Negligence – Architect – Building contract – Claimants wanting to make fundamental changes to layout of house – Claimants agreeing specification of works with defendant architect firm – Claimants entering into building contract with contractor – Dispute arising about quality of contractor’s work – Contractor becoming insolvent – Claimants issuing proceedings in negligence against defendant — Whether defendant breaching duty of care to claimants – Whether defendant acting with care and skill of reasonably competent architect – Claim allowed.
In June 2005, the claimants purchased a property for £1.7m. The house had five floors on a sloping site leading to the River Thames. The claimants wanted to make fundamental changes to the layout of the house, in particular, and to the ground and lower floors. They were introduced to the defendant firm of architects, which effectively consisted of a sole principal (F). The claimants agreed a specification of work with F on the basis that they would arrange the procurement of certain discrete parts of the work themselves, such as a new conservatory and a kitchen, thereby not attracting either the defendant’s percentage fee or the contractor’s overheads and profit on those items. In June 2006 they entered into a building contract with a contractor introduced by F.
About six weeks after the claimants had moved into the house in May 2007, they found extensive damp in the lower ground floor. Experts concluded that the contractor had failed to carry out proper waterproofing. The claimants blamed both F and the contractor. During the course of the investigations into the cause of the damp, serious problems were revealed with both the plumbing and the electrical works and the newly installed mechanical and electrical services would have to be completely removed and replaced. The claimants had to move out of the house while remedial works were done and did not return until June 2009.
The claimants sued the contractor for damages and brought proceedings against the defendant for negligence, not only in relation to its advice in relation to the treatment required for the lower ground floor to prevent damp, but also for F’s failure to notice the defects in the mechanical and electrical (M&E) installations and to have them put right. The claim was for a total sum in excess of £800,000. The issues of liability and causation were further complicated by the fact that the defendant contended that its terms of engagement included a net contribution clause, limiting its liability to the amount that it was reasonable for it to pay in relation to the contractual responsibilities of other consultants, contractors and specialists appointed by the claimants. When the contractor became insolvent, the claim against it was no longer pursued.
Held: The claim was allowed.
(1) F had fallen below the standard expected of a reasonably competent architect in failing to notice the poor quality of the M&E installations and in failing to take any steps to ensure that the contractor’s M&E calculations and drawings were submitted to the design consultant. On the evidence as a whole and, in particular, the photographic evidence, there was no doubt that if the consultant had visited the site, during mid or late November 2006, he would have been very critical of the quality of the workmanship throughout the M&E installations. The remedial work to the M&E installation recommended to be carried out had been reasonably necessary and was a direct result of the defendant’s breaches of duty, both in relation to the failure to check the work as it was being carried out and the failure to take any steps to ensure that the contractor’s calculations and design drawings for the M&E installation were submitted to the consultant for comment and approval.
(2) There had been, at its lowest, doubt about the true meaning of the net contribution clause so that regulation 7(2) of the Unfair Terms in Consumer Contracts Regulations 1999 required the court to give the clause the interpretation that was most favourable to the claimants. In any event, in the context of the factual background to the agreement, the clause did not apply to limit the defendant’s liability to the claimants where the other party liable was the contractor. However, the clause was not unfair under regulation 5(1) of the 1999 Regulations since it was not contrary to the requirements of good faith and did not cause a significant imbalance in the party’s rights and obligations arising under the contract to the detriment of the consumer. It could not be said that the defendant had been guilty of any lack of good faith. F was not out to take advantage of the claimants and the court was prepared to accept that he believed that the form of wording was at least consistent with, one approved by the RIBA for use in an architect’s terms of engagement: Director General of Fair Trading v First National Bank plc [2002] 1 AC 481 considered.
(3) In the context of a contract where the contractor, or subcontractor, had an obligation to produce a detailed design and to submit it to the services engineer for comment and approval, the risk of inadequate design by the contractor was much reduced. Whilst it would have been good practice for the defendant to specify a form of contract that provided for contractor’s design, in circumstances where the contractor’s design had to be approved by the services engineer, the defendant’s approach had been one that a reasonably competent architect could properly take. However, the defendant should have notified the contractor that failure to submit relevant information to building control might cause loss to the claimants. Accordingly, the defendant was liable for any loss resulting from its failure to do so.
4) The innocent party to a breach of contract who had been subjected to inconvenience, distress and discomfort by having to move out of his or her home whilst remedial works were carried out, as in the present case, was entitled to a modest award of general damages but the court had to be astute to ensure that it was not awarding damages for the stress and the vexation of litigation. In all the circumstances, the appropriate award for general damages was a total of £12,000: AXA Insurance UK plc v Cunningham Lindsay UK [2007] EWCA 3023 (TCC) considered.
Jonathan Selby (instructed by Hewitsons) appeared for the claimants; Richard Coplin (instructed by CMS Cameron McKenna) appeared for the defendant.
Eileen O’Grady, barrister