Building Contracts and the Law of Tort - Building Contract - page 462

constitute a sufficiently close relationship to give rise to a duty of care owed to Caltex for
breach of which it might recover its purely economic loss. Chief among those features was the
defendant's knowledge that to damage the pipeline which was damaged was inherently likely
to produce economic loss.
23. Since Caltex Oil , and most notably in Perre v. Apand Pty Ltd , the vulnerability of the
plaintiff has emerged as an important requirement in cases where a duty of care to avoid
economic loss has been held to have been owed. 'Vulnerability', in this context, is not to be
understood as meaning only that the plaintiff was likely to suffer damage if reasonable care
was not taken. Rather, 'vulnerability' is to be understood as a reference to the plaintiff 's inabil-
ity to protect itself from the consequences of a defendant's want of reasonable care, either
entirely or at least in a way which would cast the consequences of loss on the defendant. So,
in Perre , the plaintiffs could do nothing to protect themselves from the economic consequences
to them of the defendant's negligence in sowing a crop which caused the quarantining of the
plaintiffs' land. In Hill v. Van Erp , the intended beneficiary depended entirely upon the solicitor
performing the client's retainer properly and the beneficiary could do nothing to ensure that
this was done. But in Esanda Finance Corp Ltd v. Peat Marwick Hungerfords , the financier could
itself have made inquiries about the financial position of the company to which it was to lend
money, rather than depend upon the auditor's certification of the accounts of the company.
Linklaters Business Services v. Sir Robert McAlpine Ltd
and another (No. 2)
QUEEN'S BENCH DIVISIN
(2010) 133 Con LR 211, [2010] EWHC 2931 (TCC)
The claimants (Linklaters) were the service company of the well-known solicitors. In
late 1996 they moved into premises consisting of two buildings, at 1 Silk Street, EC2,
on a 25-year lease. The premises had been the subject of a major redevelopment in
which Sir Robert McAlpine Ltd (McAlpine) were the main contractors, How Engineering
services Ltd (How) were the mechanical and electrical sub-contractors and Southern
Insulation (Medway) Ltd (Southern) were sub-sub-contractors for the installation of
the insulation works. The buildings were fully air conditioned, which involved insulated
chilled water pipework throughout the building.
In June 2006 a leak was noticed from one of the chilled water rise pipes. Investigation
revealed extensive corrosion throughout the chilled water pipework. In due course
Linklaters replaced the corroded pipework throughout the building. McAlpine and
How had each given collateral warranties to Linklaters that they had performed the
main contract and sub-contract respectively. Linklaters made claims against McAlpine
and How in contract. How made claims against Southern in tort. How and McAlpine
accepted that if McAlpine were liable in contract it was entitled to 100 per cent indem-
nity from How.
AKENHEAD J:
Essentially, the arguments between the parties can be summarised as follows. How argues that
there is a duty of care which extends to damage to the steel pipework caused by careless insula-
tion work. Southern says that it does not so extend and that one cannot and should not dif-