the imported material; I have rejected that conclusion. However, the point could be taken to indicate that the asbestos in the GTA had not been crushed by Zenith/Walsgrave and, accordingly, that it was probably spread by Alun Griffiths.
Pullman: breach of the covenants in the Lease
"At the expiration or sooner determination of the said term quietly and peaceably to deliver up the demised premises leaving the same in good and substantial repair and condition to the satisfaction of the [Welsh Government] having first (if required by the [Welsh Government] to do so) removed any buildings or works and having made good to the satisfaction of the [Welsh Government] all damage occasioned to the demised premises by or in such removal."
"Please also note that the Welsh Ministers (as your Landlord) will require the removal of any buildings on the Property by the end of the term and all damage to be made good in accordance with clause 2(10) of the Lease."
(1) What is the physical subject-matter of the covenant?
(2) Is the subject-matter in a damaged or deteriorated condition?
(3) Is the nature of the damage or deterioration such as to bring the condition of the subject-matter below the standard contemplated by the covenant?
(4) What work is required in order to put the subject-matter of the covenant into the contemplated condition?
(5) Is that work nonetheless of such a nature that the parties did not contemplate that it would be the liability of the covenanting party?
The analysis is useful and has been adopted, for example, by HHJ Stephen Davies sitting as a judge of the High Court in Blue Manchester Ltd v North West Ground Rents Ltd [2019] EWHC 142 (TCC), 182 Con LR 59; though, as the authors of Dowding observe, attention must always be paid to the form of the particular covenant and the facts of the particular case.
"ALL THAT piece of land in the City and County of Swansea situate on the south side of Langdon Road on the Board's Swansea Dock Estate containing in area FOUR THOUSAND TWO HUNDRED AND FORTY SQUARE METRES or thereabouts as the same is delineated on the plan annexed to these presents and thereon coloured red … [including inter alia] all fixtures drains and other works nor or hereafter thereon and the fences or walls and gates now or hereafter erected on the northern eastern and southern boundaries of the demised premises".
The plan shows a water main along the northern boundary and a sewer along the western boundary but no other features. The evidence does not indicate that there were any buildings on the Site at the date of the demise, and I find that there were not.
"6-05 Before any question of repair arises, it must first be asked whether the premises are in disrepair. This involves asking whether there has been a deterioration from some previous physical state. If the answer is no, there will have been no breach of the general covenant to repair, notwithstanding the fact that the premises may be unsafe or unsuitable for occupation or use for some other reason.
6-06 Not every occasion of physical damage or deterioration will give rise to a liability under the general covenant. It is necessary to ask whether the consequence of such damage or deterioration is that the premises are not in the state and condition that the covenant contemplates they should be in. This involves first identifying the standard imposed by the covenant, and then comparing it with the actual state of the premises. Again, if the answer to the question is no, there will have been no breach.
6-07 Once it has been ascertained that the state and condition of the premises falls below the standard required by the covenant, the next stage is to identify what work is required to put the premises back into the required state.
6-08 The nature of the work identified as necessary may be such that it goes outside what the covenant obliges the covenantor to carry out. This 'fact and degree test' is variously formulated in the authorities …"
"The concept of 'repair' connotes the idea of making good damage so as to leave the subject matter so far as possible as though it had not been damaged: Anstruther-Gough-Calthorpe v McOscar [1924] 1 KB 716 per Atkin LJ. A state of disrepair connotes deterioration from some previous physical condition: Post Office v Aquarius Properties Ltd [1987] 1 All ER 1055. As a matter of the ordinary usage of English, that which requires repair is in a condition worse than it was at some earlier time: per Lawton LJ in Quick v Taff-Ely BC [1986] QB 809 at 821. Thus, there is no requirement 'to repair' until the subject matter of the covenant has deteriorated and purely preventative works are not within the scope of the concept: Mason v TotalFinaElf UK Ltd [2003] EWCA Civ 1604 (Ch), [2003] 3 EGLR 91. On the other hand, some prophylactic measures may be undertaken as part of the works to remedy deterioration which has already occurred in order to prevent future deterioration of a similar kind: McDougall v Easington DC [1989] 1 EGLR 93, CA at 95H per Mustill LJ.
In deciding whether there has been deterioration one must consider the condition of the subject matter at the time of construction of the premises and not (if different) their condition at the date of the lease: Post Office v Aquarius Properties Ltd [1987] 1 All ER 1055, CA; Gibson Investments Ltd v Chesterton plc [2002] 2 P & CR 494, Neuberger J. Even where a covenant to repair does not expressly require a party to 'put' the subject matter into repair, it will be construed as though it did, since the obligation to 'keep' premises in repair involves a duty to put them into repair in so far as they are out of it: Quick v Taff-Ely BC [1986] QB 809, per Dillon LJ at 818."
"It was common ground that clause 3(4), with its reference to 'well and substantially', does not require that the premises be kept in perfect repair. Equally, it was common ground that the standard to be applied should be such as, having regard to the age, character and locality of the premises at the start of the lease, would make the premises reasonably fit for a reasonably minded tenant of a class who would be likely, at that time, to take the premises, and that the appropriate standard does not alter during the term of the lease in the sense that changes in the character of the locality of the premises, or of the class of person likely to take them, do not elevate or depress what would otherwise be the standard: see, generally, Proudfoot v Hart (1890) LR 25 QBD 42 and Anstruther-Gough-Calthorpe v McOscar [1924] 1 KB 716."
"The fact that the phrase is unqualified does not give the surveyor carte blanche as to what he may require. The works to be undertaken must be to make good a want of repair or absence of good condition. In stipulating what must be done the surveyor must exercise his own judgment and come to an honest view of what is required. It is plainly implicit that he must act reasonably. He will be acting unreasonably if he seeks to require work that no reasonable surveyor could have required. On the other hand, provided he reaches a decision that a reasonable surveyor could reach, it matters not that the tenant's surveyor favours another cheaper, but no less reasonable, decision as to what should be done."
An analogous approach seems to me to be appropriate in the present case. The Welsh Government would not have carte blanche in deciding on the appropriate standard of "good condition" or the works of remediation. But it would be entitled to form its own judgment as to what was required to satisfy the appropriate standard, provided its judgment were within the range of views that could reasonably be held.
BFS: breach of obligations under the Licences
a) BFS failed to remove the GTA;
b) BFS failed to inform the Welsh Government of the GTA;
c) BFS failed to inform Zenith/Walsgrave of the GTA;
d) BFS, by its contractors, spread the GTA on the Site.
In respect of some of the allegations, the Welsh Government's case rests simply on terms of the Licences. In respect of some of the allegations, however, the Welsh Government relies on what it says were breaches of the 2012 Regulations and, for that reason, were breaches of contract. For ease of exposition, I shall first address the allegations that do not rely on the 2012 Regulations and then address those that do so rely.
"The contract should be given the meaning it would convey to a reasonable person having all the background knowledge which is reasonably available to the person or class of persons to whom the document is addressed."
The ramifications of that approach have been discussed in detail in many cases. I refer in particular to Rainy Sky S.A. v Kookmin Bank [2011] UKSC 50, [2011] 1 WLR 2900; Arnold v Britton [2015] UKSC 36, [2015] AC 1619, esp. per Lord Neuberger PSC at [15]-[22]; and Wood v Capita Insurance Services Limited [2017] UKSC 24, [2017] AC 1173, esp. per Lord Hodge at [10]-[13]. Lord Hodge's judgment in Wood v Capita Insurance discussed in particular the relationship between text and context. He said:
"10. The court's task is to ascertain the objective meaning of the language which the parties have chosen to express their agreement. It has long been accepted that this is not a literalist exercise focused solely on a parsing of the wording of the particular clause but that the court must consider the contract as a whole and, depending on the nature, formality and quality of drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to that objective meaning."
"12. … To my mind once one has read the language in dispute and the relevant parts of the contract that provide its context, it does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each."
Recently, in First National Trust Co (UK) Ltd v McQuitty [2020] EWCA Civ 107, Peter Jackson LJ, with whom Asplin LJ and Henderson LJ agreed, summarised the position at [33]:
"When construing a document the court must determine objectively what the parties to the document meant at the time they made it. What they meant will generally appear from what they said, particularly if they said it after a careful process. The court will not look for reasons to depart from the apparently clear meaning of the words they used, but elements of the wider documentary, factual and commercial context will be taken into account to the extent that they assist in the search for meaning. That wider survey may lead to a construction that departs from even the clearest wording if the wording does not reflect the objectively ascertained intention of the parties."
"28. In most, possibly all, disputes about whether a term should be implied into a contract, it is only after the process of construing the express words is complete that the issue of an implied term falls to be considered. Until one has decided what the parties have expressly agreed, it is difficult to see how one can set about deciding whether a term should be implied and if so what term. This appeal is just such a case. Further, given that it is a cardinal rule that no term can be implied into a contract if it contradicts an express term, it would seem logically to follow that, until the express terms of a contract have been construed, it is, at least normally, not sensibly possible to decide whether a further term should be implied. Having said that, I accept Lord Carnwath's point in para 71 to the extent that in some cases it could conceivably be appropriate to reconsider the interpretation of the express terms of a contract once one has decided whether to imply a term, but, even if that is right, it does not alter the fact that the express terms of a contract must be interpreted before one can consider any question of implication.
29. In any event, the process of implication involves a rather different exercise from that of construction. As Sir Thomas Bingham trenchantly explained in Philips Electronique Grand Public SA v British Sky Broadcasting Ltd [1995] EMLR 472 at p 481:
'The courts' usual role in contractual interpretation is, by resolving ambiguities or reconciling apparent inconsistencies, to attribute the true meaning to the language in which the parties themselves have expressed their contract. The implication of contract terms involves a different and altogether more ambitious undertaking: the interpolation of terms to deal with matters for which, ex hypothesi, the parties themselves have made no provision. It is because the implication of terms is so potentially intrusive that the law imposes strict constraints on the exercise of this extraordinary power.'"
(For recent advocacy of the importance of Lord Carnwarth's "iterative" approach in the entire exercise, see Anson's Law of Contract (31st edition, 2020, by Beatson, Burrows and Cartwright) at p. 162.)
(a) BFS failed to remove the GTA
1) The April Licence must be read in its entirety and in the context of the facts that have been set out above, so far as those facts were within the scope of the knowledge of both the Licensor and the Licensee at the date of the grant of the Licence.
2) Although neither BFS nor the Welsh Government knew of the presence of the GTA at the date of the grant of the April Licence, they both knew that the obligation under clause 2(10) of the Lease was to deliver up the Site (a) in good and substantial repair and condition and (b) clear of any buildings.
3) Clause 3(p) of the April Licence imposed on BFS an express obligation to provide a certificate that the Property was free from asbestos. In my view, that can only mean that BFS was under an obligation to make the Site free from asbestos, and that compliance with that obligation was to be demonstrated by the certificate. There was little if any analysis at trial of the scope of this obligation. It could not sensibly be interpreted as requiring proof that the Site was literally free of all asbestos, because the presence of a low level of free fibres would be inevitable and unexceptionable. On the other hand, the required works, as set out in the Method Statement & Plan of Works did not permit the crushing and spreading of any ACMs. Having regard in particular to that document, I interpret the requirement as being one to remove all ACMs. If that were done properly, without illicit crushing and spreading, the asbestos fibre concentrations would be unlikely to exceed 1F/cm³, as the Method Statement recognised.
4) The GTA both (a) comprised ACMs and (b) was required to be removed in order to achieve compliance with clause 2(10) of the Lease. Further, its existence was discovered during the term of the April Licence; indeed, eight days before it determined. In order to comply with the express obligation in clause 3(p), BFS was obliged to remove the GTA. In circumstances where the GTA was within the scope of the obligation under clause 2(10) of the Lease, I see no reason to construe the express obligation in clause 3(p) of the April Licence in such a manner as to exclude the GTA.
5) I also consider that text and context show that the April Licence imposed a positive obligation to carry out the works mentioned in the definition of the Permitted Use. In particular, clause 3(p) is inconsistent with a construction that would make the carrying out of works required to comply with clause 2(10) of the Lease merely optional. Read literally, the only express obligation imposed by clause 3(p) is to provide the certificate (there is no express obligation to complete the works to comply with clause 2(10)) and it might, therefore, be argued that the obligation would be complied with if all the asbestos were removed, even if insufficient works had been done to comply with clause 2(10) of the Lease. Such a construction would, however, fail to cohere with the purpose of the Licence as a whole, and in particular with the definition of "Permitted User", which shows that BFS had permission to enter the Site only for the purpose of achieving compliance with clause 2(10) of the Lease. Therefore clause 3(p) of the April Licence is properly to be construed as requiring BFS to complete the works required to comply with clause 2(10) of the Lease and to provide a certificate that the Site was free from asbestos.
6) There are two possible objections to such a construction of clause 3(p). First, the certificate was required within five working days of the termination of the Licence, even if that date were earlier than the date five working days after completion of the works required to comply with clause 2(10). However, this does not mean that the latter works were optional; the certificate might be forthcoming in advance of completion of the works, if all ACMs had been removed. Further, the provision in respect of time is better seen as an attempt to place a time limit on compliance than as an indication of the relationship between the certificate and the works. Second, clause 3(o) of the April Licence requires that any works be carried out in accordance with the method statement, which does not of course say anything about the GTA. However, this simply reflects the particular state of knowledge as to the required works at the date of the grant. It can perfectly well be taken to define the way in which identified works were to be carried out, rather than as limiting the scope of the basic obligation to achieve compliance with clause 2(10) of the Lease.
(b) BFS failed to inform the Welsh Government of the GTA
a) It was a breach of the implied obligation in the April Licence to inform the Welsh Government of any asbestos found on the Site.
b) It was a breach of clause 3(f) of the April Licence and clause 3.1.6 of the July Licence, because the failure to inform was liable to cause nuisance, annoyance, inconvenience or disturbance to the Welsh Government or to its neighbours.
(c) BFS failed to inform Zenith/Walsgrave of the GTA
a) A breach of clause 3(f) of the April Licence and of clause 3.1.6 of the July Licence, as being "something which might cause a nuisance, annoyance, inconvenience or disturbance" to the Welsh Government or its neighbours;
b) A breach of clause 3(g) of the April Licence and of clause 3.1.7 of the July Licence "because it caused damage to the Property".
(d) BFS's agents spread the GTA over the Site
Breaches of the 2012 Regulations
a) BFS's obligation "not to do or permit to be done on the Property anything which is illegal": clause 3(f) of the April Licence and clause 3.1.6 of the July Licence;
b) BFS's obligation "to comply with all laws": clause 3(k) of the April Licence and clause 3.1.11 of the July Licence.
Specifically, the Welsh Government alleges that the following matters constituted breaches of the 2012 Regulations (and therefore breaches of contract):
- Failure to inform the Welsh Government of the GTA: regulation 4(6)-(11);
- Failure to fence or segregate the GTA or to identify it with signage; failure to inform Zenith of the GTA; instructing Zenith to carry out the Phase 3 Works in circumstances where it was liable to be disturbed, broken up and distributed: regulations 4(6)-(11), 5, 6, 7, 10, 11, and 16.The illegality or non-compliance with laws on which the Welsh Government relies is alleged breaches of regulations 4(6)-(11), 5, 6, 7. 10, 11 and 16 of the 2012 Regulations.
(In his submissions, Mr Emyr Jones sought to broaden the argument to rely also on guidance from the Health & Safety Executive. But the Welsh Government must be held to the matters it alleged in its amended counterclaim.)
1) I reject BFS's contention that the 2012 Regulations had no application to the works on the Site because they only apply to buildings. They apply to "premises", which is wide enough to cover the Site. Indeed, it would be striking if the work on Site had attracted the statutory duties until the buildings came down to slab level but then ceased to apply.
2) I accept that BFS was a "dutyholder" under regulation 4(1)(a) and therefore had the duties relating to assessment in regulation 4. Once it had been notified of the GTA, those duties included the duty to review the risk assessment, pursuant to regulation 4(6), and to make provision in accordance with the reviewed assessment, pursuant to regulation 4(7)-(10). I accept that BFS was in breach of those duties.
3) I accept that BFS was an employer carrying out work that was liable to expose its employees, even if only its directors, to asbestos at the Site and that, therefore, it owed both to its employees and to all other persons, whether at work or not, who might be affected by the work (see regulation 3(3)) the duties in regulation 5 (identification of the presence of asbestos), regulation 6 (assessment of work which exposes employees to asbestos), regulation 7 (plans of work), regulation 10 (information, instruction and training), regulation 11 (prevention or reduction of exposure to asbestos), and regulation 16 (prevention or reduction of the spread of asbestos).
4) I accept that BFS was in breach of the duties on it as a dutyholder under regulation 4(6)-(10), because when it learned of the GTA it did not review the existing assessment of the presence of asbestos and manage the risk of exposure to asbestos in line with a suitable reviewed assessment.
5) I accept that BFS was also in breach of the duties on it as an employer under regulations 5, 6, 7 and 11. I do not accept that there was a breach of regulation 16, as there is no evidence that asbestos was spread outside the Site. I express no view on breach of regulation 10.
6) However, for a reason identified succinctly by Mr Hanham, I do not accept the use that the Welsh Government seeks to make of the general provisions in clauses 3(f) and 3(k) of the April Licence and clauses 3.1.6 and 3.1.11 of the July Licence. It is well established that, when considering breach of statutory duty, one must identify the nature of the harm against which the duties are intended to protect and the scope of those persons who are entitled to bring a claim for breach. The 2012 Regulations are health and safety legislation. The statutory duties they impose are owed to employees and to all others who might be exposed to asbestos by the work; they have nothing to do with loss suffered by property owners in connection with remediation works. It is true that the obligation relied on by the Welsh Government is a contractual obligation to comply with the law; the claim is not directly brought for breach of statutory duty. But I do not consider that that the contractual provisions have the effect of turning the statutory duties into the equivalent of duties actionable by the Welsh Government; for that, much more explicit provision would be needed. The relationship between unlawfulness constituted by breach of the 2012 Regulations and loss to the Welsh Government is contingent; it is the matters complained of (failure to inform etc), not the fact of unlawfulness under the 2012 Regulations, that has occasioned loss to the Welsh Government.
Summary on Liability
1) Pullman was in breach of clause 2(10) of the Lease—both the obligation to remove the buildings and the obligation to leave the Site in good and substantial repair and condition—by reason of (a) its failure to remove the concrete slabs, including the shuttering asbestos and the ACM adhesive, and (b) its failure to remove the GTA.
2) BFS was in breach of the April Licence by reason of (a) its failure to remove the concrete slabs, including the shuttering asbestos and the ACM adhesive, and (b) its failure to remove the GTA.
3) BFS's failure to inform the Welsh Government of the GTA was in breach of an implied obligation in the April Licence.
4) By reason of its failure to inform Walsgrave/Zenith of the GTA, BFS was in breach of its obligation under both the April Licence and the July Licence to use its best endeavours to prevent Walsgrave/Zenith from disturbing the GTA and distributing it over the Site; and it thereby stands in the same case as if it had itself disturbed and distributed the GTA.
Quantum
1) What is the measure of damages payable by Pullman for breach of its covenant under the Lease?
2) Is the amount expended recoverable from BFS under the indemnity provisions in the April Licence and the July Licence?
3) If the amount expended is not recoverable under the indemnity provisions, has the Welsh Government failed to mitigate its losses?
Damages under the Lease
Indemnity under the Licence
"[The Licensee agrees and undertakes] to indemnify the Licensor and keep the Licensor indemnified against all losses, claims, demands, actions, proceedings, damages, costs, expenses or other liability in any way arising from
(i) this licence;
(ii) any breach of the Licensee's undertakings contained in clause 3;
(iii) the exercise of any rights given in clause 2; and/or
(iv) the Permitted Use."
"Mr McGuire, on behalf of the plaintiffs, first approached the case on the issue of principle, without recourse to the actual terms of the indemnity or of the lease agreement. He submitted that a claim under a contract of indemnity, such as this, is not a claim in damages at all, but is a claim in debt for a specified sum due on the happening of an event which has occurred. Accordingly, it should not be open to a person providing an indemnity to challenge his obligation to pay under the contract of indemnity by reference to principles relating to the assessment of damages for breach of contract which have no application to debts. Consequently, he submitted that the learned judge was wrong in principle in his approach as set out in the paragraph of his judgment quoted above.
In my judgment this submission is correct as a matter of law though, for reasons which appear later, I do not think it carries the plaintiff home on the facts of the present case."
"57. The suggestion that the claimant has failed to mitigate its loss or caused its own loss is equally misconceived. Under the Agreement the claimant had purchased and thus owned the entire debt and clause 12(1) made it clear that it was in the claimant's discretion whether and how to enforce any part of the overall debt. In those circumstances, it cannot be said that the claimant was in breach of the Agreement in failing to collect particular debts. Equally, failure to collect debts does not give rise to a defence of failure to mitigate under a contract of indemnity, as Mr Gunaratna recognised: see the decision of the Court of Appeal in Royscot Commercial Leasing Ltd v Ismail (29 April 1993) and Codemasters Software v Automobile Club de L'Ouest [2009] EWHC 3194 (Ch); [2010] FSR 13 per Warren J at [32]:
'The law, so far as I am concerned, is therefore that questions of mitigation do not arise under contracts of indemnity so as to give the indemnifier a defence to any part of a claim for which he would otherwise be liable under his indemnity. The line of authority considered is concerned with contractual indemnities. This should not be confused with a case where a claimant seeks to recover, as damages for breach of contract or in tort, his liability to a third party (whether as the result of a case taken to trial and judgment or as a result of a reasonable settlement). I see no reason why, in such a case, a defendant should not say that the liability (whether under the judgment or the settlement) should never have arisen but should have been reduced by reasonable steps in mitigation.'
58. Furthermore, in my judgment, the alternative contention that the claimant had caused its own loss by failing to collect all outstanding debts is not a contention which has any real prospect of success. The contention is entirely circular. Since it was in the complete discretion of the claimant whether and how it collected the outstanding debt, and the contention that by not collecting the debt it caused its own loss is no more than a contention of failure to mitigate by another name. I agree with the view expressed by Warren J at [37] of Codemasters (albeit that he did not decide the point) that such a contention is inconsistent with the decision of the Court of Appeal in Royscot, where Hirst LJ, giving the main judgment, accepted that as a matter of law, a party providing an indemnity cannot challenge his obligation to pay under the contract of indemnity which is a claim in debt, by reference to principles relating to the assessment of damages for breach of contract which have no application to debts."
"I only mention the point because, for the avoidance of doubt, I consider that the weight of authority, and the more orthodox view, is that a claim under a contract of indemnity is a claim in unliquidated damages - see the decision of the House of Lords in Firma C-Trade SA v Newcastle Protection and Indemnity Association (The Fanti) [1991] 2 AC 1, where Lord Goff held at 35G that 'I accept that, at common law, a contract of indemnity gives rise to an action for unliquidated damages, arising from the failure of the indemnifier to prevent the indemnified person from suffering damage, for example, by having to pay a third party.'"
"Just as in the area of damages for breach of contract the law has engrafted limitations on the basic principle of indemnity, so in the context of contractual indemnities the law has been concerned to examine critically the basic notion that the indemnifier is liable for all loss consequent on the stipulated condition, and this is so even where the indemnity clause expressly refers to 'all consequences'. The basic tool is one of construction, and this inevitably involves reference to the reasonable contemplation of the parties. Thus, in the absence of express language, an indemnity will not cover loss caused or contributed to by the negligence of the party who invokes the indemnity: The Fiona [1994] 2 Lloyd's Rep. 506. Nor will an (implied) employment and indemnity clause cover matters which are an ordinary incident or expense of a voyage and the risk of which rests on the owners, even though they are consequent upon complying with the charterers' orders: The Aquacharm [1980] 2 Lloyd's Rep. 237 at pp. 244-245. Causation is similarly used, as in the case of damages, to limit the scope of such indemnities, and here too questions of construction cannot be avoided."
The conclusions summarised by Rix J at 432 included the following:
"First, I have already stated that in my view cl. 36 is not an indemnity clause. If, however, I am wrong about that and it is an indemnity clause, it is nevertheless one which tracks a contractual obligation, so that the same failure which triggers an indemnity would also constitute a breach of contract. In such circumstances one would expect that there should be no difference between the test of causation in the one case, indemnity, and the other, breach of contract. Nor, in my view, should one contemplate a difference in overall responsibility under the clause. It would be odd in such circumstances if owners were legally liable to indemnify a loss which was not recoverable for breach of contract, and vice versa.
Secondly, even assuming that language such as 'any loss' etc. has the same effect as 'all consequences', it is not in fact 'all' consequences that are the subject matter of an indemnity. The indemnity is curtailed by a process of construction. It is only consequences that are proximately caused that are covered. The indemnity, absent express language, will not cover consequences caused or contributed to by the negligence of the party in whose favour the indemnity is given.
Thirdly, I see force in the argument that, as a matter of construction, a fortiori under a clause where the indemnity is triggered by a breach of contract, the indemnity is subject to the same rules of remoteness as are damages, including the rules under Hadley v. Baxendale. Thus 'all consequences' would mean 'all consequences within the reasonable contemplation of the parties'. If the law is prepared to select some consequences as relevant and others not, and in contract to do so in accordance with the reasonable contemplation of the parties, then absent clear language to the contrary I do not see why the parties should not be viewed as intending to cover only consequences which are reasonably foreseeable and not consequences which are wholly unforeseeable. … In my view, … at any rate where the indemnity is triggered by a breach of contract, the indemnity as a matter of construction, absent contrary provision of which 'all consequences' is not to my mind an example, only covers foreseeable consequences caused by that trigger. I need not decide whether the same is true of an indemnity clause where the indemnity's trigger is not a breach of contract.
Fourthly, whether or not that point of construction is correct, in my judgment it is always relevant to the issue of causation that the subject matter of a claim for an indemnity is either wholly or in part foreseeable. That is so when the issue of causation arises in a claim for breach of contract (Monarch), and I do not see why it should not be so when the issue of causation arises in a claim for an indemnity.
Fifthly, the relevance of the unforeseeability of the subject matter of a claim for an indemnity remains even though the reason for the unforeseeable loss predates what is relied on as the trigger of the indemnity."
"The extent of a person's liability under an indemnity depends on the nature and terms of the contract, and each case must be governed, in general, by its own facts and circumstances."
Staughton LJ went on to hold that the clause in the charter did not, on its true construction, permit recovery of losses that were too remote to be recoverable as damages.
"It is common to refer to a chain of causation between the wrongful act and the plaintiff's loss, and to an intervening act which may or may not break the chain. If that is always the appropriate metaphor, of course it must follow that an event occurring before the wrongful act cannot break the chain. It is as simple as that. But I for my part do not accept that the chain metaphor is an appropriate one for causation in contract. Instead one has to ask whether in common sense the wrongful act was a cause of the plaintiff's loss, or whether something else was."
Causation: prior events
"(3) In order to manage the risk from asbestos in non-domestic premises, the dutyholder must ensure that a suitable and sufficient assessment is carried out as to whether asbestos is or is liable to be present in the premises.
(4) In making the assessment—
(a) such steps as are reasonable in the circumstances must be taken; and
(b) the condition of any asbestos which is, or has been assumed to be, present in the premises must be considered.
…
(6) The dutyholder must ensure that the assessment is reviewed without delay if—
(a) there is reason to suspect that the assessment is no longer valid; or
(b) there has been a significant change in the premises to which the assessment relates."
Causation: the scope of remediation works
- The concentrations and distribution of asbestos across the Site indicate a potential environmental (that is, human health) risk, from the presence of ACMs, associated with development of the Site.
- The Environment Agency's guidance applicable in 2015 indicated that only the top 100mm of soil influenced the dust generation pathway, so that only free asbestos fibres in the top 100mm would be of concern. Even significant concentrations of hazardous fibres would be acceptable under playing fields, parks and amenity areas, provided (a) that they were undisturbed and (b) that well established and properly maintained vegetation could provide adequate protection from disturbance.
- The area set aside for public open space would in any event (that is, regardless of the presence of asbestos) require a capping layer or growth medium.
- In selecting the optimum remediation strategy in terms of sustainability, the appropriate approach is that set out in "Contaminated Land: Applications in Real Environments" ("CL:AIRE") (2010). Sustainable remediation is a balance of three factors—economic/political, social and environmental—over the life-time of a project. Selection of the optimum strategy "should be based on a robust options appraisal, taking account of technical, financial, commercial, political and sustainability elements", and the balance of those factors may vary with time.
- "It was less acceptable to stakeholders back in 2015 to have left asbestos in situ than it is now (2019), considering we (that is, the technical community, having benefited from extensive technical research and developments in asbestos risk management undertaken by the Society of Brownfield Risk Assessment in 2015) are now overall more informed and experienced in assessing risks from asbestos which is commonly present at brownfield sites."
1) Option 1: £50,000 to £60,000: This was a de minimis approach, leaving asbestos on site unless it were excavated in the course of development. This strategy would have been "feasible in respect of breaking the pathway between asbestos in situ and human receptors", and it would have been "the most sustainable and cost-effective approach". However, it would have been "unlikely to be acceptable perceptionally, politically, commercially and historically where there are more factors than simple technical issues being considered" and "may have resulted in a negative perception of the land by a potential purchaser". Importantly: "This option would typically only be acceptable for a development on land owned by the developer where current and future risks can be understood and managed during construction and long term operation, with recognition of potential future legacy liabilities." In their oral evidence, the experts confirmed that they had discounted Option 1 at the outset, although Ms Cleverley sought at trial to revive it in heavily modified form.
2) Option 2: £1.1m to £1.2m: This was the strategy adopted by the Welsh Government: excavation of all impacted materials and disposal off-site, without picking or removing ACMs, with import of replacement unimpacted fill. It was the option that would be "most attractive to a risk-averse landowner with potential purchaser with high risk perception associated with a sensitive proposed land use." It was the option that best minimised the risk from asbestos, "therefore best addressing perceptional, political and commercial risks", and it was the option that rendered the site most attractive for a potential purchaser or developer. However, it was the least sustainable and "the last resort in terms of waste management options according to what is best for the environment". It was also the most expensive option.
3) Option 3: £725,000 to £810,000: This involved excavation of all impacted material and then a pick-and-sort exercise, with the waste disposed of according to its classification. Imported fill would replace waste materials. This strategy reflected the advice of Terra Firma Wales Limited, attached as Annex A to the Apex Report, that "if the ACM can be effectively isolated from the soil, there is scope to generate some non-hazardous soils." The joint statement commented: "It was considered that the risks associated with Option 3 would be the same as Option 2 as all asbestos impacted material is removed off site. However, the disposal costs would be reduced due to the sorting of ACMs and more extensive waste segregation."
4) Option 4: £610,000 to £700,000: This was essentially similar to Option 3, save that landfill tax would be avoided by the disposal of sorted material to a waste transfer treatment facility and a soil treatment facility. The joint statement commented: "Risks for Option 4 are as Option 3, but the feasibility is reliant on there being a waste-receiving facility with appropriate permit, which is understood to currently be feasible in South Wales. Therefore, this is potentially a lesser cost option than Options 2 and 3 for the same risk profile."
5) Option 5: £550,000 to £625,000: This was: "Pick and sort impacted materials by licensed contractor to remove ACMs, retain hard core / gravel materials for re-use on site, dispose of fines containing residual asbestos fibres." The experts considered that this option would "address" operational risks and "reduce" the construction and maintenance risk. "The acceptability of [the latter] risk would depend on the landowner, developer and proposed purchaser/occupier (sic) perception of risk. However, based on 2019 industry knowledge and experience, such risks are typical of those expected on any brownfield field site, especially where a construction platform has been imported." Option 5 would also be a sustainable approach.
6) Option 6: £425,000 to £480,000: This was: "Pick and sort impacted materials, using a licensed contractor. Retain hard core and soils with residual asbestos fibres where possible under development. (Capping layer / growth medium over public open space area.) Removal of impacted materials around service runs (assume road construction area)." It was noted that this was the solution that Ramboll recommended in 2018. The experts considered that it "would address the operational risks and, by replacing the Made Ground in the highway corridor, further reduce the construction and maintenance risks. There would still be a small residual risk due to residual but low level asbestos fibres in the sorted soil/hardcore matrix … [but] [t]his residual risk is likely to be of a similar level as expected from a brownfield development site in a historical industrial setting and/or with a construction platform." "This option is in greatest compliance with the waste hierarchy, [and] the most sustainable and cost effective."
"Options 5 and 6 are the current most acceptable remediation methodologies and most compliant with the waste hierarchy. The selection of the preferred option is likely to be a function of the political and future commercial risks and risk perception and appetite of the purchaser."
"The importation of this material would have effectively 'capped' the asbestos. According to Environment Agency guidance, 'only the top 100mm of soil influences the dust generation pathway', i.e. the pathway between asbestos in soil and human receptors. By capping the site with imported fill (assuming this fill did not contain any contaminants), the pathway would have been broken. A picking exercise would likely still have been needed to prevent vehicle movements from breaking up the asbestos fragments that were visible at surface."
"It would have been practical in terms of remediating the site. In terms of doing an options appraisal—if you were just considering a remediation options appraisal (which is what myself and Jo Strange did) to remedy the situation—that would have been tenable. In terms of the proposed use later on it might have been tenable. It depends exactly what was intended to be done and what foundations were required for the structure more than anything—the building for the university campus. I haven't looked into those options; I don't know if anybody has at this stage. Whether they were going to be raft foundations or pile foundations: yes, that would affect essentially what was going to happen."
She said that, though the foundations would have been likely to go below the level of any cap, the building itself would break the pathway. Her conclusion was that any of the six options would be "tenable", but that the best solution would be a combination of Option 1 and Option 5 (transcript, day 6, page 86) or maybe of Option 1 and Option 6 (transcript, day 6, page 92). The cost of such a combination would be somewhere between £100,000 and the figure for Option 5 or Option 6; she had not undertaken a costing exercise.
Conclusion