Design defects. Who pays?


Author: Gillian Birkby


Who pays the employer when a consultant and a subcontractor are both partially responsible for a design defect? The “joint and several liability” rule means that in this situation the innocent employer can pursue either or both of them for 100 per cent. of the damages it is claiming, which is particularly useful if one of them has become insolvent. Assuming that the consultant and the subcontractor are both able to pay, how are the costs of rectifying the defect apportioned between them?

There was a rule of thumb that a consultant would never pay more than in the range of 20 to 33 per cent. when it was a question of failure to discover defective workmanship on an inspection of the works.

Where both the consultant and the subcontractor have responsibility for some aspect of the design, a more sophisticated analysis is now called for, as in a recent case concerning the construction of a train servicing depot close to Wembley Stadium. To create the space for the depot, substantial excavations were made in clay, leaving slopes of 70 to 80 degrees which became unstable. This problem arose both during and after the excavation, although the problem during excavation of the slope seems to have been instability at high level whereas that after excavation was at a much deeper level.

Carillion engaged a consultant engineer, RWC, which was responsible for the “detail of design” and later became the lead consultant. The design of the specialist retained walls was carried out by the specialist contractor, Phi, with a review by the consultant, who was to “ensure that the specialist designers have addressed slip circle issues adequately”.

There were discussions among the main contractor, consultant and specialist contractor about the details of the design, which was to have a life of 120 years. Unfortunately, the design was entirely unsuccessful in this respect; there were three failures before the completion of the overall works and following the third failure extensive monitoring was put in place, and legal proceedings followed. Carillion and Phi settled their claims. Phi had also brought a claim against RWC for a contribution.

As far as RWC was concerned, the essential problem seemed to be that even though it was the lead consultant and there were two failures during the course of excavation of the slope, it never considered the fact that there could be instability at a deeper level. There was also a discrepancy in Phi’s figures which they had failed to notice.

The judge clearly thought that, when an incident of this nature occurred, RWC should have gone back and reviewed the early design and calculations. The judge said that if it had done so, the deep seated instability would have been identified. RWC had suggested to the employer at one point that it may be a good idea to consult an independent specialist, but when the employer did not respond, it never followed this up, and this also was criticised by the judge.

The contribution between a consultant and subcontractor in these circumstances is based on what is rather pompously known as the “causative potency” of the parties (i.e., how far their acts or omissions have caused the problem which has arisen) and also their relative blameworthiness. In this case RWC was not merely involved in commenting on Phi’s design. It was also lead consultant for the whole of the works and had a specific responsibility to advise on the need for further site investigation.

The judge thought that this last obligation must have meant RWC considering in detail the available site investigation reports and also the visible signs of surface movement. Therefore it was wrong to say that RWC had simply a checking or reviewing function. The judge decided that the “just and equitable apportionment” should be 60 per cent. to Phi and 40 per cent. to RWC, to take into account their equal responsibility in the pre-construction stage and the greater responsibility of Phi at the construction stage.

Gillian Birkby, partner, Fladgate LLP (gbirkby@fladgate.com)

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