England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MANCHESTER DISTRICT REGISTRY
TECHNOLOGY AND CONSTRUCTION COURT

		Manchester Civil Justice Centre, 1 Bridge Street West, Manchester, M60 9DJ
		27 January 2010

 


His Honour Judge Stephen Davies:

Introduction

1. In December 1991 the Claimant entered into an agreement with the Defendant building company under which the Defendant agreed to build for and to sell to the Claimant a new house on a plot in Prestbury, Cheshire. Having built the house the Defendant conveyed the property to the Claimant in April 1992. The Claimant wanted to have the benefit of gas fires in the lounge and in the family room. The Defendant agreed to and did construct chimney flues in both rooms to serve those fires, and the Claimant arranged directly with British Gas for the supply and installation of the gas fires.
2. Over 12 years later, in September 2004, the Claimant arranged for a British Gas service engineer to attend and service the gas fires. He conducted a test, known as a spillage test, to check that the gas fire was effectively drawing combustion products from the room in which it was located. The family room gas fire failed that test. The service engineer recorded this and he also recorded that the gas fire had a 'poor flue run'. The gas fires were disconnected for safety reasons. The Claimant then arranged for a surveyor to inspect and advise, and in October 2004 the Claimant wrote to the Defendant reporting the surveyor's findings, which were that the flues had not been constructed in accordance with good building practice or the Building Regulations in force when the house had been constructed.
3. On 8 December 2006 the Claimant commenced the present proceedings against the Defendant in the Manchester County Court. In his Particulars of Claim the Claimant contended that there were defects in the chimney flues rendering the Defendant in breach of contract, in breach of a duty of care in tort, and guilty of misrepresentation. A claim for the cost of remedial works of the order of £35,000 was asserted. Anticipating that a limitation defence might be taken, the Claimant pleaded reliance on s.14A of the Limitation Act 1980. By its Defence the Defendant denied the existence of a duty of care in tort, denied breach or misrepresentation, and pleaded that the claim was indeed statute-barred, both in contract and in tort.
4. The action was stayed to enable the parties to attempt a settlement, which did not bear fruit, and there were then various delays in progressing the action. In March 2009 the action was transferred to the TCC, and on 30 March 2009 the court ordered the trial of the following preliminary issues:

(1) Whether or not the Defendant owed a duty of care in tort to the Claimant in respect of the matters complained of in the Particulars of Claim.

(2) Whether or not the Claimant's claims in contract and/or in tort (if any) are statute-barred by reason of the expiry of the relevant periods of limitation prior to proceedings being commenced.

5. The trial of the preliminary issues came on for hearing on 8 September 2009. On that day and the following day I heard oral evidence from the Claimant and from the Defendant's expert witness, and received oral submissions to supplement the written opening submissions lodged. I adjourned to enable further documentary evidence to be produced and for further written closing submissions to be lodged on any matters arising out of that further evidence.
6. The following questions arise in relation to the first preliminary issue,:

(1) Whether or not a builder who contracts with his client to undertake building works can, in principle and without more, owe his client a duty of care in tort, concurrent with his duty in contract, to undertake the works with reasonable care and skill so as to prevent his client from incurring the cost of putting right defects in the works. Put more succinctly, can a builder owe a duty of care in tort to his client, concurrent with his duty in contract, in respect of economic loss?

(2) If so, whether or not on the facts of this case the Defendant did indeed owe such a duty to the Claimant. The Claimant's case is that he did, on the simple basis that the Defendant is to be held to have assumed responsibility to the Claimant for the services provided in the form of the building works undertaken by reason of the contractual relationship subsisting between the parties. The Defendant's case is that:

(a) The existence of the contractual relationship between the parties is not sufficient in itself to justify a finding of an assumption of responsibility.

(b) In any case, this is on true analysis a contract for the sale of land as opposed to a contract for building works, so that the contractual relationship in this case would not justify a finding of an assumption of responsibility for the building works.

(c) Clause 10 of the building conditions incorporated into the sale agreement entered into between the parties is, on its true construction, inconsistent with the Defendant having assumed responsibility to the Claimant for the building works.

This in turn involves a consideration not only of the true construction and effect of the relevant clause, but also as to whether or not the Defendant can rely on it in circumstances where the Claimant contends that it is unreasonable under the provisions of the Unfair Contract Terms Act 1977.

7. So far as the second preliminary issue is concerned, I should record that the Claimant does not seek to pursue any claim in contract (which he rightly accepts is statute-barred) or for misrepresentation, so that in order to succeed the Claimant must first establish the existence of a duty of care in tort and second claim the benefit of s.14A of the Limitation Act (he rightly accepts that the primary limitation period in tort had expired before the action was commenced, and does not seek to rely on any other basis for extending the limitation period).
8. The Claimant's case is that it was not until September 2004 at the earliest, when the gas service engineer visited to clean and/or service the gas fires, that he had the requisite knowledge to start the 3 year time period running. If that is right, then it is common ground that he commenced these proceedings in time. The Defendant's case is that the Claimant ought to have arranged for the gas fires to be serviced on an annual basis, or in any event that he ought to have had the gas fires serviced much earlier than 2004, and that had he done so the gas service engineer would have discovered then what was in fact discovered in 2004, so that the Claimant should be taken to have acquired the requisite knowledge on a date more than 3 years before proceedings were commenced, i.e. before December 2003, with the result that the action is statute-barred. The Claimant's response is that: (1) it was reasonable for him not to have the gas fires serviced until he did; (2) the gas service engineer cannot be regarded as an expert providing advice within s.14A(10)(b) of the Limitation Act; (3) it is not the case that what was discovered in 2004 would necessarily have been discovered on any earlier service.
9. The following questions therefore arise in relation to the second preliminary issue:

(1) Whether or not the Claimant ought to have arranged for the gas fires to be serviced either annually or at least much earlier than he did.

(2) If so, whether the Claimant is to be treated, either under s.14A(10)(a) or s.14(10)(b) of the Limitation Act, with knowledge of the facts which would have been discovered as a result of an earlier inspection.

(3) If so, what facts would have been discovered as a result of an earlier inspection.

ISSUE 1: CAN A BUILDER OWE HIS CLIENT A CONCURRENT DUTY OF CARE IN TORT IN RELATION TO ECONOMIC LOSS?

10. It is of course true that a question such as this cannot be answered in the abstract without reference to the particular facts of the case in which the question arises. However, this is not a case where the Claimant is relying upon any particular facts other than the existence of the contractual relationship as giving rise to the assumption of responsibility. Furthermore, the Defendant has argued the case on the basis first that the existence of a contractual relationship between a builder and his client is not sufficient in principle to give rise to an assumption of responsibility, and second that even if that is wrong in the circumstances of this particular contractual relationship there was no assumption of responsibility. In those circumstances, and since the first issue does raise matters of general interest which have been fully argued before me, I propose to consider the issues in the order in which they were argued, even if my conclusion on the second issue renders it strictly unnecessary for me to reach a conclusion on the first issue.
11. Mr Budworth's case for the Defendant is that the decision of the House of Lords in Murphy v Brentwood DC [1991] AC 398 is binding authority for the proposition that a builder does not owe a duty of care to owners or occupiers of property constructed by the builder save in relation to defects which cause either personal injury or physical damage to real property other than the property itself, and that this applies as much where the owner occupier is the party contracting with the builder as where the owner occupier has no contractual relationship with the builder. Although he accepts that, following the decision of the House of Lords in Henderson v Merrett Syndicates [1995] 2 AC 145, it is possible for a party to be held to have assumed responsibility to another party for the provision of information or services so as to found a duty of care in tort not to cause economic loss, he submits that this requires something more than the existence of a contractual relationship, and there is nothing more here. He submits that the decision of HHJ Richard Seymour QC in Tesco Stores v Costain & others [2003] EWHC 1487 (TCC), where the judge held that the defendant builder did owe a concurrent duty of care in tort to the claimant employer, was wrongly decided and should not be followed.
12. Mr Darbyshire's case for the Claimant is that: (a) the decision in Murphy v Brentwood, properly understood, is not inconsistent with the proposition that a builder may come under a concurrent duty of care in tort to his client not to cause economic loss where there is a special relationship between them; (b) the decision in Henderson v Merrett is authority for the proposition that a special relationship may arise from the existence of a contract between the builder and client for the provision of services without more; (c) the decision in Tesco v Costain was rightly decided and should be followed.
13. My attention has also been drawn to section 7-018 of the current (8^th) edition of Keating on Construction Contracts where the authors, having referred to Murphy v Brentwood, Henderson v Merrett, Tesco v Costain and a number of other relevant first instance decisions in the TCC, neatly encapsulate the current understanding as follows:

'In the light of this disagreement between judges of the TCC it is impossible to be confident as to the present state of the law. The central disagreement centres on the extent (if any) to which the making of a contract in itself gives rise to an assumption of responsibility within the meaning of Henderson v Merrett. It is difficult to disagree with the view that a contract which stipulates that the contracting party will perform certain services involves an assumption of responsibility which will normally be relied upon by the other contracting party. On the other hand it is true that the authorities prior to Henderson v Merrett, and in particular Murphy, did not envisage a builder (or possibly a builder –designer or a pure designer and supervisor of work) owing duties of care in respect of economic loss. This difference of view requires a reconciliation of these two different streams of authority which will have to await a decision from the Court of Appeal or the House of Lords.'

14. The starting point for the discussion is Murphy v Brentwood. As is well known, in that case the House of Lords unanimously departed from its earlier decision in Anns v Merton London Borough Council [1978] AC 728, holding that a local authority owed no duty to an owner or occupier of a house in connection with its role in approving plans and calculations submitted for buildings regulations purposes in respect of economic loss, in that case a loss on resale due to cracking caused by defective foundations.
15. Of course neither Murphy v Brentwood nor Anns v Merton were decisions directly about builders. However in both cases the House of Lords considered it necessary to address the scope of any duty of care owed by builders in order to decide the scope of any duty of care owed by the local authority. In Anns v Merton it appears that the builders of a block of flats had entered into long leases with purchasers after the block had been constructed, and there is no indication that the leases had included any contractual warranty so far as the builders' workmanship was concerned. All but one of the purchasers had assigned their leases prior to proceedings being commenced. The builders were named as defendants, but no claim in negligence was asserted against them, and they took no part in the action. Lord Wilberforce, with whose speech Lords Diplock, Simon and Russell agreed, said this:

'The position of the builder. I agree with the majority of the Court of Appeal in thinking that it would be unreasonable to impose liability in respect of defective foundations upon the council, if the builder, whose primary fault it was, should be immune from liability. So it is necessary to consider this point, although it does not directly arise in the present appeal. If there was at one time a supposed rule that the doctrine of Donohue v Stevenson did not apply to realty, there is no doubt that under modern authority a builder of defective premises may be liable in negligence to persons who thereby suffer injury'.

16. 2 years before Murphy v Brentwood the House of Lords had decided D & F Estates Ltd v Church Commissioners for England [1989] AC 177. That was a case where the claimants were the lessees and occupiers of property which had been constructed by the third defendant main contractor builder under a development contract with developers on land belonging to the first defendant lessors, the Church Commissioners. There was no contractual or other direct relationship between the claimants and the builder. The claimants' complaint was that plaster-work applied by the third defendant's sub-contractors was defective and at first instance were successful in holding the builder liable in negligence for their failure to supervise the plaster-work. The defective state of the plaster-work was not discovered until it fell down some 15 years after it had been applied, and the principal claim advanced was for the cost of remedial works. The Court of Appeal allowed the builder's appeal and the House of Lords dismissed the claimants' appeal from that decision. Lords Bridge and Oliver gave speeches. Lord Oliver agreed with Lord Bridge, and the other 3 members of the House agreed with both speeches. It was held that the claim was a claim for pure economic loss, which was not recoverable in tort under the principle of Donohue v Stevenson. Not surprisingly, given the absence of any contractual or other direct relationship between the claimants and the builders, the claimants did not suggest in their argument before the House of Lords that the builder could have owed any duty under a Hedley Byrne v Heller type special relationship, and it was no part of the decision of the House of Lords that the builder could not have been liable for economic loss in an appropriate case in such circumstances (see for example the speech of Lord Oliver at p.213C and p.216H-217A).
17. I should also mention the earlier decision of the Court of Appeal in Batty v Metropolitan Property Realisations [1978] QB 554. In that case the Court of Appeal was concerned with a claim made by the owners of a house which had been, as was found at first instance by Crichton J sitting in Manchester, negligently built on a development site vulnerable to landslide, thus rendering the dwelling valueless to the owners. The owners sued the builders, with whom they had no contractual relationship, and also the developers, who had sold them the property, on the basis that both had been negligent in failing to observe the signs of vulnerability at a joint inspection undertaken by them before acquiring and developing the site. The judge at first instance held the developer liable for that failure under a contractual warranty given by them to the owners to build the house 'in an efficient and workmanlike manner and with proper materials and so as to be fit for habitation', but held that he was bound by authority not to hold the developers also liable in tort. He found against the builders on the claim against them in negligence. The builder's appeal against that decision was dismissed, and it is that part of the decision of the Court of Appeal which subsequently received the most attention. However the developers also appealed, unsuccessfully, against the finding that they were in breach of contract; in contrast the claimants successfully cross-appealed against the refusal of the trial judge to enter judgment against the developers in tort. In his judgment on this last point Megaw LJ held that the judge was wrong to have concluded that he was bound by the judgment of Diplock LJ sitting as a judge of first instance in Bagot v Stevens Scanlan [1966] 1 QB 197 to hold that the developer could not owe a duty of care in negligence as well as in contract. He held that the true position was as stated by Lord Denning MR in Esso Petroleum v Mardon [1976] QB 801, where in a passage at pages 818-820 Lord Denning held that the existence of a contractual relationship between parties did not preclude a duty of care arising under the principle in Hedley Byrne v Heller. Megaw LJ went on to consider and reject a submission by the developers that the decision in Esso Petroleum v Mardon only applied where the defendant conducted a common calling and thus was under a special type of legal liability, or where the duty was owed by a professional man in respect of his professional skill. He said this:

'I see no reason, in logic or on practical grounds, for putting any such limitation on the scope of the right. It would, I think, be an undesirable development in the law if such an artificial distinction, for which no sound reason can be put forward, were to be held to exist. In my judgment the plaintiffs were entitled here to have judgment entered in their favour on the basis of tortious liability as well as on the basis of breach of contract, assuming that the plaintiffs had established a breach by the first defendant of their common law duty of care owed to the plaintiffs. I have no doubt that it was the duty of the first defendant, in the circumstances of this case, including the fact of the joint responsibility which they undertook in arranging for the erection of this house on this site, apart altogether from the contractual warranty, to examine with reasonable care the land, which in this case would include adjoining land, in order to see whether the site was one on which a house fit for habitation could safely be built. It was a duty owed to prospective buyers of the house. How wide or deep the examination had to be, to comply with the duty, would depend on the facts of the particular case, including the existence and nature of any symptoms which might give cause for suspecting the possibility of instability. It is clear from the facts found by the judge that, if he had thought that a finding of tort was procedurally permissible, he would have held, on his assessment of the evidence, that the first defendants were in breach of that duty. Accordingly, I would accept the cross-notice and would direct that judgement be entered for the plaintiffs against the first defendants for the tort of negligence as well as for the breach of contract.'

Bridge LJ (as he then was) and Waller LJ agreed.

18. In D&F Estates Lord Bridge, referring to Batty, said that:

'The liability in tort of the developers was held to arise from breach of a duty corresponding to that which they had assumed to the plaintiffs in contract. This I regard as of no present relevance [to the instant case]' (p.201D-F)

And Lord Oliver, also referring to Batty, said this:

'My Lords, I confess to the greatest difficulty in reconciling [the decision against the builder] with any previously accepted concept of the tort of negligence at common law and I share the doubt expressed [by Lord Bridge] whether it was correctly decided, at any rate so far as the liability of the builder was concerned. The case was however one in which the builder and the developer, with whom the plaintiffs had a direct contractual relationship, were throughout acting closely in concert, and it may be that the actual decision, though not argued on this ground, can be justified by reference to the principle of reliance established by the decision of this House in Hedley Byrne v Heller' (p.216F-F)

19. It appears therefore that whilst the House of Lords in D&F Estates clearly regarded that part of the decision in Batty which held the builder liable to the owner as having been wrongly decided, unless justifiable under the Hedley Byrne v Heller principle, they did not regard the other part of the decision, holding the developers liable for economic loss in tort to the purchasers with whom they had contracted, as wrongly decided. Nor, so far as I can see, was there any criticism of this part of the decision in Batty by the House of Lords in Murphy v Brentwood, so that it cannot be regarded as having been over-ruled by the House of Lords in that case.
20. If that analysis be right, then Batty stands as a decision of the Court of Appeal, which has not been overruled or doubted on this point, to the effect that a developer who enters into a contractual warranty with a purchaser to build a house in an efficient and workmanlike manner can also owe the purchaser a duty of care in tort under the principle in Hedley Byrne v Heller. It is true that, insofar as the duty is said to have been owed to 'prospective purchasers' and to have arisen from all of the relevant circumstances, it cannot be said that the Court was holding that it was the duty in contract which alone provided the basis for the assumption of responsibility. Nonetheless, it is apparent in my judgment that it was the principle in Hedley Byrne v Heller which was relied upon as giving rise to the duty of care, as opposed to the extension of the principle in Donohue v Stevenson established in Anns v Merton and subsequently held in Murphy v Brentwood to have been an illegitimate extension. It is also authority for the proposition that concurrent liability in tort under the Hedley Byrne v Heller principle is not limited to those conducting a common calling or to professional men. I should also observe at this stage that in Henderson v Merrett Lord Goff referred (in a passage beginning at p.187D) both to Esso Petroleum v Mardon and Batty as examples of cases of concurrent liability in contract and in tort, going on to suggest that the justification for those decisions is to be found in the judgment of Oliver J (as he then was) in Midland Bank Trust Co v Hett Stubbs & Kemp [1978] QB 554, for which he expressed his admiration and agreement. It is clear, therefore, that Lord Goff also appears to have regarded the decision in Batty in relation to the developers as being correct.
21. Turning now to Murphy v Brentwood itself, the builders, who were not parties to the action, had constructed the house in question before selling it to the claimant. There is no suggestion that the contract of sale contained any contractual warranty similar to that in the Batty case, so that it would appear that there was no basis for contending that the builder owed any contractual duty of care to the claimant in relation to the building works.
22. It is clear from a careful reading of the speeches in Murphy v Brentwood that the House of Lords did not regard it as necessary for them separately to consider those cases where there was and where there was not a direct contractual relationship between builder and owner. Nor therefore did they need separately to consider those cases where a builder with a contract with the claimant is under a contractual duty of care, whether express or implied, in relation to his building works, and those cases where the builder sells the completed house to the owner without giving any contractual warranty as to the building works. Given the facts of both Anns v Merton and Murphy v Brentwood, and the issues which arose in those cases, that is not surprising. It appears that the speeches are all directed to the position where there is no contractual relationship between the builder and the owner. This explains why it is that both Lords Keith and Bridge suggested that one consequence of the decision in Anns v Merton would be to impose a 'transmissible warranty of quality' upon the builder, and why Lord Keith also suggested that there was no logical or principled basis for distinguishing between the position of the builder of a house and the manufacturer of a chattel. Mr Darbyshire has submitted, rightly in my judgment, that neither of these objections are apt to cover the situation where the only claimant is a party to a building contract with the builder, firstly because there would be no question of there being a transmissible warranty in such a case (unless it was argued that an assignment of contractual rights could also operate to assign the benefit of the tortious duty of care), and secondly because if the duty of care in tort arises only where it would be concurrent with an equivalent contractual duty of care, that could not also apply in the case of a manufacturer of a chattel, where there would be no such equivalent contractual duty, even if the manufacturer had sold the chattel directly to the claimant.
23. I was taken carefully by both counsel through the speeches given in Murphy v Brentwood. I observe that:

(1) Nothing said by Lords Mackay, Keith or Jauncey appears to bear on the particular issue which arises in this case.

(2) It is clear from the speech of Lord Bridge, in particular those passages at pages 475D-F, 479B-C, 480F-G and 481D, that nothing in his judgment was intended to exclude a duty of care to guard against economic loss arising where there was a special relationship of proximity, as in Hedley Byrne v Heller, and that his conclusion that a builder did not owe any such duty to an owner of a house was not intended to extend to the particular case of the builder who was also in a contractual relationship with the owner (see in particular p.479C – 'I have so far been considering the potential liability of a builder for negligent defects in the structure of a building to persons to whom he owes no contractual duty' – emphasis added).

(3) It is clear from the speech of Lord Oliver that his criticism is directed at the process of reasoning which would allow a owner with no contractual relationship with the builder to recover economic loss from that builder (see page 487H – 489D, with its references to the position of the 'derivative owner' and the 'remote purchaser'.

24. It follows that I do not agree with the submission of Mr Budworth that Murphy v Brentwood is binding authority to the effect that a builder who contracts with the claimant to build a house can not be held to owe a duty of care to owners or occupiers of property constructed by the builder save in relation to defects which cause either personal injury or physical damage to real property other than the property itself.
25. I turn next to consider in chronological order the various authorities since Murphy v Brentwood, including Henderson v Merrett, which bear on this point.
26. First in time is the decision of May J (as he then was) in Nitrigin v Inco Allows [1992] 1 WLR 498. This was a decision on a preliminary point of law on the basis of assumed facts, as to whether or not the first defendant owed the claimant a duty of care in tort in relation to defects in piping which it manufactured under a contract with the claimant, but which was fabricated and installed by the second defendant. The pleaded allegation was that the first defendant owed the claimant a duty to manufacture the piping with reasonable care and skill. Not surprisingly, since the contract was pleaded as a contract of sale, there was no suggestion that the first defendant owed the claimant an equivalent duty of care in contract. The second defendant was in liquidation and thus played no part in the action. The contest was whether there was a cause of action, and if so whether it accrued in 1983, when the Claimant first noticed cracking to the piping, which it was agreed was merely economic loss, or in 1984, when the piping cracked and burst causing damage to the rest of the plant. If the former, then the action was statute-barred, so that unusually it was the first defendant who was positively contending that it owed a duty of care to the claimant to prevent him suffering economic loss.
27. May J held that even assuming, as pleaded, that the first defendant was a specialist manufacturer who knew or ought to have known the purpose for which its specialist pipes was needed, the relationship between the claimant and the first defendant was 'neither a professional relationship in the sense in which the law treats professional negligence nor a Hedley Byrne v Heller relationship'. The reference to the professional relationship was of course a reference to the earlier decision of the House of Lords in Pirelli v Oscar Faber [1983] 2 AC 1, which had been explained by Lord Keith in Murphy v Brentwood as a case where 'tortious liability arose out of a contractual relationship with professional people'.
28. It follows, in my judgment, that Nitrigin is authority for the proposition that a manufacturer of goods to be used in a construction project does not without more owe a Hedley Byrne v Heller type duty of care in the manufacture of those goods not to cause economic loss to the employer, even where he contracts directly with the employer to supply those goods. It is not however authority for the proposition that a builder who owes an express or implied contractual duty to exercise reasonable care and skill to his client cannot owe a concurrent Hedley Byrne v Heller type duty of care to his employer in relation to economic loss caused by the builder's failure to exercise reasonable care and skill in the building works.
29. I turn next to Henderson v Merrett [1995] 2 AC 145. That case of course involved a claim by Lloyd's names against Lloyd's underwriting agents. In the case of direct names, there was a direct agency contract between those names and the underwriting agents, whereas in the case of indirect names there was an indirect contractual relationship, consisting of a contract of agency between the indirect name and his members' agent and a separate contract of sub-agency between that members' agent and the underwriting agent. The underwriting agents accepted that it was an implied term of their contracts that they should exercise due care and skill in the exercise of their functions, but denied that they owed the direct names a concurrent duty of care in tort (which was relevant for limitation purposes) or that they owed the indirect names, to whom of course they owed no contractual duty, any duty of care in tort. The trial judge held that they owed both direct and indirect names duties of care in tort, and both the Court of Appeal and the House of Lords dismissed their appeals from that decision.
30. As with Murphy v Brentwood, I was taken carefully by both counsel through the speeches given in Henderson v Merrett. Lord Goff gave the principal speech. Lords Keith, Browne-Wilkinson, Mustill and Nolan all agreed with Lord Goff, and only Lord Browne-Wilkinson gave a short speech of his own.
31. Lord Goff recorded (p.177E-G) that in relation to the direct names the underwriting agents advanced the argument that the existence of the direct contract excluded a parallel duty of care in tort. Having referred to the speeches in Hedley Byrne v Heller, he said this (p180C):

'From these statements, and from their application in Hedley Byrne, we can derive some understanding of the breadth of the principle underlying the case. We can see that it rests upon a relationship between the parties, which may be general or specific to the particular transaction, and which may or may not be contractual in nature. All of their Lordships spoke in terms of one party having assumed or undertaken a responsibility towards the other. On this point, Lord Devlin spoke in particularly clear terms in both passages from his speech which I have quoted above. Further, Lord Morris spoke of that party being possessed of a 'special skill' which he undertakes to 'apply for the assistance of another who relies upon such skill'. But the facts of Hedley Byrne itself, which was concerned with the liability of a banker to the recipient for negligence in the provision of a reference gratuitously supplied, show that the concept of a 'special skill' must be understood broadly, certainly broadly enough to include special knowledge. Again, though Hedley Byrne was concerned with the provision of information and advice, the example given by Lord Devlin of the relationship between solicitor and client, and his and Lord Morris' statements of principle, show that the principle extends beyond the provision of information and advice to include the performance of other services. It follows, of course, that although, in the case of the provision of information and advice, reliance upon it by the other party will be necessary to establish a cause of action (because otherwise the negligence will have no causative effect), nevertheless there may be other circumstances in which there will be the necessary reliance to give rise to the application of the principle. In particular, as cases concerned with solicitor and client demonstrate, where the plaintiff entrusts the defendant with the conduct of his affairs, in general or in particular, he may be held to have relied on the defendant to exercise due skill and care in such conduct.

…

Furthermore, especially in a context concerned with a liability which may arise under a contract or in a situation 'equivalent to contract', it must be expected that an objective test will be applied when asking the question whether, in a particular case, responsibility should be held to have been assumed by the defendant to the plaintiff: see Caparo Industries v Dickman. In addition, the concept provides its own explanation why there is no problem in cases of this kind about liability for pure economic loss; for if a person assumes responsibility to another in respect of certain services, there is no reason why he should not be liable in damages for that other in respect of economic loss which flows from the negligent performance of those services. It follows that, once the case is identified as falling within the Hedley Byrne principle, there should be no need to embark upon any further enquiry whether it is 'fair just and reasonable' to impose liability for economic loss - a point which is, I considered, of some importance in the present case. The concept indicates to that in some circumstances, for example where the undertaking to furnish the relevant service is given on an informal occasion, there may be no assumption of responsibility; and likewise that an assumption of responsibility may be negative by an appropriate disclaimer.'

32. It is clear that Lord Goff was contemplating that the duty may arise in the context of contracts both of a general and of a specific nature, that the duty may arise in the case of a contract for the provision of services other than the provision of information and advice, and that in 'contract' or 'equivalent to contract' cases an objective test should be applied when asking whether responsibility should be held to have been assumed.
33. Then, considering an argument that the principle should not extend to the case of underwriting agents, he said:

'The principle has been expressly applied to a number of different categories of person who perform services of a professional or quasi professional nature, such as bankers; solicitors; surveyors and valuers; and accountants.

…

For my part I can see no reason why a duty of care should not likewise be owed by managing agents at Lloyd's to a name who is a member of a syndicate under the management of the agents. Indeed, as Saville J and the Court of Appeal both thought, the relationship between name and managing agents appears to provide a classic example of the type of relationship to which the principle in Hedley Byrne applies. In so saying, I put on one side the question of the impact, if any, upon the relationship of the contractual context in which it is set. But, that apart, there is in my opinion plainly an assumption of responsibility in the relevant sense by the managing agents towards the names in their syndicates. The managing agents have accepted the names as members of the syndicate under their management. They obviously hold themselves out as possessing a special expertise to advise the names on the suitability of risks to be underwritten; and on the circumstances in which, or the extent to which, reinsurance should be taken out and claims should be settled. The names, as the managing agents well knew, placed implicit reliance on that expertise, in that they gave authority to the managing agents to bind them to contracts of insurance and reinsurance and to the settlement of claims. I can see no escape from the conclusion that, in these circumstances, prima facie a duty of care is owed in tort by the managing agents to such names. To me, it does not matter if one proceeds by way of analogy from the categories of relationship already recognised as falling within the principle in Hedley Byrne or by a straight application of the principle stated in the Hedley Byrne case itself. On either basis the conclusion is, in my opinion, clear. Furthermore, since the duty rests on the principle in Hedley Byrne, no problem arises from the fact that the loss suffered by the names is pure economic loss.'

34. This analysis as to why the principle should apply to the managing agents is clearly focussed on the direct contractual relationship existing between the direct names and the managing agents. It would appear to follow that this relationship, which is solely a contractual relationship, is sufficient to found the existence of a concurrent duty of care in relation to economic loss. Indeed, in a passage beginning at p.193B, Lord Goff said:

'Yet the law of tort is the general law, out of which the parties can, if they wish, contract; and, as Oliver J demonstrated, the same assumption of responsibility may, and frequently does, occur in a contractual context. Approached as a matter of principle, therefore, it is right to attribute to that assumption of responsibility, together with its concomitant reliance, a tortious liability, and then to enquire whether or not that liability is excluded by the contract because the latter is inconsistent with it. This is the reasoning which Oliver J, as I understand it, found implicit, where not explicit, in the speeches in Hedley Byrne. With his conclusion I respectfully agree. But even if I am wrong in this, I am of the opinion that this House should now, if necessary, extend Hedley Byrne to its logical conclusions so as to make it clear that a tortious duty of care may arise not only in cases where the relevant services are rendered gratuitously, but also where they are rendered under a contract. This indeed is the view expressed by Lord Keith of Kinkel in Murphy v Brentwood [1991] 1 AC 398 at 466, in a speech with which all the other members of the Appellate Committee agreed.

…

My own belief is that, in the present context, the common law is not antipathetic to concurrent liability, and that there is no sound basis for a rule which automatically restricts the claim to either a tortious or a contractual remedy. The result may be untidy but, given that the tortious duty is imposed by the general law, and the contractual duty is attributable to the will of the parties, I do not find it objectionable that the claimant may be entitled to take advantage of the remedy which is most advantageous to him, subject only to ascertaining whether the tortious duty is so inconsistent with the applicable contract that, in accordance with ordinary principle, the parties must be taken to have agreed that the tortious remedy is to be limited or excluded.

…

It follows that an assumption of responsibility coupled with the concomitant reliance may give rise to a tortious duty of care irrespective of whether there is a contractual relationship between the parties, and in consequence, unless his contract precludes him from doing so, the plaintiff, who has available to him current remedies in contract or tort, may choose to remedy which appears to him to be the most advantageous.'

35. In my judgment it is clear from the speech of Lord Goff that the existence of a contractual relationship, where there is an express or implied obligation to exercise reasonable care and skill, may in itself be sufficient to justify an assumption of responsibility and concomitant reliance, and that this principle is capable of applying to all cases involving the provision of services, not just the provision of professional services by professional men.
36. The first decision in the construction field following Henderson v Merrett is the decision of the Court of Appeal in Barclays Bank v Fairclough Building (1995) 44 Con LR 34. In that case the question was whether the fourth defendant industrial cleaners owed a duty of care in tort concurrent with their contractual duty of care to the third defendant cleaning company, who had sub-contracted the cleaning of asbestos roofs at the claimant's premises to the fourth defendant. The Court of Appeal, having heard full argument on the point and having cited both Murphy v Brentwood and Henderson v Merrett, held that the fourth defendant did indeed owe 'a concurrent duty in tort to avoid causing economic loss by failing to exercise the care and skill of a competent contractor'. Beldam LJ, with whose judgment Nourse LJ and Sir Tasker Watkins agreed, said that:

'A skilled contractor undertaking maintenance work to a building assumes a responsibility which invites reliance no less than the financial or other professional adviser does in undertaking his work. The nature of the responsibility is the same although it will differ in extent.'

He also observed that to so hold would not expose the fourth defendant to the risk of an unrestricted number of claims or to claims greater in extent than those for which it would be liable in contract.

37. That decision, in my judgment, provides powerful support for the argument that a builder may owe a concurrent duty of care to an owner in tort in relation to economic loss.
38. There is then the decision of HHJ Judge Hicks QC in Storey v Charles Church (1997) 13 Con LR 206. In that case the judge held that a builder who had contracted with the claimants to build a house for them and who had also undertaken a design responsibility under that contract owed a duty of care in tort to its client in respect of economic loss caused by negligent design. He held that nothing in Murphy v Brentwood was contrary to that conclusion. He rejected the submission that a distinction should be drawn between a designer who is an independent professional and a designer who also builds as neither inherent in Murphy v Brentwood or D & F Estates nor justified. He regarded that decision as consistent with the decision of the Court of Appeal in Batty. He accepted that a line had to be drawn somewhere to prevent builders from being under a concurrent duty in tort for all of their contractual obligations, including workmanship and strict contractual warranties, although it was not necessary for him in that case to express any opinion as to where that line should be drawn.
39. That decision seems to me to support the argument that the existence of a concurrent duty of care is not limited to cases involving professional men, and I respectfully agree with the reasoning of Judge Hicks in that regard. I do not read him as expressing an opinion one way or another as to whether or not any concurrent duty of care should extend to workmanship obligations.
40. Next in time is the first decision of the Court of Appeal in Bellefield Computer Services v Turner [2000] BLR 97. In that case the defendant builders had constructed a dairy building with a wall which it was alleged should have, but did not, operate as an effective firebreak. Following the sale of the building to new owners there was a fire which, it was said, spread to the rest of the building because of the deficient wall. On those assumed facts Bell J held at first instance that the builders owed a duty of care to the new owners in relation to damage suffered to property other than the building itself, but not otherwise. The builder's appeal failed, the Court of Appeal applying Murphy v Brentwood. The decision is of some relevance to the present case primarily because of what Schiemann LJ said at p102:

'There being no evidence of any contractual exclusion clause which sought to exclude liability in tort, the case has proceeded on the basis that, had there been no change in ownership, the builders would have been liable to the original owners both in contract and in tort: Henderson v Merrett. Contract is irrelevant for present purposes, but it is significant that the builders are assumed liable to the original owners in tort for damage to the building. The result of the judge's holding is that, although the builders were under a duty owed to the original owners to build the wall in such a way that it contained any fire for a certain period and although they broke that duty, the original owners can not sue because they have suffered no damage and the subsequent owners cannot sue because the duty owed to them only extends to chattels in the building and not to the building itself. Whatever the justification is for coming to that result it can not be either a desire not to increase the degree of care which the builders would need to exercise when building the wall or a desire not to increase the exposure of the builders to damages greater than those to which they would have been exposed had there been no change in ownership. As I have already indicated, had there been no change of ownership the builders would have been liable in tort for the damage to the building.'

41. Although it is clear from the passage which I have just quoted that Schiemann LJ was referring to what appears to have been an assumed position, nonetheless one might have expected that if he had considered that assumption to be clearly erroneous, he would have made some observation to that effect.
42. In his judgment Tuckey LJ, having referred to the reasoning in the dissenting speech of Lord Brandon in Junior Books v Veitchi, said this (p106):

'It is these difficulties which I think justify the policy which prevents recovery in tort against the builder in this case for defects in the building which have caused damage to it. I do not think it is an answer to say that the original contracting party may be owed a concurrent duty in tort by the builder and so why should the same duty not be owed to his successor in title? This is still an undeveloped area of the law and in practice the builder may well be able to exclude such liability by his contract.'

43. It is clear, therefore, that Tuckey LJ was not prepared to accept that the assumption was necessarily a correct one, but equally he clearly did not consider that it was obviously erroneous.
44. Subsequent to the disposal of that appeal, there was a second trial in that case between the builder and the architects, who the builder had brought into the case as a part 20 defendant in order to claim contribution against them. There was then an appeal from the decision in that part 20 claim. It was not in dispute in that case that the architect would have owed the original owner a concurrent duty of care in tort, but the decision, reported as Bellefield Computer Services v Turner [2002] EWCA Civ 1823, is also of some relevance to this case because in his judgment May LJ (as he then was) referred to what he described as the 'blurred borderline' between architectural design and the construction details needed to put it into effect. He said (paragraph 76):

'There is a blurred borderline between architectural design and the construction details needed to put it into effect. Borderlines of responsibility cannot be defined in the abstract. A carpenter's choice of a particular nail or screw is in a sense a design choice, yet very often the choice is left to the carpenter and the responsibility for making it merges with the carpenter's workmanship obligations. In many circumstance, the scope of an architect's responsibility extends to providing drawings or specifications which give full construction details. But responsibility for some such details may rest with other consultants, e.g. structural engineers, or with specialist contractors or subcontractors, depending on the terms of their respective contracts and their interrelationship. As with the carpenter choosing an appropriate nail, specialist details may be left to specialist subcontractors who sometimes make detailed "design" decisions without expecting or needing drawings or specifications telling them what to do. In appropriate circumstances, this would not amount to delegation by the architect of part of his own responsibility. Rather that element of composite design responsibility did not rest with him in the first place.'

45. This passage, it seems to me, is relevant when one comes to consider whether there is any good policy reason for holding that a professional architect may owe a concurrent duty of care to his client in respect of his design work, whilst a builder may not owe a concurrent duty of care to his client in respect of either his design or his building work.
46. The next relevant decision is that of HHJ Humphrey Lloyd QC in Payne v Setchell [2002] BLR 489. In that case the original owner had contracted with the defendant engineer to design foundations for a new house, which the claimants then purchased from the original owner. The claimants contended that the defendant owed them a duty of care extending to economic loss, being the diminution in value consequent upon cracking due, it was alleged, to negligent design of the foundations. HHJ Lloyd applied Murphy v Brentwood to hold that the defendant owed the claimants no such duty. Having referred to the earlier decision of HHJ Hicks in Storey v Charles Church he said (paragraph 29):

'As I have already indicated I agree with Judge Hicks that a person who has undertaken to provide a design may owe a duty, concurrently with any contractual duty, to use due care and skill not to cause economic loss (although in my view in the absence of special circumstances the economic loss will be limited in extent to that in Murphy). However whilst I also agree that there should be no distinction turning not on the content of the duty but the trade or profession of the person undertaking it, when one takes into account the policy considerations that led to Murphy and Bates such an approach points in the opposite direction to that endorsed by Judge Hicks.'

He then held (paragraph 30):

'In my judgement Murphy and Bates established that, as a matter of policy, any person undertaking work or services in the course of a construction process is ordinarily liable only for physical injury or for property damage other than to the building itself but is not liable for other losses – i.e. economic loss. If any liability for such economic losses to arise it must be for other reasons, e.g. as a result of advice or statements made upon which reliance is placed in circumstances which create a relationship where there is in law to be an assumption of the responsibility for the loss – i.e. within the principle of Hedley Byrne v Heller (see Lord Keith's speech in Murphy which I have quoted above). In my judgment a designer is not liable in negligence to the client or to a subsequent purchaser for the cost of putting right a flaw in a design that the designer has produced that has not caused physical injury or damage, just as a contractor is not liable.' (emphasis added)

47. It appears to me that all that HHJ Lloyd was saying was that in the absence of an assumption of responsibility under Hedley Byrne v Heller neither a builder nor a designer could owe a concurrent duty of care in tort to his client not to cause economic loss. That does not seem to me to be controversial.
48. In the later case of Mirant-Asia Pacific v Ove Arup International [2004] EWHC 1750 (TCC) HHJ Toulmin CMG QC had to decide whether or not the defendant engineers owed the claimant a concurrent duty of care in tort in relation to economic loss as well as a duty arising in contract, He held that they did. Contrary to the approach of HHJ Lloyd QC in Payne v Setchell, he distinguished between a designer providing professional or quasi-professional services and a contractor (paragraph 395). In paragraph 397 he said this:

'It is not a part of the reasoning of my finding, but in relation to the distinction between builder and designer it is right to note that a builder warrants that its works will be fit for the purpose, see Young and Marten v McManus Childs [1968] 9 BLR 77, whereas a professional adviser warrants only that he will exercise reasonable care and skill.'

49. Of course in any contract for building services there is an implied term that the builder will carry out the service with reasonable care and skill: s.13 of the Supply of Goods and Services Act 1982. There may also, depending on the circumstances, be implied a warranty by the builder that his works will be fit for the intended purpose, but this is not an invariable warranty: see the discussion in Keating on Construction Contracts (8^th edition), paragraph 3-060. I would agree that there would be difficulties in implying any duty of care in tort concurrent with any implied warranty of fitness for purpose. However that does not, with the greatest of respect to HHJ Toulmin, seem to me to justify distinguishing between the positions of a builder and a designer when considering whether the former owes a concurrent duty of care in tort to his client to take reasonable care and skill so as to avoid causing economic loss, nor when considering whether or not any such duty extends only to errors of design or also to errors of workmanship. Indeed HHJ Toulmin was careful to say in terms that this was not part of the reasoning for his finding.
50. Finally, so far as the TCC cases are concerned, I turn to the decision of HHJ Seymour QC in Tesco v Costain & others. That was a case where the claimant was contending that a fire which caused serious damage to one of its superstores was caused by the negligence and breach of contract of Costain, the builder who had built the superstore, and Peter Hing & Jones, the architects who had designed it, due to the lack of proper fire stopping measures. It was clearly, therefore, an economic loss claim similar to Bellefield, since the only property damaged was the superstore itself. Costain contended that no duty was owed in relation to economic loss. The case came on before HHJ Seymour for the trial of a number of preliminary issues, including the issue of the existence of the alleged duty of care. Before turning to the decision on that point, 2 preliminary points should be noted:

(1) As well as denying that it owed a duty of care in tort to Tesco, Costain also denied that it had entered into a contract with Tesco. Tesco's case was that it had entered into a design and build contract with Costain on its standard documentation, under which Costain assumed responsibility for the design as well as the construction of the store. Costain's case was that it had only undertaken the work under letters of intent, and did not enter into any concluded contract with Tesco. HHJ Seymour concluded that Costain had entered into a 'simple contract' which did not incorporate Tesco's standard design and build documentation [pars 174-175], and that there were implied terms of that contract that Costain would perform its construction work in a good and workmanlike manner [par 177], and that any work designed by Costain would be reasonably fit for its intended purpose [par 180].

(2) Tesco made a further claim against Costain in negligence, arising out of an inspection carried out and report produced by Costain in relation to the adequacy of the fire stopping measures, all of which post-dated the completion of the store. Costain always accepted that it owed Tesco a duty of care in relation to the inspection and report, although there was a dispute in relation to the nature and scope of that duty of care which by agreement was left over to a further trial, so that HHJ Seymour's decision in relation to the concurrent duty of care was separate from and not influenced by that aspect of the case.

51. HHJ Seymour conducted a detailed review of the authorities. In paragraph 230 he then said this:

'I differ from the analysis of Judge Lloyd [in Payne v Setchell] with great hesitation, but I have to say that it does not seem to me that Murphy v Brentwood and the other authorities to which he referred do establish the proposition that a builder never owes a duty of care which extends to not causing economic loss, only that he does not do so in the absence of 'a special relationship'. It seems to me clear that all of the attention in Murphy v Brentwood, so far as the builder was concerned, was on his relationship with what Lord Oliver of Aylmerton at page 489E called 'a remote owner', that is to say (page 489C) 'a derivative owner with whom he has no contractual or other relationship'. While the terms of the speeches in Murphy v Brentwood may themselves have been somewhat elliptical in relation to the position of a builder in respect of owing a duty of care in tort not to cause economic loss to someone with whom he was in a contractual relationship, there are indications in the passages from the speeches which I quoted that the position was, or might be, different from that as between a builder and a party with whom he was not in a contractual relationship. Any ambiguity or obscurity at this point has now, in my judgment, been clarified by the decision in Henderson v Merrett. If the position now is, as I consider that it is, that anyone who undertakes by contract to perform a service for another upon terms, express or implied, that the service will be performed with reasonable skill and care, owes a duty of care to like effect to the other contracting party or parties, which extends to not causing economic loss, there seems to be no logical justification for making an exception in the case of a builder or the designer of a building. My reading of the authorities does not require or permit the making of such exception. I draw comfort in my analysis from the observation of Schiemann LJ in Bellefield No 1 that in his view the builder in that case did owe a duty of care to the original owner in respect of damage to the building itself.'

52. HHJ Seymour's analysis of the decision in Henderson v Merrett can be found at paragraph 225 of his judgment in these terms:

'The actual principle relevant to this part of my consideration laid down by the decision in that case, in my judgment, was, quite simply, that where, by contract, a party has agreed personally to do something and it is an express or implied term of the contract that that thing will be done with reasonable care and skill, the party owes to other relevant contracting parties the like duty of care in tort unless the existence of such duty of care is excluded or modified by the contract. Exceptionally, as on the particular facts of that case, but not usually, such a duty of care might be owed to a person higher up a chain of contracts than those immediately party to the relevant contract. The House of Lords was not concerned in that case to broaden the nature or scope of duties of care, so as to impose a duty of care upon a person in relation to something actually done by someone else, but simply to make plain that it was no answer to the suggestion that a party should be able to sue in negligence another party who had failed to exercise reasonable care and skill in doing something that had thereby caused the first party loss, to contend that the parties were in a contractual relationship and that their mutual rights and obligations should be determined exclusively under their contract.'

53. In his oral submissions Mr Budworth submitted that HHJ Seymour's reasoning in paragraph 230 was not supported by what was said either in Murphy v Brentwood or in Henderson v Merrett.
54. So far as HHJ Seymour's analysis of Murphy v Brentwood is concerned, I respectfully agree with it, save only that I do not consider that it is possible to draw a firm conclusion one way or another as to the view the members of the House of Lords in that case might have taken as to the position as between builder and his client.
55. So far as his analysis of Henderson v Merrett is concerned, I should first refer to the decision of the Court of Appeal in Riyad Bank v AHLI United Bank [2006] EWCA Civ 780, in which Lord Goff's speech in that case was considered in some detail, in particular by Neuberger LJ (as he then was). What he said as relevant to the present issue was this:

'37. There is, at any rate at first sight, attraction in the notion that, where, in a purely commercial context, parties have voluntarily and consciously arranged their affairs so that there is a contractual obligation on A to give advice to B, and on B to consider and pass on that advice, to the extent that it sees fit, to C, there should normally be no part for the law of tort to play. In other words, that (i) there should be no tortious duty in relation to the advice, either as between A and B or as between B and C, because those parties have identified the extent and ambit of the respective rights and duties between them in their respective contracts; (ii) there should be no tortious duty in relation to the advice given by A, as between A and C, because the three parties have intentionally structured their relationships so that there is no direct duty between A and C, but separate duties between A and B, and between B and C.

38. The justifications for each of these two points might appear to be the converse of each other. Point (i) is based on the contention that the raising of a tortious duty is inappropriate because the parties have agreed a contractual duty. Point (ii) is based on the contention that the raising of a tortious duty is inappropriate because the parties have decided that there should be no contractual duty. However, as I see it, despite this apparent paradox, both points essentially rested on the same proposition, namely that a tortious duty should not be invoked between parties to commercial contracts at least where there is no 'liability gap'.

39. In relation to point (i), it would be surprising (save perhaps in unusual circumstances) if the law of tort imposed greater liability on A or B than they had agreed to accept, either expressly or impliedly, in their respective contracts, and it might appear pointless and confusing if there was a tortious liability which was simply co-extensive with the contractual liability. Of course, tortious liability is generally subject to less strict statutory limitation bars that contractual liability (as is demonstrated in the Henderson case at 174 F-G), but that may seem a questionable reason, in terms of principle, for justifying a co-extensive tortious duty where there is a contractual duty.

…

42. On the other hand, there are strong countervailing arguments the other way, which appear to me, equally, to apply equally to points (i) and (ii). If a duty of care would otherwise exist in tort, as part of the general law, it is not immediately easy to see why the mere fact that the adviser and the claimant have entered into a contract, or a series of contracts, should itself be enough to dispense with that duty. If a claimant is better off relying on a tortious duty, it is not readily apparent why a claimant who receives gratuitous advice should be better off than a claimant who pays for the advice (and therefore would normally have the benefit of a contractual duty), unless, of course, the contract so provides. One might expect the question to be determined by reference to the contractual relationship on the normal basis, namely whether the nature, terms or circumstances of the contracts expressly or impliedly lead to the conclusion that the parties have agreed that there will be no tortious duty.

43. These arguments have to be assessed in the light of the decision of the House of Lords and, in particular, the analysis of Lord Goff, in the Henderson case. It seems clear from the closely reasoned passage in his speech at 184B to 194E that the issue has been resolved, at least in principle, in favour of the latter of the two views that I have summarised. In other words, "the common law is not antipathetic to concurrent liability"…

…

45. At 193B to C, Lord Goff said 'the law of tort is the general law out of which the parties can, if they wish, contract', and that the correct approach is to determine whether there would otherwise be a tortious liability arising out of an assumption of responsibility and concomitant reliance, and 'then to enquire whether or not that liability is excluded by the contract because the latter is inconsistent with it'.

…

47. Thus, the question in a point (ii) case, as in a point (i) case, is whether, in relation to the advice which he gave, the adviser assumed responsibility to the claimant, in the light of the contractual context, as well as all the other circumstances, in which the advice was given. The way in which Lord Goff expressed himself in more than one place in his speech in the Henderson case, including some of the brief passages I have quoted, suggests that it is for the adviser to establish that the contractual context negatives an assumption of responsibility, not for the claimant to show that the assumption survives notwithstanding that context.

48. Like Longmore LJ, I do not think that the answer depends on whether one asks first whether, absent the contractual context, there would be an assumption of responsibility, and secondly whether the positive answer to that question is vitiated by the contractual context; or whether one asks the single question whether, in all the circumstances, including the contractual context, there was an assumption of responsibility. Whether or not one adopts the two-stage approach may depend on the facts of the particular case, or even on the way the case has been argued.'

56. As I read these passages, particularly paragraph 47, Neuberger LJ is expressing the opinion that the correct principle, as stated by Lord Goff, is that there may be concurrent liability in cases involving a direct contract for the provision of advice between A and B, not that there will be concurrent liability in all such cases save where the contractual context is inconsistent with such liability. I respectfully agree with that analysis. What Lord Goff was saying, it appears to me, is that a concurrent duty of care in tort may arise from a contractual relationship, which itself may be a general relationship or a specific relationship, in circumstances where:

(a) One party has a special skill (an expression which has a broad meaning, extending to cases where he has a special knowledge);

(b) That party agrees to perform services (which are not limited to the provision of information and advice, nor to the performance of professional services), in circumstances where there is an express or implied obligation to exercise reasonable care and skill whilst providing those services.

(c) Considered objectively, those circumstances disclose both an assumption of responsibility by that party to the other for the performance of those services, and reliance by the other party.

(d) The contractual relationship is not inconsistent with the duty.

57. Nonetheless, it would appear to follow from the speech of Lord Goff in Henderson v Merrett that, in cases of the type he identifies, the contractual relationship itself provides the 'something more' which Lord Oliver said in Murphy v Brentwood was necessary to justify holding a builder liable for economic loss. For all practical purposes, therefore, it seems to me that there is no need to look for anything more than the contractual relationship. I observe that in such cases it is not merely the fact that there is a contract which gives rise to the duty of care. What Neuberger LJ described as the 'contractual context' will include, in the typical building contract case, the fact that the client, considered objectively, must believe that the builder is both willing and able to undertake the works with reasonable care and skill. If that were not so then undoubtedly the client would not contract with that particular builder. Again the builder must, considered objectively, be aware that the client holds that belief, because again the builder must be taken to know that a client who did not hold that belief would not contract with him to do the building works. Of course it may be that, before the contract was entered into, the builder made some statement as to the quality of his workmanship upon which the client relied. But it seems to me that even in the absence of an express statement of that kind there will still in the typical case be an implicit representation to the same effect upon which the client, whether consciously or unconsciously, can be taken to have relied. Therefore, and in the absence of circumstances pointing to a different conclusion, all the necessary ingredients to establish a tortious duty of care are present.
58. As I read his judgment, what HHJ Seymour did in Tesco v Costain was to treat Lord Goff's speech in Henderson v Merrett as establishing the general principle, and then to consider whether or not builders or building designers should be in a different position. With respect to him, however, it seems to me that the right approach is to consider whether the typical contractual relationship between builder and client (leaving to one side for the time being any particular terms of the particular contractual relationship) is such as to justify in itself the imposition of a concurrent duty of care, or whether there are particular features of that relationship which are antipathetic to the imposition of such a duty without there being 'something more'.
59. In my judgment it is clear from the authorities to which I have referred that there is no authority binding on me which requires me to distinguish between the case of a professional designer and a non-professional builder. Batty is an example of the Court of Appeal holding a non-professional developer under a concurrent duty of care, and it is clear from the speech of Lord Goff in Henderson v Merrett that he did not consider a distinction between professional and non-professional persons to be a sound one. I agree with HHJ Hicks in Storey v Charles Church and with HHJ Lloyd in Payne v Setchell that there is no basis in principle or in logic for distinguishing between the case of the professional designer and a non-professional builder. That is particularly the case where there are so many building companies who offer a full design and build service, and who also – in the case of the larger companies – may typically employ a number of professionally qualified persons. I also consider that to draw such a distinction would be to return, in the words of Lord Goff in Henderson v Merrett to the 'now outmoded concept of status'.
60. The more difficult question, it seems to me, is whether there is any proper basis for distinguishing between the design services provided by a builder and the building work which he provides. Again, there is no authority binding on me requiring such a distinction to be drawn. In particular no such distinction was drawn by Lord Goff in Henderson v Merrett, where the tenor of his speech is directed to the provision of services generally, as opposed to limiting it to advice or the provision of information. In my judgment there is no compelling reason of principle or logic to draw such a distinction. Thus:

(ii) Builders undoubtedly possess a special skill, the skill of building. That is not purely a mechanical process; it involves the exercise of skill and judgment. Builder know that in normal circumstances their clients expect them to build with reasonable care and skill, and they also know that if they do not do so their client is likely to suffer economic loss in redressing defects in the building.

(iii) That special skill, and the reliance which their clients place on them to exercise it, is not limited to those elements of the works which the builder undertakes, expressly or impliedly, to design. It extends just as much to the physical workmanship itself. Indeed, as May LJ observed in the second decision of the Court of Appeal in the Bellefield case, it is often difficult to distinguish between a builder's design and his workmanship obligations. In my judgment to seek to draw a distinction between the two could often produce absurd results. To take an example from this case; if the flues were defective because they had been designed to be constructed with an insufficient vertical run, there would be a potential liability in tort, but if they were defective because the builder had failed to construct the flue in accordance with the design, there would be no potential liability. That does not seem to me to produce a sensible result.

(iv) No such distinction is drawn in the case of professional people. Thus an architect would be as much liable for an error in – for example – failing to send out a notice of non-completion of building works in time as he would for a design error, and a solicitor would be just as much liable for a typographical error in drafting a lease as he would be for choosing an inapposite clause in the self-same lease.

61. The more compelling distinction, in my judgment, lies between the cases where there is a concurrent contractual duty, express or implied, to use reasonable care and skill, and the cases where there is no such duty. Thus a manufacturer who sells goods could never owe a concurrent duty of care to the buyer, unless he had accepted an express contractual duty of care in their manufacture or – exceptionally – such a duty could be implied, and the same would be true of a builder who builds a house and then sells it on. In the same way, if a building contract imposed both a contractual duty of care and also strict contractual duties, the builder would owe no concurrent duty of care in relation to the latter, so that there would be no concurrent tortious warranty as to the fitness for purpose of the completed works, or as to the quality or fitness for purpose either of the goods and materials used in the construction of the building or of the design of those elements of the work which he designed. His obligation would only ever be to exercise reasonable care and skill. Similarly, a supplier who agreed to manufacture and install a piece of equipment might owe a concurrent duty of care in relation to the installation, but not in relation to the quality of the equipment itself.
62. I can see that there may be some cases where it may be difficult to identify clearly whether the contract is a contract of sale or a contract for the supply of goods and services. That might particularly be so in the case of complex contracts for the provision of industrial plant. But that is a problem which often has to be grappled with for the purposes of a claim in contract, so that does not seem to me to be a compelling reason against holding that there is concurrent liability in relation to the provision of the services element of such a contract. Furthermore, it is in precisely those cases where the parties are most likely, as Tuckey LJ suggested in Bellefield No 1, to make provision in their contract for such matters.
63. Furthermore, there appears to me to be no good reason to distinguish between cases involving the provision of building works for the construction of a dwelling-house and building works for the construction of any other structure. In both cases the necessary ingredients for a duty of care exist, and in neither case is the builder taking on any liability beyond that which he would owe to his client in contract in any event.
64. In arriving at these conclusions I have had to consider the argument founded on the existence and terms of the Defective Premises Act 1972, to which reference was made in both D & F Estates and in Murphy v Brentwood. The argument, which found favour in both cases, was that to impose a duty of care in tort on builders not to cause economic loss would be inconsistent with the fact that Parliament has legislated to impose certain obligations upon builders and others involved with the construction of a dwelling, so that the courts should not interfere with the provision which Parliament has made to regulate the circumstances in which a builder will owe duties outside contract in relation to buildings which they construct.
65. As Lord Bridge said in D & F Estates (p.194C-H) the Law Commission report, dated 15 December 1970, which the Defective Premises Act 1972 substantially implemented, had recommended 'that the builder of a dwelling should be placed under a duty, similar to his common law obligations, to build properly and should not be able to contract out of this duty'. The authors of the report had gone on to recommend that that the duty should be owed to the client, where the builder builds to his client's order, to the purchaser, where he sells on to a purchaser, and to anyone subsequently acquiring an interest in the dwelling. They further recommended that the duty should extend to people such as sub-contractors and professionals taking on work in connection with the provision of a dwelling, and to developers as well. Finally, they recommended that the liability should be limited in time from the date when the building was completed.
66. Thus liability under the Defective Premises Act 1972 is limited to dwelling-houses and is also limited to claims made up to 6 years from the date of completion. The concern expressed by the House of Lords in D & F Estates and in Murphy v Brentwood was that to hold a builder or local authority liable for economic loss in tort (where of course under s.14A of the Limitation Act claims may be made up to 15 years from the date of breach) to remote owners or occupiers, both of commercial or residential property, was going beyond the intentions of Parliament as expressed in that Act.
67. This argument has undoubted force when considering, as the House of Lords was in D & F Estates and Murphy v Brentwood, the position of subsequent owners / occupiers where, absent the 1972 Act or the imposition of a duty of care in tort, there is no possibility of a claim. It also has force when one is considering claims against designers and sub-contractors, where again in the absence of a direct contractual relationship the only basis for a claim would be the 1972 Act or the imposition of a duty of care in tort. However in my judgment that objection has little or no force in the concurrent duty of care case, where the parties are already in a contractual relationship. The only real benefit the claimant gets in such a case over and above his rights under contract is the benefit of the extended limitation period under s14A Limitation Act 1980. At best, therefore, it could be said that imposing a concurrent duty of care gives the claimant a potential limitation benefit which he does not get under the 1972 Act. It does not seem to me that this consideration is sufficiently strong in itself to militate against holding that there has been an assumption of responsibility so as to give rise to a concurrent duty of care. Indeed, that consideration has clearly not militated against a concurrent duty of care being imposed on professionals in the construction industry with whom the client is in a contractual relationship.
68. I therefore conclude that in principle a builder can owe a duty of care in tort to his client, concurrent with his duty in contract, in relation to economic loss.

ISSUE 2: DID THE DEFENDANT OWE A DUTY OF CARE TO THE CLAIMANT ON THE FACTS OF THIS CASE?

69. It is necessary to refer to the relevant facts at this stage. Fortunately, they are few and not in dispute.
70. As I have already said, the Defendant is a local house-builder, who undertook the construction of what appears to have been 5 detached houses on this particular site. In paragraph 3 of his witness statement provided for the purposes of this trial the Claimant said:

'I entered into an agreement on or around 12 December 1991 with my wife to purchase 12 Magnolia Rise (then known as Plot 5 Magnolia Rise) from PE Jones (Contractors) Limited. The property was a new build property and was completed in April 1992.'

71. Although rather surprisingly neither of the parties was able to produce an executed version of the relevant documentation, it is common ground between them that they entered into a written agreement for sale in December 1991 in the same or substantially the same terms as the draft agreement which has been produced at trial, and that they entered into a transfer of the property in April 1992 again in the same or substantially the same terms as the draft transfer which has been produced.
72. As relevant, the agreement for sale provided as follows:

'Whereby the vendor agrees to sell and the purchaser agrees to purchase all that piece or parcel of land known as plot number 5 … together with the dwelling house (hereinafter called the house) now standing on the said land which said land and house are together hereinafter referred to as the property.

1. The purchase price shall be the sum of £351,700.

2. A deposit of £35,170 shall be paid … on signature of this agreement.

…

6.1. Compilation shall take place … 14 days after the issue by the vendors to the purchaser of written notice that the property is complete and ready for occupation … notwithstanding the non-completion of items of a minor nature which would not normally preclude the purchaser from taking occupation …

…

8 The Building Conditions annexed hereto are incorporated in this contract.'

73. The Building Conditions referred to provided as relevant as follows:

'1(a) The vendor will in an efficient and workmanlike manner complete the work shown on the drawings and specifications relative thereto already produced to and made available for inspection by the purchaser at the offices of the vendor with such additions variations or omissions as may from time to time be agreed in writing between the parties.

…

10. The vendor and the purchaser shall forthwith enter into the National House-Building Council's standard form of Agreement No HB5 (1986) (or any other standard form in current use at the relevant time for the like purpose) which said standard form is hereinafter called 'the NHBC Agreement'. 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 NHBC Agreement on which alone his rights and remedies are founded.'

74. Although the NHBC Agreement was not included in the trial bundles, at my invitation the Defendant was able to produce the relevant version (the 1990 Edition of the NHBC Buildmark Booklet) subsequently, so that I have been able to consider it and the parties have been able to make submissions on it. As relevant, it provides as follows:

'Important Notes (p5):

The Buildmark is an agreement between the builder, the NHBC and each purchaser of the home.

Your rights under the Buildmark are in addition to any contractual, statutory or common law rights you may have against the builder.'

The builder's warranties (p7):

1. The builder warrants to you that the home has been or will be built:

(a) In accordance with the NHBC's Requirements;

(b) In an efficient and workmanlike manner and proper materials and so as to be fit for habitation.

Note - your rights for breach of these warranties are in addition to any other rights you may have under the Buildmark.

Problems reported before the end of the Initial Guarantee Period: what are the builder must do (p8)

1. Within a reasonable time and at his own expense the builder will put right any Defect or Damage which is reported to him before the end of the Initial Guarantee Period.

Loss during the Structural Guarantee Period: what are the NHBC will pay (p12)

1. The NHBC will pay the cost of putting right any Major Damage which first appears as reported to the NHBC before the end of the Structural Guarantee Period and which is:

(a) Caused by a Defect in the Structure; or

(b) Caused by substance, settlement or heave affecting the Structure.'

75. The Initial Guarantee Period is defined as being the period of two years from the date of the 10 Year Notice which, in this case, is dated 28 April 1992. The Structural Guarantee Period is defined as being the period from the end of the Initial Guarantee Period until 10 years after the date of the 10 Year Notice.
76. In summary, therefore, under the NHBC Buildmark agreement the Claimant had the benefit of a direct contractual warranty from the Defendant which was more extensive than the warranty contained in clause 1(a) of the Building Conditions. Furthermore, he had the benefit of the Defendant's obligation to remedy defects or damage reported within the first two years, underwritten by the NHBC, together with the benefit of the NHBC's obligation to put right major structural damage and structural damage caused by substance, settlement or leave reported within the following 8 years. Finally, all of these rights were expressly stated to be in addition to any contractual, statutory or common law rights the purchaser might have against the builder.
77. Mr Budworth's first submission was that the agreement between the parties was in form and in substance a contract for the sale of land, so that whatever the position might be as between builders and their clients there was no basis for importing a concurrent duty of care in relation to a contract of this nature. Mr Darbyshire's response was to say that since as a matter of fact the Claimant entered into the agreement for sale at a time when the house had not yet been constructed, and since under the agreement for sale incorporating the Building Conditions the Defendant undertook an express obligation to build the house in an efficient and workmanlike manner, there was no difference of substance between this case and a typical building contract. I agree with Mr Darbyshire's submissions. If the Claimant had chosen to build the house and then to market it and sell it under a straightforward contract for sale, then I agree that there would have been no room either for the implication of a contractual warranty to the effect that the building had been constructed with reasonable care and skill or, it would follow, for the existence of a concurrent duty of care in tort. But that is not what happened, either in fact or in the form the contract documents took. The Defendant undertook an express contractual obligation to build the house in an efficient and workmanlike manner, and duly built it. It does not seem to me to be in any way inconsistent with the rationale of holding a builder to have assumed a concurrent duty of care on a builder to hold that the Defendant assumed a duty of care to the Claimant concurrent with that express obligation.
78. Whilst it could be said that there is no distinction of substance between cases where a builder builds and then sells, and where a builder agrees to sell and then builds and sells, in my judgment there is a difference of substance, because in the former case the purchaser is buying a completed product, whereas in the latter case the purchaser is buying a house which the builder is promising to build.
79. Mr Budworth's second submission was that the existence of a concurrent duty of care was inconsistent with and thus negatived by the terms of clause 10 of the Building Conditions. I consider this to be a much more powerful submission.
80. It is clear from the authorities which I have cited that the terms of the contract may indeed prevent a duty of care from arising. The questions which I have to consider are firstly whether or not clause 10 does indeed have this effect and secondly, if so, whether the Defendant is precluded from relying upon clause 10 by reason of the provisions of the Unfair Contract Terms Act 1977 ('UCTA').
81. So far as the first question is concerned, it seems to me that as a matter of construction clause 10 is clearly intended to prevent the Defendant from being under any liability to the Claimant for defects in the building works other than as provided for the NHBC Agreement. Although the opening words of the operative (second) sentence appear to be directed only to liability under the agreement for sale itself, it seems to me that the closing words ('on which alone his rights and remedies are founded') make it clear beyond argument that the intention of the Defendant is to ensure that its only source of obligation in respect of defects in the building works is the NHBC Agreement.
82. Mr Darbyshire submits that this does not avail the Defendant, because the NHBC Agreement expressly provides that the purchaser's rights under it are to be in addition to any contractual, statutory or common law rights it has against the builder. However in my judgment that does not assist the Claimant. If clause 10, as it does, expressly provides that the only source of obligation is the NHBC Agreement, then that provision cannot be deprived of effect by a general provision under the NHBC Agreement which seeks to ensure that the purchaser's other rights – whatever they may be - are not prejudiced by entering into the NHBC Agreement.
83. I have also had to consider how, if at all, the common law approaches clauses which seek to prevent a duty of care which would (or might) otherwise come into being from arising. In Hedley Byrne v Heller itself, where the defendant bank avoided liability because the reference they gave as to their client's financial position was expressly given 'without responsibility', Lord Reid said (at page 492) that:

'In the case of a contract it is necessary to exclude liability for negligence, but in this case the question is whether an undertaking to assume a duty of care can be inferred: and that is a very different matter. And secondly, even in cases of contract general words may be sufficient if there is no other kind of liability to be excluded except liability for negligence: the general rule is that a party is not exempted from liability for negligence 'unless adequate words are used' – per Scrutton LJ in Rutter v Palmer'.

Lord Morris' decision was to similar effect. Lord Hodson decided the case on the grounds that the circumstances were inconsistent with an undertaking to assume a duty of care, thus without referring to Lord Reid's second point.

Lord Devlin's speech was to the same effect as that of Lord Reid. Agreeing with Lord Reid, he also said:

'A man cannot be said voluntarily to be undertaking a responsibility if at the very moment when he is said to be accepting it he declares that in fact he is not. The problem of reconciling words of exemption with the existence of a duty arises only where a party is claiming exemption from a responsibility which he has already undertaken or which he is contracting to undertake'.

Finally, Lord Pearce said:

'If both parties say expressly (in a case where neither is deliberately taking advantage of the other) that there shall be no liability, I do not find it possible to say that a liability was assumed'.

84. Whilst it is true that the House of Lords, in the subsequent case of Smith v Eric Bush [1990] 1 AC 831, held that a disclaimer of responsibility (i.e. a clause which sought to prevent a duty of care from arising, as opposed to a clause which sought to exclude liability for breach of a duty of care) fell within the ambit of UCTA, it is clear from the case itself (see the speech of Lord Griffiths at p.856E-F) that this was a decision about the proper construction of UCTA which did not purport to cast any doubt on the correctness of what had been said in Hedley Byrne v Heller about the position at common law.
85. It follows, in my judgment, that there is no basis for challenging the efficacy of clause 10 at common law, since (a) it operates to prevent the duty in tort from arising, and that, on the basis of Hedley Byrne v Heller, is an end of the matter so far as the common law is concerned; (b) in any event, it is clear in my judgment that clause 10 is intended to exclude any liability arising, whether under the agreement for sale or at common law, and that it uses 'adequate words' to achieve that objective, so that it also satisfies the test in Rutter v Palmer, if it is necessary for it to do so.
86. I turn then to UCTA. It is clear, by reference to the decision in Smith v Bush to which I have just referred, that UCTA is of potential application to clause 10, which is intended to be a disclaimer of responsibility. However Mr Budworth submitted that UCTA could have no application to this contract because, as provided by Schedule 1 paragraph 1(b), UCTA does not apply to 'any contract so far as it relates to the creation or transfer of an interest in land'. Mr Darbyshire's response was to draw attention to the words 'so far as it relates to' and to submit that this is clearly not intended to exclude the operation of UCTA from all of the terms of such a contract, but only those terms which relate to the creation or transfer of the property interest. Neither has referred me to any authority on the point. As a matter of construction, and noting also the difference between the words used in this sub-paragraph 1(b) and the wider words used in the previous sub-paragraph 1(a) ('any contract of insurance'), I prefer Mr Darbyshire's submissions on this point and conclude that UCTA is of potential application.
87. However, in my judgment Mr Darbyshire's case falls down when I come to consider the question of reasonableness. The insuperable difficulty he faces, in my judgment, is that under the NHBC Agreement the Claimant obtains the benefit of the express warranty given by the builder at page 7 thereof, in addition to the other rights conferred by the Buildmark. As I have already observed, this warranty is clearly wider than the contractual warranty in clause 1(a) of the Building Conditions, and it is also more extensive than any concurrent duty of care which would otherwise exist, because it requires compliance with the NHBC requirements and also includes a warranty in relation to materials and a warranty as to fitness for habitation. It is clear that this is not intended to be taken away by clause 10 of the Building Conditions. It follows, in my judgment, that set against all of the benefits which the Claimant obtains under the NHBC Agreement (including any extended period for claims in relation to structural defects) the only substantive detriment he can point to so far as the exclusion of any duty of care in tort is concerned is the fact that s14A Limitation Act 1980 does not apply to these contractual claims. That, however, does not in my judgment provide any conceivable basis for contending that clause 10 is thereby unfair under UCTA in excluding the common law duty of care in tort.
88. It follows, in my judgment, that the Defendant successfully excluded the concurrent duty of care which I consider that it would otherwise have owed to the Claimant in tort. Since there are no other grounds for alleging liability against the Defendant under which the Claimant has any platform for contending that the claim is not irremediably statute-barred, it follows that this action must fail.

ISSUE 3 – SECTION 14A OF THE LIMITATION ACT 1980

89. I should, however, go on to consider the case in relation to the s.14A point, since it was fully explored at trial and in case the conclusion which I have just reached is reversed by a higher court.
90. As I have already observed, the Claimant's case is that it was not until September 2004 at the earliest, when the gas service engineer attended to clean and service the gas fires, and when he first became aware of a potential problem with the flues, that he had the requisite knowledge to start the 3 year time period running, whereas the Defendant's case is that had the Claimant – as they say he should have done - arranged for the gas fires to be serviced on an annual basis, or in any event much earlier than 2004, then he would have become aware at that earlier stage of the potential problem with the flues, and thus would at that stage have had the requisite knowledge. The Defendant has not suggested that the Claimant in fact became aware of the potential problem with the flues before September 2004. Nor has the Defendant suggested that there were any particular problems with the operation of the gas fires before September 2004 which ought to have alerted the Claimant to the need to have them serviced: the Defendant's case is that the Claimant ought to have had them serviced at an earlier stage as a matter of good house-keeping. The Defendant relies in particular upon advice given in the relevant user's instructions for the gas fires, and also because the Defendant says that the Claimant was, or should have been, aware of the risk of carbon monoxide poisoning from faulty gas appliances which made it all the more necessary to have the gas fires regularly serviced. It follows that the Defendant's case is based on the Claimant being fixed pursuant to s.14A(10) of the 1980 Act with constructive knowledge of the potential problem with the flues at an earlier date than he had actual knowledge.
91. Section 14A provides as follows:

Special time limit for negligence actions where facts relevant to cause of action are not known at date of accrual

(1)     This section applies to any action for damages for negligence, other than one to which section 11 of this Act applies, where the starting date for reckoning the period of limitation under subsection (4)(b) below falls after the date on which the cause of action accrued.

(2)     Section 2 of this Act shall not apply to an action to which this section applies.

(3)     An action to which this section applies shall not be brought after the expiration of the period applicable in accordance with subsection (4) below.

(4)     That period is either—

(a)     six years from the date on which the cause of action accrued; or

(b)     three years from the starting date as defined by subsection (5) below, if that period expires later than the period mentioned in paragraph (a) above.

(5)     For the purposes of this section, the starting date for reckoning the period of limitation under subsection (4)(b) above is the earliest date on which the plaintiff or any person in whom the cause of action was vested before him first had both the knowledge required for bringing an action for damages in respect of the relevant damage and a right to bring such an action.

(6)     In subsection (5) above "the knowledge required for bringing an action for damages in respect of the relevant damage" means knowledge both—

(a)     of the material facts about the damage in respect of which damages are claimed; and

(b)     of the other facts relevant to the current action mentioned in subsection (8) below.

(7)     For the purposes of subsection (6)(a) above, the material facts about the damage are such facts about the damage as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment.

(8)     The other facts referred to in subsection (6)(b) above are—

(a)     that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence; and

(b)     the identity of the defendant; and

(c)     if it is alleged that the act or omission was that of a person other than the defendant, the identity of that person and the additional facts supporting the bringing of an action against the defendant.

(9)     Knowledge that any acts or omissions did or did not, as a matter of law, involve negligence is irrelevant for the purposes of subsection (5) above.

(10)     For the purposes of this section a person's knowledge includes knowledge which he might reasonably have been expected to acquire—

(a)     from facts observable or ascertainable by him; or

(b)     from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek;

but a person shall not be taken by virtue of this subsection to have knowledge of a fact ascertainable only with the help of expert advice so long as he has taken all reasonable steps to obtain (and, where appropriate, to act on) that advice.]

92. The Defendant argues that the Claimant is caught either by s.14A(10)(a) or by s.14(10)(b). Whilst I shall have to refer to these sub-sections later, I shall begin this part of my judgment by considering the evidence and making findings as to what the Claimant's knowledge actually was over the relevant period from April 1992 (when he purchased and moved into the house) to September 2004.
93. The Claimant accepted that upon moving into the house he was provided with and that he would have read the user's instructions for the gas fires, which he attached to his witness statement, although in his witness statement he said that he would not have read them thoroughly at the time.

So far as the gas fire in the family room is concerned, on the front sheet the instructions read as follows:

'User's Instructions

This leaflet is intended to help you use and care for your gas fire.

PLEASE READ THOROUGHLY before using the fire and keep for future reference.'

On the first page, under the heading 'CAUTION', there were 11 separate safety warnings in capitalised typeface. None of them refer to any risk from carbon monoxide poisoning or warn as to the need for regular servicing for reasons of safety.

On the second page, it says:

'Thank you for choosing this Valor gas fire. This fire has been designed to give years of trouble-free service. To maintain its optimum performance advantage should be taken of the regular servicing and inspection facilities available for gas appliances. Annual servicing is recommended'.

There is no suggestion therefore that servicing is recommended for safety purposes.

On the fourth and final page it says:

'DEBRIS IN FLUES

The opening at the back of the fire must always be kept clear of obstruction. If the chimney has previously been used for coal fires or is of the normal 9in. x 9in. construction it is possible that mortar and soot can fall to the bottom of the chimney. This in time could build up until the flue becomes restricted or even blocked. The fire should be serviced regularly in order to ensure good mechanical operation and also so that the cavity behind the fire can be inspected and if necessary cleaned out.

It is important that this work should be carried out by a competent person such as a British Gas or CORGI registered installer.'

There is no suggestion however in the instructions that if the flue or the cavity behind the fire became restricted or even blocked that would present a safety hazard.

The user's instructions for the gas fire in the living room are in the same terms, save only that on the final page, in addition to the above it states that 'the chimney should be checked annually to ensure continued clearance of the combustion products and to ensure that no excessive build up of soot or other debris occurs'.

94. When asked, the Claimant said that whilst he was now, as a result of the events giving rise to this litigation and the litigation itself, very much aware of the risk of carbon monoxide poisoning from household gas appliances including gas fires, he very much doubted that he was aware of that as a risk before 2004. He accepted that he was aware of carbon monoxide as a danger before 2004, but did not agree that he was aware of it as a particular risk in the home from gas fires. He denied having been aware in the 1990's of publicity given to deaths in the home from defective gas fires. He was shown a news report which apparently appeared on the BBC News web-site on 26 November 1997 which reported on the continuing high rate of deaths from carbon monoxide poisoning in the home due to badly fitted or poorly serviced gas appliances. He denied any recollection of this particular news item, or indeed of previous publicity given to the successful prosecution of a landlord in relation to the death of a student tenant from carbon monoxide poisoning.
95. The Claimant also said in his witness statement that he had received mail-shots from British Gas offering appliance servicing, but said that he had regarded this as essentially advertising mail-shots. He had however in June 2000 taken out a form of insurance policy with British Gas which included an annual service of the central heating system, but which did not include for any servicing of the gas fires. He said that he had never been advised by any gas service engineer on any visit that he should arrange for the gas fires or flues to be serviced. By reference to his bank statements he was able to say that on 3 occasions in 1994 and 1995 he had paid for a gas service engineer, probably from British Gas, to attend to carry out repairs to the gas fires. He also gave evidence in his witness statement and orally about an occasion in 2001 when he had called out a chimney sweep to sweep the chimney after observing discolouration to the ceiling of the bedroom above the lounge, due it appears to a birds nest in the chimney causing an obstruction to the flue. He said that the chimney sweep constructed a soot box to gain access to the flue to clean it of debris, and that the afterwards the chimney sweep conducted a test of the gas fire to check that the flue was drawing up smoke through the fire, which appeared satisfactory. He said that there was no particular reason why in 2004 he had decided to make an appointment for a gas service engineer to attend. In his witness statement he said that he had asked the engineer to attend to clean the fires. It was suggested to him in cross-examination that he had arranged for a service not just for a clean. Initially he denied this, saying that he simply wanted the burners cleaning, but subsequently he seemed to me to accept that the gas service engineer had attended to clean out the gas fires and also to service them. His recollection was that British Gas were not willing to send out a service engineer only to clean the burners without also carrying out their standard service, so that this is what he instructed them to do.
96. Although Mr Budworth suggested that certain aspects of the Claimant's evidence were not entirely credible, in particular his evidence about his knowledge of the risk from carbon monoxide and the circumstances of his arranging for the gas fires to be cleaned and serviced in September 2004, in my judgment the Claimant came across as a conspicuously honest and credible witness. It did not seem to me to be surprising that he was unaware prior to 2004 of any particular risk from carbon monoxide poisoning from faulty gas fires, or that there was some reason for arranging for the servicing in 2004 which was unfavourable to his case which he was not prepared to disclose. The evidence which he submitted showed that he had arranged for the gas fires and flues to be attended to on an as necessary basis, and it did not seem to me to be surprising that he took the view that it was not necessary, from a safety point of view, to have relatively simple appliances such as gas fires serviced on an annual or any other regular basis. Although it is true that he was unable to say why he had decided to have the gas fires serviced for the first time in 2004, and although it is true that there was an inconsistency in his evidence about whether he had arranged just for the gas fires to be cleaned or for them to be serviced, it does not seem to me that this materially compromised his evidence. In my judgment the most likely explanation is that it did occur to the Claimant in early autumn 2004 that it would be sensible to have the gas fires cleaned out, that he contacted British Gas to arrange this, and ended up agreeing with their suggestion that they should be serviced, which is precisely what happened.
97. Turning then to the arguments, the first question for me to consider is whether or not subsection 14A(10)(b) can have any application to this case, which requires me to consider whether or not a gas service engineer is someone providing 'expert advice' within the meaning of that subsection. There is no definition of these words in the Limitation Act. There was however some consideration given by the Court of Appeal to the similar wording used in section 14(3) of the Act in Henderson v. Temple Pier Co Ltd [1998] 1 WLR 1540. In that case the court had to consider whether or not a solicitor advising a claimant was or could be an expert for the purpose of collecting facts, in that case the identity of the owner and occupier of the ship and gangway on which the claimant claimed to have suffered an accident. Bracewell J, with whose judgement Beldam LJ agreed, referred to an earlier decision of the Court of Appeal in the case of Fowell v National Coal Board (1986) (unrep), where Parker LJ had said, obiter, that the provision was directed to experts in the sense of "expert witnesses". She proceeded to conclude that the solicitor was not an expert for the purpose of ascertaining the identity of the owner and occupier of the ship. This was regarded as knowledge which the claimant might reasonably have been expected to acquire from facts obtainable or ascertainable by her (i.e. the equivalent of sub-section (10)(a)). It appears that she would have been willing to accept that a solicitor was an expert for other purposes, for example identifying the person answerable in law for the accident.
98. In my judgment it cannot be said in this case that a gas service engineer who is asked to service and clean a gas fire can be said to be providing expert advice within the meaning of the subsection. He is clearly not an "expert witness". Furthermore, whilst he obviously has specialist expertise in the servicing (including the maintenance and repair) of gas appliances, equally obviously he does not profess to give expert advice as such in relation to the cause or causes of defects with gas appliances for the purposes of investigating a potential claim. Furthermore, if one considers what are the facts which it is said could have been ascertained with the help of his advice, they are firstly that the gas fire and flue were unable to clear combustion products from the room (because they failed the spillage test) and secondly that there was a poor flue run. In the same way as the name of the owner and occupier of the ship in the Henderson case was not regarded as something which required expert advice to ascertain, in my judgment these facts are not ones which require expert advice to ascertain. Instead, they are the triggers for someone in the position of the Claimant to appreciate that it is appropriate to seek expert advice to understand what was wrong with the fire and flue and why it was wrong, which is exactly what he did in this case. I therefore conclude that the second limb of subsection 14A(10) does not apply here.
99. I turn then to subsection 14A(10)(a). This subsection applies to knowledge which the Claimant might reasonably have been expected to acquire from facts observable or ascertainable by him. It therefore involves asking whether or not the Claimant might reasonably have been expected to have arranged for the gas fires to be serviced either annually from the time he acquired the house or, at least, on a regular basis over the 12 years from his acquiring the house to when he first arranged for the gas fires to be serviced. So far as that is concerned, it appears to me that the relevant facts are as follows:

(1) The Claimant was not aware of any underlying problem with or defect in the gas fires or the flues. On previous occasions when there had been faults with the gas fires all the flues he had arranged for the fault to be repaired, either by a gas service engineer attending from British Gas or, in 2001, by a chimney sweep. So far as he was concerned on each occasion the fault had been satisfactorily repaired, and he had not been advised that it was necessary either to undertake further investigations or indeed to have the appliances looked at on a more regular basis.

(2) The user's instructions do not suggest that annual servicing of the gas fires, or even the cleaning out of the flues behind the fires, was recommended or advisable for safety purposes. There is no warning anywhere in the instructions that a failure to have the gas fires regularly serviced could put the occupants in danger of carbon monoxide poisoning.

100. In my judgment, therefore, the Claimant was reasonably entitled to take the view over the period from 1992 to 2004, as he did, that these were simple appliances, which did not require servicing, but simply required repair as and when necessary. As I have found, the only reason why they were serviced in September 2004 was that the Claimant had wanted them cleaned and agreed to British Gas' suggestion that they should undertake a service. It does not seem to me that the Claimant might reasonably have been expected to have arranged for a service before September 2004.
101. More generally, it does seem to me that one would expect, before it could be said to have been reasonable to expect the Claimant to have taken steps before September 2004, there to have been some triggering point which ought to have impressed on him the need to take further steps. Normally, that would involve knowledge by a claimant that there is, or might be, something wrong (in this case, with the gas fires and flues) which needed to be investigated. During the course of argument I queried whether or not sub-section 14(10) is really intended to apply so as to fix a claimant with constructive notice even before he is aware that, at the most general level, something is, or might be, wrong. In response to that Mr Budworth referred me to a decision of Jacob J (as he then was) in the case of Abbey National plc v Sayer Moore, 23 July 1999 (unrep) and submitted that in that case constructive knowledge had been held to arise where a claimant failed to take proper steps to discover whether or not there had been a mortgage fraud committed in relation to a particular transaction in respect of which the claimant building society sought to hold the solicitors involved in the transaction liable. However, having read that case it is apparent from pages 5-7 of the transcript that there were 10 specific triggering factors which Jacob J held ought to have put the claimant on enquiry, and it was in those circumstances that he held that it was reasonable for the claimant as a substantial mortgage lender to have conducted an investigation into all individual transactions involving the particular firm of valuers implicated in mortgage fraud earlier than in fact they did. It does not seem to me, therefore, that this decision really assists the Defendant in this case, and I am satisfied that sub-section 14(10)(a) does not apply where a claimant is reasonably unaware that anything has, or might have, even gone wrong which requires investigation. In the course of argument I posed the example of an employee who is exposed to a noisy working environment, and whose employers make available and recommend a free annual hearing check with the works doctor. If the employee was genuinely unaware of any deterioration in his hearing, then it seems to me that it would not be right to hold that he had constructive knowledge of a deterioration on the basis that if he had taken up the offer of the free hearing check it would have come to his attention.
102. It follows that I am satisfied that the Claimant did not have constructive notice of the facts found by the gas service engineer in September 2004 before that date, so that in my judgment the 'starting date' for the purposes of s.14A(4)(b) would have been September 2004 and not before, so that had the Defendant owed a duty of care in tort to the Claimant these proceedings would have been brought within time.
103. Finally, and briefly, I should go on to consider the last question for determination, and which again does not directly arise given my previous conclusions, which is whether on the balance of probabilities an earlier servicing would have revealed the matters which were in fact revealed by the service of September 2004. The Defendant's case is straightforward, and involves the proposition that there is no reason to believe that what was discovered in September 2004 would not also have been discovered on any earlier occasion. The Claimant contends that the Defendant has failed to establish this proposition on the balance of probabilities.
104. A significant amount of time was taken up at trial in considering this issue, in particular in cross-examination and re-examination of the Defendant's expert Mr Waddington. I will I hope be excused if I do not devote the same time to it in this judgment, given the conclusions I have already reached. In short, the position is as follows.
105. The Claimant's own expert, Mr Cichy, who the Claimant did not call to give evidence, without offering any explanation for this decision, had in his written report dated 5 January 2007 been asked to consider why the faults with the flues were not discovered previously. His answer was as follows:

'8.7.1 However in my opinion a visual inspection of the family room chimney flue from the builders opening and in the loft should have identified that it is not constructed in accordance with the requirements of relevant normative documents. Therefore action should have been taken at that time to remedy the situation.

8.7.2. Mr Robinson verbally confirmed to me that he could not remember the gas fires having been serviced since they were installed. Therefore there has not been an opportunity for the faults to be identified sooner.'

Mr Cichy gave details of his experience and qualifications in the first appendix to his report, which showed him to be a professionally qualified gas safety inspector, and that he had been employed with CORGI as an inspector since 1991.

Mr Budworth submitted, in my judgment with some force that although not explicit in Mr Cichy's report it was implicit in what he said that he would have expected the service to have involved a visual inspection which would, in turn, have revealed the faults.

106. The Defendant's expert, Mr Waddington, is a partner in a firm of architects. His experience, as he said in paragraph 2 of his principal report dated May 2009, and confirmed in evidence, is in the field of building regulations and construction. He does not purport to have any particular qualifications or expertise in the field of gas safety or gas appliances. He has no CORGI qualification.
107. In his principal report he referred to the manufacturer's instructions provided in relation to the gas fires (although in fact it appears that the versions he had obtained were not the correct ones) and concluded, without giving reasons, that:

'11.2 Should the fires have been serviced annually in accordance with the recommendations of CORGI/the gas board and the manufacturer's instructions, the potential faults of the chimneys would have been discovered.'

In his supplemental report dated 28 August 2009 he essentially repeated that conclusion.

108. Under cross examination he agreed that it was not necessarily the case that the gas fires would have failed the spillage test on each and every service which was carried out. He accepted that much would depend upon the prevailing atmospheric conditions at the time. Indeed he accepted that on the Claimant's evidence the gas fires did not fail the spillage tests undertaken by the chimney sweep in 2001. He did, however, also make the point, which seems to me to be right, that the more times that the spillage test was carried out, the more likely it was to fail due to the problems with the flue.
109. He also confirmed under cross examination that the difference between a smoke test and a spillage test is that the latter does not require the removal of the gas fire itself, whereas the former does. This is important, because without first removing the gas fire a service engineer would not have been able to carry out a visual inspection of the flue behind it and, thus, unless he had gone into the loft space, would not have been able to see the defects in construction about which the Claimant complained. Although Mr Waddington suggested that the relevant manufacturer's instructions required the service engineer to remove the gas fire and carry out a smoke test when conducting a service, that in my judgment on a proper reading of the instructions was simply not the case, and the manufacturer's instructions required nothing more than a spillage test. This is not surprising, since the manufacturer's instructions are directed only at servicing the gas fire itself, rather than clearing out behind the gas fire at the same time, which is something recommended by the user's instructions, as I have already observed.
110. Then under re-examination Mr Waddington suggested, for the first time in his evidence, that a service engineer operating to CORGI standards would be obliged to remove the gas fire to inspect the flue behind and carry out a smoke test, which he said it was unlikely to have been passed. He also suggested, again for the first time, that the service engineer would also have gained access, if possible, to the roof space to inspect the flue from that access point. I permitted Mr Darbyshire to cross examine further on this point. Mr Waddington accepted that he had not been able to obtain or produce the relevant CORGI standards to prove this. He was, however, able to produce Appendix E to the 2000 Building Regulations, which he believed came into effect in 2002, and which included a requirement to carry out a visual inspection of the accessible parts of the chimney flue. He accepted, however, that this requirement did not specifically apply to servicing.
111. Mr Darbyshire invited me to conclude that Mr Waddington had insufficient expertise to offer any proper expert opinion as to what would have happened on any service and, specifically, what steps would have been taken by a service engineer working to CORGI standards. He submitted that since it was perfectly possible that the gas fires would have passed spillage tests constructed on any earlier service, there was no reason to believe that any earlier service would have resulted in the service engineer either checking behind the gas fire, or conducting a smoke test, or checking inside the roof space.
112. In support of the Defendant's case is what actually happened in September 2004, together with the contents of Mr Cichy's report, and together also with the user's instructions insofar as they do recommend that on servicing the gas fire should be removed and the flue behind cleaned out. It does appear that if a gas service engineer had gained access to the rear of the gas fire, either to clean the flue or to carry out further investigations if the gas fire failed its spillage test, there is a fair probability that he would have observed some defects to the flue which would have put him on enquiry and lead to the same result as in September 2004. In support of the Claimant's case is the fact that Mr Waddington was unable to demonstrate any real expertise in the particular area of gas appliance servicing, so that I find it difficult to place any real weight on his evidence, save where supported by documentation, and his inability to produce hard evidence that a service engineer working to CORGI standards would have removed the gas fire to inspect the flue behind and to carry out a smoke test on a standard service.
113. What I am quite satisfied about is that if there had been annual servicing from 1992 onwards, then at some stage well before December 2003 the defects would have been discovered, either because the gas fires would have failed a spillage test leading to further inspection, or because the gas fires would have been removed to clean the flue behind thus allowing an inspection. Equally, however, I am satisfied that had there been only one or two services over that period, then I cannot be satisfied on the balance of probabilities that the defects would have been discovered, because I cannot be satisfied that on such occasions the gas fires would have failed the spillage test so that the engineer would have had any reason to remove the gas fires to inspect or to clean the flue behind and thus to have noticed the defects in construction.
114. I must therefore decide whether, assuming I had been satisfied that the Claimant ought to have had the gas fires serviced before 2004, I would have found that they should have been serviced on a reasonably regular basis. Having regard to the user's instructions, I would have been satisfied that the gas fires should have been serviced at least every 2-3 years. I am also satisfied that in such circumstances, again having regard to the user's instructions, the chimney flues behind should have been cleaned as well, so that on the balance of probabilities I would have been satisfied that the defects would have been revealed before December 2003. I would, therefore, have been satisfied that the Claimant should be taken to have acquired constructive knowledge more than three years before the commencement of proceedings, with the result - on that hypothesis - that the proceedings would have been statute barred.

CONCLUSIONS

115. For the reasons which I have given, the Defendant owed no duty of care in tort to the Claimant, with the result that s.14A of the Limitation Act 1980 does not apply, and thus that the claim must fail as statute barred.
116. Had I found that Defendant did owe a duty of care in tort, I would I would have held that the action was not statute barred, because I would also have found that the Claimant did not have either actual or constructive knowledge more than three years before proceedings were commenced, a conclusion which follows from my finding that the Claimant did not reasonably need to have arranged for the gas fires to be serviced at regular intervals over the period 1992 – 2004. (If I had concluded that the Claimant ought reasonably to have arranged for the gas fires to be serviced at regular intervals over the period 1992 – 2004, then I would have held that he would have had constructive knowledge more than three years before proceedings were commenced, so that the action would have been statute barred.)
117. I would like to end this judgment by expressing my appreciation of the preparation of the case for trial and the quality of the submissions of both counsel at trial.

POSTSCRIPT

118. After the date that my judgment was circulated in draft the Claimant's then legal advisers requested me to reconsider my decision in relation to issue 2, which after consideration I notified them that I was not prepared to do, but the result was that there was then a further significant delay in arranging for judgment to be handed down, due to the difficulties of re-arranging a day for handing down judgment and dealing with all ancillary matters which was convenient to the court and the legal representatives. In the meantime the Claimant changed his legal advisers and made a further formal application for me to receive new evidence and to reconsider my decision on issue 2, which was fully argued before me on 27 January 2010, but to which I did not accede.