| Date | 26 March 1997 |
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| Judgment | Chesham Properties Ltd -v- Bucknall Austin Project Management Services Ltd (ORB) 6 September 1996, [1996] 45 Bliss 4 |
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| The Issue | Implied reporting duties owed by a project manager to its client. |
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| Implication |
Whilst a project manager may not be said to owe fiduciary duties towards his client, he will be under an obligation to report the actual or potential deficiencies in performance of other consultants. |
printThe use of project managers for building construction is nowadays more widespread than ever, but the responsibility of a project manager in the event of substantial delay in completion or cost overspend on a project, is at best uncertain. The project manager will generally be under a duty to exercise reasonable skill and care in carrying out his professional duties but will generally say, with considerable ease, that the faults and difficulties which have occurred on a construction project are the responsibility of others. After all, designers and contractors are, of course, the only parties who deliver anything tangible. What, you might ask therefore, are you buying from a project manager? In one of the first cases to come before the courts dealing with this type of question Chesham Properties Ltd -v- Bucknall Austin Project Management Services Ltd delivered on 6 September 1996 has provided some interesting answers. Chesham were property developers involved in a scheme to develop a site known as Royal Court House in Cadogan Place, London. Bucknall Austin were members of their team of professional advisers and were only one firm in a list of no less than thirty-three defendant companies. Chesham had made a number of allegations of breach of contract and negligence in the performance of each defendant's primary professional duties. During the course of managing their case they came to recognise that they would need to make a series of new allegations against the defendants to be in a position to better establish their case. They sought the leave of the court that these new allegations might be made. They argued that there should be an implied term to the effect that the project manager should advise, warn or inform them of deficiencies in performance by the project manager or other consultants, where the deficiency might contribute to defects in the works, delay in completion or increase in cost. They argued that this term should be implied as a consequence of the obligations of the project manager to monitor the design and construction and to provide project management expertise. To give further weight to their case, they argued that the project manager was in a fiduciary relationship to its client, that is one requiring trust and loyalty. Finally they argued that the complexity of the works made it unlikely for Chesham, as developer, to discover the existence or cause of defects unless informed by the project manager and that had they been advised in time they would have had opportunity to revise or abandon their plans. His Honour Judge Hicks QC, sitting as an official referee, delivered a carefully crafted judgment dealing with all the grounds upon which such an amendment to the case might be granted. Firstly he rejected that there should be a duty imposed upon the project manager to advise its client of deficiencies in its own work. He indicated however that this situation might be analysed differently in the case of a consultant designer, referring to the case of Glasgow University -v- Whitfield in which an architect was held to be under a continuing duty to reveal what he knows of design defects. Secondly Judge Hicks looked at the alleged fiduciary duty. In seeking support of their case Chesham had given examples of the fiduciary duties owed between a principal and its agent and an employee and employer. Whilst recognising that agency and employment were not the only relationships in which fiduciary duties might arise, Judge Hicks was unable to accept the inference of such a duty on a project manager. Citing the privy counsel decision in Clark Boyce -v- Mouat in 1994 he concluded that there was no basis for the allegation made. "A fiduciary duty concerns disclosure of material facts in a situation where the fiduciary has either a personal interest in the matter to which the facts are material or acts for another party who has such an interest". The case concluded that fiduciary duties could not be cited to enlarge the scope of contractual duties. Concerning the performance of other consultants, the analysis was however quite different. It was Judge Hicks view that the project manager was plainly under a duty under the terms of its contract to report to its client deficiencies in performance on the part of the other consultants. The key provision in his view was the obligation to "implement all monitoring procedures including the performance of all consultants". He considered that monitoring in such a context could not sensibly be confined to passive observation. It must include reporting to the principal on the performance being monitored by reference to the standards which should have been achieved. Of lasting importance to project managers, finally Judge Hicks held that in the absence of appropriate express terms he would find that a term to this effect would in any event necessarily be implied in the contract.
CJ-9712
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