D&F Estates Ltd v Church Commissioners for England [1989] AC 177

Facts

  • D&F Estates were lessees of property owned by the Church Commissioners.
  • The property suffered from defective plastering work performed by a subcontractor.
  • D&F Estates sought to recover the costs of repair from the subcontractor, arguing a duty of care in tort for competent workmanship.
  • There was no direct contractual relationship between D&F Estates and the subcontractor.
  • The defective plastering resulted in financial loss but there was no allegation of physical injury or further property damage.

Issues

  1. Whether a duty of care exists in tort to prevent pure economic loss caused by defective workmanship or materials in the absence of physical damage or injury.
  2. Whether claims for the cost of repairing construction defects can be recovered in tort or must be addressed by contractual remedies.
  3. Whether allowing recovery in tort for such losses would undermine the distinction between contractual and tortious liability.

Decision

  • The House of Lords held there is no duty of care in tort to prevent pure economic loss arising solely from defects in workmanship or materials, where no physical damage or injury has resulted.
  • The court decided that such economic losses are properly addressed through contractual arrangements, not tort law.
  • The distinction between contract and tort was reaffirmed and the claim for the cost of repairing the defective plastering was not permitted in tort.

Legal Principles

  • Pure economic loss (financial loss without accompanying physical damage or injury) is generally not recoverable in tort.
  • Tort law does not impose a duty of care to prevent defective work resulting only in economic loss; this is the province of contract law.
  • Imposing a tortious duty in such cases could lead to indeterminate liability for contractors and subcontractors.
  • The contractual relationship is the appropriate framework for allocating risks and defining remedies for defective construction.
  • Upholding the separation between tortious and contractual liability maintains certainty and autonomy in commercial arrangements.

Conclusion

The decision established that, without physical damage or injury, pure economic loss from construction defects cannot be recovered in tort; such claims must be pursued through contractual remedies. This approach maintains the boundary between contractual and tortious liability in construction disputes.

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