Lead consultant not liable for third party consultants (Midlothian v Bracewell Stirling)


The Scottish Court of Session, Inner House upheld a first instance decision that a lead consultant was not liable for work carried out by third party consultants appointed directly by a local authority. Jonathan Spencer (Managing Associate) and David Fitzpatrick (Associate) of Simmons & Simmons consider the ruling.

 

Midlothian Council v Bracewell Stirling Architects [2018] CSIH 21

What are the practical implications of this case?

While this is a Scottish decision (and is, therefore, only persuasive rather than legally binding in England and Wales), it reinforces that when presented with competing contractual interpretations, the UK courts will consider the broader nexus of the parties’ relationship to arrive at a conclusion.

Construction professionals (and their PI insurers) can take comfort from the court’s decision that a lead consultant will not be held liable for consultants it has not instructed, or has no control over, unless expressly provided for in the contractual documents. The court indicated that to hold otherwise would signal a departure from accepted legal principle, and also commented that the risks that the consultant would have faced on the Council’s interpretation of the appointment ‘may not have been insurable’.
 

What was the background?

Midlothian Council (the Council) sought £12m in damages relating to a development of 64 social homes, which had been rendered uninhabitable as a result of gas ingress from disused coal mines.
 
The Council had appointed Bracewell as lead consultant for the housing project under a Framework Agreement (the Appointment).
 
The Council did not argue that there was any error in Bracewell’s own performance. The thrust of the Council’s claim, however, was that Bracewell had assumed full responsibility for all site investigation works undertaken by any party (that is, not only the work of sub-contractors appointed by Bracewell but that of other parties appointed by the Council).
 
On this basis, the Council claimed that Bracewell was liable for (among other things) the inadequacies in the performance of two consultants directly appointed by the Council (ie the ground investigation consultant and the environmental consultant).
 

What did the court decide?


On appeal, the court agreed with the decision at first instance that to hold Bracewell liable for a breach of contract by any of the other consultants would be a ‘striking departure from ordinary legal principle’ and ‘would not accord with usual commercial practice’.

The court acknowledged that as Bracewell had been appointed as lead consultant, it was responsible for the overall co-ordination of the design works—however, this was not to be construed as an acceptance of liability for anything that might ultimately go wrong with the design, no matter its cause.

It was held that a reference in the Appointment to Bracewell being ‘wholly responsible’ for any site investigation works and surveys, ‘irrespective of any Sub-Consultants, Contractor(s) or others appointed’, referred to work sub-contracted by Bracewell and over which it would, therefore, have had some measure of control and contractual rights against the sub-contractor. It did not, therefore, apply to other consultants that Bracewell did not appoint.
 
The Appointment went no further than to impose a residual duty on Bracewell to warn the Council of any concerns in relation to the performance of other consultants.
 
The court added that even though a commercial enterprise may elect to assume responsibility for the actions of another party with whom it has no contractual relationship, whose specialist expertise would be beyond its own skill-set, and whose appointment preceded its own, to do so would be ‘an unusual step’ that would carry ‘very considerable risks’.
 

Case details

  • Court: Court of Session, Inner House

  • Judges: Lords Carloway, Menzies and Drummond Young

  • Date of judgment: 27 March 2018

 
The original version of this article was first published on the Simmons & Simmons Elexica blog. Reproduced with permission.
 
The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.
Filed Under: Construction

Relevant Articles
Area of Interest