In Flanagan and another v Greenbanks Ltd (t/a Lazenby Insulation) and Cross  EWCA Civ 1702 the Court of Appeal, by a 2:1 majority, provided guidance on assessing whether there had been a break in the chain of causation, applying the principles previously set out in Borealis AB v Geogas Trading SA  and demonstrating that this is an issue which is still ripe for discussion.
Mr Cross, a surveyor, put a proposition to Lazenby, a contractor, that he could deliver customers to Lazenby for cavity wall insulation (CWI). As nothing was recorded in writing, contractual terms were implied. Lazenby was a member of two out of the three trade bodies with governing standards for CWI, which set out guidance on inspection standards (the British Board of Agrement (BBA) and Cavity Insulation Guarantee Agency (CIGA)) and Mr Cross was not. Additionally, Lazenby's T&C's with the homeowners included clauses to the effect that, if Lazenby began installation but found that the structure of the home was not suitable, Lazenby was entitled to terminate the contract. More than once throughout their relationship, Lazenby's installers had been required to make use of this clause.
In November 2005 one of Mr Cross' employees failed to check that two homes were suitable for CWI. In September 2006 Lazenby went ahead and installed the CWI, admittedly failing itself to check the suitability of the homes. The original claim by the homeowners against Lazenby was settled but Lazenby served an additional claim against Mr Cross.
The judge at first instance held that Mr Cross had breached an implied contractual term to ascertain suitability and although Lazenby should also have checked before installing, its failure to do so did not break the chain of causation. Mr Cross was, therefore, liable for his breach of contract, which the Court of Appeal’s agreed was the major cause of loss.
The judge, with whom the Court of Appeal agreed, considered the analysis of the law and desirable approach set out in Borealis AB v Geogas Trading SA  EWHC 2789 (Comm):
“First, …the legal burden of proof rests throughout on the claimant to prove that the defendant's breach of contract caused its loss.
Secondly, in order to comprise a novus actus interveniens [i.e. an intervening act which breaks the chain of causation], so breaking the chain of causation, the conduct of the claimant "must constitute an event of such impact that it 'obliterates' the wrongdoing…” of the defendant:
Thirdly, it is difficult to conceive that anything less than unreasonable conduct on the part of the claimant would be capable of breaking the chain of causation. It is, however, also plain that mere unreasonable conduct on a claimant's part will not necessarily do so…
Fourthly, the claimant's state of knowledge at the time of and following the defendant's breach of contract is likely to be a factor of very great significance…the more the claimant has actual knowledge of the breach, …the greater the likelihood that the chain of causation will be broken…
Fifthly and ultimately, the question of whether there has been a break in the chain of causation is fact sensitive, involving as it does a practical inquiry into the circumstances of the defendant's breach of contract and the claimant's subsequent conduct…."
The issue was whether the negligent survey by Mr Cross’ employee was “obliterated” by Lazenby's own negligence in failing to make its own checks?
It was argued on behalf of Mr Cross that industry standards place ultimate responsibility for a suitability check on the installer, that Mr Cross could not reasonably have foreseen Lazenby's negligence, and that Mr Cross' role was considerably less than that of Lazenby since his visit and the decision could not bind it.
Lazenby submitted that its contractual arrangement allowed it to rely on Mr Cross' expertise and its T&Cs with the householders did not impose an obligation to inspect (and in any case such obligation would not add anything to the terms of the BBA regulation), rather it permitted termination if at installation the structure were deemed unsuitable. Lazenby presented to the judge the then current Assessors Guide which it argued placed responsibility on the assessor to determine suitability for CWI. The implication being that Lazenby arrived to fit CWI with a natural expectation of suitability. Its failure, negligent but not reckless, did not obliterate the wrongdoing of Mr Cross.
The Court of Appeal held that:
"the overwhelming difficulty Mr Cross cannot surmount is in my judgement the powerful word used to describe the position at law…He fails to establish that what Lazenby did wiped out what he had already done, that is self-labelling his services as those of a surveyor and contracting with an entity whose MD had explained its 100% reliance on him."
The Court of Appeal emphasised the point that, although Lazenby's failures were undoubtedly unreasonable and negligent, mere unreasonable conduct on a claimant's part will not necessarily break the chain of causation.
Interestingly, the decision was only reached by a majority. In a dissenting opinion, Lady Justice Macur advocated a less literal application of the word “obliterates” when applying the Borealis test and stated that:
"the Respondent [Lazenby] is unable to establish that the Appellant's [Mr Cross] breach of contract and negligence remained "an effective cause of loss." The primary breach of contract was superseded by the subsequent negligence to all practical effect."
The majority judgment shows that there is still plenty of scope for disagreement as to precisely how this test should be applied in a particular case. Ultimately, the question of whether an act breaks a chain of causation remains highly fact sensitive.