A Supreme Court ruling has highlighted the danger of contractual terms that impose absolute building performance liabilities on designers that go beyond their normal professional obligations to exercise reasonable skill and a duty of care.
The ruling has emerged from litigation between MT Højgaard and client E.ON for the design and installation of foundation structures for offshore wind turbines. Grouted connections in the foundations failed, and while the contractor had followed the international standard for such work (which subsequently turned out to be flawed), fitness-for-purpose obligations set out in the Technical Requirements required the foundations to have a ‘lifetime of 20 years in every respect’.
The Supreme Court’s ruling that the literal meaning of the Technical Requirements must stand, despite obligations elsewhere in the contract for the exercise of reasonable skill and care and compliance with an international standard, is seen as having important implications for future ‘duty of care’ challenges.
‘The decision is a further illustration of the basic rule that, when interpreting the relationship between contracting parties, the Court’s primary regard will be to what is recorded in writing, and hence a further illustration of the importance of contractual terms being properly defined and properly highlighted,’ says Mark Klimt, partner at business law firm DWF and a specialist practice consultant for RIBA members.
‘The industry has long been concerned about the volume of data that can be transmitted electronically and of the resultant “information dump”, with a party being fixed with wide-ranging knowledge and responsibility as a result.’
Klimt warns that the confirmation provided by the Højgaard decision represents a particular danger for architects and other consultants under Design & Build arrangements, where a seemingly innocent sentence requiring the architect to assume the D&B contractor’s responsibilities insofar as they impact on the architect’s services, can be very wide-ranging in its effect.
‘It can also place the architect outside the protection of its professional indemnity insurance if, as in the Højgaard case, it involves an assumption of responsibility for fitness for purpose,’ Klimt warns.
Dieter Bentley-Gockmann, director at EPR Architects, says architects should be on the lookout for any terms or references that may impose duties or obligations beyond architects’ common law obligation to exercise reasonable skill and care. They should be particularly wary of any expressed or implied terms imposing duties with respect to absolute performance criteria.
‘As in this case, it is not unusual for architects’ appointments to incorporate references to design codes, standards, third party agreements or schedules and appendices, which taken together may create conflicts, inconsistencies and uncertainty regarding a designer’s specific obligations,’ says Bentley-Gockmann.
He warns that it has been known for clients to seek to impose onerous fitness for purpose duties on architects, particularly contractor-clients who may be seeking to appoint their design team on terms back-to-back with the terms of the building contract.
Clients may justify this, says Bentley-Gockmann, on the basis that any limitation clause regarding the duty to exercise reasonable skill and care in the delivery of the services would bite, thereby relieving the architect of any absolute duties.
‘However, the Supreme Court’s ruling calls this into question, confirming that each obligation should be considered on its own merit depending on the particulars of the contract and an interpretation of the intentions of the parties based on the drafting of the entire contract,’ he says.
Architects need to satisfy themselves that they understand the implications of all the terms of their appointments, taking legal advice and seeking the advice of their professional indemnity insurers where appropriate.
Klimt is now recommending that architects include within their appointments a catch-all safety net wording, precisely aimed at neutralising any unwitting assumption of strict liability for matters beyond their control.
The thrust of the wording would be that the architect’s duties and obligations shall be subject to the exercise of the professional consultant’s normal duty of care, and that nothing else in the Appointment or elsewhere will be construed as imposing additional obligations on the architect.
Thanks to Mark Klimt, partner, DWF LLP; Dieter Bentley-Gockmann, director, EPR Architects.
Text by Neal Morris. This is a ‘Practice News’ post edited by the RIBA Practice team. The team would like to hear your feedback and ideas for Practice News: email@example.com.
Posted on 7 September 2017.