Professional Negligence In The Construction Field

Construction professionals, as with other professionals, may be

liable to their clients and third parties for damage and loss

caused by the professional's negligence. The starting point in

any professional negligence claim is to consider whether the losses

are recoverable in contract. However, liability in tort becomes

important where the contractual route is unavailable: where the

arrangement of commercial transactions results in no direct

contractual relationship between the parties, where one of the

parties has become insolvent or where the limitation period in

contract has expired.

Not every careless act or fault on the part of a professional

gives rise to liability in negligence, even where damage is

sustained by another as a result.1 In order to establish

a claim in negligence, it is necessary for a claimant to satisfy

the following requirements:

The existence in law of a duty of care

Behaviour that falls below the standard of care imposed by


A causal connection between the defendant's conduct and the


Damage falling within the scope of the duty

This paper examines the circumstances in which a duty of care in

tort will arise, the basis on which damages are recoverable in the

event of a breach of such duty and the impact of recent

developments in this area on construction claims.

1. The Circumstances In Which A Duty Of Care Will Arise

In the case of personal or physical injury, reasonable

foreseeability of harm is usually sufficient to give rise to a duty

of care in accordance with the "neighbour" principle

established in Donoghue v Stevenson2. However,

many construction cases involve claims for economic loss and in

such circumstances the test is less straightforward because of

limitations driven by policy considerations. An additional

complicating factor in construction cases is the contractual matrix

which has a significant effect on the scope of any tortious duty of


1.1 The Fall Of Anns

The high point for lawyers seeking to establish a duty of care

in tort was reached in 1978 with the decision of the House of Lords

in Anns v. Merton3, setting out a simple, two

stage test as to when a duty of care, including a duty not to cause

economic loss, would be owed in tort. Lord Wilberforce expressed

the test as follows4: order to establish that a duty of care arises in

a particular situation, it is not necessary to bring the facts of

that situation within those of previous situations in which a duty

of care has been held to exist. Rather the question has to

be approached in two stages.

First one has to ask whether, as between the

alleged wrongdoer and the person who has suffered damage there is a

sufficient relationship of proximity or

neighbourhood such that, in the reasonable

contemplation of the former, carelessness on his part may

be likely to cause damage to the latter in which case a prima facie

duty of care arises. Secondly, if the first

question is answered affirmatively, it is necessary to consider

whether there are any considerations which ought to

negative or reduce or limit the scope of the duty or the class of

person to whom it is owed or the damages to which a breach

of it may give rise.

However, following a flood of claims throughout the 1980s, the

tide turned and in 1990 seven members of the House of Lords swept

away over ten years of legal authority by departing from

Anns in Murphy v. Brentwood5 and

Department of Environment v. Thomas Bates6,

giving judgment in both on the same day.

Both Murphy (claim by subsequent purchaser against local

authority for negligent approval of plans for foundations) and

Bates (claim by lessees against builder for negligent

construction of load-bearing pillars) involved claims for economic

loss in negligence and both claims failed. In Murphy Lord

Oliver stated7:

"I have found it impossible to reconcile the liability

of the builder propounded in Anns with any previously accepted

principles of the tort of negligence and I am able to see no

circumstances from which there can be deduced a relationship of

proximity such as to render the builder liable in tort for pure

pecuniary damage sustained by a derivative owner with whom he has

no contractual or other relationship."

Since the builder owed no such duty, there was no basis on which

the local authority could owe a duty.

These landmark rulings did not affect the ability of a future

occupier of a building to recover damages against a construction

professional where the professional's negligence caused

personal injury or damage to other property8. However,

in cases of economic loss, damages were generally irrecoverable in

tort against a professional unless the claim could be brought

within the concept of negligent misstatement set out in Hedley

Byrne v Heller & Partners9. In Murphy

Lord Oliver explained that economic loss would not be recoverable

in negligence where the loss was too remote or where it would be

impossible to contain liability in other cases within acceptable

bounds (the "floodgates" argument) but10:

"The critical question ... is not the nature of

the damage in itself, whether physical or pecuniary, but whether

the scope of the duty of care in the circumstances of the case is

such as to embrace damage of the kind which the plaintiff claims to

have sustained...The essential question which has to be asked

in every case, given that damage which is the essential ingredient

of the action has occurred, is whether the relationship between the

plaintiff and the defendant is such – or, to use the

favoured expression, whether it is of sufficient

"proximity" - that it imposes upon the latter a duty to

take care to avoid or prevent that loss which has in fact been


Beyond British shores, in the jurisprudential Commonwealth,

however, things were different. The two stage test in

Annscontinued to find favour and the reasoning in

Murphywas not followed:

In Australia, in Bryan v. Maloney11,the High

Court held that a builder of a house owed a duty of care to a

subsequent purchaser of the house which extended to a duty not to

cause economic loss (the diminution in value of the property built

on inadequate foundations). Policy dictated that domestic dwelling

owners should have protection against the negligence of the

builder12 and the relevant proximity was held to be the

house itself.

In Invercargill City Council v.

Hamlin13, the New Zealand Court of Appeal

declined to follow Murphy, finding a local council liable

for the cost of repairs to the foundations of a house for which it

had approved the plans. The decision was upheld in the Privy

Council14, their Lordships accepting that New Zealand

was entitled to develop the common law in its own way and for its

own circumstances.

In Winnipeg Condominium Corp v. Bird Construction

Co15, the Supreme Court of Canada also declined to

follow Murphy, holding that a contractor could be liable in

tort to a future owner in respect of the cost of remedying a defect

which posed a real and substantial danger to the occupants of the


In Singapore, in RSP Architects Planners and Engineers v.

Ocean Front Pte Ltd16, the Court of Appeal also

declined to followMurphyand held that developers owed a duty

of care not to cause economic loss to the management corporation

which had taken over the management and administration of a


Malaysia initially appeared to follow

Murphy17but in Dr Abdul Hamid Abdul Rashid v

Jurusan Malaysia Consultants18 and then again in

Steven Phoa Cheng Loon v. Highland Properties19,

James Foong J. held that architects, engineers etc. could owe a

duty not to cause economic loss. In the former case20 he


To adopt the decisions in Murphy and D&F Estates

which are based on a foreign policy of no application here would

leave the entire group of subsequent purchasers in this country

without relief against errant builders, architects, engineers and

related personnel who are found to have erred.

More recently, there have been indications that some common law

jurisdictions are moving away from the Anns

test.21 However, the Anns test has been confirmed

in New Zealand as the appropriate test to determine whether or not

a duty of care should be found in new cases22 and in

Spandeck Engineering (S) Pty Ltd v Defence Science &

Technology Agency23 the Singaporean Court of Appeal

has proposed a single test comprising legal proximity and policy

considerations together with factual foreseeability.

1.2 The Tide Turns Again - Assumption Of


The decision in Murphy expressly preserved the principle

that economic loss could be recovered for negligent misstatement,

explained by Lord Morris in Hedley Byrne v Heller &

Partners24: should now be regarded as settled that if

someone possessed of a special skill undertakes, quite irrespective

of contract, to apply that skill for the assistance of another

person who relies upon such skill, a duty of care will


See also Lord Reid25:

There must be something more than the mere

misstatement ... The most natural requirement would be that

expressly or by implication from the circumstances the speaker or

writer has undertaken some responsibility.

And Lord Devlin26:

...the categories of special relationships which may

give rise to a duty to take care...include ... relationships which

...are 'equivalent to contract', that is where there is an

assumption of responsibility in circumstances in which, but for the

absence of consideration, there would be a contract.

In Henderson v Merrett27it was held that a

duty of care in tort was owed by managing agents to Lloyd's

names to avoid economic loss regardless whether there was any

direct contractual arrangement between them. Lord Goff28

considered the ambit of Hedley Byrne and the test to be

applied to determine the circumstances in which such a duty of care

would arise:

"We can see that it rests upon a relationship between

the parties, which may be general or specific to the particular

transaction, and which may...

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