| Date | 25 June 1997 |
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| Judgment | Cliff Holdings -v- Parkman Buck Limited ORB, 6 August 1996 (unreported) |
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| The Issue | Liability of consultants to contractors under design and build contracts. |
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| Implication |
A contractor is liable for the acts and defaults of its sub-contractor except where express terms to the contrary apply as, for example, in Clauses 5(2) and 7 of the ACE Conditions. Sub-consultant owes duty of care to the contractor under the Hedley Byrne principle. |
printArchitects and engineers are generally uncomfortable when cast in the role of sub-contractors on design and build projects. Whilst some firms have taken to the role with considerable success, an unhappy relationship between contractor and consultant lies at the heart of most problems on design and construct projects. The case of Cliff Holdings -v- Parkman Buck Ltd examined the duties of consultants under the ACE conditions of engagement in relation to a design and build contract. Cliff were contractors on the Spectrum Business Park in Rochester engaged on a JCT "with contractor's design" form of contract. As they had not previously undertaken any design and build work they engaged Parkman, who were consulting engineers, to undertake engineering and architectural services for a fixed fee of £28,000 under the ACE Conditions of Engagement Agreement 2. It was agreed that the architectural element of the works would be sub-contracted by Parkman, and a separate firm of architects was engaged for this part of the works. Parkman wrote to the architects describing the services required for an agreed fee of £5,000 to be paid out of their fee. In the event the project was a disaster. The doors and windows leaked water and the screed on the first floor was cracking and breaking up. The developer maintained that practical completion had not been achieved and engaged a surveyor to assess the remedial work required. As a result he withheld payment in excess of £200,000 from the contractor. The first approach of the contractor was to commence arbitration proceedings against their client to recover this money. This resulted in failure when they were forced to abandon their claim and pay the developer's costs. Their next approach was to train their sights on their sub-contract engineer and architect, claiming breaches of contract and negligence in relation to the defective areas of work. They argued that despite there being no direct contract between themselves and the architects they were nonetheless owed a duty of care in tort. Parkman admitted that they owed a duty to exercise reasonable care in respect of their own design and detailing work but in relation to the architect's work relied upon Clauses 5(2) and 7 of the relevant ACE Conditions maintaining that the architects were specialist suppliers or contractors who had designed certain parts of the works. This, they argued, meant they were relieved of any responsibility for the design of the architects part of the works. This was rejected by the Court. They were satisfied that the engineers had chosen the architects. They had worked together before as the engineers employed no-one in-house with architectural expertise, and accordingly they had employed the architects themselves directly. They did not recommend that the contractor should employ the architects as envisaged under Clause 7; this would have put the architect and contractor into a direct contractual relationship but Parkman had chosen not to do this. The position was clear, according to the Judge: "Where a contract envisages personal skill or supervision on the part of the promisor, he is personally responsible for performance. A contractor who sub-contracts performance of the contract remains liable if the contract is not properly performed by the sub-contractor. He is liable for the acts and defaults of the sub-contractor". The ACE Conditions provide a separate scheme of matters under Clause 5(2) and 7, whereby if specialist contractors are recommended the consultant remains personally responsible for co-ordination and integration of their work but no longer personally responsible for doing the work which they design. This route however had not been followed. Also at issue was whether the architect owed a duty of care in tort to the contractor. The architect denied such a duty and asserted that the position of the professional ought not to be different from ordinary cases where sub-contractors do not owe such duties in tort to the party employing the main contractor. The Court was clear however that the position with a professional person was quite different as a consequence of the principal established in Hedley Byrne. Following this case the proper test to be applied was whether the architect had assumed the responsibility for giving advice to the contractor in circumstances where he knew that it was likely to be relied upon, and where it was reasonably foreseeable that if it was relied upon and if it was carelessly given, economic damage might result to the contractor. "I have no difficulty in concluding that the architect owed a duty of care in tort to the contractor concurrent with the contractual duty of care of the engineer. The position of the professional thus differs from that of the ordinary trade sub-contractor".
CJ-9723
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