CONTRACTOR’S LIABILITY TO THIRD PARTY FOR DEFECTIVE WORKS
ZAINAB MOHMAD ZAINORDIN
PSZ 19: 16 (Pind. 1/97) UNIVERSITI TEKNOLOGI MALAYSIA
BORANG PENGESAHAN STATUS TESIS
iJUDUL: CONTRACTOR’S LIABILITY TO THIRD PARTY FOR
DEFECTIVE WORKS
SESI PENGAJIAN: 2005/2006
Saya : ZAINAB BINTI MOHMAD ZAINORDIN
(HURUF BESAR)
mengaku membenarkan tesis ( PSM/Sarjana/Doktor Falsafah )* ini disimpan di Perpustakaan Universiti Teknologi Malaysia dengan syarat-syarat kegunaan seperti berikut :
1. Tesis adalah hak milik Universiti Teknologi Malaysia.
2. Perpustakaan Universiti Teknologi Malaysia dibenarkan membuat salinan untuk tujuan
pengajian sahaja.
3. Perpustakaan dibenarkan membuat salinan tesis ini sebagai bahan pertukaran antara
institusi pengajian tinggi.
4. **Sila tandakan ( 3 )
(Mengandungi maklumat yang berdarjah keselamatan atau
SULIT kepentingan Malaysia seperti yang termaktub di dalam
AKTA RAHSIA RASMI 1972)
TERHAD (Mengandungi maklumat TERHAD yang telah ditentukan
oleh organisasi/ badan di mana penyelidikan dijalankan)
TIDAK TERHAD 3
Disahkan oleh
__________________________ _________________________
(TANDATANGAN PENULIS) (TANDATANGAN PENYELIA)
Alamat Tetap :
Kg. Pt. Lapis Gantong, ASSOC. PROF. DR. ROSLI ABDUL RASHID
Seri Merlong, Nama Penyelia
83100 Rengit, Batu Pahat, Johor
Tarikh : 14th JULAI 2006 Tarikh : 14th JULAI 2006
CATATAN : * Potong yang tidak berkenaan.
** Jika tesis ini SULIT atau TERHAD, sila lampirkan surat dari pihak berkuasa/ organisasi berkenaan dengan menyatakan sekali sebab dan tempoh tesis ini perlu dikelaskan sebagai SULIT atau TERHAD.
i Tesis ini dimaksudkan sebagai tesis bagi Ijazah Doktor Falsafah dan Sarjana secara penyelidikan atau disertasi bagi pengajian secara kerja kursus dan penyelidikan, atau Laporan Projek Sarjana Muda (PSM).
“We hereby declare that we have read this project report and in our opinion this project report is sufficient in terms of scope and quality for the award of the degree of Master of Sciences (Construction Contract Management).”
Signature :
Name of supervisor : ASSOC. PROF. DR. ROSLI ABDUL RASHID
Date : 14th JULY 2006
Signature :
Name of supervisor : MR. JAMALUDDIN YAAKOB
CONTRACTOR’S LIABILITY TO THIRD PARTY FOR DEFECTIVE WORKS
ZAINAB BT MOHMAD ZAINORDIN
A project report submitted in partial fulfillment of the requirement for the award of the degree of
Master of Sciences (Construction Contract Management)
Faculty of Built Environment Universiti Teknologi Malaysia
JULY 2006
I declare that this project entitled “Contractor’s Liability to Third Party for Defective Works” is the result of my own research expects as cited in the references. The report has not been accepted for any degree and is not currently submitted in candidature of any other degree.
Signature :
Name : ZAINAB MOHMAD ZAINORDIN
To my beloved Father and Mother, Sister and Brother.
And Mustakim.
Thank you for your support, guidance and everything.
ACKNOWLEDGEMENTS
In the name of Allah most gracious most merciful
A research of this nature may not be undertaken without help and support of others. First and foremost, I would like to extend my sincerest and most heartfelt appreciation to Assoc. Prof. Dr. Rosli Abdul Rashid for his tireless supervision and guidance throughout the whole process of writing this dissertation.
Extended thanks are also due to all my lecturers, without whom I would not have had the knowledge to proceed of writing this dissertation.
I wish to thank the Universiti Teknologi MARA and Government of Malaysia for awarding me the scholarship that enables me to study in this course.
Most of all, I wish to express my deep sense of gratitude to my family, especially to my parents, brothers and sisters for their never-ending support and encouragement, and to my fiancé for his encouragement, help and smile.
Last but not least, thank you to all who have made this dissertation possible.
ABSTRACT
In recent times, there have been increasing incidents of defective work in Malaysia and elsewhere due shoddy workmanship, cheating and sometimes, design errors. The consequences could be catastrophic and fatal as in collapsing buildings, and sometimes less dramatic, but no less catastrophic from a financial point of view. Most defects occur after the 18-month defect liability period but the problem arises when negligence action is brought by non-contracting party, who may be a subsequent owner of the building. With that in mind, that contractor’s liability does not stop with the contract and liability may rest in the field of torts: the objective of this research is determine the contractor’s liability to third party for defective works and look into the circumstances in which that the contractor liable or not liable towards those defects. The scope of this research is confined under conventional system where the contractor not involved in design and liability of contractor to third party in tort. The methodology of this research adopts from: the judicial decision of defective work (cases concerning contractor and third party), four-stage test and observation. After analyzing the data, the main findings signify the contractor’s liability to third party only in tort no duty in contract are, injury to third party, damage to property but not economic loss. As a conclusion with this research, a contractor owes a duty to exercise all ordinary and reasonable care and diligence in the performance of its work according to terms of contract; if he fails he is liable for resulting damages.
ABSTRAK
Kebelakangan ini, kecacatan kerja di Malaysia dan di tempat lain sering terjadi, lantaran kemahiran kerja yang kurang baik, penipuan dan adakalanya kesilapan reka bentuk bangunan. Ia boleh membawa bencana dan menyebabkan kematian sekiranya bangunan yang rosak itu runtuh dan ia juga memberi kesan dari sudut kewangan. Biasanya kerosakan terjadi selepas 18 bulan tempoh tanggungan kecacatan dan masalah timbul bila tindakan kecuaian itu di tuntut oleh pihak yang bukan berkontrak seperti pemilik bangunan yang berikutnya iaitu penghuni selepas pemilik bangunan yang asal. Tanggungan kontraktor tidak hanya terbatas kepada kontrak dan dalam keadaan tertentu kontraktor juga bertanggungjawab dibawah tort. Oleh itu matlamat kajian ini adalah untuk menentukan tanggungan kontraktor mengenai kecacatan kerja terhadap pihak ketiga yang tidak berkontrak dan melihat didalam keadaan yang bagaimana kontraktor boleh dipertanggungjawabkan atau tidak bertanggungjawab terhadap kecacatan tersebut. Skop kajian ini terbatas kepada kaedah biasa yang mana kontraktor tidak terlibat didalam mereka bentuk bangunan dan kajian hanya menumpu kepada tanggungan kontraktor dibawah undang-undang tort sahaja. Metodologi kajian adalah dengan mengambil keputusan mahkamah mengenai kecacatan kerja (kes berkaitan kontraktor dan pihak ketiga), pengujian empat peringkat dan penilikan. Selepas menganalisa data, penemuan menunjukkan kontraktor bertanggungjawab terhadap pihak ketiga dibawah tort (bukan di kontrak) hanya apabila pihak ketiga cedera dan mengalami kerugian atau kerosakan kepada harta tetapi bukan kerugian wang semata-mata. Kesimpulan dari kajian ini ialah kontraktor mempunyai kewajipan terhadap melaksanakan kerja dengan ketekunan dan kemahiran yang munasabah menurut terma kontrak, jika dia gagal, dia bertanggungjawab kerana mengakibatkan kecederaan, kerugian atau kerosakan kepada pihak ketiga.
CONTENTS
Chapter Contents Page
Declaration ii Dedication iii Acknowledgements iv Abstract v Contents vii List of Diagrams x List of Figure xi List of Tables xi
List of Cases xii
1 INTRODUCTION 1
1.1 Background of the study 1.2 Statement of issues 1.3 Objective of Study 1.4 Limitation of Study
1.5 The Significant of Research 1.6 Research Method
1.7 Organisation of the report
1 3 6 6 7 8 9 2 CONSTRUCTION DEFECTS 10 2.1 Introduction 2.2 Definition of defects 2.3 Construction defects
2.4 Common types of construction defects 2.5 Causes of defects 2.5.1 Defects in materials 2.5.2 Construction faults 2.6 Classification of defects 10 11 11 13 14 16 17 17 vii
Chapter Contents Page
3 PROFESSIONAL LIABILITY 20
3.1. Introduction
3.2. The nature of Professions 3.3. Nature of the liability 3.4. Theories of liability 3.5. Professional liability
3.5.1. Contractual liability 3.5.2. Tortious liability
3.5.2.1. Concurrent liability 3.5.2.2. Liability to third parties
3.5.2.3. Loss or restriction of immunities
3.5.3. Can professional man be liable both in contract and tort at the same time?
3.6. Standard of skill and care 3.6.1. Govern by statues
3.7. Remedies for professional negligence 3.7.1. Damages
3.7.2. Loss of remuneration 3.8. Exclusion or restriction of liability
3.8.1. Statutory restriction 3.8.1.1. Client 3.8.1.2. Third parties 3.9. Limitation of actions
3.9.1. When does time start to run against me in contract? 3.9.2. For how long will I be liable in contract?
3.9.3. When does time start to run against me in tort? 3.9.4. If the ownership of a building changes, is the
limitation period affected? 3.10. When does the cause of action occur?
20 21 22 24 25 26 27 29 30 31 32 33 35 37 37 41 42 42 42 43 44 46 46 46 49 50
Chapter Contents Page
4 DATA ANALYSIS 51
4.1. SECTION A : Results from the judicial decision of
defective work (cases concerning contractor and third party) 4.2. SECTION B : Four-stage test
4.2.1. First stage- Type of harms suffered
4.2.1.1. Injury to person or physical damage to other property
4.2.1.2. No physical damage but sustained the loss. 4.2.2. Second stage- Sufficient relationship of proximity 4.2.3. Third stage - Degree of Care
4.2.4. Fourth stage - Limitation of action 4.2.5. Diagramatic of the four-stage test 4.3. SECTION C: Observations 52 65 65 66 69 74 78 81 84 90 5 CONCLUSION 93 REFERENCES 98 ix
List of Diagrams
Page Diagram 1.1 : Illustration of contractual relationship between contractor
and third party under conventional system.
7
Diagram 3.1 : Illustration of the start date of the limitation period 45 Diagram 3.2 : Illustration of the operation for long stop provision 49
Diagram 4.1 : Illustration of the Pirelli case 82
Diagram 4.2 : Illustration of the Kettman’s case 84
Diagram 4.3 : First stage-test - Analysis of Liability in respect of damage to property (Category A)
85
Diagram 4.4 : First stage-test - Analysis of Liability in respect of pure economic loss (Category B)
86
Diagram 4.5 : Second stage-test - Analysis of Liability in respect of proximity relationship
87
Diagram 4.6 : Third stage-test - Analysis of Liability in respect of contractor’s duty of care
88
Diagram 4.7 : Fourth stage-test - Analysis of Liability in respect of limitation of action
List of Figure
Page Figure 2.1 : Results of Building Research Establishment’s analysis
of causes of building failure.
16
List of Table
Page
Table 2.1 : Classification of damage to wall 19
Table 3.1 : Limitation period 51
Table 4.1 : Result from the judicial decisions in relation to defective works in category of personal injury or physical damage to property.
55
Table 4.2 : Result from the judicial decisions in relation to defective works in category of pure economic loss.
61
List of cases
Andrew Master Hones Ltd v Cruikshank & Fairweather [1981] RPC 16 Anns v Merton London Borough [1972] 1 AII ER 462
Argyll v Beaselink [1972] 2 Lloyd’s Rep. 172
Bank Bumiputera Malaysia Bhd v Tetuan Wan Mariam Hamzah & Shaik & Lain-lain [1994] 1 MLJ 124
Blyth v Birmingham Waterworks Co [1856] 11 Ex. 781, 784
Bolam v Friern Hospital Management Committee [1957] 1 W.L.R. 582; [1957] 2 AII E.R. 118 Bowen v Paramount Builders [1977] 1 NLZR 394
Bryan v Moloney [1995] 128 ALR 163
Carr v Inland Revenue Commissioners [1944] 2 AII ER 163
D & F Estates v Church Commissioner For England [1989] 2 AII ER 992 Donoghue v Stevenson [1932] AC 562
Dorset Yacht Co. Ltd v Home Office [1970] AC 1004
Dr Abdul Hamid Abdul Rashid & Anor v Jurusan Malaysia Consultant (Sued As A Firm) & Ors [1997] 3 MLJ 546
Dutton v Bognor Regis [1972] 1 QB373 Glasgow Corporation v Muir [1943] A.C. 448
Greaves & Co. v Bayham Meikle [1975] 1 WLR 1095 Hadley v Baxendale [1854] 2 CLR 517
Hedley Byrne & Co Ltd v Heller & Partner Ltd., [1964] AC 465 Hedley Byrne & Co. Ltd v Heller & Partners Ltd [1964] AC 465
xiii Junior Books v Vetechi [1982] 3 AII ER 201
Kerajaan Malaysia v Cheah Foong & Anor [1993] 2 MLJ 439 Kettman v Hansel Properties Ltd [1985] 1 AII ER 352
Lanphier v Phipos [1838] 8 C & P. 475 Lester v White [1992] 2 NZLR 483
Midland Bank v Hett, Stubs & Kemp [1979] Ch. 384 Morgan v Park Developments [1983]
Mount Albert Borough Council v Johnson [1979] 2 NZLR 234 Murphy v Brentwood District Council [1990] 2 AII ER 908
Pirelli General Cable Works Limited v Oscar Faber [1983] 1 AII ER 65 Rondel v Worsely [1969] 1 AC 191
RSP Architects & Engineers (Raglan Squire & Partners FE) v Management Corporation Strata Title Plan [1999] 2 SLR 499 ("Eastern Lagoon")
RSP Architects & Engineers v Ocean Front Pte Ltd & Anor Appeal [1996] 1 SLR 751 ("Ocean Front")
Saif Ali v Sidney Mitchell & Co. [1980] AC 198 Sharp v Sweeting & Son Ltd [1963] 1 WLR 665
Stephen Phoa Cheng Loon & Ors v Highland Properties Sdn. Bhd & Ors [2000] 4 MLJ 200 Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1986] 1 AC 80
Teh Kem On & Anor v Yeoh & Wu Development Sdn Bhd & Ors [1995] 2 MLJ 663 Victoria University of Manchester v Hugh Wilson & Lewis Wormsley (a Firm) and Pochin (Contractor) [1984] 2 Con LR 43
CHAPTER 1
INTRODUCTION
1.1 Background of the study
Contractor is someone who contracts to build things or someone who contracts for and supervises construction, as of a building (Ashley, 1985). According Chan (2002), contractor’s obligation in a traditional contract to carry out and complete the works would require him to provide the workmanship and materials as required by the specifications given by the architect and engineers. Ficken (2006) similar acknowledge that the contractor is required to perform construction fully in accordance with the contract documents, usually consisting of at least plans, specifications and the building code within required time. Thus, if the contractors fail to construct in accordance with applicable contract documents, he is responsible for resulting damages.
All too often contractors believe that liability is limited to what is written in the contract. This is a grave misconception. Simon (1979) noted that there are many areas of contractual liability which are implied and not expressed. This implied
the contractor is often subject to a scope of liability different from, and often more comprehensive than, that set forth in the written contract. Frank (1988) further supports that liability, obligations and responsibilities do not stop with the contract. There are broader and more inclusive. Liability may rest in the field of torts. Although the contract may specify that the contractor is obligated to act in a reasonable manner, even if the contract does not specify it the law of torts does.
As highlighted by Simon (1979), under the law of torts, every person owes every other the obligation to exercise reasonable care and skill. This obligation extends beyond the contracting party. It applies to all persons. The contractor may be liable for its failure to exercise reasonable care in the performance of his duties, even though it is fulfilling its contractual obligations. A contractor who lives by its contract is merely inviting potential liability.
As stated by Frankel (2005), the recent explosion in new construction has spawned, increased construction defect litigation. Construction defect litigation involves all types and sizes of building projects, but homes are its current focus, with the intensity of the concern growing rapidly. And he adds constructions defects can be defined is a failure by the contractor to comply with the terms of their contract regarding the standard and quality of workmanship and materials required. Supported by Holland (1992) where the Building Research Establishment Advisory Service study found that 58% all failures were due to faulty design, 35% of faults were due to the builder’s faulty execution of the work, 12% to failure of components or materials to meet acceptable performance, 11% of failures were due to misuse by the user of the building, see Figure 2.1. While, Frankel (2005) noted that the construction defects can arise from improper soil analysis / preparation, site selection and planning, architectural design, civil and structural engineering, negligent construction or defective building materials.
The number of construction-defect cases has surged in recent years because houses are being constructed in record numbers to meet the high demand for
housing. Many general contractors are inexperienced and others mass produce thousands of houses. The home construction industry is intensely competitive. Many builders respond to the competition with low bids for contracts, then cut corners, and frequently employ unskilled or overworked subcontractors and poorly supervise subcontracted work (Summerlin and Ogborn, 2006).
The reality of the problem is that it is extremely difficult to avoid claims in construction industry. This is because of one very simple factor. It is human to err. As we know the production of construction products is a risky, complex and lengthy process. It involves several specialists such as the project manager, architects, landscape architects, engineers, land surveyors, quantity surveyor, general contractor, specialist contractor and suppliers.
1.2 Statement of issues
A contractor is responsible to rectify at his own cost ‘any defects, shrinkages or other faults’ which appear during the specified Defective Liability Period specified in the Appendix of the contract.1 But, sometimes we heard or read in the newspaper that building or structure has failed and collapsed.2 Normally the collapsed building is not under the Defect Liability Period anymore e.g. Highland Tower case3. The news often highlighted the financial loss suffered by some people. In the worse scenario a number people were reported to be injured or have died as a result.
1
As Nicholas Mun (2001) stated in New Straits Time on Towards Defect Insurance, the Federation of Malaysian Consumer Associations (Fomca) deputy president N. Marimuthu said, "Most defects occur after the 18-month defect liability period. Such a move would be well-received by purchasers as they will know which
party they can claim from when a defect occurs”. Borja and Stevens (2002) supports
that where an apparently completed building is found to contain defects of design or construction. While Cama (2004) noted that most construction defects are latent defects, where the defects only become apparent at some later date. Supported by Frank and James (1988) that defects appears beyond the date issue of a Certificate of making goods defects if what are known as "latent" defects arise, then the employer retains a right to pursue a claim against the contractor for damages, provided of course that the defect is a result of the contractor's breach of contract and that it is not time-barred.
Nicholas Mun (2001) found that poor quality and shoddy workmanship are two issues the property industry has been wrestling with since the boom in mass housing began in the early 80s. Ter Kah Leng (1989) supported that in construction, structural or other defects may be caused by a number of factors including negligent design, inferior materials, inadequate supervision, shoddy workmanship or other forms of negligent construction. Rajendra Navaratnam (2004), similar indicated that there have been increasing incidents of defective construction works in Malaysia and elsewhere due to shoddy workmanship, negligent, cheating and sometimes and design errors. And he adds “The consequences could be catastrophic and fatal, such as in collapsing buildings and sometimes less dramatic, but no less catastrophic from a financial point of view”.
Clearly that defective construction works give the bad implications and effects, where, Summerlin and Ogborn (2006) found that poor quality workmanship can result in a long list of defects. And he add that hundreds of thousands of homeowners realize their new homes suffer from some type of construction defect that will cost thousands of dollars to repair, depreciate the value of their home, or force them to leave their home. Borja and Stevens (2002) similar indicated, each
year, homeowners and commercial property owners bring numerous lawsuits, alleging damage resulting from defective construction of faulty repair work. Also, Marianne (2005) supported that thousands of homeowners nationwide have sued or turned to contractor and insurers for repair costs, a daunting process that takes a financial and emotional toll. Thus, building defects spoil homeowners' dreams.
Besides, in the context of defective buildings, Rajendra Navaratnam (2004) stressed that the major stumbling block in majority of cases is the recovery of the costs of rectification of defects, which are discovered before physical damage occurs. This loss, which is the cost of repair, lost profits or diminution in value of the building, is classified as “pure economic loss”. Nevertheless, as stated by Borsook and Cook (1998), if the building was negligently constructed, the building owner will eventually be faced with task of repairing the defects. Depending on the terms of the construction contract between the owner and the contractor, the initial owner of a building will usually have recourse against the contractor. The problem arises when negligence action is brought by a non-contracting third party as a subsequent owner of the building with the contractor. Also, the issue here, is they have any recourse against the contractor for the cost of repairs?
The worse scenario could be catastrophic and fatal, such as in collapsing buildings. According Ter Kah Leng (1989), if the defective building collapses and can causes personal injury or physical damage to other property, therefore the injured person may bring an action in negligent construction to claim compensation for injury or loss of life against the contractor, surveyor, architect or engineer at fault. The problem arises when a negligence action is brought by a non-contracting third party or there are no privity of contract between the injury person and wrongdoer, for example between contractors to the third party.
1.3 Objective of Study
The objective of the research is to determine the contractor’s liability to third party for defective works and look into the circumstances in which that the contractor liable or not liable towards those defects.
1.4 Limitation of Study
The main thrust of this dissertation is on determining the contractor’s liability in relation to defective work. This study is limited the contractor’s liability to third party. The scope of this study will be confined to the following areas:
a. Under conventional system b. Contractor’s liability in tort only.
c. Cases related in construction defects brought in England, New Zealand, Australia, Canada, Singapore and Malaysia.
This study is limited under the conventional system because contractor not involves in design and planning, where the employer will enter into separate contracts with a professional for the design of the building works and contractor for the construction of the building works.
While, this study will be confined just contractor’s liability in tort because there is no privity of contract between the contractor and the third party. Refer diagram 1.1. Also, this is because, in practice, damage arising from defective work will not usually arise at the same time when the defective work is carried out but only after, and, in certain cases, much later than the completion of the works.
Developer
Sale and Purchase
Main Contract
Consultant Purchaser
(Third party)
No Contract Contractor
Diagram 1.1: Illustration of relationship between contractor and third party under conventional system
1.5 The Significant of Research
This research is very important in order to guideline the contractor’s liability to third party for defective works. This is because, in practice, damage arising from defective work will not usually arise at the same time when the defective work is carried out but only after, and, in certain cases, much later than the completion of the works.
Furthermore, this research also gives some information to the victim regarding their rights, when they have suffering from the defective building. The contractor must also be aware of what its legal rights are against the other contracting party. Thus, this research is perhaps would contribute towards enhancement of the contractor’s knowledge regarding their liability to third party under law of tort.
1.6 Research Method
In pursuance of the aim or objective as stipulated above, the primarily methods that have used to complete this project are research by literature review.
Sources for literature review are from books, journals, newspaper article, lecturer notes and magazines. These sources provide lots of data that can help to determine the background of the research, defective building, and nature of contractor’s liability relating to defective works.
All these reading sources can be obtained at the internet sites that are related to this dissertation and library; Perpustakaan Sulatanah Zanariah, UTM and Perpustakaan Tunku Abdul Razak, UiTM. Analysis of cases collected from Malayan Law Journal (MLJ).
The introduction stage of this research started with the overall overview of the defective building and present type of common defective building as in Chapter 2. This was followed by an extensive Literature Review on principle of liability under topic professional liability as in Chapter 3.
After setting the performance indicator and data collection stage, the following stage is the data analysis stage as in chapter 4. In this analysis will be focus on the contractor’s liability in relation to defective construction works to third party. The data analyses results make from the judicial decisions as reported in law reports and further explore related cases. This study also will be focus on what circumstances that the contractor is liable or not liable towards those defects. In this chapter, four-stage test will be use to in order to look the relevant situations concerning contractor and the third party in terms of defective works. Finally as in chapter 5, present the conclusion of research.
1.7 Organisation of the report
The dissertation consists of five chapters. The brief descriptions of each chapter are as follows:
Chapter 1: Introduction
This chapter presents the overall content of the whole project writing. It introduces the subject matter, the problems that are purported to solve. The objective is specified with an appropriate research method to achieve them.
Chapter 2: Defective works
This chapter with the overview the common type of building defects, general causes of building defects and classification of defects.
Chapter 3: Professional liability
This chapter reviews the various definitions of liability and the different of liability under contract and tort. Also, highlights what are the extent of liability in relation to defective works, standard of skill and care and limitation of actions of their liability. It starts with identify the nature of professions.
Chapter 4: Results and Analysis - Contractor’s liability
This chapter analyse the results from the judicial decisions as reported in law reports and further explore related cases regarding the contractor’s liability to third party for defective construction works and what circumstances that the contractor liable or not liable. Attempts were made to analyse the reported judicial decisions and to state the law there from. This would allow not only the law to be stated, but equally important, it allows the law to be assessed in relation to the facts as found by the court.
Chapter 5: Conclusions
CHAPTER 2
DEFECTIVE WORKS
2.1. Introduction
A house is generally homeowners’ single most valuable financial investment and one of the most important emotional investments. To them it is more than bricks and mortar; it is the place where they live, rest, and raises their families. Unfortunately, as stated by Summerlin & Ogborn (2006), hundreds of thousands of unsuspecting homeowners realize their new homes suffer from some type of construction defect that will cost thousands of dollars to repair, depreciate the value of their home, or force them to leave their home.
This chapter focuses in the overview the common type of building defects, general causes of building defects and classification of defects.
2.2. Definition of defects
According Webster’s dictionary defines;
a. The word ‘defect’ as lack of something necessary for completeness shortcoming and other means as an imperfection; fault; blemish.
b. Another term for ‘defect’ is deficiency. Webster’s dictionary defines the word deficiency as state or quality of being deficient, a shortage or deficit.
c. The word ‘deficient’ as to be wanting, lacking in some quality necessary for completeness; defective or one that is deficient.
Appropriately, the Oxford Dictionary of Law defines defect is a fault or failing in a thing. Similar indicated by the Oxford Concise English Dictionary defines defects as ‘lack of something essential or required; imperfection; a shortcoming or failing; a blemish; the amount by which a thing falls short”. Appropriately with Cama (2004), the definition of a defect in the context of a building contract is “a failure of the completed project to satisfy the express or implied quality or quantity obligations of the construction contract.”
2.3. Construction defects
A construction defect may include any problem that reduces the value of a home, condominium, or building. Construction defects can be the result of design error by the architect, a manufacturing flaw, defective materials, improper use or installation of materials, lack of adherence to the blueprint by the contractor, or any
Construction defect is essentially defined by state laws and court definition and interpretation. In defining construction defect, the states and trial courts have created a complex issue. Marianne (2005), define construction defect as a failure of a building component to be erected in the appropriate manner. Sweet (1993) similar acknowledge that the construction defects defined by the law as failure of the building or any building component to be erected in a reasonably workmanlike manner. According Cama (2004) defects are often referred to as patent defects and the latent defects. Where the Latent defects are the opposite of patent defects.
a. Patent defects are discoverable upon examination or shortcoming in a structure that is apparent to reasonable inspection for example a roof leak or a foundation crack. Normally, defects are readily apparent to the naked eye and are therefore capable of being assessed and measured relatively easily and then, if necessary, rectified.
b. Latent defects are those hidden or concealed defects that would not be discovered in the course of a reasonable inspection. A latent defect is by definition something that is not easily discoverable. Normally, defects only become apparent at some later date or upon an investigation of some consequential effects caused by the defect.
With latent defects the courts will award monetary damages. Patent defects that have been covered up by the vendor, will often be interpreted as latent defects by the courts, in order to award some kind of relief. Whether a defect is classified as a patent defect or latent defect is up to the judge and the outcome sometimes surprising (Cama, 2004). In Victoria University of Manchester v Hugh Wilson & Lewis
Wormsley (a Firm) and Pochin (Contractor),4 it was held that the latent defects is
one which could not be discovered by such an examination as a reasonably careful man skilled in that matter would make. Thus, as stated by Chan (2002) by its nature, a latent defect cannot be discovered until it becomes patent and yet it may not be
4
discovered immediately since there may be no immediately apparent signs to indicate the presence of the defects.
Again, as stated by Chan (2002) in Singapore perspective, this has created new challenges to those who suffer as a result of the said defects and wish to seek compensation. Whereas claims by the developers/owner in respect of patent defects may be pursued pursuant to the main contract with the contractor, difficulties in obtaining compensation for loss suffered in respect of latent defects turned patent may arise when:
a. The applicable limitation period has expired when the latent defects becomes apparent;
b. The latent defects becomes apparent only after the developer/owners have sold the completed structure thereby diminishing the value of the same and now classified as pure economic loss in a tortious claim relating to defects.
2.4. Common types of construction defects
As stated by Kenneth (2002), common types of construction defects include: structural defects resulting in cracks or collapse; defective or faulty electrical wiring and/or lighting; defective or faulty plumbing; inadequate or faulty drainage systems; inadequate or faulty ventilation, cooling or heating systems; inadequate insulation or sound proofing; and inadequate fire protection/suppression systems. Additionally, dry rot, wood rot, mold, fungus, or termite or vermin infestation may also be the result of a construction defect. A construction defect may also include damage caused by land movement or earth settlement.
According Marianne (2005), recognized certain grounds for relief based on alleged defects in construction, which can typically be grouped into the following four major categories:
a. Design deficiencies – buildings and systems do not work as intended (a condition alleged to be a construction defect – i.e., roof systems may be prone to leaks due to their design complexity), from a design standpoint.
b. Material deficiencies – use of inferior building materials or installed components causes certain conditions (windows that leak or fail to perform and function adequately, even when properly installed).
c. Construction deficiencies – poor quality or substandard workmanship manifests in certain conditions (i.e., water infiltration through some portion of the building structure).
d. Subsurface / Geotechnical Problems – soil conditions that are not properly addressed during construction result in certain conditions (i.e. cracked foundations).
2.5. Causes of defects
Defects occurs either because of poor design, low quality workmanship or because the building was not constructed according to the design or because it has been subject to factors not allowed for in the design. The reason for giving these examples is too indicate the way in which a defect arises. According Ashley (1985), simple examples of causes and effects are:
a. Poor workmanship in construction could cause penetration of dampness shown up by a damp patch on the wall, the resulting defects which is a
change in appearance; or the result could be rot in timber, a change in composition.
b. Insufficient attention to foundation design could lead to ground movement indicated by cracks in the brick walls, a change in construction; perhaps also with a sagging roof, a change in shape.
c. Not allowing for heavy trolley traffic in the design of a sheltered could result in wear and tear causing changes in appearance to the floor finishes.
However, according Chan (2002), two aspects of defects are seldom considered. First, the build ability of the design which determines whether good workmanship can ever be achieved if the necessary reasonable care and skill are present. Secondly, the durability of the materials which represents the life span of each material in given environment before it deteriorates, either partially or wholly.
As stated by Holland (1992), a number of analyses of building failures have been carried out to determine whether they were due to poor design, construction, materials or misuse by the occupier. The Building Research Establishment Advisory Services study, found that 58% of all failures were due to faulty design (design in this context is often building construction design and detailing and not necessarily engineering design; 35% of faults were due to the builder’s faulty execution of the work; 12% to failure of components or materials to meets acceptable performance; 11% of failures were due to misuse by the user of the building. (There is inevitably overlap since some faults are due to multiple causes). Refer Figure 2.1.
Figure 2.1: Results of Building Research Establishment’s analysis of causes of building failure (Holland, 1992)
2.5.1. Defects in materials
Products made with cement such as precast, in situ concrete and concrete blocks will shrink irreversibly. To attach expanding brick slips to a shrinking concrete beam with an inflexible adhesive, for example, is to invite trouble. According Holland (1992), materials have differing coefficients of thermal and moisture expansion and when they are used in combination it is necessary to accommodate the varying movement. There have been serious serviceability failures with some modern materials. Joint sealants, for example, have broken down under exposure to ultraviolet light from the sun within five years and polystyrene in contact with PVC can ‘drain’ the plasticizer from it making the PVC brittle and causing the polystyrene to shrink away.
2.5.2. Construction faults
Construction defects may occasionally be found in an old building it is in the post-war stock that the majority will be found. The causes are complex. Most are due to failing standards of workmanship, inadequate understanding of how non-traditional materials should be worked and installed, together with poor supervision; although genuine mistakes are sometimes deliberately hidden so as to avoid the cost and embarrassment of remedial work. In detecting this kind of defects, therefore, it is almost as important to understand human nature as it is to understand engineering principles (Holland, 1992).
2.6. Classification of defects
As stated by Holland (1992), classifications can be subjective and different investigators may classify the same defects as ‘minor’, ‘slight’, ‘moderate’ or even ‘very severe’. Categories based solely on crack width previously formulated by others have been abandoned because such measurements will often not produce a clear evaluation of the scale of damage. Also such a limited classification is not based on cause or possible worsening of the defect. Building Research Establishment recommend three broad categories of damage as a start to defining degree and suggest ‘aesthetic’, ‘serviceability’ and ‘stability’. The first group (categories 0, 1 and 2, in Table 2.1) affects only the appearance of a building. The second group (categories 3 and 4) covers cracking and distortion. The third group (category 5) is where there is an unacceptable risk of partial or complete structural collapse (Holland, 1992).
Category of damage
Degree of damage
Description of typical damage Approximate crack width
(mm)
0 Negligible Hairline cracks of less than about 0.1 mm widths are classified as negligible.
Up to 0.1
1 Very slight Fine cracks which can be treated during normal decoration. Perhaps isolated slight fracturing in building. Cracks rarely visible in external brickwork.
Up to 1
2 Slight Cracks easily filled. Re-decoration
probably required. Recurrent cracks can be masked by suitable linings. Cracks not necessarily visible externally; some external repointing may be required to ensure weather tightness. Doors and windows may stick slightly.
Up to 5
3 Moderate The cracks required some opening
up and can be patched by a mason. Repointing of external brickwork and possibly a small amount of brickwork to be replaced. Doors and windows sticking. Service pipes may fracture. Weather tightness often impaired.
5 to 15 (or a number of cracks up to 3)
4 Severe Extensive repair work involving
breaking-out and replacing sections
15 to 25 but also depends on
of walls especially over doors and windows. Window and door frames distorted. Floor slipping noticeably, walls leaning or bulging noticeably, some loss of bearing in beams. Service pipes disrupted.
number of cracks
5 Very severe This requires a major repair job involving partial or complete re-building. Beams lose bearing. Walls lean badly and require shoring. Windows broken with distortion. Danger of instability.
Usually greater than 25 but depends number of cracks
CHAPTER 3
PROFESSIONAL LIABILITY
3.1. Introduction
As we know building involves many different teams and firms with different skill, expertise and capabilities that may come from different part on the country. They comprise of many different professionals such as the project managers, architects, landscape architects, C&S engineers, M&E engineers, IT consultants, interior decorator, land surveyors, quality surveyor, general contractor, specialist contractor and suppliers (Rosli Abdul Rashid, 2006). According Siddharaj (1996), a professional is recognized as a person who has a specialized body of knowledge and has received intensive training in a particular field.
This chapter focuses in the professional liability as a lead principle of liability in legal perceptions.
3.2. The nature of Professions
As stated by Jackson and Powell (1987), a definition of ‘the professions’ is pre-eminently a matter for social historians or for sociologists rather than lawyers. Generally speaking, however, the occupations which are regarded as professions have four characteristics.
a. The nature of the work
The work done is skilled and specialized. A substantial part of the work is mental rather than manual. A period of theoretical and practical training is usually required, before the work can be adequately performed.
b. The moral aspect
Practitioners are usually committed, or expected to be committed to certain moral principles. They are expected to provide a high standard of service for its own sake.
c. Collective organization
Practitioners usually belong to a professional association, which regulates admission and seeks to uphold the standards of the profession. Such associations commonly set examinations to test competence and issue professional codes on matters of conducts and ethics.
The matter arose again in Carr v Inland Revenue Commissioners5, in Court of Appeal, Du Parcq L.J. stated:
“…before one can say that a man is carrying on a profession, one must see that he has some special skill or ability or some special qualifications derived from training or experience. Even then one has to be very careful, because there are many people whose work demands great skill and ability and long experience and many qualifications who would not be said by anybody to be carrying on a profession”.
3.3. Nature of the liability
Definition of liability in Osborne Concise Law Dictionary is ‘an amount owed; or subject to legal obligation; or the obligation itself, he who commits a wrong or break on a contract or trust is said to be liable or responsible for it’. Similar indicated in Dictionary of English Law, liability is potentially subject to obligation, either generally as including every kind of obligation or in more special sense to denote inchoate, future unascertained or imperfect obligation, as opposed to debt, to essence of which is that they are ascertained and certain. While, in Burton’s Legal Thesaurus defined liability is accountability, accountable, amenability and answerability.
According Borja and Stevens (2002) a liability is a present obligation of the enterprise arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits. While, Frankel (2005) in any legal responsibility, duty or obligation, the state of one who is bound in law and justice to do something which may be enforced by action. This
5
liability may arise from contracts either express or implied or in consequence of torts committed.
A situation in which one party is legally obligated to assume responsibility for another party's loss or burden. Liability is created when the law recognizes two elements ‘the existence of an enforceable legal duty to be performed by one party for the benefit of another' and the failure to perform the duty in accordance with applicable legal standards (Jackson and Powell, 1987). An obligation is in Webster's Revised Unabridged Dictionary defined as an acknowledgement of a duty to pay a certain sum or do a certain things; any act by which a person becomes bound to do something.
Furthermore, Frank (1988) noted that in law, a person may owe a duty to another person by his own free will in a Contract or bay the operation of common law of Tort. The failure to perform or negligently perform these duties or responsibilities constitute a breach, therefore he or she will be answerable or accountable to the other party who may have suffered as a result of his/her wrongful act.
According Siddharaj (1996), the main element in liability is duty and responsibility. The duty and responsibility of the various parties in a construction project may arise from contract or law of tort or both. It is also very much associated with the interrelationship between them and the scope and nature of services they provided in the project.
3.4. Theories of liability
According Marianne (2005), depending on jurisdiction, plaintiffs can sue on any one or a combination of the following theories of liability, each with differing types and calculations of recovery:
a. Strict liability or Negligence Per Se (i.e., violation of building code or other law)
b. Negligence (i.e., in the exercise of a reasonable degree of care, skill and knowledge ordinarily employed by such building professionals)
c. Breach of Contract (i.e., as set forth in the purchase and sale documentation) d. Breach of Implied or Express Warranty (i.e., that the completed structure was
designed and constructed in a reasonable workmanlike manner and usable for its intended purpose)
e. Fraud (Intentional Misrepresentation) and Negligent Misrepresentation (i.e., on the grounds that the developer or property manager intentionally misrepresented the quality of construction in false statements and/or advertisements)
f. Breach of Fiduciary Obligation (i.e., that directors and/or officers of homeowners’ associations have failed to adequately protect their residents’ rights or interests)
g. Negligent and intentional infliction of emotional distress (i.e., that, as a result of a given action or defective condition, the homeowner has suffered emotional distress)
h. Nuisance (i.e., loss of enjoyment and use of property as a result of a defective condition)
i. Products Liability (i.e., claims of a defective condition in installed components)
3.5. Professional liability
According Jackson and Powell (1987), the professions operate in spheres where success cannot be achieved in every case. Very often success or failure depends upon factors beyond professional man’s control. Even where the critical factors are within the professional man’s control, he still cannot guarantee success.
The problem which the courts have faced in devising a rational approach to professional liability6 is that they must provide proper protection for the consumer. Broadly speaking, the solution which has been found is to require that professional men should possess a certain minimum degree of competence and that they should exercise reasonable care in the discharge of their duties. In Greaves & Co. v Bayham Meikle7, Lord Denning M.R. stated:
“Apply this to the employment of a professional man. The law does not usually imply a warranty that he will achieve the desired result, but only a term that he will use reasonable care and skill. The surgeon does not warrant that he will cure the patient. Nor does the solicitor warrant that he will win case.”
Barros (1989) noted that the degree of success expected from different professions may vary. Thus, the professional man as defendant enjoys a privileged position. His privileged position has been eroded in certain respects by developments in the law of contract and tort.
6
Liability must, of course, be established on balance of probabilities. InBater v Bater [1951] P. 35
Denning L.J. said: “So also in civil cases, the case may be proved by a preponderance of probability, but there may be degrees of probability within that standard. The degree depends on the subject
3.5.1. Contractual liability
The word ‘contract’ may be defined as ‘an agreement enforceable by law’.8 As stated by Jackson and Powell (1987), the law of contract is the principal means by which the courts have exercised control over the conduct of professional men. In most instances there is a contract between the professional man and his client, whereby the former agrees to render certain services and the latter agrees to pay. Davies (1989) noted that contractual liability arises from breach of duty imposed by the terms and conditions of the contract entered into by the parties concerned. In such a contract there is generally implied by law a term that the professional man will exercise reasonable skill and care9.
As Oliver J. pointed out in Midland Bank v Hett, Stubs & Kemp10, the obligation to exercise reasonable skill and care is not the only contractual term which ought to be considered in a professional negligence action, there are implied terms that he will draw up the option agreement and effects registration. The importance of specific terms such as these is that a professional man will be liable if he breaks them, quite irrespective of the amount of skill and care which he has exercised (Jackson and Powell, 1987). In the absence of express term to the contrary effects, there is implied by law a term that the professional man will carry out these activities with reasonable skill and care and fit for the purpose.
Barros (1989) emphasises that the common law rule is that no one can sue or be sued on a contract to which he is not a party.
8
Section 2(b), Contract Act 1950 9
This common law principle is now embodied in s.13 of the Supply of Goods and Services Act 1982. 10
3.5.2. Tortious liability
According Barros (1989), defining ‘tort’ is difficult because of the extreme variety of behaviour it encompasses, e.g. intentionally or negligently causing physical injury, interfering with the enjoyment of land, defamation, conspiring to cause financial loss and so on. A problem is sometimes experienced in distinguishing between the torts of nuisance and negligence. While, as stated by Winfiels and Jolowicz (2002), a tort is some wrongful act, such as negligence, which gives rise to a right of action. Winfield’s definition of tort was as follows:
‘Tortious liability arises from the breach of a duty primarily fixed by the law; this duty towards persons generally and its breach is redressible by an action for unliquidated damages.’
Norchaya Talib (2003) found that the law of tort in Malaysia is largely derived from the common law of England. This means that the basic rules governing law of tort in Malaysia are to be found in English decisions. Local cases have applied these rules without substantial changes. Jackson and Powell (1987) noted that the tort of negligence is complete when three conditions are satisfied:
a. The defendant owes a duty of care to the plaintiff.
b. The defendant has acted or spoken in such a way as to break that duty of care.
c. The plaintiff has suffered damage as a consequence of the breach.
Since Donoghue v Stevenson11 the extension of the tort of negligence into areas where previously no remedy existed or the existing remedies seemed to be inadequate has been identified as a policy decision:
‘The general trend in the policy of the law as developed by your Lordships’ House in recent years has been to extend to new areas of activity the notion that a man is liable for loss or damage to others resulting from his failure to take care.”
The landmark cases which mark this development are Hedley Byrne & Co Ltd v Heller & Partner Ltd.,12 Dorset Yacht Co. Ltd v Home Office13 and Anns v
Merton London Borough Council.14 According Jackson and Powell (1987), in order
to establish that a duty of care arises in a particular situation, it is not necessary to bring the facts of that situation within those of previous situations in which a duty of care has been held to exist. Rather the question has to be approached in two stages.
First one has to ask whether, as between the alleged wrongdoers and the person who has suffered damage there is sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former, careless on his part may be likely to cause damage to the latter – in which case a prima facie duty of care arises.
Secondly, if the first question is answered affirmatively, it is necessary to consider whether there are any considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed or the damage to which a breach of it may give rise. Lord Wilberforce’s two-stage test as formulated in Anns remains an extremely useful guideline in difficult cases in determining (a) whether a duty of care exists and (b) what is its scope. The House of Lords applied his two-stage test in Junior Books Ltd v Veitchi Co. Ltd.15
12
[1964] AC 465. Held that, in absence of a disclaimer, bankers may be liable to third party for a negligent misstatement as to the financial stability of their customer, with whom that third party proposed to do business. It was immaterial that the third party would suffer only financial loss. Such liability for negligent misstatement could arise in the absence of a contract, provided there was a special relationship between the parties.
13
[1970] AC 1004, in which it was held that borstal officers supervising borstal boys, who were working on a island in Poole Harbour, owed the plaintiffs a duty to take reasonable care to prevent the boys damaging their property.
14
[1978] AC 729. Held that a local authority inspecting foundations pursuant to statutory powers owed a duty of care to future owners or occupiers of the premises.
15
[1983] AC 520. Held that a specialist sub-contractor would be liable in tort to the building owner for economic loss caused by defects in the floor which the sub-contractor had laid.
Davies (1989) noted that in the context of professional negligence, there have been four developments whereby liability has been substantially extended:
a. The professional man has been held liable to his client concurrently in contract and tort.
b. The professional man has been held to owe a duty of care to an increasingly wide range of persons who are not his clients.
c. The traditional immunities have been swept away or restricted. d. The protection afforded by the Limitation Act has been narrowed.
3.5.2.1 Concurrent liability
As stated by Siddharaj (1996), the existence of a contractual relationship between the professional man his client prevented any independent liability in tort arising. The professional man was liable only for breach of contract.16 However, the courts held that professional men were liable to their clients for breach of duty both in contract and tort.
In Argyll v Beaselink (1972)17, Megarry J. suggested that the implied
contractual duty to exercise reasonable skill and care may, on occasions, actually impose a higherstandard than the duty of care in tort. The delegation of contractual duties and vicarious liabilities are, however, exceptions to this ‘reasonable care’ approach. In Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd18 the Privy Council cast doubt on the principle of concurrent liability, Lord Scarmin giving the opinion of the Judicial Committee of the Privy Council, stated:
“Their lordships do not believe that there is anything to the advantage of the law’s development in searching for a liability in tort where the parties are in a
contractual relationship. This is particularly so in a commercial relationship. Thought it is possible as a matter of legal semantics to conduct an analysis of the rights and duties inherent in some contractual relationships. …. If any, terms are to be implied as matters of tort law when the task will be identify a duty arising from the proximity and character of the relationship between the parties. For the avoidance of confusion in the law to adhere to the contractual analysis; on principle because it is relationship in which the parties have”.
As stated by Davies (1989), for example to avoidance of confusion because different consequences do follow according to whether liability arises from contract or tort is in the limitation of action.
3.5.2.2 Liability to third parties
As stated by Barros (1989), the professional man has been held to owe a duty of care to an increasingly wide range of persons who are not his clients. Similarly indicated by Jackson and Powell (1987), following the Anns’ case, the proposition that a professional person owes a duty to no one other than his client is clearly untenable. Equally untenable would be the suggestion that he owes a duty of care to all those who are likely to be adversely affected by his acts or omissions. While, the application of the second test by Lord Wilberforce in the Anns’ case ought to reduce or negate the duty owed by the professional persons to third parties.
a. Much of the professional man’s work is directed towards protecting his client against other persons with opposed interest or promoting his client’s interests to the detriment of other parties.
b. Some professional work, particularly in the realm of statements or reports which are widely circulated, has such far-reaching repercussions that it seems
unjust to hold the professional man liable for all foreseeable consequences of error.
Furthermore, Jackson and Powell (1987) emphasizes that the subsequent owners and users of the building have a common interest with the client, in their safety depends on the skill and care of the any professional members of that team such as either architect, engineer or contractor. In view of this, Barros (1989) supported that it is not surprising that the range of cases in which it has been held that they are or may be liable to third parties has been wider.
3.5.2.3 Loss or restriction of immunities
Certain professions have, by tradition, enjoyed immunity from suit on the grounds of public interest. Barros (1989) found that architects are no longer immune where certificates are negligently given and even the immunity of barristers which was thought to rest upon the absence of any contract between a barrister and his client, is now limited to work done in court and to small category of related pre-trial work. Observations on the extent of such immunities were made obiter in Rondel v Worsely19 and later discussed in Saif Ali v Sidney Mitchell & Co.20 when even the bar would lose its immunity altogether.
3.5.3. Can professional man be liable both in contract and tort at the same time?
A statement of claim can be framed in such a way that it alleges both a breach of contract and tort as an alternative. The distinction between contract and tort is important because of the different periods of limitation, which is the time in which a claim can be brought, in each case. However, where there is a contractual relationship between two parties, particularly a commercial relationship, their obligations in tort cannot be any greater than those found expressly or by necessary implication in contract (Davies, 1989).
As stated by Siddharaj (1996), the contractor (defendant) may be liable on the same fact in contract to A and in tort to B. It is also established that the defendant may have a concurrent liability in tort and in contract to the same plaintiff, though the defendant may not recover damage twice over.
Furthermore, Davies (1989) suggested that the differentiating between tortious and contractual liability is to be found in the proposition that in tort the content of the duties is fixed by law, whereas, the content of contractual duties is fixed by the contract itself. However it is to be noted that nowadays in some cases contractual duties are fixed by the law. Torts aims principally at the prevention or compensation of harms, whereas, the ‘core’ idea of contract is about enforcing certain promises.
3.6. Standard of skill and care
The professional man must exercise reasonable skill and care. Supported by Evans (1979) the standard of care required in the particular situation needs to be establish. Similar indicated by Santhana Dass (2000) that the degree of care which the law requires is ‘that which is reasonable in the circumstances of the particular case’. In fact, Norchaya (2003) emphasizes that in Heaven v Pender21, Brett MR held that a duty of care exists in normal circumstances whereby if a person does not take usual degree of precaution another person or his property may be injured or damages.
In the dictum of Alderson B. in Blyth v Birmingham Waterworks Co22:
‘Negligent is the omission to do something which a reasonable man, guided upon those consideration which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do.’
Siddharaj (1996) found that the level of the reasonable man’s conduct is not at some impossibly high level. He is regarded as being the epitome of ordinariness. He is the ‘man in the street’ or ‘Mr. Average’. According to Lord Macmillan in
Glasgow Corporation v Muir23, the standard or foresight of the reasonable man, he is ‘free from the both over-apprehension and from over-confidence’.
Evans (1979) noted that the standard is not a standard of perfection. In the case of a person who is in a position of exercising a special skill the standard expected is that of a person competent in that skill. A surveyor must be a reasonable
surveyor, a contractor a reasonable contractor. Further, James (1994) suggested that contractor is expected to know current practice in the trade, to have knowledge of current regulations, and to be aware of any dangers involved in the trade, (e.g. dangers from the use of certain types of asbestos). Even if the standard practice has been conformed to, there may still be liability for negligent if the practice itself is unsound and unreasonable.
Nevertheless, according Jackson and Powell (1987), the common ground that the standard of skill and care must be determined by reference to members of profession concerned, rather than the man on the Clapham omnibus.24 As stated by Justice McNair in Bolam v Friern Hospital Management Committee:25
“Where you get a situation which involves the use of special skill or competence, then the test as to whether there has been negligence or not is not the test of the man on top of Clapham omnibus, because he has not got the special skill. He is ordinary man. The test is standard of the ordinarily skilled man exercising and professing to have that special skill or expertise”.
Siddharaj (1996) found that where the professional man involves the use some special skill or competence then the test as to whether there has been negligence or not is not the test of the man on the top of a Clapham omnibus, because he has not got this special skill. The test is the standard of the ordinary skilled man exercising and professing to have special skill. A man need not possess the highest expert skill: it is well established law that it is sufficient if he exercises the ordinary skill of on ordinary competent man exercising that particular art. Similarly acknowledge by Evans (1979) that there may be one or more perfectly proper standards: and if he conforms with one of those proper standards, then he is not negligent.
24
Bolam v Friern Hospital Management Committee [1957] 1 WLR 582 25
In Andrew Master Hones Ltd v Cruikshank & Fairweather,26 a case concerning patent agents, in which this point was argued, Graham J. stated:
“The degree of knowledge and care to be expected is thus seen to be that degree possessed by a notional duly qualified person practicing that profession. The test is, therefore, if I may put it that way, an objective test referable to the notional member of the profession and not a subjective test referable to the particular professional man employed.”
Furthermore, as stated by Siddharaj (1996), where special skill is required for the work to be done, a reasonable man would not be expected to attempt it, unless he is capable of performing it by possessing such special skill. In Lanphier v Phipos27, Tindal C.J. held that:
“Every person who enters into a learned profession undertakes to bring to the exercise of it a reasonable degree of care and skill. He does not undertake, if he is an attorney, that at all events you shall gain your case, nor does a sugeon undertake that he will perform a cure; nor does he undertake to use the highest possible degree of skill. There may be persons who have higher education and greater advantages than he has, but he undertakes to bring a fair, reasonable and competent degree of skill.”
3.6.1 Govern by statues
As stated by James (1994), the standard of performance or the standard of care that the contractor must exercise in discharging his/her duties is also govern by various statues:
a. The Defective Premises Act 1972
Stated under Section 1 the Act:
‘a person who is taking on work for or in connection with the provision of a dwelling, owed a duty to see that the work which he takes on is done in a workmanlike manner or as the case may be, in professional manner’.
This duty is owed to any person to whose order the dwelling is provided and also to every person who acquires a legal or equitable interest in the dwelling. A major limitation is that any cause of action under section 1 is deemed to have accrued at the time when the dwelling is completed.
b. Supply of Goods and Services Act 1982
The implied obligation of the contractor in relation to the materials used:
- That the contractor will carry out the work in a good and workmanlike manner;
- That any materials supplied by him will be of good quality and reasonable fit for their purpose; and
- That in the case of a dwelling house, it will be fit for human habitation.
Also stated under Section 13 of Act:
There is an implied duty of care and skill imposed on the contractor requiring him to exercise the skill and competence required of an ordinary competent building contractor. In addition, will be reasonably fit for any purpose for which the contractor knew it would be required.28
28
Authority for the implication of this term dates fromHarmer v Cornelius (1858) 5 CBNS. It is now
c. Others statues
According John Murdoch (2000) the contractor’s duties is most important to followed the provision controlling building work are likely to be the Building Regulation 1985, the Health and Safety at Work Act 1974 and the Construction (Design and Management) Regulation 1994, but the contractor’s obligation extends much wider than these. JCT 9829 clause 6.1.1 makes it clear that there must be compliance with local authority byelaws and also with regulations made by statutory undertakers such as electrical, gas and water boards, to whose systems the works are to be connected.
3.7. Remedies for professional negligence
3.7.1. Damages
According Harrison (1988) a plaintiff30 seeking to remedy a civil wrong, either tort or contract, usually asks for money damages from the defendant. Damages may be based on personal injury, property damage or economic loss. Jackson and Powell (1987) emphasizes that an award of damages is the normal remedy sought for breach of duty by professional man, in certain circumstances he may be deprived of his fees. And he adds, that the recovery of damages is subject to the overriding requirement that the loss or damage for which compensation is sought,
29 Joint Contracts Tribunal Standard Form of Building Contract 1998
30
