Remoteness in Concurrent Liability in Contract and Tort

The often subtle but significant differences in the application of tortious principles in the UK and Ireland has been the touched upon in several learned papers delivered in the CBA (see HERE).

A recent UK Court of Appeal judgment in Wellesley Partners LLP v Withers LLP addresses, inter alia, remoteness in cases where there is concurrent liability in contract and tort where it decided that the rules for recoverability of damage in tortious claims (i.e. remoteness), which are ordinarily broader than in contract, are to be limited to the contractual position in cases of concurrent liability.

Please see link HERE to view the judgment in question.

Bearing to Clarke J’s admonition to Irish practitioners to carefully consider (potentially persuasive) authorities sourced from other common law jurisdictions through the discerning eye of current Irish law it is a matter of debate as to the application of this restrictive approach in the Irish context.  The line of authority from Ward v McMaster [1988] IR 337  through to the seminal Glencar Exploration Plc v Mayo County Council [2002] 1 IR 84 and thereafter through Breslin v Corcoran and the MIBI [2003] 2 IR 203, Beatty v Rent Tribunal [2006] 2 IR 191 at 212 is well known to Irish practitioners advancing / defending a claim in tort in construction disputes.

In relation to the topic of concurrent liability in the inaugural paper presented to the CBA in June 2013 (download full paper HERE), our esteemed colleague Cian Ferriter SC stated as follows:

“Another difficult area in the context of potential liability in a construction context is that of a concurrent liability in tort arising out of a relationship which is governed by a contract. In Kennedy v AIB [1998] 2 I.R. 48, Hamilton C.J. endorsed a passage from the speech of Lord Goff in Henderson v Merrett Syndicates [1995] 2 AC 145, to the effect that there was no objection in principle to parties who were in a contractual relationship also owing each other duties in tort. However, in an important qualification of that position, Hamilton C.J. went on to endorse a dictum of Lloyd L.J. from the earlier English Court of Appeal decision of National Bank of Greece v Pinios Shipping (No.3) [1988] 2 Lloyds Rep 126, which stated as follows: “So far as I know, it has never been the law that a plaintiff who has the choice of suing in contract or tort can fail in contract yet nevertheless succeed in tort.” Hamilton C.J. then going on to state:

“The case clearly establishes that, when parties are in a contractual relationship, their mutual obligations arise from their contract and are to be found expressly or by necessary implication in the terms thereof and that obligations in tort which may arise from such a contractual relationship cannot be greater than those to be found expressly or by necessary implication in their contract.”

As McMahon & Binchy pertinently observe, “That is exactly what Lord Goff denied in Henderson.” (McMahon & Binchy, Third Edition, para. 10.25). It appears that the present state of the law in Ireland is as set out by O’Flaherty J. in Pat O’Donnell & Co. v Truck and Machinery Sales [1998] 4 IR 191 that:

“The general duty of care in tort cannot be manipulated so as to override the contractual allocation of responsibility between the parties. Thus if, for instance, a contract provides – whether expressly or by necessarily implication – that the defendant is not liable for a particular risk, then the law of tort shall not be allowed to contradict it.”

It should be noted that the question of concurrent liability in contract and in tort claims arising out of building contracts has been given added impetus in the UK by the fact that different limitation periods can apply in practice (as a result of the enactment of the Latent Damage Act 1986 in the UK which extends to the limitation period to three years from the “date of knowledge” (up to a maximum “long stop” period of 15 years). This is in marked contrast to the position as a matter of Irish law where there is no discoverability test introduced for physical damage (as opposed the limited classes of personal injuries and defective product damage).”

JSF

24.11.2015

Comments are closed.