Construction: Sub-Contractors - Concurrent Duty of Care in Contract and Tort

The Technology & Construction Court (TCC) has held that a sub-contractor may owe a duty in tort to its direct contractor, in addition to the duties it owes in contract.

Our previous LawNow article Construction: can a sub-contractor be liable for economic loss considered the decision of the TCC in Linklaters Business Services v Sir Robert McAlpine Limited to dismiss a strike-out application by the sub-sub contractor Southern Insulation (Medway) Limited. In that case, it was deemed that Southern could, as a matter of legal theory, owe a direct duty of care to the main contractor's employer.

The court has now considered a further strike-out application by Southern, made in the context of separate proceedings against Southern by its direct contractor, How Engineering Services Ltd. The claim by How against Southern alleges a concurrent duty in tort and is for damages equal to such sum as How might be held liable for to McAlpine (under a sub-contract or in tort) or to Linklaters (in contract via McAlpine's collateral warranty, or in tort).

The issues for determination in this strike out application were: (a) whether Southern owed How a concurrent duty of care in tort, in addition to its contractual obligations; and, if so, (b) whether the scope of such duty extended to cover How's liability to McAlpine and Linklaters.

Existence of Duty of Care

In addition to contractual duties, Mr Justice Akenhead determined that there is a concurrent tortious duty of care owed by sub (or sub-sub) contractors to their direct contractor to exercise reasonable skill and care in carrying out the works that they are contractually engaged to execute. That duty of care will be defined by reference to the contractual responsibilities and liabilities assumed by the parties. However, the concurrent tortious duty may extend beyond any limitation date set out in the contract or deed, up to the 15 year long stop date within which a claim for negligence must be pursued.

Scope of Duty

The scope of that duty is such that a contractor may recover damages from its sub-contractor for any economic losses that it is liable to pay the employer, relating to the reasonable costs of putting right negligently executed works carried out by the sub-contractor. This is on the basis that the cost of those remedial works is within the scope of the contractual and tortious duties. A sub-contractor may therefore find itself facing a claim even though it might arise: (a) from duties arising as a...