Builders And Economic Loss

Does a building contractor owe his client a concurrent duty of care in tort and in contract in relation to economic loss? This age-old question was recently addressed by the Manchester TCC in Robinson v P.E. Jones (Contractors). The decision is likely to be of interest to builders as it clarifies the extent of their exposure to claims.

In 1991, P E Jones entered into an agreement with Mr Robinson whereby P E Jones would build and sell him a house. The house featured gas fires in two rooms which were served by chimney flues that P E Jones constructed. In 2006, two years after the gas fires failed a safety test, Mr Robinson started proceedings against P E Jones, claiming that the chimney flues had not been constructed properly.

The claim was well outside the limitation period for a claim in contract. So Mr Robinson was forced to argue that the building company owed him a duty of care in tort.

P E Jones argued that there was no duty of care and that it was an economic loss. The building company argued, relying upon the House of Lords case of Murphy v Brentwood, that a builder did not owe a duty of care in tort to an owner or an occupier where the loss was an economic loss.

In his judgement, Judge Davies sought to reconcile the case law. He stated that the general rule, on which P E Jones sought to rely, that a builder does not owe a duty of care to owners or occupiers is not intended to exclude circumstances where there was a "special relationship of proximity" for example, when the builder is also in a contractual relationship with a client.

In general terms, therefore, the Judge held that, in principle, a builder will owe a tortious duty of care to his client, concurrent with his duty in contract, in relation to economic loss. Practically, this ruling means that claimants are able to take advantage of the remedy, either under contract or tort, which is most favourable to them, making it easier for them to recover economic loss.

However, unfortunately for Mr Robinson, Judge Davies held that P E Jones had, through its Building Conditions, successfully excluded any duty in respect of any defect, error or omission in the execution or completion of the works save for the ten-year period covered by the National House Building Council's agreement (which was, by that point, time-barred). Judge Davies held that Mr Robinson could not challenge the...