Understanding contractual terms case study no.1

The following example relates to a claim against a consulting engineer in connection with this clause and which resulted from the failure of a specialist contractor’s foundation design

A consultant was appointed by a local authority in relation to the construction of a new docking pier at a port.

The consultant also acted as project manager during the construction phase. A part of this project included the installation of wave screens attached to the exterior of the pier to prevent ferries docked on the other side of the pier from rocking too much in the waves. The consultant’s initial design of these wave screens was subsequently dropped by the contractor, in favour of the contractor’s own solution.

After only the first part of the scheme was complete, the wave screens failed. Subsequently, the design was modified but again there were repeated failures of the screens and further remedial works were required.  In due course, the local authority settled with the contractor and then pursued the consultant for the cost of the remedial works, totalling £3m. One of the key limbs of the consultant’s defence was that they should not be held responsible for deficiencies in the contractor’s design. The local authority argued that, under the terms of the contract, the design had effectively been approved by the consultant who had therefore become contractually responsible for that design.

The relevant extracts from the contract stated that “the contractor does not proceed with relevant work until the Project Manager has accepted his design” and “the contractor may submit his design for acceptance if parts of the design of each can be assessed fully”.

The procedure detailed here was followed to the letter in respect of other elements of the project - the contractor submitted both drawings and calculations, which the consultant then accepted. In respect of the wave screens, the contractor only ever submitted drawings (which were reviewed by the consultant) but no calculations.

The consultant argued quite reasonably that responsibility for the alternative design remained with the contractor, until such time as it had been fully approved. As he had never been given the calculations on which the alternative design was based, he argued that he had not been able to assess the design fully and could not, therefore, have accepted it.

The Achilles heel in this argument is that the contract documents contained one further provision: “The contractor’s alternative design shall be reviewed and subsequently accepted by the consultant.”

Because the drawings for the screens were reviewed by the consultant (of this point there was no doubt) the local authority contended that they had therefore been ‘accepted’, despite the consultant not positively affirming that they were accepted. 

Outcome:

On a plain reading there was a strong argument from the local authority that the consultant had effectively assumed responsibility for the design.

The words were clear and unambiguous and in the context of the rest of the document it was certainly arguable that, in relation to the alternative design of the screens, the contractor would never have started work, unless the consultant had accepted the design. The consultant raised no objection either to the design or the commencement of works and, therefore, defending the claim would have been difficult.

There were other contributing factors at play, but these contractual conditions were certainly high in the minds of those involved.

Settlement was achieved in excess of £2.5m.