Robinson v PEJones (Contractors) Ltd

Factual and Procedural Background

This appeal concerns a house owner ("Plaintiff") who claims damages for alleged defects against the builder ("Defendant") from whom he purchased a house. The house was sold under a written agreement in December 1991, with construction completed in April 1992. The Plaintiff discovered defects in the gas fire flues in September 2004 when a service engineer found one gas fire failing safety tests due to poor flue construction. The Plaintiff reported these defects to the Defendant and sought remedial costs, but no resolution was achieved.

The Plaintiff commenced proceedings in the Manchester County Court in December 2006, claiming damages for breach of contract, negligence, and breach of statutory duty, asserting that the claim was not statute-barred under the Limitation Act 1980. The Defendant denied liability and argued the claim was statute-barred.

Following case management, the action was transferred in 2009 to the Technology and Construction Court (TCC) for specialist handling. The TCC judge ordered a trial of two preliminary issues: whether the Defendant owed a duty of care in tort to the Plaintiff, and whether the claims were statute-barred. After hearing evidence, the judge held that the Plaintiff's contract claims were statute-barred, and that no tortious duty of care was owed due to exclusion clauses in the contract, dismissing the action.

The Plaintiff appealed to the Court of Appeal on multiple grounds, including the exclusion of tortious liability and admission of fresh evidence. Permission to appeal was granted on some grounds. The Defendant filed a respondent's notice contesting the existence of a tortious duty and the relevance of the Unfair Contract Terms Act 1977 (UCTA) to the exclusion clauses. The appeal was heard on 23rd November 2010.

Legal Issues Presented

1. Whether the Defendant owed a concurrent tortious duty of care to the Plaintiff in respect of economic loss arising from defects in the property.
2. Whether the Plaintiff's claims in contract and/or tort were statute-barred under the Limitation Act 1980.
3. Whether clauses in the contract, particularly clause 10 of the building conditions, validly excluded or limited tortious liability under the provisions of UCTA 1977.
4. Whether the trial judge erred in refusing to admit fresh evidence and reconsider his decision after circulation of the draft judgment.

Arguments of the Parties

Appellant's Arguments

• The trial judge should have admitted fresh evidence and allowed further argument after circulation of his draft judgment.
• Clause 10 of the building conditions does not validly exclude a tortious duty of care.
• The judge’s construction of the contract renders the warranty in clause 1(a) ineffective.
• The judge erred in his approach to clause 10 and the NHBC Agreement in limiting liability.

Respondent's Arguments

• The Defendant contends that no concurrent tortious duty of care arises in this context.
• UCTA is not relevant to the question of whether clause 10 excludes tortious liability.
• The contractual terms, including clause 10, validly exclude tortious liability for economic loss.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] 2 A.C. 803	Standard of reasonableness under UCTA; appellate deference to trial judge's assessment.	The court upheld the trial judge's reasonableness assessment of exclusion clauses, finding no error in principle or obvious wrongness.
Smith v Bush [1990] 1 AC 831	Application of UCTA to disclaimers excluding tortious duty of care.	The court applied UCTA to determine that exclusion clauses must be reasonable; personal injury exclusions cannot be validly excluded.
Murphy v Brentwood [1991] 1 AC 398	No tortious duty of care for economic loss arising from latent defects in buildings.	The court confirmed that economic loss due to defects without damage to other property is not recoverable in tort; only contractual remedies apply.
Donoghue v Stevenson [1932] AC 562	Foundational principle of duty of care in negligence.	Used as a basis to distinguish duties owed for personal injury or property damage from economic loss.
Henderson v Merrett Syndicates Ltd [1995] 2 AC 145	Concurrent liability in contract and tort based on assumption of responsibility.	The court acknowledged that tortious duties can co-exist with contractual duties where assumption of responsibility applies.
Riyad Bank v AHLI United Bank (UK) Plc [2006] EWCA Civ 780	Tortious duty of care for economic loss in financial services based on assumption of responsibility.	The court held that tortious duties may arise in contractual contexts where assumption of responsibility is established.
McCullagh v Lane Fox and Partners [1996] 1 EGLR 35	Reasonableness of exclusion clauses under UCTA.	Supported the conclusion that exclusion clauses limiting tortious liability for economic loss can be reasonable.
Anns v Merton London Borough Council [1978] AC 728 (Overruled)	Previously expansive duty of care of local authorities for building defects.	The court rejected Anns as aberrant and heretical, reaffirming limits on tortious liability for economic loss.
Junior Books Ltd v Veitchi Co. Ltd [1983] 1 AC 520 (Disapproved)	Exceptional duty of care in tort for economic loss in building contracts.	The court regarded this decision as aberrant and not good law.
Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 2 AC 1	Concurrent duties in contract and tort for professional advisers.	Distinguished from builders; professional advisers may owe concurrent tortious duties based on assumption of responsibility.
Bellefield Computer Services Ltd v E Turner & Sons Ltd [2000] BLR 97	Tortious liability of builders for damage to property other than the building itself.	The court recognized limited tortious liability for damage beyond the building but not for defects in the building itself.

Court's Reasoning and Analysis

The court undertook a detailed review of the contractual terms, statutory provisions (Limitation Act 1980 and UCTA 1977), and relevant case law. It emphasized that the relationship between a builder and purchaser is primarily contractual, with tortious duties imposed only in limited circumstances.

The court noted that clauses 8 and 10 of the building conditions incorporated the National House-Building Council (NHBC) Agreement, which provides extensive but limited protection for defects, including a two-year builder liability period and an eight-year NHBC-backed warranty for major defects. Such contractual limitation was found reasonable under UCTA.

Applying the House of Lords' authority in Murphy and related cases, the court held that no tortious duty of care arises for pure economic loss caused by latent defects in buildings absent personal injury or damage to other property. The court rejected the Plaintiff's contention that the Defendant owed a concurrent tortious duty, holding that the contractual exclusion clauses validly excluded such liability and satisfied UCTA's reasonableness test.

The court further analyzed the doctrine of assumption of responsibility from Hedley Byrne and Henderson, recognizing that professional advisers may owe concurrent tortious duties, but found no such assumption of responsibility by the Defendant builder in this case. The parties' contractual allocation of risk was clear and agreed upon with legal representation, and the law does not impose tortious duties inconsistent with this contract.

The court dismissed the Plaintiff's arguments that clause 10 was insufficiently clear to exclude tortious liability, relying on established interpretation principles and UCTA. The court also declined to admit fresh evidence or reconsider the trial judge's decision, finding no error in that procedural ruling.

Holding and Implications

The Court of Appeal DISMISSED the Plaintiff's appeal, affirming the trial judge's decision.

The holding confirms that in the context of house building contracts, tortious liability for economic loss caused by latent defects is generally excluded where the parties have agreed contractual terms limiting liability, particularly when such terms incorporate NHBC protections and satisfy the reasonableness requirements of UCTA. The decision underscores the primacy of contractual risk allocation between builder and purchaser and limits the extension of tortious duties in this field.

This ruling does not establish new precedent but reinforces existing principles from House of Lords authority, including Murphy and Henderson, clarifying the boundaries between contract and tort in construction defect claims.