A construction professionals' scope of duty - how far does it extend?

A recent case considers an application to strike out a professional negligence claim under CPR 3.4(2)(a) for wasted costs caused by delay and repayment of professional fees.

Glover and another v Fluid Structural Engineers & Technical Designers Ltd [2023] EWHC 3219 (TCC)

In the recent case of Glover and another v Fluid Structural Engineers & Technical Designers Ltd [2023][1] the court refused to strike out or dismiss a claim against a structural engineer for wasted costs and repayment of fees. The court focused on whether to grant the strike out by assessing the structural engineer’s scope of duty, and the circumstances in which a party may claim repayment of the fees.

To recap the relevant Civil Procedure Rules (the CPR):

• A court may strike out a claim where, amongst other things, the statement of case discloses no reasonable grounds for bringing or defending the claim (CPR r3.4(2)(a)).
• A court may give summary judgment where: (a) the claimant has no real prospect of succeeding on the claim or issue (CPR r24.2(a)(i)); and (b) there is no other compelling reason why the case or issue should be disposed of at a trial (CPR r24.2(b)).

Where applications are made to strike out under CPR r.3.4(2)(a) as disclosing “no reasonable grounds” for bringing the claim and, or for summary judgment, there is no difference between the tests to be applied.[2] The test for the proper grounds for strike out and/or summary judgment was set out in the case of ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007],[3] which said: “If the respondent’s case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant’s case is bad in law, the sooner that is determined, the better”.

Background

• The claimants (Glover) were the residential owners and occupiers of a London property who sought to refurbish and extend their property (such as a new basement, a full loft space at roof level (the Works).
• The defendant, Fluid Structural Engineers & Technical Designers Ltd, (Fluid), were structural engineers engaged by Glover under a written appointment for structural and civil engineering services which incorporated the terms of the Association of Consulting Engineers (ACE) Agreement 1 (Design) 2009 (the Appointment).
• Glover also appointed architects to provide services in relation to the design and engaged a main contractor (Chase) to undertake the Works under a JCT standard form of building contract.
• In September 2016, the Works commenced at the property and subsequently, damage and cracking were caused to the property and the adjoining properties. The cracking led to the Works being paused and recommenced on multiple occasions. Fluid undertook several inspections and produced several reports in relation to the extent of the cracking and the progress of the Works.
• In June 2019, Fluid produced a report which, as admitted by Fluid, contained an incorrect statement regarding how Chase had undertaken the Works and what it should have, but did not do. As a result, Chase’s contract was terminated, and a replacement contractor was appointed.
• The Works, originally due to be completed in February 2018, were not completed until 6 May 2021. At completion, Glover had incurred costs due to the delay and faced claims from the owners of the adjoining properties. Glover sought to recover these from the parties involved in the works and/or their respective insurers.

Glover’s claim and Fluid’s application

Glover brought a claim against Fluid on the basis they had acted in breach of duty by failing to:

1. “make site visits fortnightly (or at an adequate frequency) during the structural works;
2.  adequately report to the Claimants whether the structural works were being executed generally in accordance with the contract documents and with good engineering practice;
3. adequately record, or produce any documentation that records, its visits to site to consider the construction of the structural works.”[4]

It was alleged that the breaches resulted in Glover incurring considerable costs investigating matters (primarily relating to negligent design/construction by members of the project team), which Glover would have avoided if it had pursued claims under the insurance policies. Glover claimed the legal and investigation costs of £118,526.12 (the Costs Claim), and repayment of fees which they paid Fluid in relation to their alleged breach of duty (the Repayment Claim) totalling £15,730.35.[5]

 Fluid brought an application to strike out or dismiss the Glovers’ claims saying that neither of Glover’s claims could succeed as a matter of law and be allowed to go to trial (the Application).

Fluid submitted the Costs Claim were losses that did not fall within the scope of the duty agreed or assumed by Fluid in respect of the services carried out pursuant to their Appointment. Fluid’s position was based on the scope of duty principle explained in the UK Supreme Court case of Manchester Building Society v Grant Thornton UK LLP [2021],[6] and the role of a structural engineer in BDW Trading Limited v (1) URS Corporation Limited (2) Cameron Taylor One Limited [2021].[7] As for the Repayment Claim, Fluid’s position was these could only be recovered where it can be said that the professional services were either not provided at all or were worthless, either as to the whole or as to some specific part of the services.[8]

Glover contended the Costs Claim was in accordance with the scope of duty principle in Manchester Building Society or, at the very least, should not be summarily determined as being bad in law, because the application of the purpose and scope of duty principle is fact-specific and should only be determined at trial.

Glover reiterated this last point for the Repayment Claim (fact specific and should only be determined at trial).[9] Glover also submitted that just because Fluid is a structural engineer, it could not argue its only liability was for losses directly flowing from physical damage due to structural defects. This was on the basis that Fluid had specifically undertaken to investigate and or provide advice in relation to anticipated litigation.

The decision

At the hearing, the Judge HHJ Stephen Davies, focused on whether the proper grounds for strike out, or summary judgment had been met.

Dealing with the Costs Claim first, he held that it was at least arguable that Fluid was or should have been aware that the purposes of its performance of its duties in the construction phase extended to protecting Glover’s interests as a whole which included the potential consequences of damage to adjoining properties Their obligations included site visits, monitoring compliance and movement, which was to serve the additional purpose of allowing the Works to be properly investigated and resolved when faced with any claim.

Ultimately, the Cost Claim would be a question for trial, as to whether or not Glover could make out their case on the basis that initial pre-action costs were wasted due to an incorrect understanding of the true position, as a result of Fluid’s alleged breaches. HHJ Stephen Davies went on to say that Manchester Building Society v Grant Thornton UK LLP [2021] provided a perfectly satisfactory limit to the nature and extent of the losses for which structural engineers may be liable which, in appropriate cases, may extend to a liability for legal and other dispute-related costs incurred by their client or for which their client is liable.[10] For these reasons, the Cost Claim was not struck out as it was a question for trial.

As for the Repayment Claim, the judge focused on the authorities Multiplex Constructions (UK) Ltd v Cleveland Bridge UK Ltd [2006][11] and his own judgment in William Clark Partnership Ltd v Dock St Pct Ltd [2015][12]. Both cases focus on situations where the defendant has substantially (albeit negligently) performed the work, and the defendant is entitled to be paid the normal remuneration and the client must rely upon a remedy in damages. For Glover’s Repayment Claim to succeed it must show that the services were not performed at all, or were performed so poorly that they were worthless. Notably, a single joint expert report was undoubtedly highly critical of Fluid as to their failure to undertake fortnightly site visits and maintain site inspection records. Having reviewed the evidence, HHJ Stephen Davies held that it was at least possible that by the end of the trial, Glover may be able to establish that the services provided by Fluid would be so deficient that they were for all practical purposes worthless and be entitled to the Repayment Claim. For these reasons, the Repayment Claim was also not struck out as it was a question for trial.

Key takeaways

The dismissal of the application reinforces the courts approach to striking out of claims – namely that where there are valid arguments as to liability that it is inappropriate. It is also a reminder that in the context of the scope of a professional’s duty, the extent is determined by the purpose of the duty, with reference to why the advice is being given.  In each case this is a question of fact and analysis, and in this particular instance is still to be determined in the final hearing.

A practical lesson is the importance for professionals to have a clearly defined scope of work and obligations in a written appointment and where appropriate to consider limiting liability for certain categories of loss.