Sainsbury’s Supermarkets Limited v (1) Condek Holdings Limited and others

The case concerned the design and construction of a modular car park at one of the supermarket’s London stores. Sainsbury’s brought a claim in contract against the first and second defendant companies and a claim in negligence against the third defendant, the inventor of the modular car park system and director of the first and second defendant companies, as well as the fourth defendant, a firm of structural engineers who had been involved in the design of the car park. Sainsbury’s alleged that the car park was defective as a consequence of inadequate design and construction and that it needed to be demolished and rebuilt, at a cost of approximately £5 million.

The third and fourth defendants applied to strike out, and for summary judgment in respect of the claims which had been brought against them.

Sainsbury’s accepted that its claim was one for pure economic loss.The first defendant, Condek, was the company with which Sainsbury’s had contracted for the design, construction and installation of the car park. Mr Pashouros was the owner and director of Condek, as well as the inventor of the car park system which had been used. It was argued by Sainsbury’s that Mr Pashouros’ duty arose on the basis that, as inventor, he had promoted the car park to Sainsbury’s and stood to gain financial if the project was successful.

Stuart-Smith J held that Sainsbury's claim against Mr Pashouros was bound to fail on the basis that all of the contractual documents showed that Sainsbury’s had contracted with Condek and that Mr Pashouros had acted for and on behalf of his company in all his dealings, in his capacity as director. The Judge emphasised that it was commonplace that a trader who transfers his business to a limited company will do so in order to benefit financially from its commercial exploitation. If it were the case that an inventor who wanted to make money will be taken to have assumed personal responsibility, by that fact alone and without more, despite trading through a limited company the main benefits of incorporation would be lost. Furthermore, although it was evident that Sainsbury’s was very experienced in the negotiating of construction contracts, it took none of the steps that could and would routinely be taken by an employer who wished to have the added security of an enforceable duty of care owed by someone other than the person who had contracted to procure the design and construction of the structure, such as by some form of bond or collateral warranty. Instead, it was content to contract with Condek alone. On that basis, the fact that Condek was now in liquidation was a risk that Sainsbury’s had chosen to take. In short, there was nothing to suggest that Sainsbury’s relied (let alone reasonably relied) on Mr Pashouros in his personal capacity rather than on Condek, with which it chose to contract (see paras 33, 35 of judgment). Williams v Natural Life Health Foods Ltd 2 All E.R. 577 applied.

Sainsbury’s case against the fourth defendant was struck out, inter alia, on the basis that Sainsbury’s had failed to plead either direct interaction between the fourth defendant and Sainsbury’s or any other facts from which an assumption of responsibility or the existence of a special relationship of proximity could reasonably be inferred (paras 51-53, 58, 63).

For further information, please refer to the judgment in Sainsbury’s Supermarkets Limited v (1) Condek Holdings Limited (formerly Condek Limited) (2) Condek Manufacturing Limited (In Administration) (3) Andres Pashouros (4) Capita Symonds Limited [2014] EWHC 2016 (TCC) LTL 30/6/2014 : QBD (TCC) (Stuart-Smith J) 24/06/2014 [2014] BLR 574 : [2014] TCLR 5 : [2014] CILL 3553

Helena White, instructed by SGH Martineau LLP, appeared for the Third Defendant, Mr Pashouros.