Masons (A Firm) v WD King Ltd & Anor

A solicitor’s retainer is ordinarily with the person identified as the client, rather than with a special purpose vehicle whose interests may be affected by the work. A third party seeking recovery for economic loss must establish more than foreseeability, including reliance, an assumption of responsibility and a relationship making a duty of care appropriate.

An acceleration obligation ancillary to a contractor’s primary obligation to complete on time does not, by itself, create a separate entitlement to unliquidated damages for delay. The contract’s agreed liquidated damages regime may provide the relevant financial sanction, while other contractual remedies, including determination, remain available.

Masons, a firm of solicitors, claimed the balance of its fees from W D King Ltd. WDK and Prospect Gardens (Bath) Ltd brought Part 20 claims alleging negligent and contractual advice concerning a student accommodation development and the building contract with Jarvis Construction (UK) Ltd.

The principal allegations concerned the drafting and explanation of an acceleration provision, Condition 38, and whether breach of an acceleration instruction entitled the employer to recover unliquidated damages in addition to the liquidated damages specified by Condition 55. The parties also disputed whether Masons had contracted with PGBL or owed it a duty of care, and whether any breach caused a recoverable loss of opportunity.

The court also considered the effect of an adjudicator’s decision concerning Jarvis’s failure to comply with Project Manager’s Instruction 003.

1. Retainer and duty of care. The retainer was made with WDK, not PGBL. Mr Whitley had authority to retain Masons and expressly identified WDK as the client. PGBL’s status as the employer under the building contract did not alter that conclusion.

2. PGBL was not owed a concurrent common-law duty of care. Being the object of contractual work was insufficient. In a claim for economic loss, there had to be reliance, an assumption of responsibility and circumstances making it appropriate for the law to recognise a duty. Those circumstances were absent.

3. Under the retainer, Masons had duties to take account of WDK’s risk-minimisation objective and inexperience, and to warn of significant contractual risks. Those duties were discharged. WDK already knew that the liquidated damages might be less than its potential losses, and repeating that risk would not have altered its decision.

4. Condition 38. The acceleration obligation was ancillary or subservient to the primary obligation to complete on time. Failure to comply with an acceleration instruction did not, of itself, give rise to a claim for unliquidated damages. The relevant loss would ordinarily arise from the underlying failure to proceed diligently or complete on time. The contract provided sanctions for non-compliance, including possible determination under Condition 56, while Condition 55’s liquidated damages regime was the principal financial sanction for delay.

5. An express liability for open-ended unliquidated delay damages would have been commercially unacceptable to Jarvis and inconsistent with the negotiated allocation and limitation of risk. Jarvis would not have contracted on that basis.

6. The alleged breaches were therefore not established. The pleaded lost opportunities did not arise, or would not have been available on any realistic alternative terms. The adjudicator’s decision did not establish that compliance with PMI 003 would have achieved completion by the specified dates; it did establish that recovery under the contract was limited to liquidated damages for the relevant delay. Judgment was accordingly given for Masons on the claims.