| Date | 2 February 2005 |
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| Judgment | Architype Projects Ltd v Dewhurst Macfarlane & Partners, TCC 18 December 2003 |
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| The Issue | Whether a duty of care in tort exists between a subcontractor or sub-consultant and the employer. |
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| Implication |
There is generally no duty of care to avoid economic loss owed by a subcontractor to an employer except to the extent that it is fixed by a direct contract. |
printIn 1982 the House of Lords handed down a rather surprising judgment in the case of Junior Books v Veitchi. Veitchi was a specialist flooring contractor that had been engaged as a nominated subcontractor to lay a floor at Junior Books' factory. The floor was defective and Junior Books claimed the cost of relaying the floor and other financial losses consequent upon the replacement. As the parties were subcontractor and employer, there was no direct contract between them. Junior Books was therefore obliged to bring its action under the law of tort claiming negligence on the basis that Veitchi owed it a common law, non contractual, duty of care. The House of Lords decided that on the unique facts of the case there was a sufficient degree of proximity between the parties to give rise to a relevant duty of care. Veitchi was a subcontractor who specialised in flooring. Its products were required by Junior Books and Veitchi alone was responsible for the composition and construction of the flooring. Junior Books had relied on the skill and experience of Veitchi and Veitchi were taken to have known of that reliance. Moreover it was foreseeable that if Veitchi carried out the work negligently, Junior Books would suffer financial loss. Subsequent cases since 1982 have emphasised the uniqueness of this decision with the clear intention of confining it to its particular facts without actually over-ruling it. In 1988, in the case of D & F Estates v Church Commissioners for England, the House of Lords said that the Junior Books decision could not be regarded as laying down any principle of general application in the law of tort. In the case of Caparo Industries v Dickman in 1990, the House of Lords noted that there was no simple formula which would give a ready answer to the question of whether the law would impose a liability for negligence. In 1991, the House of Lords decided in the case of Murphy v Brentwood that third parties would not be entitled to sue in negligence to recover economic loss, such as the cost of putting right defective work. A liability at common law for such losses would arise only under and by reference to the terms of any contract between the parties. In the more recent case of Architype Projects v Dewhurst McFarlane & Partners the decision in Junior Books was relied upon by the claimant Architype on the basis that, being a decision of the House of Lords, it was still good law. The dispute concerned three parties in a chain of contracts established for the design and construction of a new visitor's centre, chapel and associated buildings at the National Memorial Arboretum Centre in Staffordshire. The employer was the National Memorial Arboretum Company, known as Arbco. Architype was the appointed architect and lead consultant who in turn had appointed Dewhurst as its sub-consultant for civil and structural engineering. Serious defects were said to have been found in the structural work in the course of the construction of the Arboretum. These required remedial works which were carried out by others causing delay to the completion of the project. Claims were brought by Arbco against Architype which were in due course settled. Architype then turned its attentions to Dewhurst claiming an entitlement to recover monies arising out of the defective structural design, either in its own right or as an assignee of Arbco's claims against Dewhurst. Dewhurst replied that it could not be liable to Arbco for such claims. There was no contract between itself and Arbco and it owed Arbco no duty of care. Their engagement involved a chain of contracts and as such there was no privity of contract between itself and Arbco. Moreover, Dewhurst had offered to provide a collateral warranty for Arbco, but this had never been entered into. This indicated that it was the common intention of the parties not to create a duty of care in the absence of such a warranty. His Honour Judge Toulmin carefully reviewed the law concerning the fixing of a duty of care in tort. He concluded that unless the circumstances in this case were identical to the Junior Books case, he was not bound by it. He should instead accept that there was no formula which would provide a ready answer in every case. Judge Toulmin concluded that in each case the factual situation should be considered to see whether there exists a sufficiently close proximity between the parties, such that it would be fair and reasonable that the law should impose a duty of care upon one party for the benefit of the other. He noted that there is generally no assumption of responsibility by a subcontractor directly to the building owner because the parties have structured their relationship such that it is inconsistent with any such assumption of responsibility. He concluded that the Junior Books' case must be confined to its own particular unique facts. These were not identical to the facts in the present case and he was therefore not bound to follow Junior Books. He was satisfied that the contracts between the employer and the architect and the architect and sub-consultant were structured such that there was no assumption of responsibility between the sub-consultant and the employer. It would therefore not be fair and reasonable to impose a duty in tort on Dewhurst for the benefit of Arbco. It was relevant that a warranty between the two parties had been offered but not concluded.
CJ-0504
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