204 Construction contracts

Quite apart from the designer’s potential liability to the client for breach of contract, there is the possibility that defective design may lead to personal liability for breach of Building Regulations.

In the UK, the Construction (Design and Management) Regulations 2015 impose severe and wide ranging obligations on all designers, the breach of which carries criminal penalties. The most important of these obligations is that designers must do everything reasonably practicable to avoid danger to the health and safety of anyone working on the site, or affected by the work. For example, this obligation extends to anyone cleaning the finished project, or affected by cleaning, and further to anyone demolishing the facility when it comes to the end of its life. There are additional obligations to co-operate with other designers and with the Principal Designer and to ensure that the client is aware of any health and safety obligations.

13.3LEGAL RESPONSIBILITY FOR DESIGN

Whether a person can be liable for breach of contract in respect of a design fault is, in theory at least, a simple one to answer. It depends upon the terms, express and implied, of the contract under which the design function has been carried out. However, as we shall see, the application of this straightforward principle is not always obvious.

13.3.1Architect

The overall responsibility for the design of the project will usually be borne by the architect, where one is involved. Indeed, the basic rule is that the architect cannot delegate any part of the design work. Such delegation, without authority, will render the architect personally responsible for any defects in the design that arise out of negligence.

It was on this basis that liability was imposed upon an architect in Moresk Cleaners Ltd v Hicks.15 The claimants in that case, who wanted an extension to their laundry, employed the defendant architect for the project, which involved designing a reinforced concrete structure on a sloping site. Feeling that this was beyond his competence, the architect gave the job to a contractor on a design and build basis. When the design proved defective, the architect argued that either he had implied authority to delegate specialist design tasks, or he had acted merely as the employer’s agent in employing the contractor. However, it was held that the architect was liable in respect of the design, which he had been wrong to delegate. The judge stated that an architect who lacks the ability or expertise to carry out part of a design job has three choices:

to refuse the commission altogether;

to persuade the employer to employ a specialist for that part of the work; or

15 (1966) 4 BLR 50.

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to employ and pay for a specialist personally, knowing that any liability for defective design can then be passed along the chain of contracts.

Notwithstanding the basic principle applied in Moresk, the complexity of modern construction technology has led to an increased dependence on specialists at both design and construction stages of a project. As a result, authority for an architect to delegate specified parts of the design will frequently be given by the employer, and it may even be implied from the circumstances of the particular case. In Merton LBC v Lowe,16 for example, an architect was held entitled to appoint a specialist sub-contractor who specialized in the use of a certain proprietary ceiling.

In recommending the appointment of a particular specialist (or, for that matter, a particular contractor), architects owe their clients a duty to use reasonable care and professional skill. They will not be automatically responsible for the defaults of the people they recommend. But if their recommendation is negligent, they may become liable for their clients’ losses. In Pratt v George J Hill Associates,17 for instance, a contractor who was strongly recommended by the defendant architects proved to be highly unsuitable. He became insolvent leaving a trail of defective work. It was held that the defendants were liable to the client for the money she was unable to recoup from the contractor.

Even assuming that architects act reasonably in recommending a specialist, this is not the end of their duty to the client. The Court of Appeal has summed up the legal position as follows:

In relation to the work allotted to the expert, the architect’s legal responsibility will normally be confined to directing and co-ordinating the expert’s work in the whole. However ... if any danger or problem arises in connection with work allotted to the expert, of which an architect of ordinary competence reasonably ought to be aware and reasonably could be expected to warn the client, despite the employment of the expert, and despite what the expert says or does about it, it is ... the duty of the architect to warn the client. In such a contingency he is not entitled to rely blindly on the expert, with no mind of his own, on matters which must or should have been apparent to him.18

13.3.2Contractor

As already mentioned, traditional methods of procurement regard design as the exclusive province of the architect, plus such specialists as are necessary. Design and build or package deals may be different but, under general contracting, the contractor’s responsibility is merely to build in strict accordance with the designer’s specification. This frequently includes a considerable measure of detail as to the quality and standards of materials and workmanship. Thus one might expect the contractor to be free from any form of responsibility for design.

16(1981) 18 BLR 130.

17(1987) 38 BLR 25.

18Investors in Industry Ltd v South Bedfordshire DC [1986] 1 All ER 787, 808.

206 Construction contracts

This indeed does represent the basic legal position, as appears from the case of

Mowlem v British Insulated Callenders Pension Trust.19 This concerned a contract let under JCT 63, where a performance specification in the bills of quantities purported to impose a measure of design responsibility on the contractor. It was held that this was ineffective because of clause 12(1) (now clause 1.3 of JCT SBC 11), which prevents anything contained in the bills from overriding the contract conditions.

In theory, then, a contractor is not involved in design in any way that may create legal liability. In practice, however, even under a general contracting form of contract things are not quite so clear-cut. Contractors and sub-contractors tend to take on a measure of design responsibility in the following ways:

Where the contract documents do not give sufficiently fine detail, a contractor who exercises discretion is effectively taking on a design function. This may shade into questions of ‘workmanship’, or it may be very small-scale, such as a decision on how far apart to place fixing screws. In any event, it appears that a contractor who uses initiative in such circumstances, instead of seeking an architect’s instruction, will incur responsibility for any defects that ensue.

Contractors and sub-contractors are often asked, as a project progresses, for their opinion as to the best means of overcoming a particular problem that has arisen. There can be no doubt that, if such advice is given (at least where the person giving it is a specialist), a duty of care will arise.

Where contractors, sub-contractors or suppliers are required to produce drawings for the architect’s approval, any matters of design that are included may be a source of liability. This is despite the possibility that the architect may also be liable.

Most importantly, it has been held by the Court of Appeal that a term will

be implied in some, if not all, building contracts, requiring the contractor to warn the employer of any defects in the design.20 The extent of such an obligation, which is based on the contractor’s duty to exercise reasonable skill and care, has not yet been fully worked out by the courts; it has so far been applied only to defects of which the contractor is actually aware (as

opposed to those of which the contractor ought reasonably to be aware) and only where the defects in question are dangerous.21

Apart from these hidden forms of design liability, there are of course certain situations in which a contractor specifically undertakes responsibility for the design as well as the construction of a building. If the parties do indeed intend their relationship to be on a design and build or package deal basis, then it is important to adopt an appropriate form of contract. Such contracts would include JCT DB 11, or (where only part of the work is to be contractor-designed) JCT SBC 11 with its

19(1977) 3 Con LR 64.

20Plant Construction plc v Clive Adams Associates and JMH Construction Services Ltd [2000] BLR

21See Equitable Debenture Assets Corporation v Moss (1984) 2 Con LR 1; Victoria University of Manchester v Wilson & Womersley (1984) 2 Con LR 43; University Court of Glasgow v Whitfield

(1988) 42 BLR 66; Lindenberg v Canning (1992) 62 BLR 147.

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incorporated contractor’s designed portion (CDP Works), or NEC3 where the extent of design is explained as part of the works information, or the FIDIC 1999 Silver Book. However, as we have already noted, an important drawback from the point of view of an employer is that the JCT forms limit the contractor’s design liability to ‘reasonable care and skill’ level. There is no warranty that the design will be fit for its intended purpose.

13.3.3Sub-contractor

Even more common, perhaps, than cases of ‘contractor’s design’ are cases in which part or all of the design is allotted to a specialist as sub-contractor. Where the main contract is JCT SBC 11 and the specialist in question is a sub-contractor, the employer is well advised to enter into a collateral warranty with the subcontractor in order to provide a direct contractual warranty between the subcontractor and employer in respect of design matters. It should be borne in mind that the sub-contractor, under the appropriate form for this warranty agreement, typically does not warrant that the sub-contract works will be fit for their purpose, but merely that reasonable skill, care and diligence will be exercised regarding their design. In addition, the agreement provides that the sub-contractor owes the same obligation to the employer as to the main contractor, subject to certain exceptions which are stated in the agreement.

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