Concurrent claims in contract and tort

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Wellesley v Withers (December 2015) Construction Industry Law letter Court of Appeal

Facts

Wellesley Partners are an executive search agency which instructed Withers, a law firm, to draft their new partnership agreement with elaborate provisions limiting the partners’ options to withdraw their capital.  These clauses did not work and Wellesley sued Withers for professional negligence.  The financial damages available in the law of tort were argued to be greater than those available in the law of contract.  Withers’ defence (apart from denying liability) was also that they should only be liable for the contractual levels of compensation, which made a considerable financial difference.

Held

  1. As professional advisers, Withers had the necessary “proximity” to the client to create a tortious duty of care in negligence which is not supplanted by the existence of a contract.
  2. The remoteness rules in tort were more generous to claimants than the equivalent measure of damage rules in contract.  Wellesley were able to benefit from this to make a larger claim in respect of the loss and the damage to the partnership created by these badly drafted Provisions.

Comment

  1. Following Robinson v P E Jones (a decision of the Court of Appeal), where a contract is sufficiently detailed and comprehensively covers the parties’ relationship, it is now much more difficult than previously to establish that a contractor owes a current duty in contract and in tort.
  2. Whether or not a claimant has a right to claim in tort as well as contract is really important because of the different limitation periods and the different damages rules.  The burden of argument is going to be on the claimant to persuade the Court that the Defendant has assumed responsibility as well as just entering into a contract, and therefore should be liable in tort for negligence as well as in contract.
  3. This is likely to be easier where the Defendant is either a design and build contractor providing design services or, even more so, a professional person such as an architect or engineer.

For more information, help or advice please contact Rob Langley on 0191 211 7975 or email [email protected].