RSK Environment Ltd v Hexagon Housing Association Ltd

In determining the scope of a common-law duty of care for economic loss, the court must consider the contractual nexus, or absence of one, together with the wider factual and contractual arrangements. Stated limitations or exclusions of liability may form part of that assessment. Where the contractual matrix, the existence or terms of a direct contract, and the construction of relevant provisions are disputed or unresolved, the court cannot properly determine their effect on a tortious duty in a Part 8 claim. The issue must be considered on an adequate factual and contractual foundation.

RSK prepared a geotechnical investigation and report for a housing development undertaken by Hexagon. After ground collapse, Hexagon asserted that RSK owed it a common-law duty of care and had acted negligently. RSK commenced Part 8 proceedings seeking declarations that, assuming such a duty existed, its scope and liability were governed by limitations in RSK’s contractual terms with Skillcrown.

The parties disputed whether Hexagon had contracted with RSK, whether the contractual terms had been provided to or accepted by Hexagon, and whether the limitations were effective. The central issue was whether those questions could be determined as a matter of principle without resolving the contractual and factual matrix.

1. Part 8 claim refused. The claim was not suitable for determination under Part 8. The court refused RSK’s claim for declaratory relief and directed that consequential matters, if not agreed, be dealt with at a further hearing.
2. Where concurrent contractual and tortious duties exist, the contractual obligations will usually define the scope of the tortious duty, unless the defendant undertook an additional task from which an extended assumption of responsibility can be inferred. A tortious duty may be limited or excluded where that would be inconsistent with the applicable contract, applying the principles discussed in Henderson v Merrett [1995] 2 AC 145.
3. The present claim proceeded on the assumption that there was no contract between RSK and Hexagon. Accordingly, the court had to assume that no concurrent contractual and tortious duty existed between those parties. RSK’s argument instead required consideration of whether its retainer with Skillcrown could determine the scope of a duty owed in tort to Hexagon.
4. In a commercial context, the nature and extent of a common-law duty of care are framed by the contractual nexus or lack of contractual nexus, the wider factual and contractual arrangements, and any stated limitations or exclusions of liability. The authorities emphasised the importance of examining the factual matrix when determining both whether a duty arises and its scope.
5. That analysis could not be undertaken on the assumed facts. The existence of any direct contract, its terms, the documents provided to Hexagon, Hexagon’s knowledge or agreement, and the proper construction and effect of the limitation provisions were unresolved. The court could not decide those issues by a quick review of the documents or by severing one provision from the wider contractual context.