No contract, no duty of care Multiplex v Bathgate & others [2021] EWHC 590 (TCC)

Published 12 abril 2021

This judgment provides more certainty for insurers in terms of assessing potential risks and liabilities at the outset of a complex construction project.  Establishing a duty of care, in absence of a contract, remains difficult.

Multiplex brought claims against RNP, an independent design checker, following the failure of a slipform rig used in the construction of a 40-storey tower at 100 Bishopsgate.  RNP had contracted with the subcontractor Bathgate only, to independently check the design by specialist consultants BRM.  Multiplex alleged that RNP owed it a duty of care arising out of an assumption of responsibility and/or that RNP’s certificates contained warranties to Multiplex. 

After a 3 day trial, the Judge found that RNP owed no duty of care and/or warranties to Multiplex.  The judgment contains a detailed review of the authorities and reaffirms that where the parties have deliberately entered in to a contractual framework, the Court will be reluctant to impose additional, tortious duties in to that contractual chain.  There was no “liability gap”, as Multiplex had a cause of action against the main contractor.  There was also nothing in RNP’s certificates which constituted a warranty to Multiplex.

Given the insolvency and/or lack of insurance of both Bathgate and BRM, Multiplex had pursued its claim against RNP (and its insurers Argo) as its most realistic chance of recovery.  RNP relied on this to contend that Multiplex had constructed an “artificial claim”.  The Judge commented that a denial of a duty of care did not mean that Multiplex was without a remedy, and although enforceability may be an issuer, the law does not determine matters such as justness and fairness based on the financial durability of parties.

The Judge also said that had the duty of care claimed by Multiplex been imposed, this would have led to “formidable” extra insurance costs in terms of increased premiums payable by the checker and the exposure to potentially vast liabilities to a main contractor such as to delay costs. 

Comment

Insurers will be relieved at this confirmation that a court will be slow to impose additional duties on parties who have already agreed a contractual relationship.  This should enable insurers to better rate a risk at the outset and offer reasonable terms.

Insurers should also note that 3 of the key parties in this claim had become insolvent, and that Argo for RNP claimed that the claim against it had been artificially constructed as it was a financially viable target (under the Third Parties (Rights Against Insurers) Act 2010).  Whilst the Judge rejected this as a valid basis for the claim, we have already seen an increase in claims under the 2010 Act as the Covid-19 pandemic hits the both the insurance and construction industry hard.  Insurers should be alive to more creative claims as the financial repercussions of the pandemic will continue for some time.

This article was first published in Insurance Day.