- Tort law governs negligence claims in construction. Negligence involves a wrongful act or omission that violates a duty of care and causes reasonably foreseeable harm. - Key cases established that construction professionals like engineers owe a duty of care not just to their clients but also to foreseeably affected third parties. This allows claims for economic losses from negligent statements or defective work. - The scope of recoverable economic losses in tort expanded but was later reined in by courts requiring physical damage from latent defects, not just costs to remedy work. Malaysian courts have allowed some recovery for economic losses in construction negligence cases.

1. CONSTRUCTION LAW
LECTURE 10: TORT - NEGLIGENCE
CLAIMS & ISSUES IN
CONSTRUCTION

2. TORT-Negligence Claims and Issues in
Construction
● Comprises either a wrong act or omission, that isn't authorised by law.
● A tort has the impact of intrusive onto another's interest, which entitles
the other party to a remedy that can hopefully be resume to his previous
position and the damages are also unliquidated.
● Contrary to contracts where only parties to a contract can sue and be
sued upon, entities who have been affected from the breach of legal
duties have the right to sue as well.

3. ● The award of damages for breach of contract is to compensate the
plaintiff for what he would have obtained if the contract had been
performed.
● The sources of Tort law in Malaysia are mainly from judicial decision and
common laws. The only branch of tort law that has been codified into
statute is the law of defamation as contained in the Defamation Act 1957.
Types of Tortious actions relevant for Construction:
- Negligence, Trespass, Nuisance, Defamation, Vicarious liabilities

4. TORT & CONTRACT RELATIONSHIP
● Actions in tort and contract may overlap in that the same wrong action
may be both a breach of contract and also a breach of duty which
constitutes a tort.
● Where there is a contract with two parties, there exists also a parallel duty
in tort irrespective of what the parties had agreed.
CASE LAW: BATTY V. METROPOLITAN REALISATION LTD (1978)
● Parallel duties in contract and tort were exist
● Developer held liable in breach of contract of solding a house which was
not fit for staying because it was built on a unstable slope

5. TORTS RELATED TO CONSTRUCTION INDUSTRY
NEGLIGENCE
● Negligence is a fluid principle, which has to be applied to the most
diverse conditions and problems of human life. - Lord Wright, House of
Lords.
● The entire concept of negligence is to extend liability beyond the borders
of privity of contract.

6. ● Basis of an action or omission in negligence is the failure to exercise the
standard of care which the law requires in a particular set of
circumstances.
CASE LAW: CORPORATION OF THE DISTRICT OF SURREY, THE V. ALBERT J
CHURCH & ORS (1977).
● A consulting engineer was held to be negligent for not warning the
employer of the unsatisfactory soil conditions revealed by trial pits in a
project.

7. For an action in negligence, the plaintiff must prove the following;
❖ The defendant owed to the plaintiff a duty of care.
❖ The defendant was in breach of that duty,
❖ As a result of the defendant's conduct,he suffered actual damage or loss
as opposed to other tort like defamation.
❖ The Plaintiff must show that the damage or loss suffered by him was a
reasonable and foreseeable consequence of the defendant's conduct.

8. PRINCIPLE OF DUTY OF CARE
Duty of care arise whenever a person can reasonably foresee that his acts or
omission may injure or cause damage to another.
DONOGHUE v. STEVENSON (1932)
● Neighbour principle: manufacturer has duty of care to consumer even
though there was no privity of contract.
● Duty of care must be given to the person who are closely and directly
affected by the act.
● The damage was latent in nature. If it was patent, then such claim can
only be under a contract relationship.

9. ● There is a duty of care for both designers and contractors to ensure that
the building does not cause physical damage to person/property during
its intended life.
● Therefore, there is no liability under negligence for defects in a building
which are patent or physically obvious to anyone.

10. LIABILITY FOR STATEMENT ISSUED
Liability in tort for negligent statements which allowed recovery of financial loss
sustained in the absence of either personal or physical damage to property.
HEDLEY BRYNE & CO LTD v. HELLER & PARTNERS LTD (1964)
● Plaintiff sustained financial loss after getting into a business with a company relying
based on the information provided carelessly by defendant.
● In this case, the statement issued contained a disclaimer which ruled that it allows
the defendant to avoid liability.
Negligent misrepresentation has to be based on the following premises:
1. Existence of close/special relationship between representor and representee.
2. The misstatement is expected to cause financial damage.

11. DAY v. OST (1973)
● Subcontractor contemplated whether he should stop work as he had not
been paid.
● He resumed work based on the statement given by the Architect, in which
it was assured without any basis.
● Consequently, the main contractor went bankrupt and the subcontractor
successfully sued the architect for his loss.
● There is no privity of contract between architect and the subcontractor,
but architect has duty of care.

12. IMPLICATIONS OF HEDLEY BYRNE DECISION ON
CONSULTANTS/PROFESSIONALS
● Consultants provide advices and prepares report, where accuracy and
adequacy of work done is relied upon by the third parties in their works.
INDEPENDENT BROADCASTING AUTHORITY v. EMI ELECTRONICS LTD
AND BICC CONSTRUCTION LTD (1980)
● Subcontractor is liable for giving assurance negligently to the employer in
relation to the TV mast which they had designed.
● Employer would have carried out some test which may have detected
potential defects in the mast, if it was not for the assurance by
subcontractor.

13. DEVELOPMENT OF TORT LAW IN CONSTRUCTION
Dutton v. Bognor Regis Urban District Council (1971)
The Court of Appeal held that Mrs Dutton could recover money from the
council, as an extension of the principle in Donoghue v Stevenson. It was fair
and reasonable that the council should be liable to a later purchaser of a
house that its surveyor had negligently certified to be sound.

14. Consequences of the Dutton case is:
● Claims in tort were potentially available against parties not thought liable;
● Claims in tort could be brought as an alternative to claims in contract.
Thus the Dutton case opens the 'floodgates' for cases brought in tort against
local authorities, contractors and professionals. Which led to the House of
Lords deciding to disapprove its own previous decisions. However the court
can only decide on issues in the case before it.

15. Anns v. The London Borough of Merton (1977)
It is not until 1977, that the opportunity arose for the House of Lords to
reconsider the Dutton decision. The case was Anns v. The London Borough of
Merton. The case concerned allegations of negligence against local authority's
building inspectors, the primary issue being whether the claim was statute
barred.
The House of Lords took the opportunity to restate this whole area of law and
widen the grounds in which a duty of care arise

16. Junior Books v. Veitchi (1982)
The major development in law of tort is in the case of Junior Books v. Veitchi in
which the plaintiff owners of a factory sue a nominated subcontractor in tort
for economic loss for installing a flooring negligently, the loss being the cost to
replace the defective flooring. The House of Lords allowed the claim, holding
that there was no good reason to restrict the loss recoverable to the cost of
making good physical damage. However, Lord Brandon delivered a strong
dissenting judgment.
The position after Junior Books case seemed to be that you are better off
relying on tort than contract which is much more generous limitation period
were available and no difficulty to recover damages.

17. Murphy v. Brentwood District Council (1990)
The defendant local authority had negligently approved plans for the footings
of a house. The claimant purchased the property, but some time afterwards it
began to subside as a result of defects in the footings. The claimant was
unable to afford the required repairs, and was forced to sell the property as a
loss. He also claimed damages for the health and safety risk which the defects
had caused to himself and his family during the time they lived at the
property.

18. The decision, which is of far-reaching importance, re-established the following
principles:
- A builder owed duty of care within the principle of Donoghue v. Stevenson,
to persons likely to suffer injury as a result of his negligence;
- This extended, however, to only injury caused by latent, i.e. undiscovered
defects in the building.
- Where a defect is discovered, the cost of remedial work was to be regarded
as pure economic loss, not recoverable in tort;
- Contrary to Dutton and Anns, cracks representing the manifestation of
underlying defects were not to be regarded as material damage;
- The House of Lords left open the question whether a local authority
exercising powers to secure compliance with building regulation owed any
duty to owners or occupiers of the relevant building.

19. Steven Phoa Cheng Loon v Highland Properties Sdn Bhd (2000)
the legal position in Malaysia is found in Steven Phoa Cheng Loon v Highland
Properties SdnBhd (2000). Highland Towers consists of 3 blocks of 12 storey
apartments in Ampang which was constructed between 1975 and 1978 in
front of a steep hill and a stream.
- On 11 December 1993, one of the blocks collapsed resulting in 48 deaths.
The resident of the other 2 blocks were prevented from entering their
apartments by the authority for fear of instability of the 2 other blocks.

20. - They sued a party who purported to be the architect of the project to recover
damages (economic loss). James Foong J affirmed his ruling in earlier case of
Dr. Abdul Hamid Abdul Rashid v Jurusan Malaysia Consultants (1997) where
he held that 'pure economic loss in this country can be maintained against a
defendant'.
- The court of appeal upheld the findings of liability but took the view that they
could not decide on matters of policy (between position taken in English
decision and other commonwealth jurisdiction). The Appeal court allowed for
claims for diminution of value of the blocks of apartment still standing on the
basis that it was reasonably foreseeable and not too remote in negligence.
- The position of negligence in Malaysia is still somewhat uncertain because
the case was also decided with reference to the defendant's liability for
nuisance.

21. QUESTION 1
What must the plaintiff prove in order for an action in negligence to occur?

22. QUESTION 1 (Answer)
What must the plaintiff prove in order for an action in negligence to occur?
For an action in negligence, the plaintiff must prove the following;
● That the defendant owed to the plaintiff a duty of care.
● That the defendant was in breach of that duty,
● That as a result of the defendant's conduct,he suffered actual damage or
loss as opposed to other tort like defamation.
● That the Plaintiff must show that the damage or loss suffered by him was
a reasonable and foreseeable consequence of the defendant's conduct.

23. QUESTION 2
In tort, how are damages awarded to the plaintiff ?

24. QUESTION 2 (Answer)
In tort, how are damages awarded to the plaintiff ?
● In tort, the award of damages is to restore the plaintiff, as far as possible,
to the position he was in before the commission of the tort and the
damages is also unliquidated. In contrast, the award of damages for
breach of contract is to compensate the plaintiff for what he would have
obtained if the contract had been performed.

25. QUESTION 3
In the event that renovation works has caused damages to the adjoining
neighbouring property, can the contractor be held liable? Why?

26. QUESTION 3
In the event that renovation works has caused damages to the adjoining
neighbouring property, can the contractor be held liable? Why?
● Yes, the contractor can be held liable.
● Based on the ruling of Donoghue v. Stevenson, the contractor owed the
neighbour duty of care even though there is no privity of contract as his
renovation works caused damages to the neighbouring property.

27. QUESTION 4
The owner contracted with architect to prepare plans, drawings and
specifications for a project. Contractor was awarded for the project based on
traditional procurement method. After starting the construction, contractor
discovered that there are a lot of errors in the architect’s drawings, which
disrupted the work schedule and forced the contractor to provide additional
labour and materials. What can the contractor do?

28. QUESTION 4
The owner contracted with architect to prepare plans, drawings and specifications for a
project. Contractor was awarded for the project based on traditional procurement
method. After starting the construction, contractor discovered that there are a lot of
errors in the architect’s drawings, which disrupted the work schedule and forced the
contractor to provide additional labour and materials. What can the contractor do?
● Even though there is no privity of contract between the architect and contractor,
the architect has the duty of care.
● The contractor can sue the architect for negligent misrepresentation for the work
to be done.
● Contractor relied on the drawings to start the construction and caused him
financial damage.

29. QUESTION 5
Which case contribute to the major development in law of tort?

30. QUESTION 5
Which case contribute to the major development in law of tort?
● Junior Books v. Veitchi (1982)

31. QUESTION 6
You just bought a new house from a developer, upon moving in you realize
there are cracks everywhere. Can you sue the developer for negligence?

32. QUESTION 6
You just bought a new house, upon moving in you realize there are cracks
everywhere. The repairs are too expensive and you are forced to sell it below
the purchased price due to the defects. Can you sue the local authority for
negligence?
● No. Because based on Murphy v. Brentwood District Council (1990),
damage suffered by the claimant was neither material nor physical but
purely economic, the defendant is not liable in negligence. It was decided
that to allow the claimant to recover damages for the money which he
had lost on the sale of the property, or for the cost of repairing it.