South of the border, the question as to whether a building contractor owes to his client a duty of care in tort as well as a contractual duty can be of some considerable importance. This is because under the rules in England and Wales limiting the period within which claims must be pursued, a party may find that a contractual claim is excluded leaving only the option of a claim founded on a breach of a tortuous duty of care.
This is the situation that was considered in the recent English Court of Appeal decision in the case of Robinson v PE Jones (Contractors) Limited [2010].
Decision in Robinson
It has been established for some considerable time that loss in the form of damage to the article supplied under a contract is classified as pure economic loss. A claim by an employer against his building contractor to recover the cost of remedying defective works is regarded as a claim to recover economic loss. These economic losses can be recovered by an employer as damages for breach of contract. Is, however, he also entitled to recover such losses by way of a claim for breach of a tortuous duty of care?
A number of cases have concluded such losses are so recoverable. The Court of Appeal has, however, now made it clear that it is extremely unlikely that a building contractor will ever be liable in tort to his employer in respect of losses incurred to remedy the defective works of the building contractor. Previous decisions where it has been held that a building contractor owes a duty in tort in relation to the economic losses sustained by his employer are stated to have been wrongly decided.
What does this mean for Scotland?
Because of the different way that Scottish law deals with prescription and limitation issues, the question considered in the Robinson decision is not one that comes before the Scottish courts. However, the principles applied south of the border to establish a duty in tort in respect of economic loss are essentially the same as those that apply in Scotland to establish a duty of care in delict for such losses. It is likely that that the Robinson decision may be followed by the Scottish courts albeit it is not binding.
This is of particular relevance when it comes to the drafting of letters of intent. Letters of intent take a number of forms, some of which establish a contractual relationship and others that do not. If an employer cannot in delict pursue a claim in respect of the defective works of his building contractor when he concludes a building contract with that building contractor, he will arguably not be able to pursue such a claim when he has no contract with his building contractor. The employer should, therefore, ensure that in the letter of intent that is concluded, the building contractor accepts a contractual responsibility for his defective works.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
