The Supreme Court of Bermuda reassesses concurrent liability in contract and tort under Bermuda law (for what it’s worth, and subject to appeal)

In his 25 November 2016 judgment in the case of Carlos Medeiros v Island Construction Services Ltd & Bermuda Hospital Board et al [2016] SC (Bda) 103 Civ, Chief Justice Kawaley of the Supreme Court of Bermuda has reassessed the state of Bermuda law on the issue of concurrent liability in contract and tort.

In summary, Chief Justice Kawaley has held (apparently) that Bermuda common law does recognize concurrent liability in tort where the parties have entered into a contract between them, without drawing any distinction (it would seem) between (a) claims for pure economic loss, and (b) claims for physical damage or personal injury.

In doing so, Chief Justice Kawaley has summarily accepted (it would seem) that the English House of Lords’ decision in Henderson v Merrett (1995) should be treated as representing the true state of Bermuda law, despite the Privy Council’s decision in Tai Hing Cotton Mills v Liu Chong Hing Bank (1986), the Bermuda Court of Appeal’s decision in White v Conyers Dill & Pearman (1994), and without addressing any arguments to the effect that Henderson v Merrett may have been wrongly decided or unpersuasive in the reasoning of the majority.

Hitherto, a conventional application of the doctrine of precedent and stare decisis, in the context of Bermuda’s legal system, would have suggested that Chief Justice Kawaley, being a first instance Bermudian judge, would be bound by judgments of the Court of Appeal for Bermuda and the Privy Council (even if he felt that they had been wrongly decided, or inconsistent with a subsequent decision of the UK House of Lords or Supreme Court).

It would then be a matter for the Court of Appeal of Bermuda, or the Privy Council, to revisit the legal issue, if appropriate, at an appellate level.

However, Chief Justice Kawaley appears to have taken inspiration (once again) from Lord Denning in his approach to the constraints of precedent, by articulating a variety of reasons why the relevant statements in Tai Hing and White v Conyers Dill & Pearman were obiter dicta, rather than ratio decidendi, and therefore not binding on him after all.

Chief Justice Kawaley’s judgment raises a whole host of interesting questions:

  • Will there be an appeal to the Court of Appeal or the Privy Council by the Bermuda Hospitals Board?
  • If so, should there be any intervention in the appeal by third parties with an interest in, and deeper knowledge of, the legal and commercial issues than just the litigants themselves? I have in mind, in particular, the various professional bodies in Bermuda (including, potentially, the Bermuda Bar Council), and/or the professional indemnity insurance market as a whole?
  • Absent an appeal, what precedential value does Chief Justice Kawaley’s judgment actually have, in any event, as a statement of Bermuda law? Whatever Chief Justice Kawaley might have said in his own judgment, his judgment is not binding on other first instance judges in Bermuda (and, indeed, he decided not to follow or apply a 2014 judgment of Mr. Justice Hellman (or refer to various other first instance judgments of his own, as well as Mr. Justice Bell – as he then was, and others), with the result that there are now conflicting first instance judgments in any event), and Tai Hing and White v Conyers Dill & Pearman have still not been overruled by the Court of Appeal or the Privy Council themselves.
  • I would respectfully suggest that the judgment has very limited precedential value, for a number of other reasons. These include the facts that:
  1. it was decided in the context of a strike-out application, the hearing of which was apparently only 1 day;
  2. perhaps as a result, the Court does not appear to have received the benefit of the fullest, or highest quality, legal submissions, or a review of all the relevant authorities and principles involved (one obvious consequence of which is that the Judge did not address the distinction between cases of pure economic loss and cases of physical damage/personal injury); and
  3. while the BHB’s position, in this particular case, appears to have been an unattractive one on its merits, there are many other cases involving professional liability claims in Bermuda where legal and commercial certainty is substantially undermined by allowing a tort claim (especially a claim for pure economic loss) to be asserted despite the existence of a contract. Although this proposition assumes that Henderson v Merrett should not be followed or applied in Bermuda, it is not, I would suggest, an inevitable conclusion that Henderson v Merrett should be followed or applied, if the point is re-argued before the Privy Council. Henderson v Merrett, it may be remembered, was controversial when it was decided. Since then, there have been many cases in the past 20 years in which some of the difficulties associated with the imposition of concurrent liability, even in England, and Wales might justify a fresh appraisal of the issue. And above and beyond that point, Bermuda’s social and economic circumstances (and, indeed, its local statutory framework, including with respect to statutorily implied terms/duties, limitation of liability, limitation periods, contributory fault, and rights of contribution/indemnity) provide a reasonable basis upon which to argue that Bermuda common law should not follow English common law in this particular respect (and that the status quo reflected in White v Conyers Dill & Pearman should be maintained).
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