Tortious duties of care and third party rights John Redmond.
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Transcript of Tortious duties of care and third party rights John Redmond.
Tortious duties of care and third party rightsJohn Redmond
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Tortious duties of care and third party rights
• Why do we worry about third party rights?
• Collateral warranties/ Rights of Third Parties Act
• Concurrent duties in contract and tort
• Complex structures
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Once upon a time not a very long time ago
The broadening scope of tort claims in the 1970s
Dutton v Bognor Regis UDC [1972] 3 BLR 11
Anns v Merton LBC [1978] AC 728
Junior Books v The Veitchi Co Ltd [1983] 1 AC 520
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Back to orthodoxy – the invention of the collateral warranty
D&F Estates v Church Commissioners [1989] AC 177
Murphy v Brentwood District Council [1991] 1AC398
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Contracts (Rights of Third Parties) Act 1999
A person who is not a party to a contract can enforce a term of that contract where:
• the contract expressly provides that he may; or
• the contract "purports to confer a benefit on him"
The third party can be identified by name or by class or description. He need not be in existence when the contract is entered into (eg all future tenants)
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Contracts (Rights of Third Parties) Act 1999
Are collateral warranties dead?
If not, why not?
Step in rights
Copyright
The comfort of a piece of paper
Schedules of Third Party Rights
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Collateral warranties in practice
Linklaters Business Services v
Sir Robert McAlpine Ltd,
How Engineering Services Ltd,
Southern Insulation (Medway) Ltd and others[2010]EWHC 2931 (TCC)
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Linklaters v McAlpine
Linklaters Business Services
Sir Robert McAlpine
How Engineering Services
DS Property Developments
Southern Insulation
Main Contract
Sub Contract
Sub Sub Contract
Lease
Collateral Warranties
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Linklaters Business Services v Sir Robert McAlpine Ltd
Chilled water pipework installed by How
Insulation by Southern
Practical completion September 1996
Leaks found in June 2006
Caused by defective insulation, allowing damp air to condense on the pipes, causing corrosion.
Linklaters replaced all the pipework
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Linklaters Business Services v Sir Robert McAlpine Ltd
Linklaters sued McAlpine & How under the warranties
McAlpine sued How
How sued Southern in tort (duty owed to How) and for contribution (duty owed to Linklaters) – contract claim time barred
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Linklaters Business Services v Sir Robert McAlpine Ltd
Did Southern owe a duty in tort to How?
Yes – concurrent with contractual duty
But not in breach – not negligent
Did Southern owe a duty in tort to Linklaters?
Linklaters had sufficient interest because of obligation to keep in repair
But there is no cause of action in respect of "the thing itself"
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Linklaters Business Services v Sir Robert McAlpine Ltd
Complex Structures
Structural steel contractor might be liable for damage caused to floor or walls (Murphy)
But is paint manufacturer liable to car owner for damage caused by rust?
Where is the dividing line?
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Economic Loss in the Washington Supreme Court
Affiliated FM Insurance Company v LTK Consulting Services No 82738-9
Fire on the Seattle monorail due to negligent wiring by LTK
Seattle Monorail Services lost $3million in maintenance costs (of the damaged train) and lost business - all "economic loss".
Judge Mary Fairhurst:
"LTK, by undertaking engineering services, assumed a duty of reasonable care. As we have defined it, with respect to risks of physical damage to the monorail. SMS enjoyed legally protected interests in the monorail, and LTK's duty encompassed those interests"
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Washington Supreme Court (2)
Eastwood v Horse Harbor Foundation No 81977
Lessee of Double KK Farm, Poulsbo cited for unlawful burning of waste and improper management of horse manure.
Judge Mary Fairhurst:
"An injury is remediable in tort if it traces back to the breach of a tort duty arising independently of the terms of the contract……We hold the duty to not cause waste is an obligation that arises independently of the terms or a lease….."
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Concurrent claims in contract and tort
Robinson v PE Jones (Contractors) Ltd [2011] EWCA Civ 9
Contract December 1991, completion April 1992
Problems found in September 2004 – defective flues
Proceedings issued December 2006
Claim for breach of contract and also for negligence
Contract claim time barred
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Robinson v PE Jones (Contractors) Ltd
Judge Davies, Manchester TCC
If there is a contractual duty to take reasonable care, there was probably a similar duty in tort, unless contract term to the contrary.
Jackson LJ, Court of Appeal
Unless there is an assumption of responsibility there is no co-extensive duty of care.
Contractual duties are negotiated and consensual.
Tort duties are a matter of policy
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Robinson v PE Jones (Contractors) Ltd
Professional people are likely to have assumed a duty to avoid economic loss
They "give advice, prepare reports, draw up accounts, produce plans and so forth"
A builder is not a professional person and will owe the duty of care not to cause physical damage or damage to property.
A builder will not have assumed responsibility for economic loss unless there are special circumstances
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Robinson v PE Jones (Contractors) Ltd
So – there will be a concurrent duty of care, but not necessarily a coextensive duty
But what about
specialist subcontractors?
design-build contractors?
complex structures?
Questions