DESIGN RESPONSIBILITY: A CAUTIONARY TALE FOR EMPLOYER’S REQUIREMENTS
The court held that the statement in the employer’s requirements was not sufficient to qualify the contractor’s assumption of design responsibility and could therefore not be relied upon by the contractor. While this reaffirms the contractual approach regularly assumed in this form of procurement structure, the case does serve as a reminder of the importance of effective project management, clear lines of communication with regards to the extent of the contractor’s design role and the need for a detailed scope of services which does not contradict the broader contractual approach.
Workman Properties Ltd v Adi Building and Refurbishment Ltd (2024) EWHC 2627 (TCC)
This matter related to a set of expansion works being undertaken at the employer’s dairy. The works were procured using the 2016 edition of the JCT Design & Build contract. The parties agreed to amend the standard form using a bespoke set of contractual amendments, which included key adjustments:
- The third recital was adjusted to note that the contractor had ‘examined the employer’s requirements’ and agreed to ‘accept full responsibility for any design contained therein’.
- Clause 2.17.1 further noted that the contractor was ‘fully responsible in all respects of the design of the Works including all design work proposed by or on behalf of the employer’.
Such amendments are routinely accepted as being market standard for this form of procurement, whereby it is generally accepted that the contractor will assume full design and build responsibility.
Employer’s requirements
Paragraph 1.4 of the employer’s requirements stated that the contractor would be fully responsible for the ‘complete design, construction, completion, commissioning and defects rectification of the works’.
Crucially, paragraph 1.4 then went on to state that ‘significant design has been developed to date which has been taken to the end of RIBA stage 4’.
Dispute
A dispute emerged concerning design responsibility, which was then brought forward to adjudication. The contractor submitted that the wording contained within paragraph 1.4 of the employer’s requirements amounted to a warranty given by the employer. They argued that this statement specifically warranted that the design had been developed to the end of RIBA stage 4, prior to the date of the building contract. Accordingly, they argued that the employer was in breach of this warranty and that this would entitle the contractor to claim for additional time, costs and/or loss and expense pursuant to their own works in developing the design to the end of RIBA stage 4. The adjudicator agreed, and sided with the contractor.
Challenge
The adjudicator’s decision was challenged by the employer at the TCC. In doing so, they claimed that the contractor had taken full design responsibility for the entirety of the design in the employer’s requirements and could therefore not be entitled to claim for time, costs and/or loss and expense. Having examined the employers requirements, the contractor had accepted the stage to which the design had progressed, notwithstanding the statement at paragraph 1.4.
Decision
The court found in favour of the employer, noting that the key contractual terms all clearly sign posted that the contractor should take full responsibility for the employer’s requirements. The only exception to this position being paragraph 1.4 of the employer’s requirements.
This case highlights the importance of interpreting contracts as a whole rather than focusing on isolated clauses. It is a good example whereby an order of precedence clause would bring some welcome certainty.
The court’s analysis however, noted that the wording in the employer’s requirements was ‘nowhere near sufficient’ to require the wider contractual provisions to be ‘so heavily qualified’.
The intention of the parties was made clear by the adoption of a bespoke set of contractual amendments which imposed a greater burden of design responsibility on the contractor than the standard form.
The court therefore reasoned that significantly derogating from this position as a result of the statement in the employer’s requirements would deviate from the wider risk allocation that was agreed in principle between the parties.
Key implications
The contractual amendments considered in this case are routinely made to the JCT Design & Build form of contract, with employers procuring works on the understanding that the contractor will accept full responsibility for the design contained within the employer’s requirements. It is this single point of design responsibility which appeals to developer clients, notwithstanding the relinquished control in the design procedure. The court’s decision is therefore not particularly surprising.
That being said, despite the prevalence of this position (as regularly amended by contract amendments), it appears to be the first time that a court has considered a dispute regarding the extent to which an employer retains liability for the designs included in the employer’s requirements. To avoid any future disputes, there are some practical steps that can be taken by all parties (including key design consultants).
Practical considerations
This case highlights the importance of interpreting contracts as a whole rather than focusing on isolated clauses. It is a good example whereby an order of precedence clause would bring some welcome certainty. It enforces the need for employers to be wary of any statements in the employer’s requirements which in isolation may cut across the intended allocation of design responsibility set out in the contract conditions.
When reviewing and preparing these documents, care should be taken to avoid statements which could be construed as offering a guarantee or warranty as to the progress of design. A final sense check of the technical contract documents in tandem with the main contractual provisions would ensure a degree of consistency and avoid any uncertainty.
Parties should also ensure that clear lines of communication are maintained throughout the procurement and design phases of the project to ensure that all designers understand the extent and delineation of design responsibility. The theme of robust project management and clear communication certainly goes beyond the question of design responsibility, and is often at the forefront of reducing ambiguity and the potential for dispute.