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Damage to the Thing Itself: The Complex Nature of the Complex Structure Theory

By Bill Perry and Samantha Wilson, Carter Perry Bailey LLP

Bill Perry and Samantha Wilson at Carter Perry Bailey explore the complexity surrounding the general principle of damage “to the thing itself” when it comes to liability claims. 

Article - Complex Structure Theory

It is well established in English law that there is no cause of action in tort where the only damage that has been sustained is damage to “the thing itself”. This general principle derives from the often-cited case of Donoghue v Stevenson [1932] UKHL 100: where there is a claim in negligence and no contractual relationship between the parties, the claim does not lie where all that has been damaged is “the thing itself”. 

An example in a construction context is a building which contains within it a defect. The negligent contractor would be liable in tort if the defect caused injury or damage to something else, for example to a car-owner if a brick fell out and landed on his or her parked car. However, damage to the building (eg, the brick smashes a window on the way down) would be considered damage to the thing itself and the building owner would have no action in tort against the contractor. His remedy is limited to his contractual one against the main contractor.

Difficulties thus arise in situations where the failure of one component of a larger structure (which includes machines as well as buildings, of course) causes damage to the rest of that structure. This is known as the complex structure theory and has been the subject of much legal discussion in England. Not all of this has led to clarity!  

In D&F Estates Limited v Church Commissioners for England [1989] AC 177, Lord Bridge held that where a structure is so complicated that the individual elements of it can be distinguished, then a defect in one part that causes damage to another part can be treated as damage to other property. 

However, he then complicated matters when in Murphy v Brentwood DC [1991] 1 AC 398 he himself held that:

The reality is that the structural elements in any building form a single indivisible unit of which the different parts are essentially interdependent … Therefore any defect in the structure is a defect in the quality of the whole and it is quite artificial…to treat a defect in an integral structure, so far as it weakens the structure, as a dangerous defect liable to cause damage to “other property”.

He concluded that the complex structure theory offered no escape from the conclusion that damage to a house which was attributable to a defect in the structure of the house is not recoverable in tort.

Over 25 years have passed since the decision of Murphy v Brentwood and despite numerous decisions we are no closer to clarification. Most examples of the theory being advanced unsuccessfully by claimants relate to negligently constructed foundations of a building. In such cases, the court generally found that the foundations were part of the building so that together they constituted “the thing”. 

One successful example is the Court of Appeal decision of Bellefield Computer Services Ltd v E Turner & Sons [2000] ABC L R 01 28. This involved a dairy farm where a fire spread from one part of the farm to the other due to a negligently constructed compartmental wall. The Court held that while there could be no claim in tort for damage to the buildings or the wall, there could be a claim for damage to the machinery contained within the building, thereby creating a distinction between the structure of the building itself and mechanical components contained within it.

The headline case is now Linklaters v McAlpine & Ors [2010] EWHC 1145 (TCC). The facts were as follows:

The claimant, the well-known law firm Linklaters, appointed a developer to carry out works at their London premises. The developer appointed McAlpine as the main contractor. McAlpine contracted How Engineering Services (HES) to install the chilled water pipework. HES subcontracted Southern Insulation Limited (SI) to install the thermal insulation of the chilled water pipework.

Linklaters claimed against McAlpine in relation to a leak in one of the chilled water pipes.  Linklaters alleged that McAlpine had failed to apply the thermal insulation correctly. McAlpine issued Part 20 proceedings against HES; HES claimed a contribution from SI.

SI applied for summary judgment exonerating themselves. 

HES argued that there was a duty of care which extended to damage to the pipework that was caused by SI’s careless insulation work. SI argued that the duty did not extend that far because one could not differentiate between the two components, being the insulation and the pipework, which go to make up one installation: the insulated chilled water pipework. SI’s argument was thus that damage to the pipework was damage “to the thing itself”.

Mr Justice Akenhead considered examples of the complex structure theory previously cited in judgments, such as a purchaser of a second-hand car that has been fitted with a tyre which, as a result of careless manufacturing, is defective and causes injury to a person or the car. There is no doubt that the negligent manufacturer is liable in tort: the car is not the same thing/structure as the tyre (see D&F Estates at para. 49). He considered that these examples did not satisfactorily deal with components of the offending installation, giving examples such as the reinforcement within a tyre which caused damage only to the tyre. He did not go as far as saying that the previous comments of Lord Bridge/the House of Lords were wrong as a matter of principle, but did not think that they were applying their minds to this specific situation, that is, the extent of the duty of care owed by a subcontractor or supplier who provides a defective element of a structure. 

He held that no decision on this point could be made in the application as there were too many factual uncertainties. The scope of the duty and its dividing lines should be decided by the Court of Appeal.

The Court of Appeal concluded that the insulated chilled water pipework was essentially one thing for the purposes of tort. One would not have chilled water pipework without insulation because the chilled water would not remain chilled, and it would corrode. Thus in this case, the insulation was an integral part of the “chilled water pipework” and hence was the thing itself.

Unfortunately, the Court of Appeal confined itself to this case. The decision did not offer any guidance on how parties should interpret what constitutes “the thing” in other cases. The complex structure theory thus remains fact-critical and to a degree an issue of first impression.

Conclusion

What became clear through the application and the Court of Appeal decision was that each case will turn on its facts. There will always be circumstances when it could be argued that a distinct component, negligently constructed, which as a result caused damage to the larger structure of which it was part, was an entirely separate component and therefore not part of the thing itself.

Using the matter of Bellefield as an example, the machinery contained within the building was held to be separate. One can readily think of examples where an outer structure, perhaps of relatively low value, contains expensive machinery, which although attached to the main structure, could be considered distinct. Further, applying a judgement/fairness test, it does not sit well that a manufacturer responsible for one small element of a larger structure which, as a result of his negligence, causes extensive damage to the rest of the structure, should not be held responsible for that negligence. 

This issue has yet to be determined properly in court and the mixed authority on the subject may deter claimants from pursuing the argument. It seems that as long as you are the manufacturer of the largest and/or most “intrinsic” part of “the thing”, you may be able to make a good argument that you are protected. However, any defendant attempting to run the defence when responsible for only a component of “the thing” should proceed cautiously.

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