Legal Developments In Construction Law - September 2018

1. Supreme Court rules bank owes no duty of care for gambler's credit reference

   A bank was asked to provide a credit reference in respect of a customer. The request came from Burlington Street Services Ltd, a company acting for the Playboy Club, but the true purpose of the inquiry, and the fact that the reference was required for the benefit of another company was not disclosed. The bank confirmed that the customer had an account with them and was trustworthy up to £1.6 million per week but the account was not opened until two days after the reference was sent and had a nil balance until it was closed two months later. The Club was left with losses when the customer's cheques were returned unpaid and sued the bank, claiming that the bank owed it a duty of care in giving the reference.

   The Court of Appeal said the only party owed a duty of care was Burlington but the Club appealed to the Supreme Court, claiming that it was owed a duty of care because, borrowing the contract law agency concept, it was Burlington's undisclosed principal.

   In rejecting the Club's appeal the Court said that it does not follow from the fact that a non-contractual relationship between two parties is as proximate as a contractual relationship, that it is legally the same as a contractual relationship or involves all of the same legal incidents. Whether a relationship is sufficiently proximate to give rise to a duty of care is essentially a question of fact from which the law draws certain conclusions. The liability of a contracting party to its counterparty's undisclosed principal, however, is not a legal conclusion from any factual relationship between them. A person may be brought into contractual relations with someone with whom they have no factual relationship at all. Such a relationship is by definition not proximate nor, in any relevant sense, voluntary or consensual so as to give rise to an assumption of responsibility. And the law on undisclosed principals is a complex bundle of interrelated rights and liabilities, most of which are entirely inapposite to tort law.

   The Bank had no reason to suppose that Burlington was acting for someone else, and they knew nothing of the Club. In those circumstances, it was plain that they did not voluntarily assume any responsibility to the Club.

   Banca Nazionale del Lavoro SPA v Playboy Club London Ltd & Ors [2018] UKSC 43

2. Court of Appeal confirms contract clause bars eot for concurrent delay

   A building contract clause said that, where there was a delay for which the contractor was...