UK: Construction: Sub-Contractors - Concurrent Duty of Care in Contract and Tort

Last Updated: 2 September 2010
Article by Joanna Owens and Giles Tagg

The Technology & Construction Court (TCC) has held that a sub-contractor may owe a duty in tort to its direct contractor, in addition to the duties it owes in contract.

Our previous LawNow article Construction: can a sub-contractor be liable for economic loss considered the decision of the TCC in Linklaters Business Services v Sir Robert McAlpine Limited to dismiss a strike-out application by the sub-sub contractor Southern Insulation (Medway) Limited.  In that case, it was deemed that Southern could, as a matter of legal theory, owe a direct duty of care to the main contractor's employer.

The court has now considered a further strike-out application by Southern, made in the context of separate proceedings against Southern by its direct contractor, How Engineering Services Ltd. The claim by How against Southern alleges a concurrent duty in tort and is for damages equal to such sum as How might be held liable for to McAlpine (under a sub-contract or in tort) or to Linklaters (in contract via McAlpine's collateral warranty, or in tort).

The issues for determination in this strike out application were: (a) whether Southern owed How a concurrent duty of care in tort, in addition to its contractual obligations; and, if so, (b) whether the scope of such duty extended to cover How's liability to McAlpine and Linklaters.

Existence of Duty of Care

In addition to contractual duties, Mr Justice Akenhead determined that there is a concurrent tortious duty of care owed by sub (or sub-sub) contractors to their direct contractor to exercise reasonable skill and care in carrying out the works that they are contractually engaged to execute. That duty of care will be defined by reference to the contractual responsibilities and liabilities assumed by the parties. However, the concurrent tortious duty may extend beyond any limitation date set out in the contract or deed, up to the 15 year long stop date within which a claim for negligence must be pursued.

Scope of Duty

The scope of that duty is such that a contractor may recover damages from its sub-contractor for any economic losses that it is liable to pay the employer, relating to the reasonable costs of putting right negligently executed works carried out by the sub-contractor.  This is on the basis that the cost of those remedial works is within the scope of the contractual and tortious duties. A sub-contractor may therefore find itself facing a claim even though it might arise: (a) from duties arising as a result of a collateral warranty voluntarily entered into by a contractor with the employer and (b) outside any contractual limitation date between the sub-contractor and the contractor.

The underlying rationale for this is that sub or sub-sub contractors in the position of Southern can be taken to know the tortious duty of care owed and may take steps to protect themselves by way of insurance, enhanced pricing or negotiation of limitation clauses to guard themselves against the risk of being sued for negligence beyond the limitation date imposed by any contract or deed.

Accordingly, sub contractors ought to familiarise themselves with the terms of contracts and any collateral warranties between employers and main contractors, in order to ensure that they put appropriate protection in place against any potential future claims.

Appeal

Expedited appeals of Mr Justice Akenhead's decisions in both strike out applications came before the Court of Appeal in the August vacation. The appeal of the decision in the strike out application against How was adjourned in view of the fact that the Court of Appeal said it would be unlikely to deliver judgment before the start of the substantive trial in October. The Court of Appeal commented however that the issues "were not unproblematical" and might well require the attention of the Supreme Court in due course.

Further reading: How Engineering Services Ltd v Southern Insulation (Medway) Ltd [2010] EWHC 1878 (TCC)
Southern Insulation (Medway) Limited v How Engineering Services Limited and Another [2010] EWCA Civ 999

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 01/09/2010.

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