Concurrent tortious duties in defect claims: where are we now?

A recent TCC decision is the first to consider the extent to which the Court of Appeal’s decision in Robinson v PE Jones prevents claims for pure economic loss arising from defective workmanship or materials being made in reliance on a tortious duty of care arising concurrently with contractual obligations. The decision, relating to an application for summary judgment, suggests that such concurrent duties remain arguable depending on the circumstances of the case. In addition to the Court’s analysis of these issues, this Law-Now provides a summary of the reasons why concurrent duties in tort provide a useful addition to contractual rights.

Concurrent liability in construction claims

Claims for defective or poorly performed construction work have traditionally been made both in contract and under the general law of “tort” (or “delict” as it is known in Scotland) which imposes liability for certain negligent acts. Tortious liability arises independently of any contract but may also apply alongside contractual duties (a situation known as “concurrent liability”). Concurrent tortious liability can sometimes provide an advantage over contractual liability in the following ways:

• Under English law, the limitation period for contractual claims varies depending on whether the contract is executed as a deed (where the applicable period is 12 years) or under hand (where the period is 6 years). Whilst the basic limitation period for claims in tort is 6 years, this is able to be extended in latent damage cases to 3 years from the date on which claimant knew or ought to have known the facts necessary to bring a claim (up to a maximum of 15 years).
   
• The commencement of the limitation period for tortious claims may be later than for contractual claims, due to the rule that contractual claims accrue on breach whereas tortious claims accrue when damage occurs. For example, tortious claims for defects against subcontractors will accrue on practical completion of the main contract works (or possibly when a claim is made by the employer), whereas contractual claims will ordinarily accrue on the, usually earlier, completion of the subcontract works.
   
• Tortious claims may not be caught by contractual prohibitions against assignment.
   
• The rules on remoteness of damage are more generous in tort than in contract, however recent caselaw has held that these more generous tortious rules do not apply where tortious liability is concurrent with liability in contract (Wellesley Partners Ltd v Withers LLP).

In the 2011 case of Robinson v PE Jones, the Court of Appeal concluded that concurrent duties in tort in relation to pure economic loss arising from defective work or materials would not ordinarily arise in a construction contract. Tortious liability for defects themselves was held to require an assumption of responsibility like that which occurs in professional relationships such as in the appointment of an architect or engineer. This has left a measure of uncertainty as to the position of design and build contractors.

Sheffield Teaching Hospital Foundation Trust v Hadfield Healthcare Partnerships Limited

The Sheffield Teaching Hospital Foundation Trust (the “Trust”) entered into a PFI Project Agreement with Hadfield Healthcare Partnerships Limited (“Hadfield”) for the design and construction of a new ward block at the Northern General Hospital in Sheffield (“the Hadfield Wing”). Hadfield entered into a construction subcontract with Kajima Construction Europe (UK) Limited (“Kajima”). The Hadfield Wing achieved practical completion on 26 March 2007.

In 2017, the Trust identified potential defects in the fire compartmentation and other fire protection works of the Hadfield Wing. The Fire & Rescue Service determined that the Hadfield Wing was an excessive risk to persons in case of fire and as a result it was vacated for medical use. The Trust commenced TCC proceedings against Hadfield in 2020 seeking damages in the region of £13 million. Hadfield subsequently made a Part 20 claim against Kajima which relied on concurrent duties in tort as well as contractual rights.

Kajima issued an application seeking summary judgment/strike-out of parts of the Part 20 Claim. One of the issues on which summary judgment/strike-out was sought was the extent to which Hadfield’s claims in tort were sustainable in light of Robinson v PE Jones.

The Decision

In reviewing the judgments of the Court of Appeal in Robinson, the Court derived the following principles:

1. When A assumes responsibility to B in the sense described in previous cases such as Hedley Byrne & Co Ltd v Heller & Partners Ltd, A comes under a tortious duty to B, which may extend to protecting B against economic loss.
    
2. The existence of a contract between A and B does not prevent such a duty from arising.
    
3. The existence of a contract between A and B does not automatically give rise to such a duty of care in tort co-extensive with the contractual terms and carrying liability for economic loss.
    
4. It is necessary to consider the relationship between the parties, together with the factual and any contractual matrix, to ascertain in any given case whether A assumed responsibility to B in the Hedley Byrne sense, to give rise to a concurrent duty of care in tort.
    
5. The allocation of risk in the contract between A and B, including any exclusion or limitation of liability, on a proper construction, may preclude the imposition of any duty of care in tort, as it did in Robinson.

Of particular note, Mrs Justice O’Farrell accepted Hadfield’s argument that whether a concurrent duty in tort may arise in respect of pure economic loss arising from defective workmanship or the use of defective materials in the performance of a construction contract “remains unsettled and is controversial”. This contrasts with comments by one of the appeal judges in Robinson that, “it must now be regarded as settled law that the builder … does not by reason of his contract to construct or to complete the building assume any liability in the tort of negligence in relation to defects in the building giving rise to purely economic loss.”

A number of reasons were given by the Court for why Hadfield’s position was not precluded by Robinson:

• There was a reasonable argument that Robinson could be distinguished because the contract in this case contained both design and workmanship obligations, did not contain any exclusion of Kajima's liability in tort to Hadfield (as was the case in Robinson) and must be construed in the context of complex PFI contractual arrangements.
   
• Robinson does not preclude the existence of a concurrent duty of care in tort where the factual circumstances give rise to an assumption of responsibility. That assumption of responsibility was referred to in Hedley Byrne as arising through the exercise of a “special skill”, undertaken for the assistance of another.
   
• Mrs Justice O’Farrell considered that Hadfield were “right to question, as a matter of law, whether there is any basis on which building contractors should be distinguished from other professionals when ascertaining whether there has been any Hedley Byrne assumption of responsibility.” The Judge noted that the range of recognisable professions has considerably expanded and within the construction industry today there are many disciplines of special skill and expertise which could be described as professional.

For these and other reasons Kajima’s summary judgment application was refused.

Conclusions and implications

This is the first TCC judgment to directly consider the extent to which the Court of Appeal’s decision in Robinson prevents claimants from relying on concurrent duties in tort when pursuing workmanship or materials claims for pure economic loss. Much commentary has been written on Robinson since it was decided in 2011 and the present judgment suggests that greater scope exists for such claims than some commentators have been prepared to allow.

The Court’s decision emphasises that each claim will depend on its facts and to be successful the claimant will need to show an assumption of responsibility which will often involve the identification of a “special skill”. The door has been opened to arguments which seek to meet this test by reference to the many and varied skillsets utilised in the modern day construction industry.

Further clarity may be received if this case proceeds to trial as planned later this year where the Court will be required to determine the precise extent of any tortious duties which arise in this case. Subject to that, it would appear that reliance on concurrent duties in tort is likely to remain a feature of construction claims for defective work or materials for some time yet.

References:

Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465

Robinson v PE Jones (Contractors) Ltd [2011] EWCA Civ 9

Wellesley Partners Ltd v Withers LLP [2015] EWCA Civ 1146

Sheffield Teaching Hospital Foundation Trust v Hadfield Healthcare Partnerships Limited [2023] EWHC 644