Professional Obligations in Construction

It is an accepted point, in fact and in law, that the contractor comes into a relationship
with the engineer which is the result of the contractor entering into the contract with the
employer and of the engineer having been engaged by agreement with the employer to
perform the functions required under the contract. The engineer assumes the obligation,
under its agreement with the employer, to act fairly and impartially in performing its
functions. The engineer is under a contractual duty to the employer to act with proper
care and skill.

The contract provides for the correction, by the process of arbitration or the courts, of any
error on the part of the engineer and if there is any real scope for an error on the part of
the engineer which would not be at once detected by the contractor. The court will, at
least in the absence of any factual basis for the engineer to have foreseen any other
outcome, proceed on the basis that the contractor would recover the sums which it ought
to recover under the contract. It is, foreseeable that a contractor under such an
arrangement may suffer loss by being deprived of prompt payment as a result of
negligent under-certification or negligent failure to certify by the engineer and in the
case, among others, that the engineer does not provide an extension of time due to
unforeseen conditions for which the contractor is not liable.

The contractual duty of the engineer to act fairly and impartially, owed to the employer,
is a duty in the performance of which the employer has a real interest. If the engineer
should act unfair to the detriment of the contractor, claims will be made by the contractor
to get the wrong decisions put right. If court proceedings are necessary, then the
employer will be exposed to the risk of costs in addition to being ordered to pay the sums
which the engineer should have allowed. If the decisions and the advices of the engineer,
which caused the proceedings to be taken, were shown by the employer to have been
made and given by the engineer in breach of the engineer’s contractual duty to the
employer, the employer would recover its losses from the engineer. There is, therefore,
not only an interest on the part of the employer, in the due performance by the
engineer to act fairly and impartially, but also a sanction which would operate, in
addition to the engineer’s sense of professional obligation, to deter the engineer
from the careless making of unfair or unsustainable decisions adverse to the
contractor.

The respective rights of the parties should be of such a nature that they might be fairly
enforced whatever contingencies might arise and that, if such conditions were adopted, it
should be understood by all the parties that in the event of a dispute arising every clause
would be enforced without question. It might also be observed that the parties obligations
in their contractual arrangement have been based on the principle that the design of the
permanent works is, generally, carried out by someone other than the contractor.
The central question which arises is that the contractual structure of the contract into
which the contractor was prepared to enter with the employer implies that the contractor
will look to the engineer by way of reliance for the proper execution of the latter’s duties
under the contract. In other words, although the parties were brought into close proximity
in relation to the contract, a failure by the engineer or the architect to carry out their
duties under the contract would foreseeably cause loss to the contractor which was not
properly recoverable under its rights against the employer.

It is immediately apparent that there is no simple unqualified answer to the question

‘Does the engineer owe a duty to the contractor to exercise reasonable skill and
care?’ but that this question can only be answered in the context of the factual matrix
including especially the contractual structure against which such duty is said to arise.
This creates the complex issue of matrix of duties of care and the doctrines of privity and
agency.

In Ranger Vs Great Western Railway Company, where Ranger was the contractor
engaged on the construction of works including, inter alia, the Avon Bridge and the
engineer was Brunel. Ranger’s bills asserted fraud on the part of the company through
their engineer in two relevant respects. The first was that inspection pits misled the
contractor into underestimating the hardness of the rock to be excavated in the tunnel and
he was thereby induced to tender an uneconomically low price. The second point, of
greater subtlety, was that unbeknown to the contractor Brunel was a shareholder in the
company. Lord Cranworth, in affirming the duties of an engineer, said:
It is not necessary to state the duties of the engineer in detail: he was, in truth, made the absolute judge,
during the progress of the works, of the mode in which the appellant was discharging his duties; he was to
decide how much of the contract price of £63,028 from time to time had become payable; and how much
was due for extra works; and from his decision, so far, there was no appeal. The contention now made by
the appellant is, that the duties thus confided to the principal engineer were of a judicial nature; that Mr.
Brunel was the principal engineer by whom those duties were to be performed, and that he was himself a
shareholder in the company; that he was thus made a judge, or arbitrator, in what was, in effect, his own
cause.

The case of Sutcliffe v Thackrah established that an architect owes a duty of care towards
his client and the contractor, in the performance of all duties including contract
administration and certification, and could be liable for negligence in the performance of
those duties. The House of Lords acknowledged, obiter dicta, that a professional
consultant had an implied duty to act impartially when deciding questions between its
client and the contractor; this means acting independently, honestly, fairly and without
bias. Lord Salmon stated:
No one denies that the architect owes a duty to his client to use proper care and skill in supervising the
work and in protecting his client’s interests. That, indeed, is what he is paid to do. Nevertheless, it is
suggested that because, in issuing the certificates, he must act fairly and impartially as between his client
and the contractor, he is immune from being sued by his client if, owing to his negligent supervision (or
as in the present case) other negligent conduct, he issues a certificate for far more than the proper amount,
and thereby causes his client a serious loss.

In Sutcliffe v Thackrah, Lord Reid, by emphasising the duty of an architect to act

reasonably and fairly and above all in a professional manner, said:
The employer and the contractor make their contract on the understanding that in all matters where the
architect has to apply his professional skill he will act in a fair and unbiased manner in applying the terms
of the contract. An architect is not an arbitrator but he has two different types of function to perform. In
many matters he is bound to act on his client’s instructions, whether he agrees with them or not; but in
many other matters requiring professional skill he must form and act on his own opinion.

In Arenson v Casson Beckman Rutley & Co., Lord Salmon, in dismissing a submission
made that there should not be a duty owed by the architect to the contractor since it
would put the former in the risk of being liable for both the client and the contractor
simultaneously, said in favoring the principles set by Sutcliffe v Thackrach (1974)
(supra):
In spite of the remarkable skill with which this argument was developed, I cannot accept it. Were it
sound, it would be just as relevant in Sutcliffe v Thackrah as in the present case. The architect owed a
duty to his client, the building owner, arising out of the contract between them to use reasonable care in
issuing his certificates. He also, however, owed a similar duty of care to the contractor arising out of
their proximity. In Sutcliffe v Thackrah the architect negligently certified that more money was due than
was in fact due; and he was successfully sued for the damage which this had caused his client. He might,
however, have negligently certified less money was payable than was in fact due and thereby starved the
contractor of money. In a trade in which cash flow is especially important, this might have caused the
contractor serious damage for which the architect could have been successfully sued. He was thus
exposed to the dual risk of being sued in negligence but this House unanimously held that he enjoyed no
immunity from suit.

In Anns v Merton London Borough Council, Lord Wilberforce, after reviewing the
trilogy of cases namely, Donoghue v Stevenson, Hedley Byrne & Co. Ltd. v Heller &
Partners Ltd., and Dorset Yacht Co. Ltd., v Home Office, introduced a two stage test for
imposing a duty of care by stating the following:
Rather the question has to be approached in two stages. First one has to ask whether, as between the
alleged wrongdoer and the person who has suffered damage there is a sufficient relationship of proximity
or neighbourhood such that, in the reasonable contemplation of the former, carelessness on his part may
be likely to cause damage to the latter-in which case a prima facie duty of care arises. Secondly, if the
first question is answered affirmatively, it is necessary to consider whether there are any considerations
which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is
owed or the damages to which a breach of it may give rise.

In Governors of the Peabody Donation Fund v Sir Lindsay Parkinson & Co. Ltd., the
court held that the true question to find negligence was whether the particular defendant
owed the particular plaintiff a duty of care having the scope pleaded and that it was
reasonable for that duty to be imposed. It was not reasonable to impose a duty on the
local authority, in this case, to indemnify the builders from relying upon the advice of
their own architects and contractors. Lord Keith stated the following:
The true question in each case is whether the particular defendant owed to the particular plaintiff a duty of
care having the scope which is contended for, and whether he was in breach of that duty with consequent
loss to the plaintiff. A relationship of proximity in Lord Atkin’s sense must exist before any duty of care
can arise, but the scope of the duty must depend on all the circumstances of the case.

(1978) AC 728. The claimants were tenants in a block of flats. The flats suffered from structural defects
due to inadequate foundations which were 2ft 6in deep instead of 3ft deep as required. The defendant
Council was responsible for inspecting the foundations during the construction of the flats. The House of
Lords held that the defendant did owe a duty of care to ensure the foundations were of the correct depth.

The architects proposed a system of flexible drains for a site, but the contractors persuaded them to accept
rigid drains which once laid proved inadequate at considerable cost. The local authority permitted the
departure from the plans.