Liability and Complexity in Construction

Scenario:

As part of the redevelopment of the river Irwell valley, the City Council (“the Owner”) entered into a development agreement with Development Limited (“the Developer”) for the design and construction of a new suspension footbridge (“the Works”) across the river Irwell on the site of the original Broughton Bridge.

The Developer awarded the contract for the design and construction of the Works to Constructors Limited (“the Contractor”).

In order to procure the design and construction of the Works, the following agreements were entered into by the parties:

A development agreement dated 23 December 2011 executed as a deed by the Owner and the Developer (“the Development Agreement”).

A construction contract dated 31 March 2012 executed as a simple contract by the Developer and the Contractor (“the Construction Contract”) for the construction of the Works; and

A deed of warranty dated 31 March 2012 executed as a deed by the Owner, the Developer and the Contractor (“the Deed of Warranty”).

Relevant provisions from, or amendments to, each of these agreements are set out below.

The Development Agreement

The Development Agreement included the following relevant provisions:

Clause 1 The Developer agreed to commence and thereafter procure the Works.

Clause 2 provided that:
“The Developer shall ensure that the Works shall be carried out in a good and workmanlike manner in accordance with good building practice with suitable materials and with all reasonable skill and care”.

Under clause 3 the Developer agreed to enter into the Construction Contract with the Contractor on a design and build basis before the Works commenced and to appoint an Employer’s Agent to administer the Construction Contract (including administration of the testing of the Works on completion).

Under clause 4 the Developer agreed to enforce the defects liability provisions in the Construction Contract.
Under clause 5 the Developer agreed to procure various duty of care deeds executed as deeds in the form annexed to the Development Agreement from: the Contractor, the Employer’s Agent and every sub-contractor in favour of the Owner.

The Construction Contract

The Construction Contract was under the Joint Contracts Tribunal Design and Build Contract 2016 Edition (“JCT DB 2016”) and certain insertions and / or amendments as agreed between the parties as set out below.

Contract Particulars 7.4 “Third Party Rights and Collateral Warranties”: “Not Applicable” Insert: “The Employer and the Contractor agree that the Contracts (Rights of Third Parties) Act 1999 shall not apply to this Agreement. Therefore any person who is not a party to this Agreement cannot enforce any term of it in their own right…”

Delete: Clause 1.6 and replace with:
“Nothing in this Contract confers or is intended to confer any right to enforce any of its terms on any party who is not a party to the Contract.”

Delete: Clauses 7.1 to 7.6 inclusive.

Delete: Clauses 7A to 7E inclusive.

Save in respect of the above amendments please refer to the JCT DB 2016 for its full terms and their true meaning and effect.

The Deed of Warranty

Under the terms of the Deed of Warranty, the Contractor warranted to the Owner as follows:

“The Contractor warrants to the Owner that

1.1 The Contractor has carried out its obligations under the Construction Contract in accordance with the terms thereof.

1.2 The Contractor has exercised and will continue to exercise all reasonable skill, care and diligence to be expected of a competent design and build contractor experienced in carrying out work for a project of similar scope and complexity to the Works in:

1.2.1 the design of the Works

1.2.2 the selection of materials and goods for the Works (including all materials and goods which have been or will be selected by the Contractor’s servants, agents, consultants, sub-contractors or suppliers).”

Chronology

Performance of the Works

Between June 2012 and June 2015, in performance of its obligations under the Development Agreement, the Developer procured the design and construction of the Works and in performance of its obligations under the Construction Contract, the Contractor carried out and completed the design and construction of the Works. However, the Works were subject to numerous delays relating to the lack of funding approvals from the Owner under the Development Agreement.

The bridge design was undertaken by a specialist designer named Design Engineers (“the Sub-consultant”).

The Works were deemed practically complete on 21 July 2015 by the Owner on the advice of Consultancy Advisors (“the Employer’s Agent”).

The Director of Engineering for the Owner has always considered that the testing documentation associated with the Works, as handed over on 20 July 2015, did not include evidence that synchronous lateral excitation had been adequately considered.

Defective Works

In addition to the issues that existed at practical completion a major defect began to manifest itself in the September of 2015 when, during the marathon, excessive movement in the bridge occurred resulting in the event being cancelled. The bridge was immediately closed to the public and has remained closed since.

Following the appointment of an in-house legal advisor to complement the council’s growing in-house expertise in December 2020, the Owner discovered executed copies of the duty of care deeds referred to in the Development Agreement and instructed a technical Expert Witness (“the Expert Witness”) in suspension bridge design and construction in January 2021. The Expert Witness prepared a report in June 2021 which identified that the cause of the problem was “inadequate consideration of tuned active excitors which resulted in the excessive movement compounded by the incorrect installation of the bridge damping system” The Expert Witness advice is that the entire bridge needs to be removed and replaced at a cost of approximately £5 million.

A meeting was held on a without prejudice basis, between the Owner, the Expert Witness, the Employer’s Agent, the Contractor and Sub-consultant. At the meeting, the Sub-consultant accepts that, in retrospect, it may have used an inadequate form of load modelling.

The Developer refused to attend the meeting saying that this is a matter for the Contractor to sort out and has recently been declared insolvent.

The Owner wrote to the Employer’s Agent on 8 July 2021 pointing out that in the Owner’s opinion practical completion should never have been granted in respect of the Works and requesting the Employer’s Agent confirm that it had put the Employer’s Agent’s professional indemnity insurers on notice of a potential claim.

The Employer’s Agent’s response to the above letter from the Owner was that in the Employer’s Agent’s opinion this is a matter for the Contractor to sort out and that if and when the Employer’s Agent thought it appropriate it would advise its insurers accordingly.

Task Description

Note:

It is possible that you may believe as a result of your own personal expertise and knowledge that the defects would not have occurred as represented and / or the choice of standard form of contract was inappropriate. However, such issues are not relevant to the task in hand which is to interpret the legal implications of the facts as set out in the brief. You are being asked to adopt the role of a legal advisor, and not that of a technical expert.

It may be that the same issues crop up in more than one of the task elements. If so, you need only deal definitively with the issue (e.g. by giving full case law/statutory references and argument etc) the first time that it occurs. If it arises again, you can then deal very briefly with it.

The applicable law is that of England & Wales.

You should assume you are considering the matter as at 10 August 2021.

For the avoidance of doubt the Letters of Advice should not address the dispute resolution process nor any issues associated or connected in any way with Covid – 19 or similar occurrence.

Tasks

Adopting the role of legal advisor to the Owner, write a detailed letter of advice to your client in which you particularize, so far as possible from the information with which you have been provided, the claims which the Owner may be able to pursue against the Contractor and the Employer’s Agent.

When doing so, it is important to identify the legal / factual nature and the origin of any such claims. Do not seek to anticipate any defences that the Contractor may raise. Your letter of advice must set out in detail the legal arguments that the Owner could pursue (on current information) in respect of the Contractor and the Employer’s Agent and any actions your client may want to take.

Include discussion of whether, and if so how, your client may be able to seek redress from others including the possibility of funding from insurers. Support your answer by reference to properly cited legal authority. [2,500 words]

Adopting the role of legal advisor to the Contractor, write a detailed letter of advice to your client setting out in detail the defenses available to your client (on current information) in relation to the claims against the Contractor identified in Part 1 of the task.

When doing so, it is important to identify the legal / factual nature and the origin of any such defences. Your letter of advice must set out in detail the legal arguments that your client could adopt and any actions your client may want to take.

Include discussion of whether, and if so how, your client may be able to seek redress from others. Support your answer by reference to properly cited legal authority. [2,500 words]