Many thanks to Marion Smith QC of 39 Essex Chambers, who provided a fantastic interactive talk to the Simmons & Simmons LLP insurance and construction teams across London, Bristol and the Middle East this morning (17 April 2018).
The session highlighted where there might be advantages to bringing a tort claim alongside one in contract, looking at matters such as:
- when the cause of action arises in contract and tort, and the corresponding impact on questions of limitation (although see our article here on limitation issues in tort)
- the different (arguably) remoteness tests in contract and tort, and
- the different processes for calculating damages in respect of a claim in contract and a claim in tort.
The session also covered pure economic loss and the complex structure theory, including the case of Linklaters Business Services v Sir Robert McAlpine Ltd.
Marion raised an interesting point in relation to relationships within the context of construction projects. In circumstances where a builder has entered into a contract with the main contractor and has caused pure economic loss, the question often asked is whether the builder also owes a tortious duty of care to the main contractor.
Our article here summarises the key principles governing establishing a duty of care. There are circumstances in which professionals will be taken to have assumed tortious liability for economic loss through the doctrine of assumption of responsibility (see for example our blog post on the architect’s negligence case of Lejonvarn v Burgess here). Although it is an established principle that a builder owes a duty of care to its employer to take reasonable care to protect it from suffering property damage or personal injury, a builder entering into a construction contract does not usually assume tortious liability in relation to latent defects giving rise purely to economic loss (see for example Robinson v PE Jones (Contractors) Ltd). In the Robinson case, it was held that the builder was not being paid for specialist/professional advice so there was no ‘special relationship’ between the parties, and, as the contract detailed what the parties had agreed in respect of allocation of duty of care and assumption of responsibility (including the exclusion of pure economic loss), additional tortious duties should not be imposed.
These issues are of particular interest for the insurance and construction teams, and arise on a regular basis in respect of the claims we are dealing with, here at Simmons & Simmons LLP.
This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.