TCC Case Update – Assuming a duty of care: relief for consultants…but some cause for caution
In Multiplex Construction Europe Ltd v Bathgate Realisations Civil Engineering Ltd & Ors, the Technology and Construction Court (TCC) was asked to consider whether a consultant appointed by a sub-contractor owed a duty of care to the main contractor, where it only had a direct contract with the appointing sub-contractor. The decision reaffirmed the status quo, but with some interesting takeaways that will give consultants pause for thought about how they could ‘sleepwalk’ into greater responsibilities/liabilities.
Background and issues in dispute
Multiplex was the main contractor on the 100 Bishopsgate project in London. It appointed Dunne (the First Defendant) as the design and build sub-contractor for concrete works. Dunne then sub-contracted the design of a portion of the works (a slipform rig) to BRM, the Second Defendant. Finally, Dunne appointed RNP (the Third Defendant) to carry out an independent ‘Category 3 check’ on the rig design and provide compliance certificates.
According to Multiplex, the design was defective. Claims for damages in excess of £12m were brought by Multiplex against its sub-contractor and the two sub-subcontractors. Judgment in default (where no defence is filed with the Court) was obtained against Dunne and BRM, although enforcement proved difficult given they were (a) in Dunne’s case, in administration and uninsured and (b) in BRM’s case, domiciled in Dubai. That left RPN, through their insurer Argo, as the most likely route for Multiplex to recover their losses, the only hurdle (and quite a significant one) being that Multiplex never had a direct contract with RPN. Instead, they alleged that RPN owed a duty of care to them in tort, having ‘assumed responsibility’ to Multiplex. A preliminary hearing was held to decide on this issue alone.
Fraser J’s judgment – found here – is an informative ‘tour’ through the case law in this area. To summarise, he found that RNP did not have any responsibility to Multiplex:
— The facts did not meet the Hedley Byrne test for ‘assumption of responsibility’ (referring to the leading case on establishing where such duties are owed). When asked to provide some service, a person may answer by (a) declining or keeping silent, (b) providing it, with a qualification that no legal responsibility is being assumed or (c) providing the service unqualified. Here, there was no direct request or answer between Multiplex and RNP. RNP ‘answered’ that question specifically to Dunne, in the contract.
— Reaffirming the Court decision in Henderson v Merrett Syndicates Ltd  – where the parties have constructed a clear contractual ‘chain’, that would be ‘inconsistent’ with assumptions of responsibility in tort (duty of care).
— There was no ‘liability gap’ – Multiplex had a complete cause of action against Dunne for the design of the temporary works and their certification (and they had already obtained a judgment against them under that cause of action – issues with enforcement do not erase that).
— Citing the earlier case of Arrowhead Capital Finance Ltd v KPMG LLP , it was ‘inconceivable’ that a reasonable party would consider RNP, in carrying out their £4,000 services, would believe themselves to have, or voluntarily assume, unlimited responsibility to the main contractor on a complex, high-value project. It would assume that its responsibility was to Dunne, the party it contracted with.
It is a decision that will be reassuring for construction professionals and their PI insurers. It preserves the status quo that where there is a clear (and very common) contractual structure in place (e.g. formal sub-contracts and sub-subcontracts), the courts are going to be very reluctant to ‘superimpose’ additional duties/relationships into that structure. Speaking hypothetically, the opposite decision would have seen the sub-consultant, who was responsible for only around £4,000 of discrete services, being potentially liable for damages of £12m to a party it neither contracted with nor exchanged any correspondence with. It isn’t too difficult to imagine the kind of impact that would have on contracting in the industry, independent checks and the safe assumptions professionals make about who they owe their duties to.
The decision also underscores the importance of a professional taking care when asked to go beyond the scope of their contractual obligations to another party. Any response provided by a professional may have consequences and could lead to them falling on the wrong side of the Hedley Byrne principles above.
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This update is for general purposes and guidance only and does not constitute legal or professional advice. You should seek legal advice before relying on its content. For advice, get in touch with your usual Greenwoods GRM contact or scroll down to complete our enquiry form.