For a claimant to succeed in an action in tort (civil wrong), the person against whom the claim is being made must owe them a ‘duty of care’. The purpose of this rule is to prevent claims being made against persons who are remote from the claimant and thus could not foresee the loss that might result from their actions.
This doctrine is important in the building industry, since work is often subcontracted down through a chain of contractors.
In a recent case, a sub-subcontractor went to court seeking to prevent itself from being joined in a claim brought by the firm which had originally suffered a loss. The situation was that firm A claimed against B, which had subcontracted the work to C, which had subcontracted it to D. D argued that it owed A no duty of care with regard to its substandard workmanship and went to court to argue that the claim against it (it was joined in the claim by B) should be struck out.
It argued that it had no contract with A and that A’s loss was purely economic. Established law is that in the absence of a ‘special relationship of proximity’ the law of tort imposes no duty of care to safeguard a claimant against economic loss. This principle prevents the chain of liability from becoming (potentially) infinitely long.
The Technology and Construction Court declined to rule that the claim against D could not be brought.
The other question which will be addressed in this case is that of ‘complex structure’. Established case law provides that even where there is a duty of care, the resultant economic loss can only be claimed for with regard to ‘other property’, not with regard to the object itself. In the case of a building, however, is the object the building as a whole or is the building a complex structure made up of individual components? If the latter, then damage to one part allows a claim in tort to be made in relation to the other parts.
In the case in point, the claim relates to insulation material which was incorrectly applied to pipework. If the court decides that the insulating material is an integral part of the building as a whole, then there will be no claim. If, on the other hand, it is ancillary equipment which is not part of the building as a whole, and therefore the rest of the building is ‘other property’, then the claim may be able to be made.
This case differs from most otherwise similar ones in that the claim was brought directly by the firm that suffered the damage, and the claim was brought in tort, not contract, because a claim under the law of contract would have been out of time.
The ruling of the Court may well have a significant impact on firms in the construction industry. Mr Justice Akenhead noted that the case will need to examine ‘the extent of the duty of care owed by those in the position of subcontractors’ where their work ‘causes consequential damage to other elements of the building’.
Contact Bill Duncan on 01752 292362 for more information.