Cornes and Lupton's Design Liability in the Construction Industry

Sarah Lupton has degrees in architecture and law, and has over 30 years' experience as a partner in the London-based architects' practice of Lupton Stellakis. She combines practice with an academic post at the Welsh School of Architecture, as Professor and director of the MA in Professional Studies. She lectures widely on subjects related to construction law, and is an arbitrator, adjudicator and expert witness. Sarah is a member of many industry and professional committees, and is chair of the CIC Liability Panel, and past chair of the RIBA Presidents Advisory Committee on Dispute Resolution.  As well as this publication, she is the author of many books, including a series on standard form construction contracts.

Acknowledgements vii

Preface ix

1 The Industry Context 1

1.1 What is design? 1

1.2 Procurement routes 3

1.3 The construction professions: who are the designers? 10

2 Liability under Contract 19

2.1 Formation of a contract 20

2.2 Terms of the contract 26

2.3 Exemption clauses 32

2.4 Privity of contract 34

2.5 Assignment 35

3 Liability under Tort: Part 1 37

3.1 Definition of a tort 38

3.2 Liability and parties in tort 38

3.3 Vicarious liability 38

3.4 Negligence 40

3.5 Historical perspective 43

3.6 Anns v Merton London Borough Council (1978) 45

3.7 Junior Books (1983) 47

3.8 1985–1988: the retreat 48

3.9 D & F Estates Ltd v Church Commissioners for England (1988) 50

3.10 Murphy v Brentwood District Council (1990) 52

3.11 Tests for establishing a duty of care in respect of economic loss 54

3.12 Contract and tort concurrently? 55

3.13 Summary of the position in 1994 58

4 Liability under Tort: Part 2 (Post-Murphy) 59

4.1 Liability for physical injury and damage to other property 59

4.2 The ‘complex structure’ theory after Murphy 60

4.3 What if a defect is patent? 64

4.4 Liability for economic loss 65

4.5 Application of the tests following Henderson v Merrett 67

4.6 Contractors’ liability for pure economic loss 69

4.7 Consultants’ liability for pure economic loss 77

4.8 Summary of the position in 2013 79

5 Liability under Statute 81

5.1 Defective Premises Act 1972 82

5.2 Building Act 1984 88

5.3 Health and safety 89

5.4 Copyright 91

6 Liability for Professional Negligence 97

6.1 Reasonable skill and care 97

6.2 Application of the test to designers 99

6.3 Examples of failure to take care 100

6.4 Special skills 104

6.5 ‘State of the art’ defence 105

7 ‘Fitness for Purpose’ Liability 107

7.1 Contractors’ obligations 107

7.2 Reliance and partial reliance 115

7.3 Consultants and strict liability 120

7.4 Contractor’s duty to warn 124

8 Duties in Detail 133

8.1 General duties of a designer 133

8.2 Appraisal and site investigation 135

8.3 Budget issues 144

8.4 Design development 147

8.5 Commenting on/approving others’ designs 153

8.6 Inspection and certifi cation 157

8.7 Duty to review the design 172

9 Delegation of Design Duties 183

9.1 General issues 183

9.2 Option 1: Declining the commission 184

9.3 Option 2: Employer engages a specialist consultant direct 184

9.4 Option 3: Designer engages specialist designer direct 187

9.5 Option 4: Designer arranges for a contractor or sub-contractor to undertake the work 188

9.6 Option 5: Designer relies on outside sources 194

9.7 Is there a difference between delegation and reliance? 195

9.8 Summary of options 196

10 Liability to Third Parties: Procurement Issues 199

10.1 Relationship between contract and tort 199

10.2 Liability in particular situations 204

10.3 Warranties 215

10.4 Collaborative working 225

10.5 BIM 227

10.6 Insurance solutions 233

11 Damages and Contribution 235

11.1 General principles 235

11.2 Damages and designers 242

11.3 Contributory negligence and contribution 249

11.4 Damages recoverable on assignment 254

12 Limitation 259

12.1 Statutory periods 260

12.2 Limitation and contract 264

12.3 Limitation and tort 267

13 Measures for Limiting Liability 277

13.1 Using fi nancial caps 279

13.2 Limiting liability for loss of profits and consequential losses 282

13.3 Net contribution clauses 282

13.4 Agreeing shorter periods for limitation of liability 285

14 Standard Forms of Contract for Design-Build 287

14.1 Joint Contracts Tribunal (JCT) forms 287

14.2 GC/Works/1 forms 302

14.3 NEC3 Engineering and Construction Contract (ECC) 307

14.4 Project Partnering Contract (PPC2000) 309

14.5 FIDIC forms 311

15 Standard Forms of Appointment 317

15.1 RIBA 317

15.2 ACA 320

15.3 ACE 321

15.4 ICE 322

15.5 RICS 323

15.6 CIC 325

15.7 Novation and Switch Agreements 327

16 Professional Indemnity Insurance 329

16.1 General 329

16.2 Principles of professional indemnity insurance 330

16.3 The professional indemnity policy (consultants) 341

16.4 Avoiding disputes with insurers 345

16.5 Professional indemnity insurance for design and build contracts 347

16.6 Professional indemnity – changing insurers 352

16.7 Other types of insurance 353

17 Design Liability in the EU 357

17.1 Belgium 358

17.2 France 361

17.3 Germany 364

17.4 Italy 368

17.5 The Netherlands 371

18 Design Liability in the Rest of the World 375

18.1 Australia 375

18.2 China 379

18.3 The Middle East 383

18.4 Russia 388

18.5 USA 391

Bibliography 397

Cases and Legislation 401

Index 423