In an industry dominated by contracts, understanding your rights and obligations under the law of contract is very important. But contractual obligations are only half the story. As well as the duties that you owe to your contractual partners, you also owe duties to a wide range of people who may be affected by what you do - or don't do - under the law of tort.
The law of contract and the criminal law may be recognisable to the public at large, but the law of tort will be less familiar.
Tort: the basics Tort law can be compared to criminal law. In essence, the criminal law enforces a standard of behaviour by the state punishing, by fine or imprisonment, those who fall below the standard.
The law of tort also operates in relation to a standard of behaviour but, rather than state punishment, those who fall below the standard are required to compensate those who suffer loss as a result.
There are several branches of the law of tort, for example defamation and trespass, but for the construction industry the most important are negligence and breach of statutory duty.
In broad terms decisions of the courts establish the relevant standard of behaviour in negligence and Acts of Parliament establish the standard for breach of statutory duty.
For negligence, the required standard is to be reasonably careful in what you are doing so as to avoid harm to the person or property of others. This is commonly called a duty of care and the key issues are the scope of the duty, the identity of those to whom the duty is owed, and the types of losses for which compensation can be awarded.
To whom do you owe a duty in negligence?
It is - with the few exceptions that we mentioned in last month's explanation of contract law (NCE 22/29 August) - relatively easy to identify who you owe a contractual duty. It is less easy to identify the classes of people to whom you owe a duty in tort.
For example, there are the subcontractors with whom you have no direct contract but whose work will be affected by your advice. There are the neighbours who may be disturbed by the way in which the works are being carried out. There are members of the public at large who may suffer as a consequence of your technical blunder.
The technical answer to the question 'To whom do you owe a duty of care in tort?' is: 'To the people that you should reasonably have in mind as likely to suffer injury or loss as a result of your negligent acts or omissions'.
This range of people is wide. It may lead to potential liability to large numbers of claimants.
What kind of duties are we talking about?
The duty is to take care to avoid injuring people or damaging their property. In relation to property there is a line to be drawn between liability for supplying defective property (which is principally dealt with by the law of contract) and damaging property owned by someone else.
For example: One of the original negligence cases concerned negligent production of a bottle of ginger ale.
The negligent producer was responsible to a consumer where health was affected by the ginger ale. But the producer was not responsible for the cost of the ginger ale. That would have been a contractual issue between the consumer and the retailer who sold the ginger ale.
Similarly in the construction world the builder or designer of a defective structure will be liable in tort for injury or damage to other property caused by the defect but will generally not be liable for the cost of rectifying the defect. As this is the critical area of the construction industry, we shall go into a bit more detail.
Defective construction works The law on liability in tort for defective construction works is notoriously difficult. The courts have a tough time drawing the line between the need for a remedy and the need to prevent the range of liabilities in tort spiralling out of control. They want to avoid creating an infinite duty of care to an infinite number of people.
First, there is the question of when a claimant can recover the cost of putting right defective construction works - a type of loss known as 'pure economic loss'.
Second, there is the question of why engineers, architects and other professional advisers are subject to more stringent duties in respect of defective construction than contractors.
When can a claimant recover the cost of putting right defective construction works?
A defendant who is responsible for defective construction works will owe a duty of care in tort to anyone who suffers a physical injury. This means that the defendant is liable for the cost of putting right the defective construction works as well as being liable for the losses suffered as a direct result of the physical injury.
A defendant will also owe a duty of care in tort to anyone who suffers damage to property other than the defective construction works for which the defendant was responsible.
Again, the defendant is liable for the cost of putting right the defective construction works as well as for the costs of the damage to the other property.
But if the only loss that the claimant has suffered is the cost of putting right the defective construction works (he has no physical injury and no other property of his has been damaged), then the law of tort says that the defendant does not owe him a duty of care. The defendant is not liable for the cost of putting right the defective construction works.
However there are important exceptions.
For example, the law will make an exception if the defective construction works create a risk of personal injury or material damage to other property or a highway.
More importantly, the law makes exceptions for professional advisers. It imposes greater duties on them.
Negligent advice Engineers, as with all professionals, will be held to account for the consequences of their advice.
An engineer will owe a duty of care in tort to anyone to whom he has given negligent advice, to whom he has made a negligent statement or in respect of whom he has voluntarily assumed a responsibility.
The engineer will be liable for pure economic loss such as the cost of putting right defective construction works, where the claimant can show that he has relied on advice or statements which turned out to be bad.
Advice has a wide definition. It includes designs and drawings but stops short of negligent acts or omissions.
Distinctions between negligent words and negligent acts or omissions cease to be important where you can show a voluntary assumption of responsibility.
Duty to warn This is an area of the law that is of great concern to engineers. But when is an engineer under a duty to issue a warning if he or she has become aware of a situation that may be dangerous? How long does the duty last and who does he or she have to tell?
For example: The Court of Appeal explored the question of whether an engineer is under a continuing duty after completion of the project to advise on new information in the famous case of Eckersley v Binnie.
The engineers were held liable for the consequences of an explosion of methane gas that had built up in a pumping station.
Sixteen people died. The risk of the methane being present should have been taken into account in the design.
However, the court stopped short of finding a continuing duty to warn.
In a more recent case, a contractor became aware of a danger arising from the design of the works. Even though the design of the works was under the control of a competent engineer, the Court of Appeal imposed a duty on the contractor to warn of the danger that it had spotted, as part of its ordinary duty of skill and care.
In this case the contractors were judged to be 'not mere bystanders'.
The same principle will apply to another engineer involved in the project.
Statutory duties Another important source of duties is the statute books.
Engineers, in their day to day work, are subject to an ever increasing burden of duties imposed by Acts of Parliament. These range from those aimed at promoting general safety and environmental protection (eg the Health & Safety at Work etc Act 1974, the Occupiers' Liability Act 1984 and the Environmental Protection Act 1990) to those that are specifically aimed at the construction industry (eg the Defective Premises Act 1972, the Construction (Design and Management) Regulations 1994 and the Building Act 1984).
How can I limit the duties that I owe?
There are some duties which cannot be limited, however hard you try. Despite the frequent attempts that you see to do so, you cannot exclude liability for causing personal injury or death.
However, a clearly worded limitation of liability clause or disclaimer can offer some protection from liability in tort.
For example, it may provide evidence to rebut a claim that you voluntarily assumed responsibility towards someone.
Never underestimate the lengths you have to go to limit your liability.
Take a recent example of occupier's liability towards a trespasser.
For example: A local authority owned a park that contained a lake used for regulated yachting and scuba diving but swimming was not permitted.
There were notices around the lake stating 'Dangerous water: no swimming' but the authority knew that these notices were largely ignored.
In addition, the authority knew that the lake was dangerous and a council resolution had proposed action that had not yet been acted upon.
A trespasser was paralysed when he dived into the shallow water and struck his head on the bottom. Even though he was a trespasser, the notices were not sufficient to discharge the authority's duty under the Occupiers' Liability Act 1984 as the authority knew that the notices were ineffective.
The authority had, itself, identified actions to be taken to reduce the danger at modest cost but had failed to implement the actions until after the accident.
Plant Construction v Clive Adams Associates plc
Aurum Investments Ltd v Avonforce Ltd
Tomlinson Ltd v Congleton Borough Council
For details and Lovells case studies visit www. nceplus.co.uk/legal
By Professor Phillip Capper and the Lovells projects and engineering team
E-mail: projects. engineeringteam@ lovells. com www. lovells. com
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