Breach of contract — Damages claim — Strike out — Claimants alleging third defendant chartered surveyor in breach of obligation to value only properly executed work with no obvious defects – Third defendant applying to strike out defects claim — Whether third defendant owing alleged duty to claimants — Whether third defendant in breach of obligation — Application dismissed
The claimants brought an action for damages arising out of alleged defects in the design and construction of their house. The first defendant was the contractor, the second defendant was the architect and the third defendant acted as the quantity surveyor.
There was no written contract between the claimants and the third defendant, which had become involved by way of letters sent through the architect. Although the contract had not been formalised, the claimants argued, inter alia, that the third defendant had breached its duty only to value work that had been properly executed by the contractor and was not obviously defective (the defects claim).
The third defendant applied to strike out the defects claim on the basis that, as a matter of law, it did not owe the duty alleged.
Held: The application was dismissed.
The third defendant had to make an independent assessment of the work carried out on a monthly basis in order to arrive at a proper valuation. However, although it had to check the amount of work carried out, it was not obliged to investigate whether that work was defective. It was for the architect to ensure that the work that the third defendant had assessed for the purposes of valuation had been properly carried out. Further, in assessing amounts to be certified, the architect and the quantity surveyor were obliged to ensure that the claims for payment were reasonable and justified by the work done at the time, in quality and amount respectively. Where the quantity surveyor was also engaged by the employer, the architect had to keep it informed of any defective or improperly executed work so as to give him the opportunity of excluding it from interim valuation: Sutcliffe v Chippendale & Edmondson (1971) 18 BLR 149 applied.
The third defendant had been aware of the terms of the building contract and of its obligation to include in its interim certificate a percentage based on the value of the works properly executed. Accordingly, the claimants were right to assert that the contract contained an implied term, in order to give it business efficacy, that the third defendant would act with the reasonable skill and care of a quantity surveyor of ordinary competence and experience when valuing the works properly executed for the purposes of the interim certificates: Liverpool City Council v Irwin [1976] 1 EGLR 53; (1976) 238 EG 879 and 963 applied.
However, the claimants sought to imply a term that omitted the “reasonable skill and care” qualification, thus seeking to impose an absolute obligation, the breach of which was said to be measurable by results, as though it were a guarantee. It created a positive obligation not to value work that was “obviously defective”. However, inherent in that obligation was a positive duty on the part of the third defendants to inspect the works, so as to draw to the architect’s attention any that it thought were obviously defective.
On the material before the court, there was no basis in fact or in law for such a positive duty. It could not be said to have been expressly agreed and there was no legal foundation for implying the term. Moreover, such a term would fail the test in Liverpool City Council because it could not be said that that term was necessary to make the contract work or that the contract was unworkable unless the quantity surveyor, whose primary obligation concerned valuation, was also responsible for inspections regarding quality. Such a term could not be necessary where those fell to the second defendant.
On the evidence, the claimants pleaded claim against the third defendant in respect of defective work was unsustainable since the latter appeared to have complied with its duty. Its conduct could not be criticised merely because, on completion, the work contained alleged defects.
However, disclosure had not yet taken place and it was possible that, on the evidence, the claimants might be able to demonstrate that, in carrying out the obligation to value the works, the third defendant had done something that fell below the standard to be expected of ordinarily an competent quantity surveyor. The court was not persuaded that that was a real possibility, but provided that the claimants were aware of the significant costs risks, they would be allowed to pursue their case to the next stage, if they wanted to do so.
Jonathan Lewis (instructed by Quercus Law) appeared for the claimants; Paul Parker and Timothy Chelmick (instructed by Barlow, Lyde and Gilbert LLP) appeared for the third defendants.
Eileen O’Grady, barrister
