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Legal case

Weightmans successful in significant duty of care case for the professional indemnity market

This judgment will be welcomed by construction professionals and their professional indemnity insurers.

Multiplex Construction Europe Limited v (1) Bathgate Realisations Civil Engineering Limited (in administration) (2) BRM Construction LLC (3) Argo Global Syndicate 1200 [2021] EWHC

Weightmans has won a significant victory for construction professionals and the insurance market in a key case determining the circumstances where the courts will impose a duty of care on a professional. The case will be welcomed by professionals and professional indemnity insurers alike for clarifying the scope of a professional’s liability under the tort of negligence.

Important issues appertaining to the relevant British Standard and the Construction (Design and Management) Regulations 2015 were also discussed.

Facts of the case

The claim arose out of the construction of a 40-storey tower in London. The claimant, Multiplex, was the main contractor and appointed the first defendant, Dunne, as its design and build sub-contractor. Dunne sub-contracted the design of the slipform rig to the second defendant, BRM. Under the relevant British Standard, the design of the slipform rig required a “Category 3 check” and Dunne contracted with RNP, a firm of consulting engineers, to carry out the Category 3 check. RNP was paid approximately £4,000 by Dunne for its services.

Multiplex alleged that the design of the slipform rig was defective and the rig had failed in use, necessitating its replacement on site. This was said to have caused losses to Multiplex of in excess of £12 million. It brought a claim against Dunne under the sub-contract and against BRM in tort and for breach of warranty. RNP had entered into liquidation in 2018 and Multiplex therefore brought its claim directly against the third defendant, Argo (RNP’s professional indemnity insurer), under the Third Parties (Rights Against Insurers) Act 2010.

Dunne had also entered administration in 2016 and was uninsured for the purposes of Multiplex’s claim. With BRM being domiciled in Dubai, neither Dunne nor BRM played any substantive role in the proceedings. Multiplex obtained default judgment against each of them. However, it had difficulties in enforcing such judgments and continued to pursue its claim against Argo alone.

Whilst there was no contract between Multiplex and RNP, Multiplex alleged two preliminary issues: (1) that RNP owed it certain duties of care, and (2) that RNP had provided warranties. Accordingly, Multiplex sought to advance a claim directly against RNP, notwithstanding the lack of any direct contractual link between them. A preliminary issues trial was ordered to take place to determine these matters.

Judgment

The Technology and Construction Court provided their judgment on 16 March 2021, in which Fraser J held that RNP owed no duty of care to Multiplex and gave it no warranties.

On the first preliminary issue, concerning duty, Fraser J carried out a detailed survey of the authorities, concluding that there had been no assumption of responsibility on RNP’s part and no duty was owed to Multiplex. The judgment reaffirmed the established position in the authorities; that is to say that where, as on large construction projects, the parties have deliberately entered into a complex and interlocking series of contractual relationships, the court will be slow to superimpose additional, tortious duties onto that contractual chain.

Fraser J rejected Multiplex’s contention that this was not a contractual chain case and that there was a “liability gap.” The specific facts of this case militated against a duty being owed, including the finding that, contrary to Multiplex’s arguments on this issue, Multiplex did have a complete cause of action against Dunne in respect of the design of the slipform rig and the contents of the Category 3 check certificates, and the lack of any direct contact between RNP and Multiplex prior to the provision of the certificates. A further interesting issue on the facts arose in respect of unilateral alterations made to one of the certificates by Dunne, without RNP’s knowledge. 

The warranty issue was also decided in the negative. Here, Fraser J briefly found that, in circumstances where there was no direct contract between Multiplex and RNP until after the certificates had been issued, and where nothing in the certificates provided by RNP to Dunne constituted a warranty to Multiplex, RNP had not provided any warranties to Multiplex.

Significance and comment

The judgment will be welcomed by construction professionals and their professional indemnity insurers. It confirms that parties providing design checks or other design services in respect of a discrete aspect of a construction project will not, without more, assume duties to parties with whom they have not contracted to prevent economic loss. As Fraser J put it, citing Arrowhead Capital Finance Ltd v KPMG LLP [2012] EWHC 1801 (Comm), it was “inconceivable” that any reasonable businessman would have considered RNP to have been “voluntarily assuming an unlimited responsibility towards the main contractor on a highly complex construction project, or to any other party involved in that project other than the one with whom RNP was in direct contract”.

Paul Lowe, a partner at Weightmans acting for Argo, commented:

The judgment is important reading for construction professionals, their insurers and legal advisors. The decision makes clear the circumstances where a duty of care will be imposed in the absence of a contractual relationship (such as a collateral warranty) with a main contractor. It avoids the situation whereby unintended and unlimited liability might arise for a consultant exercising a discrete set of services. Such liabilities are ones that the professional indemnity market in particular will be keen to have seen avoided.”
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