Recent case law has imposed on architects, and other construction professionals, liability for failing to notice the mistakes of others. Against this new backdrop, Anthony Sheppard, a partner in Merricks solicitors, asks whether the architect is warranting everyone else on his professional indemnity policyNULL
English law has never been shy of imposing obligations on the architect. Architects standard terms of engagement set out their basic obligations, but standard terms are not exhaustive and these are supplemented when necessary.
In a traditional construction project, an architect, employed by the building owner, must design, and also supervise and oversee the contractor.
The architect must certify the contractor's work, not as the building owner's agent but as an independent professional acting impartially.
The last function of the architect is to issue the final certificate stating the satisfactory completion of the work. If either the contractor or the building owner's unhappy with anything that the architect has certified, then they have 28 days from the issue of the final certificate to issue proceedings.
If no proceedings are issued in the time period, then the claims cannot be brought and the parties are left without a remedy.
The architect is not, however, only responsible for his own errors. Recent case law has imposed on architects liability for failing to notice the mistakes of others.
The architect deprives the building owner of a claim by issuing a final certificate. The architect must grant a final certificate but if he does so incorrectly, and the building owner does not issue arbitration proceedings, the architect exposes himself to liability.
Normally, however, if a loss was actually the result of a third party's behaviour the architect would have a remedy by issuing contribution proceedings against the contractor. The effect would be that the architect could seek to pass any damages to the contractor as the real defaulting party. In the case of a negligent final certificate the architect (and his insurers) may be deprived of this contribution.
The point has been illustrated by the case of Oxford University Fixed Assets v Architects Design Partnership 1999.
The architect issued a final certificate which prevented the building owner suing the contractor. Later the building owner sued the architect, alleging that the contractor's work was defective and the architect had negligently inspected. By issuing the final certificate the cause of action against the “wrongdoer” had been extinguished. The building owner therefore looked to the architect to compensate him for the loss of his chance of suing the contractor. The architect looked to the contractor whose work was defective.
The court held that the contribution proceedings could not be brought as the final certificate meant that a claim could not be established against the contractor. The effect of this is that the architect, though not a party to the contract that gives the certificate its status, had it used against him (and his insurers) to prevent contribution proceedings passing down the chain the liability to the real wrongdoer.
Checking other professionals
The architect can be liable when he does not notice that another professional has not performed his duties.
The starting point for this proposition is Chesham v Bucknall Austin and Others 1996. The case involved allegations of professional negligence. A final certificate was issued; the building owner did not issue proceedings and therefore lost his remedy against the contractor. The building owner later alleged negligence against all the professionals.
What was significant was the allegation that all the professionals were under a continuing duty to report to the building owner the defects of other professionals.
The case found all the professionals had a continuing duty to report on other professionals' deficiencies.
The effect was, not only that the architect had a new duty, but also that his professional indemnity insurance was warranting not only the contractors but also other professionals' performance. The building owner therefore had “two bites of the cherry”.
A building owner whose professional failed to carry out his obligations would be able to sue that professional for six to 12 years after the breach occurred. The watching professional has a continuing obligation to report the deficiencies of others. Therefore, he can be sued for six or 12 years after the contract's completion.
Given that a breach of contract may occur early in a contract, this could lead to the “wrongdoing” professional's claim becoming statute barred before the building owner sues. The building owner may, however, have a “second bite at the cherry” against another professional who had a continuing duty to supervise.
These cases illustrate, not only that construction professionals' duties are expanding, but also that they, when they do make mistakes, may not have the same redress to other negligent parties as others.