Concurrent liability: avoiding complexity?
A party in breach of a contractual obligation may also be liable in tort. A claim for defective works or services in construction cases,
might be framed as:
- a breach of contract (the obligations agreed between the parties); and
- as a tort, which imposes liability for acts of negligence.
Liability in tort may arise separately but will sit alongside a contractual right (hence concurrent).
A claim in tort may (in some circumstances) have the advantage of a longer limitation period. The rules of causation and recoverability of certain types of loss may also be better for the claimant. So a claimant may have good reason to pursue a claim in tort as well as one in contract.
Successive judgments delivered in the QB and in the TCC have grappled with the application of concurrent liability. More recently, the courts have in a number of cases restricted the ability of parties to rely on concurrent tortious duties in establishing a claim, especially in construction disputes.
The Court of Appeal has followed this trend in a recent claim against a firm of solicitors. It ruled in favour of Withers (the firm in question). Withers had been instructed to draw up an agreement on admission of new partners to an LLP. The court said that the rules for recoverability of damage in tortious claims, which in in some regards are broader than in contract, are to be limited to the contractual position when concurrent liability is brought into pleadings.
The court emphasised that on entering into a contract, the parties have an opportunity to assess whether there are special circumstances for recoverability. The remoteness test in contract is “was this loss in reasonable contemplation of the parties at the time the contract was made”? The court assumed that parties contract on the basis that their liability will be restricted to damage of such kind that is in their reasonable contemplation. In the court’s reasoning, the parties have the opportunity to regulate their legal affairs and that should not be upset by imposing a greater burden on them than they have bargained for.
Contractors, consultants and their insurers will welcome this reassurance as to the level of loss recoverable in tort where there is a concurrent claim in contract.
By Shereen Jenkins, Solicitor