Causation In Construction Contracts

In order to claim damages for breach of contract, there must be a clear causal link between the breach and the damage suffered by the innocent party.

In the case of Quinn v. Burch Brothers (Builders) Ltd., Q, acting as a sub-contractor to B for certain building works, found B in breach of an implied term of the sub-contract. This term required B to provide, within a reasonable time, any necessary plant or equipment for carrying out the subcontract works. B’s failure to supply a requested stepladder led Q to use an unsuitable trestle, which resulted in injury to Q when it moved unexpectedly. The court determined that while B’s breach of contract created the circumstances for Q’s injury, it was not the direct cause; rather, the injury stemmed from Q’s voluntary use of the trestle. Consequently, B was not liable for damages as Q’s injury was not a natural consequence of the breach, even though it might have been foreseeable.

The principle holds that damages for breach of contract can only be awarded for the breach itself, not for any loss incurred due to the manner of the breach. Moreover, the breach must be the primary cause of the loss, although it need not be the sole cause. The causal link can be broken by intervening acts of the plaintiff or third parties. However, courts are cautious about establishing general principles, and many cases are decided based on their unique circumstances.

For example, in Weld-Blundell v. Stephens, the negligent actions of S, who permitted a libellous letter to reach a third party, severed the causal link between S’s breach of contract and W’s resulting damage.

A more complex scenario emerged in Bank of Nova Scotia v. Hellenic Mutual War Risks Association (Bermuda) Ltd. (The Good Luck), where various factors, including a fraudulent claim by shipowners and the bank’s negligence, complicated the causation argument. Ultimately, the court found the breach of contract by the defendant to be a significant cause of the bank’s loss.

Similarly, in Brown v. KMR Services Ltd., the Court of Appeal emphasised the importance of identifying the specific advice a plaintiff should have received and determining the consequences of its receipt when assessing causation in cases involving professional advice.

In cases involving intervening events, such as Monarch Steamship Co. Ltd. v. Karlshamms Hjesabrikes (A/B), foreseeability plays a crucial role in determining whether the causal link between breach and damage remains intact.