Robinson v PE Jones Ltd [2011] 3 WLR 815

Facts

• Mr. Robinson purchased a house constructed by PE Jones Ltd.
• The property was subsequently found to have defective foundations, resulting in significant structural issues.
• Mr. Robinson brought a claim against PE Jones Ltd, alleging negligence in the construction and seeking damages for the cost of repairs.
• The losses claimed were purely economic, relating to repair costs without accompanying physical damage to persons or property.
• There was a contractual relationship between Mr. Robinson and PE Jones Ltd regarding the purchase of the property.

Issues

1. Whether PE Jones Ltd owed Mr. Robinson a duty of care in tort to avoid causing pure economic loss in the context of defective construction.
2. Whether a duty of care in tort can coexist with contractual obligations where the parties’ contract defines their rights and liabilities.
3. Whether the absence of a special relationship precludes recovery in tort for pure economic loss arising from defective performance of a contract.

Decision

• The Court of Appeal held that, in the absence of a special relationship, PE Jones Ltd did not owe Mr. Robinson a duty of care in tort for pure economic loss resulting from defective construction.
• The contractual relationship between the parties was determinative of their rights and remedies, including limitations on liability.
• The court found that tort law should not be used to circumvent the terms or limitations expressed in the contract.
• Mr. Robinson could not recover in tort for losses that were not recoverable under the contract.
• The Court emphasized policy concerns, including the risk of indeterminate liability, as grounds for refusing to extend tortious duties in such circumstances.

Legal Principles

• The existence of a contract generally limits the scope of tortious duties between contracting parties for pure economic loss.
• Concurrent liability in contract and tort is limited; a duty of care in tort for pure economic loss arises only in specific cases, such as the existence of a special relationship.
• Recovery for pure economic loss in tort is restricted to avoid creating indeterminate liability, particularly in the absence of contractual privity or duty.
• The terms of the contract, including any exclusions or limitations, define the parties’ primary obligations and remedies.
• The principles set out in prior leading cases, such as Henderson v Merrett Syndicates Ltd [1995] 2 AC 145, Caparo Industries plc v Dickman [1990] 2 AC 605, and Murphy v Brentwood District Council [1991] 1 AC 398, were reaffirmed.

Conclusion

The Court of Appeal confirmed that a duty of care in tort for pure economic loss does not arise where a contract defines the parties' obligations and no special relationship exists, reinforcing the primacy of contractual terms in allocating risk and remedies for defective performance.