Paul Musa and Robert Goodlad review the recent case of Multiplex v Bathgate & others  EWHC 590, during a trial of preliminary issues, in which the TCC considered whether a firm of engineering consultants engaged by a sub-contractor to perform British Standard 5975 third party design checks owed a duty of care in tort to the main contractor.
Multiplex was the design and build main contractor for the construction of 100 Bishopsgate in London, which was to comprise three main buildings around an open public area. Bathgate, formerly known as Dunne Building and Civil Engineering (and referred to as Dunne in the judgment), was appointed as sub-contractor for the design and construction of the concrete package of works to Building One. This included the concrete core, which was constructed, level by level, using a slipform rig, which is part of the temporary works. The sub-contract between Multiplex and Dunne incorporated the JCT Design and Build Sub-Contract 2005 Edition, Revision 2, 2009, subject to certain modifications. It was accepted that, under the terms of its sub-contract with Multiplex, Dunne had full design responsibility both for the concrete core and for the temporary works. .
Dunne in turn appointed BRM Construction LLC ("BRM"), a specialist design and engineering consultancy, to design the slipform rig, under a Consultancy Agreement executed between them on or about 18 November 2015.
Dunne also appointed RNP Associates Ltd ("RNP") to provide a Category 3 third party design check on the design for the temporary works, as required both under BS 5975 and Dunne's sub-contract with Multiplex.
It was when Multiplex appointed Byrne Brothers Limited ("Byrne"), an alternative sub-contractor in place of Dunne, following termination of Dunne's subcontract as a result of Dunne being placed into administration, that defects in the concrete works were uncovered, and the conclusion reached that the slipform rig (the design of which had been the subject of RNP’s checks) was unsafe.
Multiplex brought a claim for a sum totalling just over £12 million, including remedial works, delay, disruption and consequential losses said to have been incurred as a result of various breaches by each of Dunne, BRM and RNP. However, in addition to Dunne being in administration, BRM appears to have had no insurance, and RNP had also entered into liquation on 1 October 2018. RNP had professional indemnity insurance and so Multiplex, brought its claim directly against RNP’s professional indemnity insurer, under the Third Parties (Rights Against Insurers) Act 2010.
There were two preliminary issues before the Court as to RNP's potential liability (and so the potential liability of RNP's insurer):
- Did RNP owe any duties and/or obligations to Multiplex in respect of the Category 3 Design Check Certificates provided by RNP to Dunne?
- Did RNP provide warranties to Multiplex?
Concerning the first question, the TCC judgment contains a detailed assessment of the leading authorities on the circumstances in which a duty of care is to be owed (going back to the decision of the House of Lords in Hedley Byrne & Co v Heller & Partners Ltd). In light of that review, the Court rejected Multiplex's submission that a duty of care arose because of an assumption of responsibility to Multiplex on the part of RNP. In paragraph 172 of its judgment, the TCC identified fifteen factual reasons as to why it reached such conclusion, in particular these included that:
- Multiplex and Dunne had a direct contractual relationship for the sub-contracted works pursuant to which Dunne had full design responsibility (including for the slipform rig);
- there was no direct contractual link between Multiplex and RNP. As well as that there was no direct contact between RNP and Multiplex at all prior to the issue of the first design check certificate;
- Multiplex was not involved in the selection of RNP as the independent design checker, the terms upon which RNP was engaged by Dunne, nor the documentation that was provided to RNP to undertake the design check;
- 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 (Dunne could not comply with its contractual obligations without such check having been done by an independent checker).
The TCC also rejected the argument that a duty of care should nonetheless be inferred because a liability gap was in existence. There was no liability gap here, the Court found, because there was direct contractual responsibility for design of the temporary works from Dunne to Multiplex (and because Multiplex was advancing pleaded claims against Dunne for precisely the same matters that were being relied upon in its claim against RNP, whilst also alleging responsibility on Dunne's part for the failures of RNP). The parties had consciously created a contractual framework where no duties were owed from RNP to Multiplex, therefore, the responsibility does not lie with the TCC to infer such a tortious duty to fill the gap, in the event that one does exist.
Regarding the second question, the TCC concluded that this argument was one that was "weak". The TCC concluded that "it would go entirely outside that detailed contractual framework to construe statements by RNP within the certificates, or the certificates themselves, as constituting warranties given directly by RNP to Multiplex".
This case is a significant win for third party design checkers and their insurers as, if a duty of care to the main contractor were to be imposed upon a Category 3 checker, the Court recognised this would have caused "potentially serious consequences" within the insurance and construction industry. While nothing in this ruling is new law it reinforces that where parties have established a “complex arrangement of contractual obligations”, the court will refrain from interfering; establishing a non-contractual duty of care is difficult especially when such arrangements exist.
If contractors do wish to impose obligations on such professionals (with whom there is no direct contractual relationship) they should either seek rights under the Contracts (Rights of Third Parties) Act 1999 or have collateral warranties in place, which provide for a duty of care to be extended to the contractor.
For further information please contact the authors:
Paul Musa – Trainee Solicitor
Robert Goodlad - Director