Stephen Clarke’s case notes

James Andrew Robinson v PE Jones

Court of Appeal, January 2011

In December 1991 Mr Robinson agreed to buy a new-build house from PE Jones (Contractors) (“the contractor”). During construction of the house Mr Robinson decided that he wanted an extra gas fire in one of the living rooms, which meant an extra chimney flue was necessary.

The house was completed in April 1992 and all seemed well. However, in September 2004 British Gas was instructed to service the extra fire and, due to what was described as “a poor flue run”, the engineers had to disconnect the gas to the fire. Mr Robinson was concerned enough to obtain an expert’s report, which stated that the flue had not been constructed in accordance with good building practice or with the Building Regulations at the time.

Mr Robinson then wrote to the contractor with his report and a price to repair the defect of £35,000. Negotiations between the parties were unsuccessful and proceedings were issued in December 2006. Unfortunately they were not issued in the Technology and Construction Court and the Court of Appeal stated that this led to a substantial delay.

Notwithstanding this, at the hearing in January 2011, the Judge stated that a clause in the building contract excluding a claim in tort (ie negligence) against the contractor prevented any such claim and, (unfortunately for Mr Robinson), any claim in contract was now out of time. The importance of the tort issue was that if a claim in negligence were possible then the limitation period would be different because of the Latent Defects Act (which extends the limitation, but only in negligence not in contract).

Mr Robinson took the matter to the Court of Appeal, which held that the contract contained all of the parties’ obligations to each other and there was no duty of care implied on the contractor in addition to his contractual obligation. His only obligations in tort were to take reasonable care not to cause personal injury or damage to other property.

The normal position is that there can be no claim for “pure economic loss” only, but there are some exceptions, usually where there is an “assumption of responsibility” by professional advisers giving advice on which clients rely. In this case, the court held that the contractor was not giving any such advice — he was merely building the house.

Mr Robinson had also claimed that a clause in the contract which tried to exclude the builder’s liability for defects to two years only was unfair but the court disagreed, in part because of the fact that NHBC cover had been obtained for the period after that.

The court concluded that the contract represented “a perfectly sensible allocation of risk” and no additional risk should be incorporated from the law of tort. The appeal was dismissed.

Stephen Clarke’s analysis

The debate concerning the extent of the law of tort has raged since what Lord Justice Jackson refers to as “the heroic age of the law of negligence” in the 1970s and 1980s.

This decision is very helpful to contractors because it is now unlikely that, in the absence of any special relationship, a contractor will owe a duty of care to avoid economic loss under the law of tort in addition to his contractual obligations.

However, the decision may not help a professional adviser, such as an architect, whom the court considered could have “an assumption of responsibility”, and therefore liability under tort. They will need to ensure that their indemnity insurance remains in place for a full 15 years after completion.

Somewhere in between these two poles is the design and build contractor. There may still be a debate about whether they “assume responsibility” under the design and build contract and therefore also owe duties beyond that contained in the contract.

Why is all this important? Because in tort there is a much longer limitation period — up to 15 years from the date of the alleged negligence rather than the six or 12 generally under contract. Therefore, this decision will be of real importance if latent defects are discovered after a long delay and outside of the contractual limitation period.

Stephen Clarke is a solicitor and national head of construction law at Clarke Willmott. Contact him for 30 minutes of free advice on 0845 209 1303 or email [email protected]