Robinson v P.E.Jones (Contractors) Ltd

A builder does not, merely by contracting to construct a building, assume a concurrent duty in tort to protect the purchaser from the purely economic cost of repairing defects. Absent an assumption of responsibility, the builder’s tortious duty is limited to taking reasonable care to prevent personal injury and damage to other property.

An assumption of responsibility may create liability for economic loss, particularly in a professional retainer, but it depends on the parties’ relationship and dealings. The existence of a contract neither prevents such a duty nor automatically creates one. Reasonable contractual terms may exclude liability for economic loss which might otherwise arise, although liability for death or personal injury resulting from negligence cannot be excluded.

The appellant purchased a newly constructed house from the respondent builder. More than 12 years after completion, defects were discovered in two chimney flues. No personal injury or damage to other property had occurred. The appellant sought the estimated cost of reconstructing the flues and damages for loss of use.

His contractual claim was time-barred. Following a trial of preliminary issues, His Honour Judge Stephen Davies held that a builder could in principle owe a concurrent duty in tort for economic loss, but that clauses 8 and 10 of the building conditions reasonably limited the respondent’s liability to that provided by the NHBC agreement. He therefore dismissed the action.

The central issues on appeal were whether the builder had assumed a duty in tort concerning the purely economic loss and whether the contractual limitation was effective under the Unfair Contract Terms Act 1977.

1. Appeal dismissed. The builder did not owe the purchaser a tortious duty to compensate him for the purely economic cost of repairing the defective flues. Jackson LJ delivered the leading judgment. Stanley Burnton and Maurice Kay LJJ agreed.

2. The relationship between a builder or manufacturer and its immediate client is governed primarily by their contract. Freedom of contract permits the parties to allocate risk, subject in a consumer contract to the Unfair Contract Terms Act 1977. Without an assumption of responsibility, tort does not impose duties co-extensive with the contractual obligations. It ordinarily requires reasonable care to prevent personal injury and damage to property other than the building or product supplied: Murphy v Brentwood [1991] 1 AC 398 applied.

3. Assumption of responsibility under Hedley Byrne provides a distinct basis for liability extending to economic loss. A contract does not prevent such a duty from arising, but a promise to perform contractual obligations does not itself create an identical duty in tort. Professional retainers commonly involve the necessary assumption because the client is expected to rely upon advice, reports, accounts or plans with financial consequences. The parties’ relationship and dealings must therefore be examined.

4. The respondent had undertaken an ordinary building contract. Its warranties and the purchaser’s remedies were expressly stated, and it was not retained to give advice or prepare material on which the purchaser would act. Nothing established an assumption of responsibility in the Hedley Byrne sense.

5. Clauses 8 and 10 reasonably limited liability to the protection provided by the NHBC agreement. That scheme gave substantial protection against defects and the risk that a builder might be unable or unwilling to remedy them. The trial judge’s reasonableness assessment was entitled to great weight and disclosed neither an erroneous principle nor a plainly wrong conclusion.

6. Clause 10 also clearly excluded any liability in negligence which might otherwise have arisen. Section 2(1) of the Unfair Contract Terms Act 1977 would prevent it from excluding liability for personal injury caused by negligence. It could, however, reasonably exclude liability for the economic cost of repairing a defect. The purchaser could not use tort to displace the contract’s allocation of risk.

1. Court of Appeal (Civil Division): The appeal was dismissed by [2011] EWCA Civ 9. The court upheld the determination that no relevant duty in tort arose and that the contractual limitation was reasonable.

2. Technology and Construction Court, Manchester District Registry: His Honour Judge Stephen Davies tried preliminary issues and dismissed the action on 27 January 2010. He held that a concurrent tortious duty was possible in principle, but that clauses 8 and 10 excluded it and satisfied the reasonableness requirement under the Unfair Contract Terms Act 1977. No neutral citation is stated.

3. Manchester County Court: The claim was issued there in December 2006 and transferred to the Technology and Construction Court in March 2009.