Robinson v PE Jones (Contractors) Ltd [2011] EWCA Civ 9

In December 1991 Mr Robinson and his wife entered into a contract with Jones for the purchase of a house then still under construction. Clause 8 provided that the “building conditions” annexed to the contract were incorporated into the contract between the parties. The conditions provided:

“8. The Vendor shall not be liable for any defect in or failure or inadequacy of any article item of equipment or fi tting supplied to the Vendor by the manufacturer thereof (whether or not personally selected by the Purchaser) which is not within the terms of the Certifi cate of the National House-Building Council nor for any injury loss or damage arising from any such defect failure or inadequacy.

10. ...The Vendor shall not be liable to the Purchaser or any successor in title of the Purchaser under the Agreement or any document incorporated therein in respect of any defect error or omission in the execution or the completion of the work save to the extent and for the period that it is liable under the provisions of the N.H.B.C. Agreement on which alone his rights and remedies are founded.”

During construction Mr Robinson informed Jones that he would like to have two gas fi res fi tted. The specifi cation only provided for one. It was agreed that Jones would construct a second chimney fl ue to serve a second gas fi re. Mr Robinson would then contact British Gas directly to supply and install the second gas fi re itself. The construction works were duly completed. In September 2004 a British Gas service engineer attended to service the fi res and disconnected the fi res for safety reasons. It was later reported that the fl ues had not been constructed in accordance with good building practice and the relevant Building Regulations. Remedial works were required at a cost of £35,000. Mr Robinson claimed for the cost of the remedial works and also general damages for loss of use of the gas fi res in both contract and/or tort.

The key question was whether or not Jones owed a concurrent duty of care in tort to Mr Robinson in respect of the defects to the fl ues. If Jones did, could this liability be limited by clauses 8 and 10 of the contract? And if that happened, would the Unfair Contract Terms Act 1977 (“UCTA”) prevent such limitations taking eff ect?

At fi rst instance the Judge held that whilst, in principle, a builder can owe a duty of care in tort to his client that would cover pure economic loss, in this case they did not. The reason for this was that clause 10 of the contract satisfi ed the requirements of reasonableness under UCTA and excluded concurrent liability in tort. The result of this was that the contractual claim was time barred under the Limitation Act 1980. Mr Robinson appealed. The CA agreed. In the CA’s view clauses 8 and 10 of the contract were not harsh provisions. Under the NHBC Agreement, a builder has extensive liability to a house owner for defects during the fi rst two years after completion and these are underwritten by the NHBC. During the following 8 years the NHBC undertakes to meet the cost of putting right major damage as defi ned in the NHBC Agreement. Whilst this did not provide total protection, it gave very substantial benefi ts to households across the country. This included substantial protection in the event that a builder became insolvent. It was therefore “quite impossible” to say that the terms of the NHBC Agreement were unreasonable.

The CA also considered whether a builder can owe his client a concurrent duty of care in tort in relation to economic loss. It held that it could, but the relationship between the builder of a building and the immediate client is primarily governed by the contract between the two parties. The law does not, however, automatically impose upon every contractor or subcontractor tortious duties of care that are co-extensive with the contractual terms and carry liability for economic loss.

The law of tort imposes a diff erent and more limited duty upon the builder. This duty is namely to take reasonable care to protect the client (and any others who foreseeably own or use it) against suff ering personal injury or damage to other property. In the context of pure economic loss, which was what had been suff ered by Mr Robinson, it was necessary to look at the relationship and dealings between the parties in order to ascertain whether there had been an assumption of responsibility coupled with reliance so as to give rise to tortious duties.

However, here, there was nothing to suggest that Jones had “assumed responsibility” to Mr Robinson. The contract was a normal building contract with warranties for quality and specifi c remedies were provided for should those warranties be breached. There was no professional relationship between the parties. Mr Robinson was not paying Jones to give advice or prepare reports which would then be relied or acted upon. Indeed even if the building contract had not included clauses 8 and 10, Lord Justice Jackson stated that he would still have been disinclined to fi nd that Jones owed a duty of care to Mr Robinson in relation to the defects in question.

Finally the CA considered the UCTA. Again, the CA agreed that the exclusion clauses in question satisfi ed the requirements of reasonableness - for the very same reasons set out above in relation to the limitations placed on Jones’ contractual liabilities.