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The TCC considers whether an independent design checker owed a duty of care to the main contractor in a construction project

Posted: 25/03/2021

The Technology and Construction Court (TCC) has recently published a judgment regarding whether an independent design checker owed a duty of care in tort to protect the main contractor from ‘pure economic loss’. The judgment is typical of the so-called “classic duty of care issues arising on a complex construction project”, and helpfully includes several considerations that could equally apply to other parties on similar projects.

The case

The case is Multiplex Construction Europe Limited v (1) Bathgate Realisations Civil Engineering Limited (formerly known as Dunne Building and Civil Engineering Limited) (In administration) (2) BRM Construction LLC (3) Argo Global Syndicate 1200 [2021] EWHC 590 (TCC).

This claim concerns the construction of 100 Bishopsgate in the City of London, a substantial construction project. Multiplex was the design and build contractor, and it had engaged Dunne as a sub-contractor for the design and construction of the concrete package works. BRM was appointed by Dunne to carry out part of the design work. Dunne also appointed RNP Associates Ltd to provide a Category 3 design check, as required under the British Standard BS 5975, but also as required under the terms of Dunne’s sub-contract with Multiplex.

Following the point at which Dunne went into administration, an alternative sub-contractor was engaged and uncovered defects in the works subject to RNP’s checks. These defects had to be rectified before work continued. Multiplex’s claim is pleaded at more than £12 million, comprising remedial works, delay, disruption and consequential losses.

There was no contract between Multiplex and RNP. However, Multiplex alleged that RNP owed it certain duties of care and/or obligations in respect of its Category 3 design check. Accordingly, it sought to advance a claim against RNP for the pure economic loss sustained, notwithstanding the lack of any direct contractual link between them. Its incentive for doing so undoubtedly stemmed from the fact that Dunne and BRM were neither solvent nor insured. As it was, RNP (or more accurately, Argo, RNP’s insurer) may be the only party from whom Multiplex might realistically expect any recovery.

The judgment

Multiplex put its case squarely on the basis that RNP owed it a duty of care arising from an ‘assumption of responsibility’. (This is one of the three tests for establishing a duty of care in tort – the other two being ‘the three-part test’, and the ‘incremental test’).

One of the key cases in this regard is Henderson v Merrett Syndicates [1994] UKHL 5; [1995] 2 AC 145, which focused particularly on the structure of the parties’ contractual relationships. This required the court to consider whether it would be inconsistent to find an assumption of responsibility that would have the “effect of, so to speak, short circuiting the contractual structure so put in place by the parties”.

In this case, the contractual structure in place comprised the contract formed directly by Dunne with RNP, and, separately, a sub-contract between Dunne and Multiplex. There was no contractual link between Multiplex and RNP. The court considered it obvious that this was a “consciously created framework of contractual relationships”.

The TCC’s detailed judgment drew upon the plethora of cases addressing the circumstances in which a duty of care in tort could be established. Two significant points arising from this are as follows:

  • it was emphasised that the tests used when considering whether a defendant sued for causing pure economic loss owed a duty of care disclosed no single common denominator by which imposition of duty could be determined. The court would focus its attention on the detailed circumstances of the case and the particular relationship between the parties in the context of their legal and factual situation taken as a whole; and
  • the resounding theme was that although an existence of a contract is not entirely determinative, it is a highly relevant feature. The TCC noted that the closer the situation under scrutiny is to a more conventional or habitual business-like relationship governed by contractual arrangements agreed by the parties, the less likely the law will be to answer the questions concerning assumption of responsibility and fairness, justness and reasonableness in favour of a claimant such as Multiplex who had no contractual relationship with RNP.

The TCC found that RNP did not owe Multiplex a duty of care and/or obligations in respect of the Category 3 check. Crucial to its decision were 15 ‘specific features’ of the factual background, some of which are set out as follows:

  • the consciously created relations between the parties did not include any direct contractual responsibility between RNP and Multiplex;
  • the purpose of the Category 3 check was to comply with the requirements of the British Standard so that Dunne could comply with its own contractual obligations to Multiplex;
  • Multiplex did not know, and was not involved in, what documents had been provided to RNP in order for it to perform its Category 3 check; nor was Multiplex involved in the selection of RNP as the independent design checker, nor the terms it was engaged by Dunne;
  • there was no direct contact between RNP and Multiplex at all prior to the issue of the check certificate; and
  • It would be inconsistent with the contractual structure to make a finding in Multiplex’s favour or, similarly put, it would “short circuit the contractual relations”.

While Multiplex did not seek to establish that a duty of care should be imposed based on the ‘three-part test’, the TCC did add that this would not be a circumstance in which it was ‘just, reasonable or fair’ to impose a duty of care upon RNP. It noted that Multiplex still had a cause of action against Dunne (the party it chose to contract with on highly detailed terms) for the same matters advanced against RNP. The law is not influenced by the fact that the enforceability of that remedy may not be possible due to the financial durability of Dunne.

Take-aways from the case

The judgment is yet another reminder of the court’s reluctance to impose a duty of care in respect of pure economic loss in circumstances where the parties have specifically chosen not to establish a contractual relationship with one another.

In this particular case, the court was guided by the consideration that the facts were not unusual, and the contractual structure was an entirely conventional arrangement in a major construction project.

While each case will have its own specific features that parties can draw upon to seek to establish a relevant duty of care, there will continue to be reluctance from the courts to move from the established position. Ultimately, in order to circumvent this, parties should seek to enter into collateral warranties or to grant rights under the Contracts (Rights of Third Parties) Act 1999. Separately, parties should also ensure that those they engage have appropriate insurance cover in place.

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