Category Archives: Civil Engineering

Construction: Adjudicator’s powers survived “binding settlement”

Section 108 of the Housing Grants Construction and Regeneration Act 1996 says:

“(1) A party to a construction contract has the right to refer a dispute arising under the contract for adjudication under a procedure complying with this section.”

Where there is a dispute as to whether there has been a full and final settlement agreement between the contractual parties does the dispute arise “under” the construction contract or under the alleged settlement agreement or both?

In J Murphy & Sons Ltd v W Maher and Sons Ltd [2016] Murphy issued proceedings seeking a declaration that the adjudicator had no jurisdiction to entertain a dispute arising out of an alleged final settlement since:
– the alleged settlement agreement was a standalone agreement and
– there was no adjudication agreement applicable to that agreement and
– the disputed claim did not arise “under” the original sub-sub-contract.

The High Court said that adjudicator had jurisdiction because the adjudication clauses in the sub-sub-contract survived and were broad enough to cover a dispute arising under the alleged settlement agreement because that later agreement undoubtedly arose in connection with the original sub-sub-contract.

“A dispute as to whether all or some of the alleged entitlements which one contractual party has against the other has been settled in a binding way arises “under” the original contract.”

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Failure to serve Pay Less Notice did not prevent final account being challenged for all time

In Paice & Anor v MJ Harding (t/a MJ Harding Contractors) [2015] the contractor argued that:

1. if an employer wishes to pay less than the sum stated in the contractor’s account under clause 8.12 of the building contract, which incorporated the JCT Intermediate Form 2011 edition, it must issue a “Pay Less Notice”.

2. So the employer could only set aside the adjudicator’s decision to award the sum stated in the contractor’s clause 8.12 account in subsequent litigation by showing that its Pay Less Notice was validly served in time.

3. So if the employer failed to to serve a valid Pay Less Notice in time, it would deprive the employer of the right to challenge the contractor’s account.

The High Court pointed out that this would apply for all time even if the contractor had seriously overvalued his account and that the contractor would thereby obtain a windfall that the employer could never recover.

That would subject interim certificates to a more draconian regime than that which applies to the Final Certificate.

In the case of Final Certificates, if the employer commences adjudication or litigation within 28 days of it being issued, it ceases to be conclusive in respect of the matters raised in the litigation or adjudication (clause 1.9).

The High Court said that what would be due under clause 8.12.5 would be the “… amount properly due in respect of the account”.

In this case the adjudicator had not determined what was “properly due”.

He had decided that, in the absence of a valid Pay Less Notice, the employer had to pay the amount stated in the contractor’s account within 28 days.

The Court of Appeal has now backed the High Court. They said the employer could challenge the valuation arrived at on the contractor’s final payment application by applying for a further adjudication even though they had failed to issue a proper payment or Pay Less Notice.

The court said the employer’s failure to serve a Pay Less Notice had limited consequences. These were mainly that the employer had to pay the total shown on the contractor’s account and dispute the figures later. The employer had paid that amount, as the previous adjudicator had ordered. The employer could now proceed to adjudication in order to ascertain the true value of the contractor’s claims and of the employer’s counter-claims. So the High Court Judge had got this right.

So whilst the employer must comply with the adjudicator’s decision in the meantime by paying the sum ordered, it remains open to the employer to initiate further adjudication or litigation to decide what sum is properly due in respect of the contractor’s account.

Clearly the employer will want to avoid this drain on cash flow by serving the Pay Less Notice in time, especially if there are doubts as to the continuing solvency of the contractor when it comes to refunding the over payment.

This case helps in respect of final account payments. Here, a failure to serve a payment or Pay Less Notice will not usually prevent an employer from later challenging the true value of the work through adjudication or court proceedings.

The Court of Appeal has left the position in regard to interim payments less clear.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Adjudication: Linked issues formed single dispute

In Whitney Town Council v Beam Construction (Cheltenham) Ltd [2011] Akenhead J gave guidance as to one way of identifying whether or not two separate disputes had been invalidly referred to an adjudicator:

“A useful if not invariable rule of thumb is that if a disputed claim No 1 cannot be decided without deciding all or part of disputed claim No 2, that establishes such a clear link and points to there being only one dispute.”

In that case a claim for a final account and a claim for the financial consequences of termination were ruled part of a single dispute.

In Wycombe Demolition Ltd v Topevent Ltd [2015] an adjudicator awarded £113,666.63, with interest and his fees and expenses due from the employer (“Topevent”) to the claimant contractor (“Wycombe”).

Topevent complained that the adjudicator had no jurisdiction because more than one dispute was referred to him. The adjudicator was addressing both the issue of valuation and, what they said, were separate issues arising out of the termination/cessation of the works, and that they were two entirely separate disputes.

The High Court said it was plain from the Notice of Adjudication that the dispute between the parties concerned the outstanding payment due to Wycombe, following the cessation of works on site.

That payment was made up of a number of elements, including both the value of variations, and the financial consequences of termination and demobilisation.

There was a claim for one final payment comprising all outstanding sums, including the £4,000, for “wrongful termination of contract.” Wycombe wanted one final payment so as to be able to close their books on this contract. That could only be achieved if the adjudicator addressed all their outstanding claims. So there was a clear link between their rejected claim for the cost consequences of the “wrongful termination”, and the overall claim for all sums outstanding. They were not separate disputes.

Secondly Topevent’s representative had written a letter saying that the valuation of Wycombe’s work could not be carried out properly unless the amount of incomplete work was taken into account. That letter made a direct link between those two issues.

Accordingly, both elements of the claimed payment were part of a single dispute. They were simply different components of the total sum in dispute.

Even if there were two separate disputes paragraph 11.1 of the TecSA Rules which were the basis of the adjudicator’s appointment made it clear that the adjudicator could deal with “any further matters which all Parties agree should be within the scope of the Adjudication”.

The disputes concerned with the valuation of the work, and the dispute about termination, were addressed without qualification by both parties during the adjudication.

Indeed, Topevent’s counterclaim of approximately £180,000 was based on the latter. But Topevent had never suggested that the termination dispute should not be dealt with in the adjudication. In fact, they wanted it so decided.

So if were two separate disputes, Topevent’s acquiescence in, and failure to object to, the adjudicator dealing with both disputes, gave him the necessary jurisdiction anyway.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Operation of extension of time provisions not pre condition to liquidated damages claim

Can it be said in absolute terms that any failure on the part of a Contract Administrator (“CA”) to operate the extension of time provisions under a building contract prevents a claim for liquidated damages?

In the High Court case of Henia Investments Inc v Beck Interiors Ltd [2015] the Claimant, Henia Investments Inc (the “Employer”) sought declarations concerning its building contract (“the Contract”) with Beck Interiors Ltd (“the Contractor”) in relation to an Application for an interim payment that the Contractor had issued.

The Contract was the JCT Standard Building Contract without Quantities 2011 as amended.

One of the issues was whether a failure on the part of the CA to make a decision in respect of a contractually compliant application for extension of time rendered the CA’s Non-Completion Certificate invalid or otherwise prevented the Employer from deducting and/or claiming liquidated damages?

The court actually decided the case on other grounds but as a non binding aside it said the language of the principal liquidated damages provision, Clause 2.32, did not suggest that the CA fulfilling its duty to operate the extension of time provisions was a condition precedent to the Employer’s entitlement to deduct liquidated damages.

It seemed odd that, if there was to be a condition precedent that no liquidated damages should be payable or allowable unless the extension of time clauses have been operated properly, it was not spelt out as such.

This was more especially the case as Clause 2.32.1 expressly imposed two other conditions precedent, namely the need:

– for the CA to have issued a Non-Completion Certificate for the Works and

– for the Employer to have notified the Contractor before the date of the Final Certificate that he may require payment of, or may withhold or deduct, liquidated damages.

The lack of any precondition as to the extension of time clauses having been operated properly could be explained commercially by the facts that:

1. There can be serious arguments between the Contractor and the CA (as there were here) not only as to whether delays have occurred by reason of which extensions of time can be granted but also as so as to whether the Contractor has properly complied with the notification and particularisation requirements required by Clause 2.27.

2. The extension of time application may range from being a wholly good to a hopeless one or it may relate to the whole of the delay or only a very small part.

In short, there may turn out to be no or only a limited entitlement to an extension of time, leaving intact all or most of the Employer’s liquidated damages entitlement.

3. The Contractor is not left without remedies which, in the short term, it can pursue through adjudication and in the long-term final dispute resolution processes.

It can challenge the refusal to grant an extension and/or the deduction of liquidated damages and, in the case of adjudication, secure relief if it can persuade the adjudicator that it is appropriate and that the Employer and the CA are wholly or partly in the wrong.

It could be argued that it is unfair on the Contractor to have liquidated damages deducted at a time when the CA has failed to consider extension of time claims. The answers to that were:

A the ready availability of those short and long-term remedies

B the existence of numerous potential defaults on the part of both Employer and Contractor which could cause serious financial consequences for the other and

C the mere fact that unfairness could happen in the short term does not necessarily or obviously require clauses to be interpreted to be conditions precedent to the ability of either party to secure such financial advantage in that short term.

So a failure on the part of the CA to operate the extension of time provisions did not preclude the Employer from deducting liquidated damages where the explicit conditions precedent in Clauses 2.32.1.1 and 2.32.1.2 have been complied with.

However under other building contracts, if the effective operation of extension of time provisions is clearly a condition precedent it may be a precondition to the Employer’s claim for liquidated damages.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Construction: paperwork not clear enough to amount to interim payment applications

In the High Court case of Caledonian Modular Ltd v Mar City Developments Ltd [2015], the defendant denied liability for any part of the amount awarded by an adjudicator. The adjudicator’s decision turned on the date on which the claimant had notified the defendant of the sum due under the letter of intent for the construction project.

On the claimant’s view, the relevant interim payment application was made on 13 February 2015. If that was right, it was common ground that the defendant’s payless notice of 25 March 2015 was out of time and invalid.

But the defendant said that the documents of 13 February were not a claim for or notice of the sum due for payment, and that the claimant’s claim was not made until 19 March 2015. If that view were correct, it was common ground that the defendant’s payless notice of 25 March would be within time and would have provided a complete defence to the claimant’s claim.

If the documents of 13 February did not constitute a fresh application for an interim payment, or a valid payee’s notice no further sums were due from the defendant to the claimant and the adjudicator had been wrong to conclude to the contrary.

The court said:

1. Neither the covering email of 13 February 2015, nor the three documents enclosed with it, stated that they were a new application for an interim payment. The documents said variously that they were a ‘final account application summary’ and an ‘updated account’.

2. A later invoice of 19 March 2015 did not say that it was in any way a default payment notice or that the payee’s notice had originally been provided on 13 February 2015. If that had been the claimant’s position, they would have said so in clear terms.

3. In between the email of 13 February and the invoice of 19 March, the defendant expressly asked the claimant what the 13 February documents were. Unsurprisingly, the defendant was confused as to what, if anything, they were supposed to do with those documents. The claimant’s explanation did not even begin to suggest that the documents of 13 February were in fact an entirely new interim application, or that a fresh claim had been made less than a fortnight after the last, in the middle of the month and not at the month’s end.

In all three documents that the claimant relied on as being applications for interim payment, the claimant had had the opportunity to say clearly that those documents were what they now said they were, namely a new application for an interim payment and/or a payee’s notice, but the claimant failed to do so.

This omission was significant. It suggested that the claimant’s case now, that the documents were in fact a fresh claim, was “something of an afterthought.”

The only other alternative explanation was that the claimant believed that it was in its best interests to be “studiedly vague” about the nature of the documents, so as to set up precisely the argument they advanced successfully in winning the adjudication.

On any view, if they intended to serve a valid payee’s notice on 13 February, they could and should have said that that was what they were doing.

They were even asked a question which, if that had indeed been their intention, required only that simple answer. It was not provided.

Accordingly, the court granted a declaration that the documents of 13 February 2015 were not a valid application for an interim payment, or a valid payee’s notice and that no sums were due in consequence of the adjudication.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Adjudication payment triggered implied contractual right to recover overpayment

Adjudication in construction disputes is designed to provide provisional resolution of disputes to preserve cash flow but the outcome is subject to final determination in later legal proceedings.

Provisions are implied into a construction contract under section 108(5) of the Housing Grants, Construction and Regeneration Act 1996, read with the Scheme for Construction Contracts (England and Wales) Regulations 1998 (“the Scheme”).

By providing that the decision of an adjudicator is binding and that the parties shall “comply with it”, paragraph 23(2) of the Scheme makes the decision enforceable for the time being. It is enforceable by action founded on the contractual obligation to comply with the decision combined, in a normal case, with an application for summary judgment.

The limitation period for enforcement will be six years from the adjudicator’s decision. But the decision is only binding and the obligation to comply with it only lasts “until the dispute is finally determined” in one of the ways identified.

By use of the word “until”, paragraph 23(2) appears to contemplate that there will necessarily be such a determination. The short time limits provided by paragraph 19(1) also indicate that adjudication was envisaged as a speedy provisional measure, pending such a determination.

But there is nothing to prevent adjudication being requested long after a dispute has arisen and without the commencement of any proceedings.

Also its unlikely that the Scheme imposes on either party any sort of obligation to start court or arbitration proceedings in order to confirm its entitlement.

Either or both of the parties might understandably be content to let matters lie.

The Supreme Court in Aspect Contracts (Asbestos) Ltd v Higgins Construction Plc (2015) has now provided some guidance as to when those proceedings must be brought and has come to some conclusions which could have bizarrely inconsistent results.

In that case Aspect had failed to pick up some asbestos on a survey which later impeded and added cost to Higgins’ contruction work. Higgins were awarded over £600,000 adjudication which was 75% of their claim. Aspect paid.

The contract was not entered into as a deed so the limitation period for bringing proceedings for breach of it was 6 years rather than 12 years from breach.

More than 6 years after their breach of contract Aspect sought recovery of monies they had paid Higgins under that adjudication award. However they issued proceedings for it within 6 years of paying it.

Aspect rested its claim on an implied term, alternatively in restitution.

The implied term was that:

“in the event that a dispute between the parties was referred to adjudication pursuant to the Scheme and one party paid money to the other in compliance with the adjudicator’s decision made pursuant to the Scheme, that party remained entitled to have the decision finally determined by legal proceedings and, if or to the extent that the dispute was finally determined in its favour, to have that money repaid to it.”

The court said it was a necessary legal consequence of the Scheme implied by the 1996 Act into the parties’ contractual relationship that Aspect must have a directly enforceable right to recover any overpayment to which the adjudicator’s decision had led to, once there had been a final determination of the dispute.

The obvious basis for recognising that right was by way of implication arising from the Scheme provisions which were themselves implied into the construction contract.

If and so far as the court’s decision abolishes the basis on which the payment was made an overpayment is, retrospectively, established. Repayment must then be required either by contractual implication or, if not, then as an independent restitutionary obligation.

Since Aspect’s cause of action arose from payment and was only for repayment, then whether it was analysed as in implied contractual terms or restitutionary terms, it was a cause of action which could be brought at any time within six years after the date of payment to Higgins on 6 August 2009.

Higgins complained that this gave Aspect a one-way throw and undermined finality. By delaying commencement of the present claim until 2012, Aspect can sue to recover all or part of the £658,017 paid to Higgins, without having the risk of ending up worse off, since Higgins was barred by limitation from pursuing the £331,855 balance of its original claim.

That, however, resulted from Higgins’s own decision not to commence legal proceedings within six years from April 2004 or early 2005 and |Higgins has assumed the risk of not confirming (and foregoing the possibility of improving upon) the adjudication award it had received.

Adjudication had been conceived as a provisional mechanism, pending a final determination of the dispute.

Though it was understandable that Higgins should wish matters to lie as they were following the adjudication decision, Higgins could not ensure that matters would so lie without either pursuing legal or arbitral proceedings to a conclusion or obtaining Aspect’s agreement. In the absence of Higgins doing that there would be finality.

This post is made out of general interest. It does not replace the need to get bespoke legal advice in individualcases.

VAT: University building was extended rather than continued so no zero rating

Section 30(2) of Value Added Tax Act 1994 (“VATA”) provides that a supply of goods or services is zero-rated if the goods or services are of a description for the time being specified in Schedule 8 VATA.

Item 2 in Group 5 of Schedule 8 VATA specifies:

The supply in the course of the construction of:—

(a) a building … intended for use solely for … a relevant charitable purpose …

of any services related to the construction other than the services of an architect, surveyor or any person acting as a consultant or in a supervisory capacity.

Note 16 to Group 5 provides as follows:

For the purpose of this Group, the construction of a building does not include:-

(b) any enlargement of, or extension to, an existing building …”

In the First-tier Tribunal (Tax) case of York University Property Company Ltd v Revenue & Customs [2015] it was decided to build a chemistry building in two phases due to an initial lack of funds to complete the whole building. At the time phase 1 was completed, it was not known when phase 2 would be completed.

Phase 1 was a three-storey building shaped like a rectangle, with a sacrificial wall on one of its short sides.

A donation was made to the University, in 2010, enabling phase 2 to be completed. The University wanted the phase 2 works to be zero rated for VAT.

Phase 2 was in the same style and was of similar size and shape to phase 1, and was joined to phase 1 where the sacrificial wall previously stood.

Following completion of the phase 2 works, there was one single three-storey rectangular building that was double the length of the phase 1 construction. Without looking closely at the building it would now be impossible to tell that the two parts of the building were constructed at different times.

There was no disagreement between the parties that both the phase 1 and phase 2 works related to “a building … intended for use solely for … a relevant charitable purpose” within the meaning of this provision, and HMRC accepted that the phase 1 works fell to be zero-rated on that basis.

Of the precedent cases there had been only one where a second phase of works was found to be a continuation of the original development rather than an extension to a completed building.

The tribunal said the fact that the phase 1 construction contained a sacrificial wall in anticipation of the phase 2 works was of marginal relevance.

In one of the precedent cases the first phase single storey wing included foundations and steel beams of sufficient strength to support the additional storey to be added in phase 2, but this had not affected the tribunal’s conclusion that it was an enlargement of an existing building rather than a continuation.

The only precedent case at all supportive of the University’s argument, that phase 2 was a continuation, was different as it had rested on the finding that the kitchen and laundry block built in the second phase (included in the planning consent) was integral to the development, in that the hospital could not function without it. There had been only an 18 month gap between completion of the first phase and the commencement of the second phase. Moreover, in that case the Commission for Social Care Inspection had required that the kitchen and laundry facilities be built, and had granted an extension of time for that to be done.

In this case the Chemistry Department’s vision could not be achieved until phase 2 was completed, but there was no suggestion that the phase 1 construction could not function and be used for chemistry research until phase 2 was completed.

Phase 1 did so function, as did the Chemistry Department as a whole, for some 9 years until phase 2 was completed in 2013.

Phase 1 could have continued to so function indefinitely, without phase 2. There was no suggestion that any public authority required phase 2 to be completed within any stipulated timeframe, or at all.

So phase 2 of the building was, for purposes of Item 2 in Group 5 of Schedule 8 VATA, an enlargement of or extension to phase 1, rather than a continuation of the original development of the building and so not eligible for zero rating.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Agreed adjudication procedure could by agreement make final and binding decision

A Scheme Construction Adjudication under Section 108(3) of the Housing Grants, Construction and Regeneration Act 1996 (“Construction Act”) carries with it an implicit proviso that, unless expressly stated in the Construction Contract or agreed between the parties to the contrary, the adjudicator’s decision will be only temporarily binding on the parties, in the sense that they must comply with it, and the court will enforce it, irrespective of any complaints about its correctness or other issues which the losing party may wish to raise, unless and until the dispute is finally resolved. That final resolution may be by legal proceedings, by arbitration (where applicable) or by agreement.

In the High Court case of Khurana & Anor v Weber Construction Ltd [2015] the right of adjudication under the Scheme did not statutorily apply to the construction contract, because under Section 106 of the Construction Act the right of adjudication under the Scheme does not statutorily apply to construction contracts with residential occupiers for operations on a dwelling house.

Nonetheless in a letter the Defendant’s solicitor expressly proposed, and in their written response the Claimant’s solicitors expressly agreed to, the appointment of a quantity surveyor under the Scheme under procedures to be “conducted in accordance with” the Scheme “save that the decision of the independent structural quantity surveyor shall be binding on the parties.”

The court said both parties must be taken to have been aware that a Scheme adjudication decision would be only temporarily binding, unless expressly stated to the contrary. The words “save that the decision … shall be binding on the parties” could only sensibly have been intended to derogate from that default position.

The reasonable observer could only have concluded that those words in the Defendant’s solicitor’s letter clarified that unlike a Scheme adjudication, the adjudicator’s decision would be permanently, as opposed to temporarily, binding on the parties if their proposal was accepted.

The letter made it plain that the losing party to the proposed adjudication could not subsequently elect to re-run the whole dispute afresh in legal proceedings if that proposal was accepted (which it was by the Claimant’s solicitor’s letter).

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Pace and timing of adjudication did not deny natural justice

The courts will usually enforce the decision of an adjudicator.

There may be exceptions where a properly arguable case can be made out that there has been a breach of natural justice, or that the adjudicator lacked the necessary jurisdiction to reach the decision.

In CSK Electrical Contractors Ltd v Kingwood Electrical Services Ltd [2015], the defendant raised both challenges:

The natural justice challenge was based on the adjudicator’s timetable being too quick and therefore overstretching their resources.

This argument had been unsuccessfully raised in earlier cases.

The High Court said adjudication is a “rough and ready process” because it has to take place within a very strict timetable.

That often puts the responding party under particular pressure.

That was “a fact of adjudication life”. It is “inherent in the whole process”.

Here, the claimant testified that they had proper cash flow reasons for pursuing the claim at the time they did.

After all the importance of cash flow was the principle that underlies the adjudication process.

The timetable the adjudicator had set down made the best use of the 28 days that was available.

Though it took place over the Christmas/New Year period, the defendant had held the disputed invoices since the middle of November and so must have known what points it intended to make in the adjudication. Otherwise what was the basis for the defendant saying that the claims would be ‘strenuously defended’ on 18 December 2014? Also there had been no great complexity about the disputes between the parties.

The only real point of significance was whether or not the defendant had served on the claimant a valid “payless notice”. That was relatively straightforward and well capable of determination within the 28 days.

Lastly the defendant could have asked the adjudicator for further time but the defendant failed to do that.

That strongly suggested to the judge that this challenge was not based on something that was of great concern to the defendant at the time, but rather “on an attempted comb through the authorities on adjudication, to try and find a reason after the event for avoiding making payments to the claimant.”

So the defendant’s challenge to the adjudication, on this ground, was unsuccessful. Indeed it was on all the other grounds as well.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Structural Engineers not liable for Contractor’s negligence

Construction professionals’ duty to warn may be analysed as follows:

1. We must first decide what the scope of the contractual duties and services were.

The scope of the duty to warn and the circumstances in which it may arise should be determined against the context of what the professional person was contractually engaged to do.

2. The professional must exercise reasonable care and skill.

That duty must be looked at in the same context.

The duty to warn is a corollary of the duty to act with the skill and care of a reasonably competent person in that profession.

3. The existence and extent of that duty will depend on all the circumstances.

4. The duty to warn can arise when a careful professional ought to have known of a danger either to life and limb or to property having regard to all the facts and circumstances. It does not have to be an obvious and significant danger.

5. Any duty to warn may well not be engaged if all there is a possibility in future that the contractor may not do the works properly, or of some other danger.

Generally, the engineer or architect is required to design the permanent works and the contractor is responsible for the design of the temporary works necessary to facilitate the permanent works.

But it will always be necessary to consider what services the professional is engaged to provide. There may well be contracts for professional services in which the engineer is employed to consider and approve temporary works’ proposals and, if so, that must be done with reasonable care and skill.

On other contracts the engineer may be engaged to supervise or inspect the works and, also, that will have to be done with reasonable care and the scope of that duty may entail checking how safely the works are being carried out by the contractor.

In the High Court case of Goldswain & Anor v Beltec Ltd (t/a BCS Consulting) & Anor [2015] the Claimants had a leasehold ground floor flat with a cellar which they decided to convert into living accommodation by underpinning the outer walls to create more height. They retained professional engineers, Beltec Ltd (“Beltec”).

Beltec was employed to provide the permanent works design for the excavation of the basement, the underpinning of the perimeter walls and the provision of support to the internal walls and structure as necessary.

That the obligation related and was limited in scope to design was supported by the Letter of Instruction:

“This letter instructs [Beltec] to carry out structural designs…”

This pointed strongly to the scope of the services not covering any supervision or inspection of the contractor. There was nothing referring to any involvement with the contractor.

Later AIMS Plumbing & Heating Ltd (“AIMS”). AIMS installed the underpinning. Following increasing amounts of cracking in the superstructure the building collapsed.

By the legal proceedings AIMS was believed to be insolvent.

The court said, in the contractual context what were the Claimants contractually entitled to expect from Beltec?

Beltec was required to provide the Claimants with the structural designs with reasonable care and skill.

The main issues were whether:

1. the drawing which showed the light well at the rear with the doorway into the light well, created a weakness or risk such that a competent contractor would not necessarily have appreciated it and,

2. therefore whether Beltec should have provided for some way of overcoming such weakness or risk.

No professional negligence in relation to the design and specification of the rear light well or otherwise had been established.

All Beltec had to do was to tell AIMS to follow the requirements set out on the drawings which had been done.

It had not been established on any balance of probabilities that Beltec should have realised that AIMS was completely out of its depth or not competent to do the job which it had been employed to do. They had believed that a company like AIMS would not necessarily need to have a temporary works designer if it had the experience in-house. There was no evidence that AIMS did not have that experience in-house.

The overwhelming probability was that AIMS had failed to carry out their work with reasonable care and skill or in compliance with the drawings which it was provided with. The breaches of contract on the part of AIMS had undoubtedly caused the collapse.

The primary mechanism of failure was a horizontal or sliding movement of the base of the flank wall. There was no propping of the flank wall and the specified sequence had not been followed, particularly in relation to the need to form the subjacent floor slab and kicker under and next to each of the pins.

Although Beltec had provided no specific guidance on how the base slab sections to the pins in the various corners were to be constructed, that was something which could reasonably be left to the contractor to work out, since the contractor had responsibility for how the works were done.

Any competent contractor could and would be expected to read the drawings and correctly interpret and implement the correct thicknesses.

Competent engineers, exercising reasonable care and skill, would have readily assumed that builders would read and understand the drawings in that way and the order in which the works were to be done.

It was unnecessary to decide whether or not AIMS would have followed more detailed advice or design specifications in relation to propping and the like.

Anyway, there was insufficient evidence to establish on the balance of probabilities that AIMS would have followed such advice or further specification because AIMS ignored such advice as was given.

So even if the court had found material breaches of duty on the part of Beltec, it is unlikely that it would have found an adequate causal link between such breaches and the collapse because the intervening and immediate cause of the damage and loss would have been the contractor’s negligence.

So the Claimants’ case against Beltec was dismissed and AIMS was found liable to the Claimants for damages of £287,754.55 – not that that would have been any consolation to them.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.