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Steven LOBLE

International & Commercial Litigation

Duty of Care

A new case on duty of care - John Innes Foundation and Others v. Vertiv Infrastructure Limited [2020] EWHC 19 (TCC).

Vertiv, a large infrastructure company, was contracted to provide maintenance for standby and emergency power equipment. The contract had been in place since 2006.

Two service visitsper year were contracted for. For a period of two years, no such visits took place. The customer had not specifically requested visits.

A fire caused substantial damage to the property in March 2015. The landlord and some of the tenants sued Vertiv.

Vertiv applied for summary judgment – and won.

The judge set out the relevant test to establish whether there was a duty of care, including foreseeability, proximity, whether it would be fair, just and reasonable, and the type of damage which might be caused - personal injury, physical damage or pureeconomic loss.

Type of damage

“In my judgment, the authorities establish that where a negligent act of a person causes physical damage, that type of act will normally be actionable. However, as the dictum of Cooke P recognises, physical damage causes loss of an economic type and in some cases the loss may be an indirect loss to property interests. Where a novel situation arises, then the authorities make it clear that the court should approach the development of the law incrementally by reference to analogous decided cases, applying the threefold Caparo test.In this case, the pleaded claims are for loss caused by physical damage to the building (in the case of the First Claimant) and to computers and other machinery and equipment (in the case of the Second to Fourth Claimants), but also for loss inrespect of business interruption and increased costs of working (in the case of the Second to Fourth Claimants) which may be loss consequent on the damage to the relevant Claimant’s property or may bepure economic loss.

In my view, the appropriate approach in this case is to consider the application of the threefold Caparo approach to these claims, whilst bearing in mind the willingness of the courts to find that a duty of care exists in respect of acts causing physical damage.”

Act or omission

“In this case the claim against the defendant rests uponan allegation of failure on its part to make the contracted visits. Whilst this is not necessarily determinativeof the issue as to the existence of a duty of care, I agree with Mr. Blaker’s submission that the fact that the claim is based upon a failure to act rather than a negligent act is a relevant factor and a relevant distinction between this case and the John F. Hunt case.”

Nature of the relationship - proximity

“It would be somewhat curious if JIC, who previously would only have been able to have recourse against the Defendant subject to its terms of contract with the Defendant, could find itself in a position where by making a claim in tort it could potentially be in a better position because the Defendant’s contract was now with NBI.

As for the other Claimants, there is no allegation in the pleading that any of them ever had any relevant or significant direct contacT with NBI.

In my view, this is precisely the situation referred to by Lord Goff in the passage I have emphasised above, where the parties have so structured their relationship that it is inconsistent with an assumption of responsibility.

In the circumstances, it is in myjudgment difficult to say that there was sufficient proximity between any of the Claimants and the Defendant to satisfy the requirement of proximity.

In this case, as in many others, there is a considerable overlap between the requirement of proximity and the question as to whether it is fair just and reasonable to impose a duty of care upon the Defendant.

As I have said above, it is an important feature of this case that what is alleged is a failure to act. Stripped bare, the allegation isof a negligent failure by the Defendant to honour its contractual obligation to NBI to attend site or to remind NBIthat such visits were due. That is, on my understanding of the authorities, a novel case which I should approach as an incremental extension of the scope of the law.

On the pleaded case, I find it impossible to discern any factual basis upon which it can be said that the Defendant assumed any responsibility to any of the Claimants to make the visits or to issue reminders, northat any of the Claimants relied upon them to do so.

For these reasons I conclude that the Claimants’ case that the Defendantowed each of them a duty of care is bound to fail. As I say below, my conclusion isstrengthened by some of the arguments advanced by the Defendant as to breach of duty.

I have considered whether there are any facts which might come out on a full trial which might alter that conclusion. However, taking the pleaded case on its face, as I must, I cannot discern any factual evidence which would alter the conclusion which I have reached. The only area of factual investigation which the Claimants’ skeleton argument suggests might be relevant is investigation as to whether the Defendant knew or ought to have known that the Claimants were relying upon it to carry out the annual testing of the equipment. However, that reliance appears to go no further than establishing foreseeability, which I have accepted can be shown in this case. As I have pointed out above, there is no suggestion that any of the Claimants relied upon the Defendant in particularto carry out such tests.

Thus, as it seems to me, I am in as good a position as a trial judge is likely to be in answering the central question, which is a question of law, as to whether a duty of care was owed to any or all of the Claimants.

Even if some duty of care was owed to one or other of the Claimants, there remains the question whether the Defendant owed a duty of care to take care to avoid pure economic losses. On the authorities, even if a duty to take care to avoid physical damage existed, it is difficult to see how a duty to take care to avoid pure economic loss could be established on the facts of this case.”

Vertiv was represented by Steven Loble of W Legal Limited and Gary Blaker QC.

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