Contributory negligence in construction claims

A claimant's damages can be reduced where by his own fault he has contributed to causing his loss. It is quite arbitrary when this happens.

A problem

Consider this everyday type of problem. A contractor who is erecting a new building discovers that the roof is wonky. The sub-contractor who designed and installed the roof refuses to re-lay it. The contractor replaces the roof so as to obtain practical completion. He then seeks to recoup his losses from the roofer.

The roofer tries to reduce his otherwise clear liability for breaching the sub-contract. He blames the contractor for the unevenness of the walls on which the roof was built.

Would the contractor's damages be reduced to account for his share of the blame? The answer depends upon whether the Law Reform (Contributory Negligence) Act 1945 applies.

The 1945 Act – importance of the defendant's "fault"

The 1945 Act says that where someone suffers loss partly as a result of his own "fault" and partly the "fault" of another, his damages are to be reduced in proportion to his degree of responsibility.

The critical issue is whether the defendant is at "fault" as defined by the Act. This turns on the nature of the duties breached by the defendant. In our example, the 1945 Act would apply if the roof were wonky because the roofer had breached both:

• a contractual duty of care (such as a term requiring the exercise of reasonable skill and care) and
• a duty of care to the contractor in tort.

It would then be a matter of reducing the contractor's damages in proportion to his degree of fault (see below).

The 1945 Act would not apply if:

• The roofer owed no duty of care to the contractor in tort. The preferred view is that a breach of a contractual duty of care alone is insufficient for the 1945 Act to apply. In recent times the TCC judges have disagreed about when a duty of care is owed where, as in our example, only economic loss has been suffered (as opposed to physical damage or harm – see "Confused? You will be" elsewhere in this issue). This makes it hard to predict when the 1945 Act applies. According to the approach adopted by Judges Hicks and Seymour the roofer probably owed the contractor a duty of care not to cause economic loss in respect of his design (but not the quality of his workmanship). Judge Toulmin would agree if he considered the roofer a "designer performing services of a professional or quasi-professional nature". Judge LLoyd would probably say that the roofer owed no duty of care at all not to cause economic loss. Of these judges only Judge Toulmin currently sits in the TCC.
• The roofer breached a strict duty (as well as the two duties set out above) that also caused the contractor's loss - such as a duty to provide a roof that was fit for purpose or properly aligned. The Court of Appeal held in Barclays Bank v Fairclough Building that the 1945 Act is excluded insofar as the parties' contract sets strict duties.
• The roofer's contractual duty required a higher standard than exercising reasonable skill and care. In the recent case of Rolls Royce v Ricardo the defendant contracted to provide goods and works that were "new and of first class quality". Judge Seymour QC held that this set a standard which was higher than merely undertaking the provision of services with reasonable skill and care and therefore excluded the 1945 Act.

As should be apparent: the 1945 Act applies somewhat arbitrarily. A defendant who breaches a duty of care in tort and is negligent can obtain a reduction in the damages he has to pay. He does not if the loss was also caused by him breaching a strict or stricter contractual duty or it appears if he owes no duty of care in tort.

Excluding the 1945 Act

As we have seen, parties can contract out of the 1945 Act. In our example the sub-contract might say that no approval of, or failure to correct, the roofer's design or the works affects the contractor's rights. Provisions such as these are regularly included in construction contracts.

A just and equitable reduction of the claimant's damages to allow for the claimant's "fault"

In our example it is unlikely that a reduction would be made for the contractor failing to highlight errors in the roofer's design or construction. It would be wrong in principle if the contractor were penalised for not preventing the roofer from breaching his sub-contract.

On the other hand it is likely that a reduction would be made for the contractor failing to co-ordinate the wall design with the roof design (assuming this was not the roofer's responsibility) and for failing to provide an even wall.

The reduction would be made even if the contractor had not breached a term of the sub-contract. It is sufficient if he has failed to take reasonable care to protect his interests. This can make the basis for a deduction very wide indeed. That said the contractor might have a claim against his consultant or the blockwork subcontractor. This shows how when the 1945 Act applies it can lead to a proliferation of claims.

Causation and mitigation of loss

Where the 1945 Act does not apply a court can still find that the claimant's failings (and not the defendant's breaches) caused his losses. In our example the court might find that the true cause of the wonky roof was the uneven walls – although it is hard to see how the roofer, having built on them, might avoid any responsibility.

Alternatively the court might find that the contractor should have acted when the roof was only half built and in doing so failed to mitigate his loss. The contractor's damages could then be reduced to the amount it would have cost to remedy the roof when it was half built.

Conclusion

The example raises issues that apply in other construction contracts and not just sub-contracts. It also shows that the law on contributory negligence is arbitrary, confused and ripe for change.