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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Lendlease Construction (Europe) Ltd v Aecom Ltd (Rev1) [2023] EWHC 2620 (TCC) (01 November 2023) URL: https://www.bailii.org/ew/cases/EWHC/TCC/2023/2620.html Cite as: [2023] EWHC 2620 (TCC) |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (KBD)
7 Rolls Building, Fetter Lane, London, EC4A 1NL |
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B e f o r e :
____________________
| LENDLEASE CONSTRUCTION (EUROPE) LIMITED |
Claimant |
|
| - and - |
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AECOM LIMITED |
Defendant |
____________________
Lynne McCafferty KC and Matthew Thorne (instructed by Beale Law) for the Defendant
Hearing dates: 30th November, 1st, 5th, 6th, 7th, 8th, 12th December 2022 (further submissions 10th March 2023)
____________________
Crown Copyright ©
Mr Justice Eyre:
Introduction.
Aecom")
was in breach of its obligations to Lendlease under a contract to provide mechanical and electrical consultancy services in relation to the Project ("the Consultancy Agreement") and seeks to recover losses said to have been caused by such breaches[1].
Aecom
and Lendlease had been undertaking work in relation to it since then. Pursuant to the Project Agreement and the other agreements to which I will now turn the Oncology Centre is operated by Project Co and maintained by Engie Buildings Ltd ("Engie").
The Relevant Contracts.
i) Project Co's engagement of Lendlease under a design and build contract ("the D&B Contract") to build the Oncology Centre.
ii) Lendlease's engagement of
Aecom
under the Consultancy Agreement.
iii) Project Co's engagement (by way of the novation of an agreement with Lendlease) of Engie to carry out estate maintenance renewal and replacement services at the Oncology Centre over the 30 year lifetime of the PFI Project ("the EM Contract").
iv) A tri-partite agreement between Project Co, Lendlease, and Engie ("the Co-Operation Agreement") setting out their respective obligations and liabilities. This made provision for the resolution and re-allocation of claims and liabilities between those parties. As explained by Joanna Smith J the effect was that Project Co could require Engie to carry out remedial works and, if those remedial works related to defects caused by Lendlease, Engie was entitled to claim an indemnity for the cost of those works from Lendlease.
v) An agreement between
Aecom
and Project Co ("the Collateral Warranty") under which
Aecom
gave Project Co a warranty in respect of its performance under the Consultancy Agreement.
Aecom
disagree about the scope of the Consultancy Agreement and
Aecom's
obligations under it. In short Lendlease says that
Aecom
was to be responsible for the design of the mechanical and electrical services in relation to the Project and to be the lead consultant responsible for the Fire Safety Strategy ("the Fire Strategy") and the design thereof. Lendlease says that it sub-contracted to
Aecom
its obligations to Project Co under the D&B Contract in respect of MEP services and fire safety design.
Aecom
says that when properly analysed its obligations under the Consultancy Agreement were rather more limited and were not an exact replication of Lendlease's obligations to Project Co. In addition in June 2005 Lendlease had engaged Rotary Yorkshire Ltd ("Rotary") as its installation sub-contractor for MEP services. A further aspect of the dispute about the extent of
Aecom's
obligations concerns the extent to which it was open to
Aecom
to leave matters of detail to Rotary.
The Procedural and Litigation Background.
Aecom
and Lendlease with the former asserting that fees were outstanding and the latter alleging defects in
Aecom's
performance under the Consultancy Agreement. This dispute culminated in a deed of settlement ("the Settlement Agreement") executed on 28th September 2012. The effect of that agreement on the claims now being made is in issue between the parties and will be considered further below.
Aecom
in 2018 initially in respect of issues which had been raised by Engie but subsequently in respect of the points being advanced by Project Co.
Aecom
in these proceedings was issued on 30th May 2019. Lendlease seeks to pass down to
Aecom
liability in respect of matters which it contends were the consequence of
Aecom's
breaches of its obligations under the Consultancy Agreement. Lendlease says that the Plant Room 2 Defects were all the consequence of
Aecom's
breaches and that it is entitled to be indemnified in the full amount of its liability to Project Co. Lendlease maintains that
Aecom
was in breach by reason of the facts pleaded in respect of Defect 2 but accepts that no separate loss flowed from that alleged breach. In respect of Defects 10 – 25 Lendlease does not attribute the workmanship defects to
Aecom
but it does say that the latter is responsible for the defects in relation to matters of MEP design. These are said to be Defects 11, 13, 14, 15, 18, 19, 21, 22, and 23 ("the Non Plant Room 2 Defects"). Lendlease says that £2,161,000 of the sum payable in settlement of the claim relating to Defects 10 – 25 is attributable to those defects. It also claims £463,599.71 for additional design costs relating to Defects 13, 18, and 19; £62,300 in respect of
Aecom
design fees; £159,178.35 for management time; and £160,080 (by way of reduction of the sum of £200,000) in respect of the legal costs paid to Project Co and Engie.
Aecom's
contractual obligations under the Consultancy Agreement (it being accepted that any claim in negligence would be statute-barred). To the extent that reference was made to negligence or to a breach of a duty of care that was now to be regarded as a reference to the contractual duties of care and skill which Lendlease said derived from the Consultancy Agreement.
Plant Room 2 and the Proceedings before Joanna Smith J.
"The generators shall be located within the level –1 designated plant area, contained within their own rooms. Each generator room is a 1 hour fire compartment and a separate designated fire zone."
"The generators shall be located within the level –1 designated plant area, contained within their own room within the main plant room area."
Aecom's
design had been provided to Lendlease just over a year before that in July 2005.
Aecom
says that Rev 19 was produced to reflect the "as built" state of the Plant Room; that
Aecom
only learnt of the absence of fire compartmentation in Plant Room 2 when it was told of this by Lendlease in November 2007; that Rev 19 took the form it did as a consequence of Lendlease's insistence that it reflect the "as built" Plant Room; and that
Aecom's
reservations about this were overcome by insistence from Lendlease and confirmation that the installation in that way had been approved by Leeds Building Control. For its part Lendlease said that the absence of fire compartmentation was a consequence of the design which had been provided by
Aecom
and that
Aecom
remained obliged to advise Lendlease of Rev 19's non-compliance with the Health Technical Memoranda to which I will turn shortly.
Aecom
in the events leading up to Rev 19 and have heard argument on behalf of
Aecom.
Moreover,
Aecom
was not a party to the proceedings before Joanna Smith J. The issue for me in relation to Rev 19 is the responsibility as between Lendlease and
Aecom
for the Fire Strategy as contained in that document and the associated drawings. It follows that Joanna Smith J's analysis can provide me with little assistance on this question.
The Issues.
i) The nature of
Aecom's
obligations to Lendlease and their relation to the latter's obligations to Project Co. This will involve consideration of the extent of
Aecom's
design responsibility and the extent to which it is answerable for the consequences of the actions of Rotary (although in light of the conclusions reached on a number of the other issues rather less will turn on the latter point than appeared to be likely at one stage); the extent to which
Aecom's
obligations to Lendlease reflected those of the latter to Project Co including the issue of the extent to which
Aecom
was obliged to achieve a particular outcome or attain a particular standard as opposed to exercising reasonable care and skill (and the extent, if any, to which there is a difference between obligations so described); and whether
Aecom
had a continuing duty to review matters and/or to advise and/or warn Lendlease whether after having provided its design originally or upon being asked to provide Rev 19.
ii) Whether and if so to what extent the claim is statute-barred. There are two aspects of this issue. The first is a matter of the construction of the Consultancy Agreement. It will be necessary to consider whether the Consultancy Agreement took effect as a deed and whether, if it did not take effect as a deed, it nonetheless provided for a limitation period of 12 years. It is not suggested on behalf of Lendlease that the claim was brought within time if the limitation period is one of 6 years. The second aspect arises from
Aecom's
contention that even if the relevant limitation period is one of 12 years significant parts of the claim are statute-barred. For
Aecom
Miss McCafferty says that Lendlease's causes of action in respect of the Non-Plantroom 2 Defects all arose before 30th May 2007 and that in respect of the Plantroom 2 Defects all save those resulting from the issuing of Rev 19 on 19th November 2007 are statute-barred. In this regard the outcome will depend in part on the conclusion reached as to the nature of
Aecom's
duty and in part on that reached in respect of the origin of and responsibility for Rev 19 and it will need to be considered after the resolution of those questions.
iii) The proper interpretation and, accordingly, the effect of the Settlement Agreement. It will be necessary to consider the scope of the claims covered by that agreement; whether the alleged defects on which Lendlease now relies ought reasonably to have been known to it at the time of the agreement; and, if so, whether the agreement precludes the bringing of a claim in respect of those defects.
iv) The origin of and the responsibility for Rev 19 together with its relation to the as-built state of Plant Room 2. The conclusion on this issue will affect the determination of the obligations owed by
Aecom
at that time and consequently whether there was a breach of such obligations. As noted above the conclusion on this issue will also be relevant to
Aecom's
limitation defence.
v) There is a limited issue as to contributory negligence.
Aecom
contends that Lendlease was contributorily negligent by reason of the omission of internal fire walls enclosing the G2 generator panel in Plant Room 2. This is advanced as a defence in respect of Defects 1 and 1C and I will consider it in relation to those.
vi) The determination of liability and quantum in respect of each of the particular alleged defects in light of the conclusions reached on the preceding issues. In addition to the points already noted in relation to liability and limitation
Aecom
takes issue with the quantum of the claim. In that regard it will be necessary to consider the effect of the settlement with Engie of the Non-Plant Room 2 Defects and of the judgment of Joanna Smith J in relation to the Plant Room 2 Defects.
The Principal Relevant Provisions of the Consultancy Agreement.
"The Consultant shall be deemed to have notice of and shall observe the Employer's Requirements and/or the Project Agreement and/or the Principal Agreement to the extent the same shall have been issued to the Consultant by the Contractor and to that extent shall be deemed to have full knowledge of the terms and conditions of the Employer's Requirements and/or the Project Agreement and/or the Principal Agreement. To the extent of the obligations of the Consultant as set out in this Agreement, the Consultant shall ensure that no act, default or omission of the Consultant shall cause or contribute to any breach by the Contractor of any of its obligations contained in the Employer's Requirements and/or the Project Agreement and/or the Principal Agreement."
"In consideration of the Consultancy Fee set out in the First Schedule, the Contractor appoints the Consultant as the Structural and Services Engineer on the terms set out below for the provision of Consultancy Services referred to in the Second Schedule and in particular, in connection with the Principal Agreement to be entered into with the SPV by the Contractor at Financial Close."
"The calculations, drawings, specifications, plans, advice, submissions and other documents prepared by the Consultant in accordance with the Second Schedule."
"The team comprising the Contractor, the Consultants with design responsibility and all Subcontractors with design responsibility."
"The Consultant warrants that he has exercised and will exercise all reasonable skill care and diligence in conformity with the normal professional standards of a consultant holding himself out as a competent consultant experienced in the provision of such services for projects similar in scope and complexity to the Works and having regard for the dates and periods stated in the Contract Programme and Design Service Programme and duties herein described and will comply in all respects with the requirements of the local authority, statutes, regulations, and codes of practice in force and relevant to the design of the Works, including but not limited to fire, health and safety. Notwithstanding any other clause in this Agreement or the Principal Agreement or term implied by statute or common law, the Consultant shall not be construed to owing any greater duty in relation to this Agreement than the use of necessary reasonable skill, care and diligence pursuant to this Clause 4.01."
"The Consultant shall act upon all written instructions issued by the Contractor as soon as reasonably practicable, including but not limited to any variation in relation to an addition, modification, deferment, omission, reduction from or substitution of any of the Consultancy Services. Any adjustment to the Consultancy Fees for any such variation shall be ascertained in accordance with Clauses 5.13 or 5.14 as appropriate."
"6.04 The Consultant shall exercise all reasonable skill, care and diligence to see that there will not be recommended or selected in relation to the Consultancy Services, or post completion commissioning or in the rectification of any defects which are required under the Contract to be carried out, materials which are generally known to be
6.04.1 deleterious to health and safety or the durability of the building and/or other structures and/or facilities and/or finishes and/or plant and machinery forming part of the Works in the particular circumstances in which they are used or
6.04.2 which are otherwise not in accordance with the Building Research Establishment Digest, British Standards, equivalent European or International standards recognised in the United Kingdom, Codes of Practice or
6.04.3 which do not otherwise accord with established and accepted UK building and/or established and accepted UK engineering practice or techniques current at the date of recommendation or selection as the case may be."
"6.05 The Consultant shall inform the Contractor forthwith in the event of the Consultant becoming aware that any materials which are not in accordance with Clause 6.04 above. This clause does not create any additional duty for the Consultant to check the work of others which is not required by this Agreement."
"Where necessary the Consultant shall comment upon such drawings, specifications, agreements and the like as may be received by the Consultant from other Consultants, the Contractor, Subcontractors or other specialists which touch or concern the Consultancy Services and provide such comments within 5 Working Days of receipt by the Consultant, or as otherwise agreed with the Contractor. The Consultant's comments shall not relieve the party who has produced or caused to be produced on their behalf the drawings, specifications, agreements and the like in respect of the Works of any liability in respect of the same, and the Consultant shall not be liable for the same."
Clause 6.12 said:
"6.12 In performing the Consultancy Services, the Consultant shall:
6.12.1 insofar as it is within its control or the control of any specialist subconsultant, subconsultant or other person engaged by the Consultant in connection with the provision of the Consultancy Services, provide advice, documents (including designs, drawings, information and specifications), consents, comments, approvals, instructions, certificates and reports promptly, efficiently and in good time in accordance with the Construction Programme and the Design Service Programme (as developed from time to time) and advised by the Contractor. The Consultant shall not be responsible if the Consultancy Services are not completed within the required timescales to the extent that the same is due to the negligence or default of others, save for any specialist subconsultant, subconsultant or other person engaged by the Consultant in connection with the provision of the Consultancy Services. If the performance of the Consultancy Services is delayed, the Consultant shall use its best endeavours to expedite the provision of the Consultancy Services in order to recover the delays without any additional cost to the Contractor save to the extent that the the performance of the Consultancy Services is delayed due to the negligence or default of others, in which case the provisions of clause 6.01 shall apply, and the Consultant shall be entitled to payment in accordance with clause 5.13, but in doing so the Consultant shall at all times comply with its obligations under this Consultants Agreement. For the avoidance of doubt the Consultant's liability in respect of delay related costs shall only apply if and to the extent that the Consultant has failed to exercise reasonable skill and care as set out in clause 4.01 or the Consultant has committed an error or omission.; and
6.12.2 The Consultant shall have due regard to the Employer's Requirements (as developed or amended from time to time) and shall immediately advise the Contractor (with reasons) if the Consultant considers that any of the objectives and requirements in the Employer's Requirements are not reasonable or attainable."
Aecom
to advise as to the making of applications in these terms:
"The Consultant shall advise the Contractor in writing in accordance with the Contract Programme and Design Service Programme whenever it is necessary for the Trust SPV Contractor to make applications for approval under Building Acts, Regulations and other statutory requirements as are necessary for the performance of the Works, provided always that the Consultant shall advise the Contractor of the need to make such applications on a date which, having regard to the Completion Date is neither unreasonably distant from nor unreasonably close to the date on which it is necessary for the Contractor to receive such approvals. Following advice from the Consultant, the Contractor shall instruct the Consultant to make the necessary applications for approval under Building Acts, Regulations and other Statutory Requirements."
Aecom's
expertise in the provision of the Consultancy Services.
"The Architect shall be responsible for the co-ordination and integration of all design Information provided by the Design Team the Contractor pursuant to the Principal Agreement including the issue of all drawings and other detail and will be deemed to be the Lead Designer."
Aecom
was designated as responsible to lead and coordinate. Matrix 2 similarly addressed responsibility for coordination of design. Matrix 3 addressed "MEP Services Installation Design Activities". It did so in three columns: "Design Activity", "Responsibility", and "Additional Explanation". The Responsibility column was broken down into three further columns: "Designer", "Installer", and "Other" with boxes entered to indicate which of those had responsibility for which matters in the Design Activity column.
Aecom
had extensive responsibilities at all stages. Paragraph 6 detailed
Aecom's
responsibilities in the "Post Contract Pre-Construction and Construction Period". The thirty-one used sub-paragraphs are to be read as a whole but the following are of particular note:
"6.1 Regularly review and update a Design Programme for the issue of information and submissions for approval including all builder's work requirements throughout the duration of the Contract. Issue a schedule of all building services drawings and other information to be provided for the Works, including a building services design drawings register."
6.2 Update the information provided in the previous Stage so that the building services designs and specifications are compliant with those defined in the Contract.
6.3 Re-evaluate the building services design and consider alternative products and materials and value engineer the design with the other members of the Design Team, sub-contractors carrying out design and the Contractor to ensure the most economical design solution, subject to the constraints imposed by the Accommodation Output Specification. Participate in Value Engineering workshops if required.
6.4 In conjunction with the Contractor and other Consultants, agree and confirm design and co-ordination responsibilities for each proposed sub-contract element.
…
6.6 Provide when required relevant drawings, specifications and schedules for the tendering and/or placing of sub-contract orders for the building services works.
6.7 When required certify compliance of the design and specifications with all relevant current legislation. Advise on and assist the Contractor to obtain any necessary derogations.
6.8 Review, comment upon and liaise with the Lead Designer to assist him co-ordinating the building services subcontractors' designs and production information, and advise on non-compliance with the brief and design programme requirements. Review and comment upon whether the detailed design developed by the design and install sub-contractors complies with the construction sequence, temporary works requirements and methodology as determined by the Contractor's Construction Programme and is within the cost allowance in the Contractor's Proposals. Encourage value engineering by Sub-contractors.
…
6.10 Advise the Contractor of any variations arising from the sub-contractors' designs, assist in their evaluation, and advise on their impact on the other building elements.
6.11 Liaise with the Lead Designer to assist him co-ordinate and ensure that sub-contractors' designs are fully co-ordinated with the design by the other Consultants and respect the tolerances defined by the lead Consultant at trade and zone interfaces.
…
6.13 Continue discussion with Statutory, Fire and other Regulating Authorities and advise the Contractor and other Consultants regarding the placing of orders for incoming Statutory Services. Provide the necessary information to enable the Architect to secure the clearance of Town Planning matters, Building Regulations and any other regulatory approvals.
6.14 Provide such further information as is reasonably requested to enable sub-contractors to complete their design and installation drawings.
6.15 Comment on the sub-contractors' design progress and attend meetings with the Contractor, Sub-Contractors, the Design Team, the SPV and/or the Trust as reasonably necessary
…
6.22 At suitable intervals inspect the Works by performing a construction quality audit role and report to the Contractor on areas of non-conformance to the specified standards and in addition, when required, advise on the progress of the Works.
…
6.26 Maintain awareness of the site developments and check and confirm that the Operating and Maintenance Manuals and As-Installed Drawings prepared by sub-contractors are in accordance with the requirement of the Planning Supervisor for inclusion in the Health and Safety File and EC requirements.
…
6.28 On completion of the Works or each phase of the Works prepare in conjunction with the Contractor and other Consultants a schedule of defects and inspect/approve the making good of such defects.
…"
Aecom's
responsibilities broken down by stages. It began with this preamble:
"The [Aecom]
design brief currently allows for providing the lead and assisting the Architect in designing the fire safety strategy to comply with the brief. The further advice covers specialist advice relating to its application, and liaison with Building Control to ensure that the design approach adopted is compliant with the latest recommendations of HTM 81 and Approved Document B."
Aecom
was to:
"Liaise with Building Control or their approved Inspectorate to assist with HTM 81 and the AD issues raised during detailed design.
Attend meetings with Building Control during detailed design to clarify design principles.
Assist the team with the submission of the Part B compliance documentation and comment on the proposed content.
Respond to queries raised by Building Control during the detailed design and construction period relating to HTM 81 and the AD."
Aecom
was to "liaise with the Architect as required to see that the detailing is being constructed in accordance with the requirements."
The Approach taken to Assessment of the Evidence.
Aecom
until the following year. As will be seen there were further difficulties beyond those which would inevitably flow from evidence being given about matters after such an interval.
Aecom
David Burton had some although limited involvement in the preparation of designs in the period October 2004 to July 2005 and some occasional involvement for a period thereafter. He had no further dealings in relation to the Project until he became involved in investigating the claims being made against
Aecom
in 2018.
Aecom's
Project Director in respect of the Project and gave direction to
Aecom's
team. He accepted that he would have seen most but not all of the emails, correspondence, and other documentation about the Project at the time. He left the employ of
Aecom
in April 2012 returning in June 2015. However, it was not until 2019 that Mr Middleton was asked to cast his mind back to the relevant events with a view to addressing the contentions made by Lendlease. Understandably in the course of his evidence Mr Middleton accepted that there were matters he could not recall.
Aecom
but he did not begin working for them until 2014 and had no involvement in the matters giving rise to the claim. Mr Taylor was engaged from 2019 onwards in investigating the matters raised by Lendlease. His evidence consisted almost entirely of the conclusions which he had reached as a result of those investigations. It related to two matters: the resilience of the domestic hot water systems (Defect 15) and the sizing of the condensate pipework (Defect 13). As to the former it was non-expert opinion evidence and has played no part in my conclusions. As to the latter in part the evidence recorded the respects in which the installation on site differed from
Aecom's
drawings. Although this was technically opinion evidence it was non-contentious because it was common ground that the installation differed from
Aecom's
drawings. The further points which Mr Taylor made as to the adequacy of
Aecom's
design and the potential cause of the venting which was being encountered were non-expert opinion evidence and I have taken no account of it.
Aecom's
Lead Fire Engineer and had considerable involvement in the relevant dealings. Not only has he been retired from
Aecom
for some years but when he was last in contact with
Aecom
he was said to have been elderly and not in good health. Against that background
Aecom
had not sought to obtain evidence from him.
Aecom.
Neither of those gentlemen gave evidence before me. The explanation given for this was that they had ceased to work for
Aecom
some time ago. In the case of Mr Palmer that was in September 2010.
Aecom's
witnesses were similarly working on the basis of incomplete records.
Aecom's
involvement in the Project had been managed from its Altrincham office. However, that office was closed in 2010 or 2011 several years before this dispute arose. The difficulty of obtaining documents was compounded by the fact that at the time of the closure of the Altrincham office
Aecom
had been in the process of changing from hard copy to electronic records and that it had been unable to access the tape system on to which the electronic records from the Altrincham office had been downloaded. Nigel Hodgson, a commercial director of
Aecom,
explained that in those circumstances
Aecom
had worked on the basis of such hard copy documents that it could find in such archive boxes as it could recover.
Aecom
said that it had been hampered by Lendlease's refusal to allow it independent access to the BIW system on which documents had been stored electronically. This was a digital document management platform operated by Lendlease. In the course of the Project those involved were given access to this and had the opportunity to upload documents onto the platform and to download those which had been uploaded by others. Lendlease did not include the platform in its disclosure and refused to give
Aecom
access to it. At the Costs and Case Management Conference Lendlease explained to me that this was because it believed all the relevant documents which would be found on a search of the platform would be thrown up by other searches. I have no doubt that was Lendlease's genuine belief at the time. On that basis I declined to order disclosure of the platform. I do not propose to speculate on whether a search of that platform would in fact have revealed further relevant documents still less as to the content of such documents. It suffices to note that the parties and the court had to approach the case without the assistance of a complete documentary record.
Aecom's
responsibility for design only extended to the end of RIBA Stage E and that the division between the RIBA stages governed the allocation of responsibility between
Aecom
and Rotary. I will consider below whether that is the correct interpretation of the Consultancy Agreement. For present purposes the relevance is that Mr Burton was unwilling to engage with points made by reference to material suggesting a different analysis and that this was coupled with a downplaying of the extent to which
Aecom
retained a responsibility for or involvement in the work after its design had been produced. I remind myself that Mr Burton's involvement in the Project was limited and that he was being asked about matters which occurred at a time when that involvement had become no more than occasional. Nonetheless, I formed the impression that Mr Burton had come to a particular view and was unwilling to engage with any potential alternative interpretation of the material.
Aecom's
performance should be read in that way. Similarly although conceding he was not a fire engineer he was resolute in resisting the suggestion that there might not have been compliance with HTM 81. At other points (an example of which is his evidence about an email exchange in August 2006 which I will consider below) his evidence was at least in part an exercise in the subsequent rationalisation or justification of what he believed had happened or had been meant rather than one of recollection. I remind myself of the considerable caution which must be exercised in drawing any conclusions based on the demeanour of a witness. In addition I take account of the fact that Mr Middleton's stance appeared in part to result from understandable frustration at being questioned in detail about the meaning or effect of documents prepared several years ago including documents of which he not only had not been the author but which he had not seen at the time.
Aecom.
Miss McCafferty was critical of this. In particular she criticised the approach which had been taken for example by Mr Jones in advance of Joanna Smith J's judgment of saying that he reserved the right to align his opinion with that of the judge. Miss McCafferty said that by aligning their evidence with the approach adopted by Joanna Smith J the experts were failing to give properly independent expert evidence and went as far at points to say that the experts were changing their evidence to suit the changed position of Lendlease. I am satisfied that in general Miss McCafferty's criticism both over-stated and over-simplified the position and that Lendlease's experts were not giving evidence contrary to their true opinions in order to advance their client's case. An expert witness must maintain his or her independence and express frankly his or her true professional opinion. If that opinion remains it cannot be expressed differently just because a judge in a different case has disagreed with it. However, an expert is entitled to revise his or her opinion in light of a judge's finding as to what is or is not required in order to comply with particular regulations or equivalent regulatory standards. In the context of this case the experts were entitled to take account of the judgment of Joanna Smith J in those regards. That judge having found that aspects of the installation did not comply with HTM 81 the experts were entitled to accept that as a definitive assessment of the position and to revise an earlier opinion that there had been compliance. In addition reflection on points made in cross-examination or by another expert or the assessment by a judge can entirely properly lead to a revision of an opinion. Indeed an expert witness would not be fulfilling his or her duty to the court if he or she failed to reflect on such points and on the earlier judgment. I formed the impression that this was in most respects what had happened here subject to the qualifications in respect of particular aspects of the evidence which will appear in my treatment of the defects.
Aecom.
Second, to the extent that
Aecom's
obligations are found to have been to exercise due care and skill rather than to achieve a particular result then it may be relevant that the approach taken by
Aecom
accorded with that which Lendlease's expert witness had previously regarded as appropriate.
The Limitation Defence based on the Consultancy Agreement.
Aecom
advances two limitation defences. The first is that the Consultancy Agreement operated as a contract but not as a deed with the consequence that the relevant limitation period is 6 years from the date of the accrual of Lendlease's cause of action meaning that every part of the claim is statute-barred. The second is that even if the relevant limitation period is one of 12 years significant parts of the claim are nonetheless statute-barred because the cause of action in relation to them accrued more than 12 years before the commencement of proceedings on 30th May 2019.
Aecom's
case as to the date of the accrual of the relevant causes of action and I will consider that issue and
Aecom's
second limitation argument below after having considered the questions of the nature and extent of
Aecom's
duty and of the origins of and responsibility for Rev 19.
Aecom
to take place in one of two ways. One was execution by the affixing of the relevant party's common seal in the presence of either two directors or a director and the company secretary. The other was by the document being expressed as being executed by the company as a deed and signed by two directors or by a director and the company secretary.
Aecom
they did not sign in the section asserting that the agreement was being executed as a deed by
Aecom
acting by two directors but in the signature block above that. This was the section providing for execution by the affixing of
Aecom's
common seal in the presence of two directors. The signatures of Mr Cooper and Mr Palmer, accordingly, purport to be the signatures of persons witnessing the affixing of
Aecom's
common seal. That seal was never affixed to the Consultancy Agreement. It is to be noted that a footnote to the phrase "executed as a deed by the consultant" had been inserted before the signing of the agreement. That footnote stated that "the named directors are Michael Cooper and Gareth Jones". It is also to be noted that the prepared text alongside the space where Mr Palmer signed read as "director/company secretary" and that the words "company secretary" were deleted in manuscript leaving "director" as the description next to Mr Palmer's signature.
Aecom.
Mr Cooper had been a statutory director but had resigned from that position in November 2003 when there was a rearrangement of
Aecom's
board with a reduction in the number of statutory directors. Mr Cooper had then been appointed a special director of
Aecom.
Mr Palmer had never been either a statutory director or a special director of
Aecom.
He had described himself as having been a director of
Aecom
from January 2004 in a subsequent LinkedIn profile and had been described as such in a magazine article of March 2006 based on an interview with Mr Palmer.
Aecom's
Altrincham office together with Gareth Jones (the other person named in the footnote in the Consultancy Agreement). Although Mr Burton was not able to say what, if any, difference in authority there was between Mr Cooper and Mr Jones Mr Middleton's evidence was to the effect that Mr Cooper was the boss at Altrincham. In that capacity Mr Cooper was in charge of
Aecom's
involvement in the Project. Mr Middleton accepted that Mr Cooper had the authority within
Aecom
to sign contracts of the nature of the Consultancy Agreement. He also accepted that this was a high level of authority. Neither of those witnesses was asked about the role of Mr Palmer.
Aecom's
current approach to the role of directors. In short it no longer has employees designated as special directors. However, there are a number of persons who hold powers of attorney by virtue of which they are able to execute deeds on behalf of
Aecom.
Mr Hodgson began working for
Aecom
in 2014 and was not able to give evidence about the arrangements in 2004. Similarly Alan Avey who was Lendlease's sole lay witness did not have any involvement in these matters until 2016 and so was not able to speak from his own knowledge as to the events leading up to the Consultancy Agreement.
Aecom
has established that neither Mr Cooper and Mr Palmer was a statutory director at the time he signed the Consultancy Agreement it has not been suggested that either was acting other than properly when he did so. There is no suggestion that
Aecom
was not content for them to sign the Consultancy Agreement let alone that either was in some way acting on a "frolic of his own" when he did so. It is also to be noted that the contention that the Consultancy Agreement did not operate as a deed was advanced for the first time in the context of this dispute.
Aecom
did not at any earlier stage set out the position which it has now adopted namely that because Messrs Cooper and Palmer were not statutory directors the Consultancy Agreement did not operate as a deed but because they had authority to enter contracts on behalf of
Aecom
it instead took effect as a contract. Indeed the denial at [19] of the Defence that the Consultancy Agreement was a deed was followed, at [20], by the admission that "the parties proceeded and contracted on the terms of that document".
Aecom's
common seal because the seal was not affixed. Nor was it executed as a deed by being expressed to be executed as such by
Aecom
and being signed by two directors. As neither Mr Cooper nor Mr Palmer was a statutory director of
Aecom
their actions could not have the effect which the actions of a director would have had. In addition Miss McCafferty said that when signing the Consultancy Agreement Messrs Cooper and Palmer were not purporting to execute it by their signatures but rather were purporting (by reason of the place in the document where they signed) only to witness the affixing of the common seal. In those circumstances the Consultancy Agreement simply was not a deed.
"The Consultancy Agreement was signed by Mr Cooper and Mr Palmer on the basis that they were held out byAECOM
as directors with actual or ostensible authority to bind the company: they were the representatives of
AECOM
involved with the closing of the deal for
AECOM's
appointment. These gentlemen were also held out as directors in the Deed of Collateral Warranty provided to Project Co. as set out in paragraph 3 hereinabove. There was no affixation by common seal upon the Consultancy Agreement because it was not intended that
AECOM
would affix a common seal. Rather the signatures of Mr Cooper and Mr Palmer were (incorrectly) put in the signature box for the common seal rather than, as intended, in the box for the signature by two directors, being the alternative recognised means for a company executing a Deed".
"(1) Under the law of England and Wales the following provisions have effect with respect to the execution of documents by a company.
(2) A document is executed by a company by the affixing of its common seal.
(3) A company need not have a common seal, however, and the following subsections apply whether it does or not.
(4) A document signed by a director and the secretary of a company, or by two directors of a company, and expressed (in whatever form of words) to be executed by the company has the same effect as if executed under the common seal of the company.
(5) A document executed by a company which makes it clear on its face that it is intended by the person or persons making it to be a deed has effect, upon delivery, as a deed; and it shall be presumed, unless a contrary intention is proved, to be delivered upon its being so executed.
(6) In favour of a purchaser a document shall be deemed to have been duly executed by a company it if purports to be signed by a director and the secretary of the company, or by two directors of the company, and, where it makes it clear on its face that it is intended by the person or persons making it to be a deed, to have been delivered upon its being executed".
"(1) A document is validly executed by a company as a deed for the purposes of section 1(2)(b) of the Law of Property (Miscellaneous Provisions) Act 1989, if and only if –
(a) it is duly executed by the company, and
(b) it is delivered as a deed.
(2) A document shall be presumed to be delivered for the purposes of subsection (1)(b) upon its being executed, unless a contrary intention is proved".
"(2) An instrument shall not be a deed unless –
(a) it makes it clear on its face that it is intended to be a deed by the person making it or, as the case may be, by the parties to it (whether by describing itself as a deed or expressing itself to be executed or signed as a deed or otherwise); and
(b) it is validly executed as a deed by that person or, as the case may be, one or more of those parties…"
Aecom's
common seal was not affixed to the Consultancy Agreement and so subsection (2) does not come into play. Lendlease did not suggest that it was a purchaser for the purposes of section 36A and did not seek to rely on subsection (6). Accordingly, the question of whether the Consultancy Agreement took effect as a deed turns on the operation of subsection (4).
Aecom's
Altrincham office but that was not akin to directing the affairs of the company or even of a part of the company in the way in which a statutory director would be entitled to act.
Aecom.
In the latter regard Miss McCafferty emphasised the positioning of the signatures of Messrs Cooper and Palmer saying that they were not purporting to execute the document by signing it but were instead purporting only to witness the affixing of the common seal.
Aecom
and as having the necessary authority to bind
Aecom.
In those circumstances it was not open to
Aecom
now to say that the Consultancy Agreement was not a deed. Mr Hickey submitted that it sufficed for the purposes of section 36A(4) of the 1985 Act that the persons signing as directors had been held out as directors and had authority to bind the company and it was not necessary that they should be statutory directors of the company in question. Mr Hickey relied on the decisions of the Court of Appeal in Freeman & Lockyer v Buckhurst Part Properties (Mangal) Ltd [1964] 2 QB 480 and Hely-Hutchinson v Brayhead [1968] 1 QB 549. He said that the effect of these was that a person held out as being a director will have the authority which that person would have had if formally appointed and would do so even if the holding out was by way of implication rather than express.
Aecom
made with Lendlease and Project Co and the agreement it made with the Trust, Lendlease, and Project Co. Mr Cooper and Mr Palmer signed each of those. In each case they signed alongside wording stating that the document was being executed and delivered as a deed by
Aecom
acting by two of its directors or by a director and its company secretary. Neither of those documents contained any alternative section providing for any of the parties (save for the Trust in respect of the latter agreement) to execute the deed by the affixing of a common seal. All the parties other than the Trust executed or purported to execute both those documents by the signature of two directors. Mr Hickey said that the actions of Messrs Cooper and Palmer in relation to those documents were mirrored by their actions in relation to the Consultancy Agreement and that in respect of all the documents they signed as directors executing them as deeds on behalf of
Aecom.
There is force in this point but its relevance is limited. The actions of Messrs Cooper and Palmer in relation to those documents are indeed relevant as an indication of how they were signing and purporting to sign connected documents at the same time as they signed the Consultancy Agreement. As will be seen these actions provide some assistance in determining what those gentlemen were intending and purporting to do when they signed the Consultancy Agreement. However, there was no suggestion before me that there had been an issue about whether those documents took effect as deeds nor that there had been reliance on their nature as deeds. The actions of Messrs Cooper and Palmer in relation to them do not assist, other than by way of background, with the crucial question of the effect in relation to the Consultancy Agreement of the signatures of persons who were not directors of
Aecom.
Aecom's
acceptance that the Consultancy Agreement was a binding contract she said that they did not further Lendlease's case. In addition Miss McCafferty returned to her point that Mr Cooper and Mr Palmer did not purport to execute the Consultancy Agreement by signing it but were instead only signing as witnesses to the affixing of the common seal. Miss McCafferty contended that in circumstances where Lendlease had not sought rectification of the Consultancy Agreement it was not open to it to argue that those gentlemen had purported to execute the agreement. Further Miss McCafferty submitted that the evidence did not establish that Messrs Cooper and Palmer had been held out as statutory directors of
Aecom
as opposed to being persons with authority to enter contracts on its behalf.
Aecom's
common seal. There was no evidence to the effect that such was the intention and it would have been inconsistent with the approach taken to the other documents executed at the same time. The reality is that Messrs Cooper and Palmer signed in the wrong place on the Consultancy Agreement. They signed in the section immediately below that where Lendlease's representatives had signed. That happened to be the section providing for execution by the affixing of the common seal with the signatures purporting to be those of the persons witnessing that affixing. The intention had clearly been to sign in the section below that one and so in the section providing for execution by the signature of two directors. The alternative interpretation of the actions of Messrs Cooper and Palmer would involve them purporting to witness something which had not happened. It would, moreover, involve them in having done so in a formal document. That would be at the very best sloppy practice and in reality improper conduct. The conclusion that they signed in the wrong place by error is consistent with there having been an error of the kind which can readily be understood to have been made when a number of documents were signed at the same time. It is also consistent with the actions of Messrs Cooper and Palmer in respect of the related documents signed at the same time. It is also a markedly more likely explanation than that there was the improper conduct which would be involved on the alternative approach. Miss McCafferty sought to finesse this difficulty by saying that I should proceed on the basis that the document indicates an intention for execution to be by affixing of the common seal and that when signing Messrs Cooper and Palmer had merely anticipated this being done. However, this does not solve the problem. Not only is there no evidence that the intention was for the common seal to be affixed (indeed the execution by signature of the other agreements signed on the same day is a potent indication to the contrary) but the impropriety would remain. On Miss McCafferty's approach Messrs Cooper and Palmer had purported to witness something as having been done which had not been done and that would still be improper even if, as to which there is no evidence, they expected it to be done subsequently.
Aecom's
common seal should lead to a different conclusion. The positioning of the footnote does provide some support for the view that execution by the affixing of the seal was contemplated but in the absence of further explanation it cannot alter the conclusion flowing from the analysis I have just set out.
Aecom
as directors with actual or ostensible authority to bind the company" it has not pleaded any reliance on that holding out nor in terms asserted any form of estoppel arising from that.
"In the circumstances the three decisions relied on by the defendants are to my mind no more than illustrations of the well-established principle that a party who seeks to set up by an estoppel must show that he in fact relied on the representation that he alleges, be it a representation in words or a representation by conduct. That this is so is, I think, made clear by the judgments in Houghton's case itself. Thus Bankes L.J., after referring to the rule in Mahony's case, went on to say that "…in order to establish a case which falls within the rule it is essential that the person who claims the benefit of it must prove that he relied upon the ostensible authority which he sets up…".
"The ground of the judge's decision in favour of the plaintiffs is stated in these two sentences of his judgment: "In my judgment a company is bound by the acts of persons who take upon themselves, with the knowledge of the directors, to act for the company, provided such persons act within the limits of their apparent authority, and strangers dealing bona fide with such persons have a right to assume that they have been duly appointed…In my opinion in the present case Kapoor was acting as managing director, certainly as a director acting for the company with the knowledge of his board, and I hold that the company is bound by his action in employing the plaintiffs. He cited Biggerstaff v Rowatt's Wharf Ltd. (per Lopes L.J.) and British Thomson-Houston Co. Ltd. V. Federated European Bank Ltd (per Scrutton L.J.).
In my view the decision of the judge was correct. On the facts as found the plaintiffs were entitled to rely on Kapoor's ostensible authority to give them instructions on behalf of the company because there was a holding out of Kapoor by the company as its agent to conduct its business within the ordinary scope of that business. The expressions "ostensible authority" and "holding out" are somewhat vague. The basis of them when the situation is analysed, is an estoppel by representation. The agent professes to act on behalf of the company, and he thereby impliedly represents and warrants that he has authority from the company to do so: Firbank's Executors v Humphreys. We are concerned in this case only with the representation, and not with the warranty which in some other case might give to the other contracting party a right of action for damages for breach of warranty. In this case the company has known of and acquiesced in the agent professing to act on its behalf, and thereby impliedly representing that he has the company's authority to do so. The company is considered to have made the representation, or caused it to be made, or at any rate to be responsible for it. Accordingly, as against the other contracting party, who has altered his position in reliance on the representation, the company is estopped from denying the truth of the representation".
"If the foregoing analysis of the relevant law is correct, it can be summarised by stating four conditions which must be fulfilled to entitle a contractor to enforce against a company a contract entered into on behalf of the company by an agent who had no actual authority to do so. It must be shown:
(1) that a representation that the agent had authority to enter on behalf of the company into a contract of the kind sought to be enforced was made to the contractor;
(2) that such representation was made by a person or persons who had "actual" authority to manage the business of the company either generally or in respect of those matters to which the contract relates;
(3) that he (the contractor) was induced by such representation to enter into the contract, that is, that he in fact relied upon it; and
(4) that under its memorandum or articles of association the company was not deprived of the capacity either to enter into a contract of the kind sought to be enforced or to delegate authority to enter into a contract of that kind to the agent".
Aecom's
common seal. I have found that they signed the Consultancy Agreement expressly on the footing that they were executing it as a deed on behalf of
Aecom.
In the light of that
Aecom's
stance involves it in resiling from the actions of those gentlemen in circumstances where it is not suggested that they were acting improperly or had gone outside the scope of their authority. There is an artificiality in the contention that
Aecom
is bound by the Consultancy Agreement as a contract because Messrs Cooper and Palmer had authority to enter such a contract on
Aecom's
behalf but not bound by that agreement as a deed because they were not statutory directors of
Aecom.
The Consultancy Agreement was expressed to be a deed and was structured as such with provisions, such as clauses 14.03 and 14.06, which were readily compatible with the agreement taking effect as a deed and which were clearly incorporated on that footing. In effect
Aecom
was seeking both to approbate and to reprobate the agreement. It accepted that it was bound by the Consultancy Agreement as a contract and took the benefits of performing under it but now seeks to avoid the consequences of an intrinsic part of the arrangement namely its status as a deed.
Aecom.
Indeed, at [5] the Reply does not in terms assert either an estoppel or reliance. In that regard I must remember that the issues between the parties are to be seen as having been defined in the pleadings. In context, however, it is clear that [5] was intended to be an invocation of the approach explained in Freeman & Lockyer and that it was understood as such by
Aecom.
In addition I am satisfied that it is appropriate to infer both representation and reliance in circumstances where both Mr Cooper and Mr Palmer expressly signed as directors a document which was predicated on the execution on behalf of
Aecom
being by directors of that company and the terms of which made it clear that it was being entered on that basis; where
Aecom
had placed those gentlemen in positions where they were able and expected to perform in that way; and where the parties thereafter proceeded on the basis that their dealings were governed by the Consultancy Agreement.
Aecom's
position. It accepts that Messrs Cooper and Palmer had authority to act as they did and that "the parties proceeded and contracted on the terms of [the Consultancy Agreement]". It is not open to
Aecom
to accept that it was bound by the actions of Messrs Cooper and Palmer and then to adopt an unrealistic stance as to the nature of those actions or as to their effect. I have already explained my conclusion that there was no intention that the Consultancy Agreement should be executed by the affixing of
Aecom's
common seal. It follows that when Mr Cooper and Mr Palmer signed the Consultancy Agreement they were intending to execute a deed on behalf of
Aecom.
They were not acting improperly in relation to
Aecom
in doing so but were indeed doing what they were expected to do. As I have already noted the necessary representation and reliance can readily be inferred here. In those circumstances it is not open to
Aecom
to contend that the Consultancy Agreement was not a deed. It follows that the applicable limitation period in respect of claims asserting a breach of that agreement is one of twelve years from the date of the accrual of cause of action.
Aecom
was aware of the terms of the Design and Build Contract. In his opening submissions Mr Hickey refined this argument saying that the effect of clauses 14.03 and 14.06 was that the parties had "expressly agreed that any claims in contract could be brought by way of proceedings within 12 years of practical completion".
Aecom
that it would:
"maintain Professional Indemnity Insurance from commencement of the provision of the Consultancy Services until 12 years after the Actual Completion date for the works for a limit of Indemnity of not less than [ 20,000,000 ] Twenty Million Pounds for each and every claim against any legally enforceable costs, claims, charges or expenses including but in no way restricted to liability of the Contractor to the SPV and the SPV to the Trust arising from any breach by the Consultant of the Consultant's obligations pursuant to this Agreement or other act, omission, neglect or default by the Consultant in relation to or in any way connected with the Works …"
"No action or proceedings under or in respect of this Agreement in contract or for breach of statutory duty shall be commenced against the Consultant after the expiry of 12 years after the Completion Date for the Works."
The Nature and Extent of
Aecom's
Obligations under the Consultancy Agreement.
Aecom's
obligations in a number of different respects.
The Replication of Lendlease's Obligations to Project Co.
Aecom's
obligations to Lendlease replicated the latter's to Project Co and the separate but related issues of whether
Aecom
was required to perform its obligations so as to achieve a particular standard or instead to exercise reasonable care, skill, and diligence and whether there is a difference between those latter two formulations.
Aecom
was "obliged to exercise reasonable skill, care, and diligence in performing the Services". However, reference had already been made to clause 1.01 and at [41] the effect of that was said to be that
Aecom
"was required to observe the Employer's Requirements and the Project Agreement and to ensure that it did not place Lendlease in breach of the said agreements".
Aecom
with the consequence that
Aecom
was obliged to achieve the outcome which Lendlease had contracted to achieve under the D&B Contract? In that regard, as Joanna Smith J explained at [110], although Lendlease was not a party to the Project Agreement the effect of the D&B Contract was that "Lendlease assumed the obligations, risks, and liabilities of Project Co under the Project Agreement".
"Notwithstanding any other clause in this Agreement or the Principal Agreement or term implied by statute or common law, the Consultant shall not be construed to owing [sic] any greater duty in relation to this Agreement than the use of necessary reasonable skill, care and diligence pursuant to this Clause 4.01."
Aecom
was obliged to achieve the outcome that Lendlease was for its part obliged to achieve under the D&B Contract (and as a consequence to achieve the outcome that Project Co was required to achieve under the Project Agreement) would involve reading this sentence in clause 4.01 as saying "notwithstanding any other clause in this Agreement save for clause 1.01 of this Agreement or the Principal Agreement …". There is no basis for such a reading when the more natural reading is to see this clause as having the effect which it purports to have and as being a qualification on the duties which would otherwise be owed by
Aecom
under other provisions including clause 1.01. That reading does not do violence to clause 1.01 nor deprive it of effect because that clause still takes effect as imposing an obligation on
Aecom
albeit that what is required is subject to the qualification imposed by clause 4.01.
Aecom
warranted that it would "comply in all respects with the requirements of the local authority, statutes, regulations, and codes of Practice in force and relevant to the design of the works including but not limited to fire, health, and safety". Mr Hickey said that this echoed clauses 1.01 and 6.04 and that the former of those required
Aecom
to observe the requirements laid down by the Trust. I will deal below with the argument that the clause imposed two separate requirements: at this point it suffices to say that I do not accept that the passage on which Mr Hickey relied can properly be read as imposing an obligation on
Aecom
to achieve the outcome which Lendlease was contracted to achieve. The words in question have a sensible meaning independent of the terms of the D&B Contract or the Project Agreement neither of which are referred to in them. I do not read these words as echoing the provisions in different terms in clause 1.01. They are in similar terms to those used in clause 6.04 but those in turn do not refer to achieving the outcome which Lendlease was contracted to achieve under the D&B Contract.
Aecom
Lendlease's obligations to Project Co.
The Effect of Clause 4.01 of the Consultancy Agreement.
Aecom
to achieve a particular standard or solely to exercise reasonable care and skill. I do not agree that the clause can properly be read as imposing two separate requirements such as to require an analysis along the lines adopted in Hojgaard of seeing one as imposing a minimum requirement without qualifying the other. It is possible to read clause 4.01 as containing distinct warranties but this is somewhat artificial and it is better read as imposing a single standard. This is particularly so in light of the final sentence and its effect as I have already noted of qualifying all the obligations under the Consultancy Agreement.
Aecom
was to have knowledge by reason of clause 1.01 and by the need for compliance with the standards set out in clause 4.01. To those are to be added the express reference to HTM 81 and to Approved Document B in the document accompanying the Second Schedule of the Consultancy Agreement. It is in that setting that the points made by Judge Stephen Davies in Martlet v Mulalley at [265] and by the editors of Jackson & Powell on Professional Negligence (9th ed) at 9-122 and 9-123 become relevant. A failure by
Aecom
to comply with the standards laid down by the applicable regulations and in particular to produce a design satisfying the requirements of HTM 81 is to be seen as a failure to exercise reasonable care, skill, and diligence in the absence of a compelling explanation to the contrary. Save to a limited extent in respect of some of the defects that is not really in issue here.
Aecom's
case was that the design it produced satisfied the requirements of HTM 81 and to the extent that there was non-compliance this was because of the actions of others for whom it was not responsible or arose out of matters outside the scope of the works to be undertaken by
Aecom
and the scope of those works is the question to which I will now turn.
The Scope of
Aecom's
Design Obligations.
Aecom's
obligations related to the scope of
Aecom's
design obligations. This question is conveniently considered alongside that of the extent to which
Aecom
was required by the Consultancy Agreement to advise in relation to the work of others and the consequences of such advice (although that aspect overlaps with the issue of the duty to review which I will consider in the next section).
Aecom's
stance seemed to be that its responsibility was limited to the preparation of a design to the end of RIBA Stage E and to providing support thereafter as to the interpretation of that design with clause 6.08 having the effect that
Aecom
bore no responsibility for comments made or advice given in relation to drawings or similar material prepared by others.
Aecom's
case was not in reality being put that starkly. Nonetheless it continued to emphasise that it was Rotary rather than
Aecom
which produced the Stage F design and that
Aecom
had no responsibility for deficiencies in design produced by Rotary. In addition
Aecom
continued to stress the relevance of clause 6.08.
Aecom
and Rotary that could not be filled by an artificial reading of the Consultancy Agreement so as to extend
Aecom's
responsibilities. Nonetheless, I find that
Aecom's
role and responsibilities were more extensive than it now contends. That role and those responsibilities are to be deduced from the terms of the Consultancy Agreement and in this regard the Schedule of Duties and the matrices as contained in the Second Schedule are of crucial importance. These do not define
Aecom's
responsibilities by reference to the RIBA Stages but by reference to particular tasks (in the Schedule of Duties and in Matrix 3) and by reference to particular functions (leadership, design, and coordination) in relation to aspects of the construction works (in Matrix 1). In addition a number of the sub-paragraphs of paragraph 6 of the Schedule of Duties refer to matters going beyond the preparation and handing over of
Aecom's
design and envisage a continuing involvement thereafter (which in reality
Aecom
accepted to be the position).
Aecom
was responsible under the Consultancy Agreement for a particular alleged defect can only be answered by determining how the defect came about and considering against those provisions where responsibility was allocated by the agreement. However, in that exercise it has to be remembered that the documents are to be read as a whole. In particular there was force in Miss McCafferty's submission that the matrices do not stand alone but are to be seen in the context of the Schedule of Duties which identified the tasks which
Aecom
was to undertake in relation to particular periods. It follows that there could be periods when the time for
Aecom
to perform the activity identified in a particular part of a matrix had passed.
Aecom
would not be responsible for the faulty implementation of its design if that implementation was by others and the fault was not due to the design itself provided that
Aecom
neither controlled the implementation nor was allocated with responsibility for it by the Consultancy Agreement. It is, however, clear that
Aecom
did exercise some control over the implementation of its design and over the work undertaken by Rotary. At [179] and following below I have rehearsed the terms of exchanges in June and August 2006 between David Dean of
Aecom
and Gavin Don of Rotary. That exchange shows
Aecom
controlling the way in which the design was being implemented. The tenor of that exchange goes beyond advice or support and makes it clear that
Aecom
in the person of Mr Dean was telling Rotary it need not install dampers around the ductwork passing through the partitions in Plant Room 2. As a matter of basic principle
Aecom's
actions after the Consultancy Agreement are not material to the proper interpretation of that agreement which depends on the meaning of the words used when read in the context of the circumstances at the time. The relevance, however, of the August 2006 exchange is that it will not be open to
Aecom
to say that a particular defect was the consequence of the way in which Rotary implemented
Aecom's
design if
Aecom
caused Rotary to act in that way. Such direction by
Aecom
of the manner of implementation must be taken as an acceptance that the manner of implementation was appropriate and in accord with its design.
Aecom's
obligation to exercise reasonable care, skill, and diligence when commenting on the work of others. The effect of the provision is that
Aecom
must exercise reasonable care and skill in the making of the comments but what is required in order to constitute such care and skill is to be judged in the context of the comment being made on a drawing or other document produced by another and not on the footing that
Aecom
had the responsibility which it would have had as the author of the document in question. When in clause 6.08 it is said that
Aecom
"shall not be liable for the same" the words "the same" refer to "the drawings, specifications, agreements and the like" and not to
Aecom's
comments. This follows from the fact that the words "the same" are used twice in the last sentence of clause 6.08 and on each occasion they must be referring to the same thing. This means that by commenting
Aecom
does not assume an author's responsibility for the document in question such as to be liable for the document. It does not mean that
Aecom
is not liable for its own comments. The duty to exercise reasonable care and skill remained in respect of such comments. In addition, as Mr Hickey rightly emphasised, this provision was concerned with comments on drawings or other documents for which
Aecom
was not responsible. It did not operate to reduce
Aecom's
responsibility for such documents it produced itself or for which it otherwise had responsibility under the terms of the Consultancy Agreement.
Aecom
having responsibility for the former but not the latter.
A Continuing Duty to Review, Advise, or Warn.
Aecom
had a continuing duty to advise or to warn Lendlease or to review the state of the works. It will be convenient to consider alongside this issue the question of when the cause of action in respect of a breach by
Aecom
of its obligations will have arisen as a matter of law.
Aecom
should have warned Lendlease that the Fire Strategy and the configuration of Plant Room 2 in Rev 19 were not compliant with good practice nor with the applicable HTMs. As pleaded the failure to give such a warning was advanced as being a matter of negligence rather than as a breach of a specific term of the Consultancy Agreement. In the Amended Reply Lendlease pleaded at [54] that:
"AECOM
was, and should have been, involved in the process of what was being built within plantroom 2, which was the product of their design development, and their obligations as fire engineer meant that they should have been involved in making sure that what was built was compliant with the Applicable Standards."
Aecom
had a continuing duty up to practical completion to review its design and to advise of any non-compliance. In my ruling of 22nd November 2022 I had refused permission for that amendment on the basis that if it was a confirmation of Lendlease's existing case it was unnecessary and that if it was a fresh allegation this was not permissible in the Reply. Although the copy of the Amended Reply in the electronic bundle contained the sentences which I had directed should be struck out the pleading is to be considered as if they had been struck out.
"AECOM
was required to do the detailed design of the substation and its configuration, to make itself familiar with what was being installed in the substation to ensure that it was compliant with Applicable Standards and to review and validate that it was compliant or if not to advise and warn Lendlease.
AECOM's
obligations were continuing ones right up to Practical Completion."
Aecom
had a continuing obligation until then. In his closing submissions Mr Hickey said that there was a continuing duty on
Aecom
"to do their design, to do their fire strategy, and to complete so that [Lendlease] was not put in breach" of its obligations. He characterized the compilation of Rev 19 as having been
Aecom's
"last opportunity" to have remedied matters.
Aecom's
design obligations and limitation. She said that there was no continuing duty to warn or advise and that any cause of action against
Aecom
accrued when it handed over its design to Lendlease for construction in July 2005 alternatively when construction of Plant Room 2 began in June 2006.
"I accept the proposition that, although it is necessary to look at the circumstances of each engagement, a designer who also supervises or inspects work will generally be obliged to review that design up until that design has been included in the work: see Jackson and Powell on Professional Negligence 4th Edition para 2-17. In a number of cases, it has been held that this duty continues until practical completion: see Chelmsford District Council v TJ Evers (1983) 25 BLR 99, 106, Equitable Debenture Assets Corporation Ltd v William Moss Group Ltd [1984] 2 Con LR 1, 24 and Victoria University of Manchester v Hugh Wilson [1984] 2 Con LR 43, 73."
"In my view, in the absence of an express term or express instructions, he is not under a duty specifically to review the design of the foundations, unless something occurs to make it necessary, or at least prudent, for a reasonably competent architect to do so. For example, a specific duty might arise if, before completion, the inadequacy of the foundations causes the building to show signs of distress; or if the architect reads an article which shows that the materials that he has specified for the foundations are not fit for their purpose; or if he learns from some other source that the design is dangerous. In such circumstances, I am in no doubt that the architect would be under a duty to review the design, and, if necessary, issue variation instructions to the contractor to remedy the problem. But in the absence of some reason such as this, I do not think that an architect who has designed and supervised the construction of foundations is thereafter under an obligation to review his design."
"In my judgment, the duty does not require the architect to review any particular aspect of the design that he has already completed unless he has good reason for so doing. What is a good reason must be determined objectively, and the standard is set by reference to what a reasonably competent architect would do in the circumstances."
"The continuing duty does not, however, give rise to a single and continually accruing cause of action. Rather, a different cause of action accrues at various stages. Thus, the cause of action for a failure properly to review the design is a different cause of action from a failure to provide a proper design in the ?rst place. The causes of action will therefore accrue on different dates."
"There used to be a suggestion that designers owed some sort of continuing duty to review their design, even after construction was complete. This so-called 'duty to warn' was almost always raised by claimants in order to try and avoid limitation difficulties. However the notion has fallen out of favour in recent years, and the duty has been said to arise only when something occurs to put the designer on notice that a review is required: see New Islington and Hackney Housing Association Ltd v Pollard Thomas and Edwards Ltd (2000) 85 ConLR 194 at 202, [2001] BLR 74 at 80. There is no continually accruing cause of action: see Oxford Architects Partnership v Cheltenham Ladies College [2006] EWHC 3156 (TCC), [2007] BLR 293. In any event, Mr Hargreaves confirmed that this was not how he put BDW's case on this appeal."
Aecom
was not a pure designer and it had obligations and responsibilities which continued after the provision of its design. However, it was not in the position of an architect, such as those in New Islington and Oxford Architects, responsible both for design and for overseeing the construction as a whole. Even on Lendlease's case the obligations which
Aecom
had after providing its design were obligations of review and coordination rather than control. It is to be remembered that the Consultancy Agreement expressly designated the architect as the Lead Designer.
Aecom
had a duty to ensure that as built the Plant Room was compliant with HTM 81 and the other applicable standards. Such a duty would go beyond the review by
Aecom
of its design and would extend to oversight of the work of others. Even though
Aecom's
duties did not end with the provision of the design in July 2005 I find that, subject to the dealings in relation to Rev 19, the contract is not to be interpreted as imposing an obligation to oversee the work of others to ensure that there was compliance with the HTMs. Nor is it to be interpreted as imposing on
Aecom
a duty to review the work of others with a view to providing Lendlease with unsolicited advice as to the compliance of such work with the applicable standards. Even if there was such a duty the cause of action in respect of a breach would have accrued at the date of breach which would at the latest have been the completion of the construction by the end of August 2006. Similarly if
Aecom
had a duty to review its design before the completion of the construction then that duty would only have arisen when there was a good reason to review and again any cause of action for breach would have accrued by the end of August 2006.
Aecom
had any continuing duty of review after the Plant Room had been built. It is to be noted that although paragraph 6 of the Schedule of Duties provides for
Aecom
to undertake work on the completion of the construction the tasks in question are limited and specific. Thus at paragraph 6.28 there is a particular limited obligation and, similarly, parts 4 and 5 of Matrix 3 identify limited specific responsibilities resting on
Aecom.
Aecom
to keep its design or the Plant Room as constructed under review after the construction. I find the agreement is not to be read as giving rise to such a duty. Even if there was such a duty the obligation to review would only be triggered if there were a good reason such as to call for a review. Such a good reason would have to be pleaded and proved. Lendlease does not suggest that there was such a trigger other than the need to provide the final version of the Fire Strategy to enable practical completion to be certified: a need which led to Rev 19.
Aecom
to review the Plant Room design or construction nor to warn Lendlease as to non-compliance with HTM 81 unless the circumstances leading to the compilation of Rev 19 brought such a duty into being.
Aecom
was clearly acting pursuant to the Consultancy Agreement when it provided Rev 19 and so it becomes necessary to consider how Rev 19 came about and the consequences of that for
Aecom's
obligations.
The Origin of and Responsibility for Rev 19.
Aecom
in October and November 2007 and, then, that of assessing the effect of that determination on the claim as a whole.
Aecom's
original design configuration did not provide sufficient space for the generators which were to be installed. At times in the evidence there was a degree of confusion as to whether reference was being made to the physical removal of the partitions or to the removal of a partition's status as a fire-rated division. Some of Mr Middleton's answers in cross-examination appear to have been addressed to the former basis but in closing Mr Hickey clarified that Lendlease's case was being put on the latter basis. A development of this point was that the size of the rooms meant that for there to be adequate ventilation of the generators there could not be fire compartmentation. As it stood by the end of the hearing Lendlease's position was that Rev 19 reflected Plant Room 2 as it had been built. Fire compartmentation between the internal rooms was not possible because of the number and nature of the penetrations which were needed in the partition walls. That, in turn, was said to be a consequence of
Aecom's
design and the provision which
Aecom
had made for the routing of services which had determined the number and scale of the openings in the walls. When it supplied Rev 19 to Lendlease
Aecom
should have advised that the Fire Strategy was neither compliant with HTM 81 nor an adequate fire engineered alternative with the consequence that it did not satisfy Lendlease's obligations to Project Co. Mr Hickey submitted that the court should proceed on the footing that if such advice had been tendered Lendlease would have acted on it and would have caused the configuration of Plant Room 2 to be altered at that stage so as to achieve compliance with its obligations. The development of Lendlease's case is understandable in circumstances where it was not drawing on the recollection of those involved in these dealings on its behalf but was rather putting forward a case based on the incomplete documentary record. I will consider below the extent to which it is open to Lendlease to advance its case on the footing of what it would have done if it had been given such advice by
Aecom.
Aecom's
position was that reference to the earlier email correspondence about the movement of walls was a red herring because there had in fact been no physical movement of the relevant partitions or rather that to the extent that one had been moved it had been replaced with a partition maintaining the same division in a slightly different position. It said that it had not been aware until October 2007 that the fire compartmentation provided for in the earlier versions of the Fire Strategy had not been put in place. It does not accept that the providing of routes and the necessary penetrations for the services prevented fire compartmentation saying that this was a failing in the course of construction rather than of its design. It was instructed to revise the Fire Strategy to accord with the "as built" position and did so only after direction to that effect from Lendlease accompanied by confirmation that the approach adopted had been approved by Leeds Building Control. As explained above
Aecom
does not accept that the Consultancy Agreement imposed any continuing duty to advise about these matters but says that in any event Lendlease made it clear that it was not seeking advice but was requiring
Aecom
to provide the revised Fire Strategy.
Aecom's
Senior Mechanical Engineer for the works, and Gavin Don of Rotary is of significance.
"Just a reminder, you were going to email me to explain why I didn't need to install the dampers to ductwork passing in and through this area."
"LBS wanted the plantroom i.e. PR2 as a separate compartment.
The electrical rooms are fire hazard rooms within the compartment and the ducts pass through the rooms with no take-offs and therefore do not require to be dampered.
This was discussed and agreed with Nigel Brown, LBS."
Aecom's
fire expert, Stephen Morgan, if he could assist with the reference to fire hazard rooms. He explained that HTM 81 contained a list of rooms which were within areas considered to be a higher fire risk though he said that an electrical switch room would not normally be characterised as a room but rather as a compartment. Mr Morgan's evidence provided some support for the latter interpretation of Mr Dean's comments but he gave the impression that such usage in connexion with Plant Room 2 could not readily be seen as an application of HTM 81. In addition it is not clear that Mr Dean who was not a fire engineer was adopting the language of HTM 81. Support for the former interpretation came in Mr Morgan's evidence that a view could be taken that the generator sets did not each need to be in a fire compartment provided they were as a group in such a compartment.
Aecom
telling Rotary in terms that there was no need to install dampers to the ductwork passing through the partitions between the separate rooms in Plant Room 2 and saying that this course had been approved by Leeds Building Control. I will consider the relevance of this exchange further below.
Aecom
and Leeds Building Control in the course of the works. By way of example, there was substantial involvement on the part of
Aecom
in a meeting at the offices of the building control team in November 2003. In addition the email exchange of August 2006 to which I have just referred appears to result from direct dealings between
Aecom
and Leeds Building Control though that does not necessarily follow from the terms of the exchanges. However, those previous dealings between
Aecom
and Leeds Building Control are of limited assistance in determining which party in fact engaged with Leeds Building Control in the autumn of 2007: an issue on which I find the exchanges at that time of greater assistance.
"Totally disagree with your comments, I could just amend the doc against the e mail as instructed but you are asking [Aecom]
to advise you and when we do we do it with the intent that we are protecting the scheme, it is only [Lendlease's] view we are in task avoidance mode. In two years time when the fan is full, and no one has an audit trail, [
Aecom]
are your first port of call, all we are doing is trying to apply something other than a knee jerk reaction. And quick cost fix.
We have your overall interests in mind !!"
"… you have not revised sections 7.5 or 8.2.1 following Nigel's confirmation that the horizontal fire shutter separating B2/B1/ L0 and the generator rooms in B1 plant need not be in their own 1hr compartments.
Please advise when you can revise and reissue."
"The walls to the HV/LV/Generators are not fully fire stopped due to the amount and type of penetration. So we leave no room for being picked up on, it was agreed that the perimeter of the B1 plantroom would be the line of fire separation from the corridor, therefore please amend the document."
Aecom
revised the Fire Strategy to accord with the "as built" configuration of the Plant Room and did so after direction from Lendlease to do that. Those engaged in that exercise on behalf of
Aecom
were unaware that the partitions in Plant Room 2 lacked the 60 minute fire rating provided for in the earlier versions of the Fire Strategy until Mr Vaughan explained this on the afternoon of 19th November 2007.
Aecom
had initially been reluctant to make the revision but it had done so after it had been assured that the installation had been approved by Leeds Building Control in the person of Nigel Brown. Even then the final revision of section 7.5 of the Fire Strategy document was only made after Mr Vaughan's explanation and request on 19th November 2007. Although there was contact between
Aecom's
Mr Hopkinson and Leeds Building Control that was not material to what happened and the work at that time of liaising with the latter; of persuading Mr Brown to the extent that was necessary; and of obtaining approval of the installation had been undertaken by Lendlease.
Aecom
did not advise Lendlease as to the compliance or otherwise of Rev 19 with HTM 81 or the requirements of the Project Agreement. In that regard Lendlease made it clear that it was not seeking advice from
Aecom
about these matters. Instead Lendlease was focused on what was needed to obtain the certificate of practical completion. It pressed for
Aecom
to revise the Fire Strategy in the way it requested and in the course of doing so overrode the reservations expressed by Mr Middleton.
Aecom's
obligations under the Consultancy Agreement the questions of what duty
Aecom
owed in respect of the compilation of Rev 19 in November 2007 and whether there was a breach of such a duty.
Aecom's
Obligations in November 2007 in relation to and as a consequence of Rev 19.
Aecom
have a duty to advise Lendlease of this and to warn of the non-compliance?
Aecom's
fire engineering expert witness. He accepted that a reasonably competent fire engineer exercising due care and skill should have advised that Rev 19 was not compliant with those requirements. It is, however, to be remembered that Lendlease's claim is now advanced only on the basis of a breach of the terms of the Consultancy Agreement and that Lendlease has accepted that it is unable to pursue a negligence claim. The relevant question, therefore, is whether
Aecom
had an obligation under that agreement to advise or warn in November 2007. If there was such an obligation then Mr Morgan's evidence would be highly relevant to the question of the advice which should have been given but it cannot determine the effect of the Consultancy Agreement.
Aecom
had a contractual duty to warn or advise such as is asserted depends on the role which it was being asked to perform in the particular circumstances. As explained above I have found that in October and November 2007
Aecom
was being instructed to revise the drawing and the Fire Strategy so as to accord with the as built configuration of Plant Room 2. It was not asked to provide advice and the reservations it expressed were overridden and met with the response that the manner of installation had been approved by Leeds Building Control.
Aecom
was being required to perform this exercise so that practical completion could be certified.
Aecom
had to do in accord with the Consultancy Agreement. In the circumstances appertaining in October and November 2007 the Consultancy Agreement did not require
Aecom
to advise on the compliance of Plant Room 2 with HTM 81 and the other requirements nor to warn that the installation was non-compliant. For
Aecom
to have done so would have amounted to a direct contradiction of the instructions which were being given. Applying the analysis I have set out at [152] and following above for there to have been such an obligation there would have to have been both a duty continuing beyond the time of construction to that of practical completion and a trigger for a review of matters by
Aecom.
I have already explained why there was not such a duty. In addition even if there had been such a duty the instruction to revise the Fire Strategy would not have operated as a trigger for
Aecom
to review its design. That is because the instruction was not for a general revision in such terms as
Aecom
using its expertise found fit but rather for the alteration of particular passages of the text and particular aspects of the drawing in ways specified by Lendlease.
Aecom
should have reviewed its own earlier design. Rather it is whether a duty to warn arose when
Aecom
was instructed to revise the Fire Strategy in this way and in the circumstances as they were in October and November 2007. However, the result is the same whichever way the question is framed. I find that in light of the clear instructions which were given to
Aecom
and the terms in which they were expressed by Lendlease there was no duty to advise as to the wisdom or otherwise of what was to be said in the revised Fire Strategy nor to warn as to the non-compliance of that and the configuration of the Plant Room. The short point is that having given the instructions which it did and having done so in terms which made it clear that it was relying on its own judgement and on that of Building Control Lendlease cannot say that the Consultancy Agreement obliged
Aecom
either to decline to give effect to those instructions or to warn as to the consequences of complying.
Aecom
but for the latter to draw up the documents in a particular way.
Aecom
did know this or rather knew that dampers had not been fitted to the openings for the duct work. Indeed the absence of dampers was because of the instruction which
Aecom,
through Mr Dean, had given to Rotary in August 2006. Such knowledge might very well have been relevant if
Aecom
had an obligation to advise Lendlease in November 2007 but it does not give rise to a duty if there is not otherwise one under the Consultancy Agreement. To the extent that
Aecom
was in breach of its contractual obligation to exercise reasonable care and skill by giving that instruction to Rotary the cause of action in respect of that breach accrued in August 2006.
Aecom
was not in breach of its obligations under the Consultancy Agreement in producing Rev 19 in the terms it did nor in failing to warn Lendlease that the resulting Fire Strategy was not compliant.
The Causative Effect of Rev 19.
Aecom's
breach of the terms of the Consultancy Agreement. That was a reference back to both the Plant Room 2 Defects and the Non-Plant Room 2 Defects; to the breaches of Lendlease's obligations to Project Co; and to the works necessary to remedy the defects.
Aecom
would have led to a reconfiguration of Plant Room 2 before it was handed over to Project Co:
"14. It is obvious that hadAecom
acted with reasonable skill and care, it should have drawn attention to the deficiencies in the solution adopted, and in consequence plantroom 2 would not have been handed over in a defective and compromised state.
"15. Had that occurred, a major redesign would have been necessary of the electrical distribution within the substation, to the fire-rating of the walls, the introduction of a fire-suppression system and modifications to the ventilation for the generators. This is in effect what the Trust's remedial scheme is now having to do".
Aecom's
breach of its design obligations "caused Lendlease to hand over a non-compliant plantroom 2 which resulted in Lendlease incurring loss and liability to Project Co". However, even that does not put the case in quite the way Mr Hickey ultimately advanced it.
Aecom
in November 2007 but even if I had not reached that conclusion I would had considerable reservations as to whether it was open to Lendlease to put its case in this way.
Aecom
had warned as to Rev 19 should have been expressly pleaded and supported by evidence. The pleading at [55] of the Amended Reply does not spell out what Lendlease would have done differently. There was also no evidence on the point. This is not surprising given that Mr Avey was not involved in matters in 2007 and there was no other evidence from those who had been involved at the time. The conclusion as to what Lendlease would have done if given advice by
Aecom
is far from self-evident. The tone and content of the email exchanges in October and November 2007 are such that at the very least there is scope for question as to whether Lendlease would have acted on such advice.
Aecom
then Lendlease would have incurred considerable expense at that stage. It would be necessary to explore how much of that expense would have been borne by Lendlease rather than recovered from others at that time and for credit to be given for the resulting sum against the sums now being claimed.
The Statutory Limitation Defence.
Aecom's
obligations went beyond the mere provision of a design and as I have explained above there were continuing responsibilities going beyond the provision of the Stage E design. However, I have found that
Aecom
did not breach its obligations in the dealings connected with Rev 19 in October and November 2007. I have also found that
Aecom
did not have any duty to review its design or to undertake coordination or its other related tasks after the time when construction was completed. In respect of Plant Room 2 that was by the end of August 2006 at the latest.
Aecom's
contractual obligations and which was causative of the defect. In his written opening Mr Hickey gave as an example showing that
Aecom
was still providing services after May 2007 an email sent by Derek Elliott of Lendlease to Mr Middleton on 19th December 2007. However, that does not advance matters. It appears to show Mr Elliott asking for Mr Middleton to provide answers to queries which had been raised about the construction. This does indeed show that correspondence was continuing at that time but that did not without more trigger an obligation to review. What is necessary is for Lendlease to show acts or omissions in breach of contract causative of the particular defects and establishing those matters requires more than the fact of correspondence unless the terms of the correspondence constitute a breach causative of the defect.
The Effect of the Settlement Agreement.
"(A) Lend Lease appointedAECOM
to undertake various civil, structural, mechanical and electrical and related services in connection with the development of new facilities and the consolidation of existing facilities at the Leeds Oncology Hospital PFI Project (the "Project") under an appointment contract dated on or around 15 October 2004 (the "Appointment");"
"(C) Lend Lease has made various claims againstAECOM
for loss and damage incurred due to alleged deficiencies in certain services performed by
AECOM
under the terms of its Appointment"
"(D)AECOM
has made various claims against Lend Lease in respect of unpaid fees owing by Lend Lease to
AECOM
for services performed under the Appointment;"
"(i)AECOM's
claims for payment in respect of the consultancy services provided by
AECOM
pursuant to the Appointment, including
AECOM's
claims for fees set out in
AECOM's
fee claim breakdown dated August 2008 and
AECOM's
additional fee claim submission dated December 2010 (and updated/re-submitted in July 2011); and
(ii) Lend Lease's claims relating to alleged deficiencies in certain services performed byAECOM,
as set out in the claim documents submitted by Lend Lease relating to: the Haematology Ward; Chilled Beams; Kitchen Wards; Beverage Bay; Temporary Process Cooling; Plant Room Ventilation; Major Equipment Rooms Electrical Distribution; Fire Alarm Cause & Effect; Aseptic Pharmacy; Linac Chambers Electrical Distribution System; Medical Gases and Vacuum Services; Connections to Washing Machines, Tumble Dryers and Dishwashers; Extract Ventilation Systems - Dirty Extract Fans."
"…any defects that may become manifest and/or are notified to Lend Lease after the date of this Agreement and which arise out of or in connection withAECOM's
provision of services pursuant to the Appointment and in respect of which Lend Lease would be entitled to bring a claim up to the expiry of the limitation period in accordance with the Limitation Act 1980. For the avoidance of doubt, Latent Defects excludes the defects notified to
AECOM
in the Notified Claims and any defects which are known or ought reasonably to have been known to Lend Lease as at the date of this Agreement."
"The Parties agree that the terms and conditions of this Agreement are in full and final settlement of the Notified Claims and any other claims and counterclaims, liabilities or debts (of whatever nature) which are known to the Parties or which ought reasonably to have been known to the Parties as at the date of this Agreement arising out of or in connection withAECOM's
provision of services pursuant to the Appointment. For the avoidance of doubt,
AECOM
shall remain liable in respect of Latent Defects."
"In consideration of the payment of the Lend Lease Settlement Sum and theAECOM
Settlement Sum and the Parties' compliance with the terms and conditions of this Agreement, the Parties agree to waive and unconditionally and forever release each other, their insurers, their parents, subsidiaries, affiliates and associate companies (included but not limited to their respective directors, officers, employees, agents, successors, assigns and heirs) from (a) the Notified Claims and/or (b) any other claims and counterclaims, liabilities or debts (of whatever nature) which are known to the Parties or which ought reasonably to have been known to the Parties as at the date of this Agreement arising out of or in connection with
AECOM's
provision of services pursuant to the Appointment. For the avoidance of doubt, this release shall not extend to
AECOM's
liability in respect of Latent Defects."
Aecom
would otherwise have to Lendlease in respect of defects existing at the date of the Settlement Agreement provided that Lendlease knew or ought to have known of the defect in question. It was implicit that as well as knowing of the defect it was necessary that Lendlease knew or ought to have known that the defect related to a matter for which
Aecom
was responsible. However, for current purposes the significant point is that the focus is on the defects and the liability arising from them rather than on claims in existence at the date of the agreement.
Aecom
accepts that the Settlement Agreement is not a defence to the claim based on defects 13, 18, and 23 but does rely on it in relation to the other defects. It will be necessary to consider for each of those defects where
Aecom
does rely on the Settlement Agreement whether Lendlease knew or ought reasonably to have known of it as at 28th September 2012. The question of whether Lendlease ought reasonably to have known of a particular defect is to be determined objectively but it is to be remembered that as
Aecom
is asserting the defence the burden of showing the requisite actual or constructive knowledge lies on
Aecom.
The Consequences of the Judgment of Joanna Smith J.
Aecom's
breach was the cause of the former's liability to Project Co but said that once that had been done the amount awarded in the "upstream" proceedings should be taken as the measure of loss subject to limited exceptions. For its part
Aecom
says that the effect of the decision of the Court of Appeal in Ward & others v Savill [2021] EWCA Civ 1378 is that notwithstanding the judgment of Joanna Smith J Lendlease must prove in this action all the elements of its claim including the amount of the loss caused by Defects 1 - 9.
"In my judgment there are significant differences between the case where the plaintiff's liability is fixed by agreement and the case where it is fixed by an arbitration award. In the case of an agreement the amount depends entirely upon the decision of the parties to agree to a particular sum, whereas in the case of an arbitration award the amount depends upon the determination of the arbitrators. Thus in the case of an agreement it makes sense to hold that the agreement is at best prima facie evidence of the plaintiff's loss and to impose on the plaintiff the burden of pleading and proving that the settlement was reasonable. That is in my opinion the effect of the decision in Biggin v. Permanite. In the case where the plaintiffs liability is determined by an award I can see no reason why the plaintiff should not say that his liability has been so determined and why he should not be able to rely upon the award without more to establish the amount of his liability, leaving it to the defendant to show, if he can, that the plaintiff has failed to mitigate his loss or that the award is (in the relevant sense) unreasonable or perverse.
…"
Aecom
was the invocation of the decision in Ward & others v Savill. In earlier proceedings against different defendants the claimants there had obtained a declaration that they, the claimants, had been induced to invest in particular schemes by deceit; that they had a beneficial interest in the monies which had been paid over; and that they were entitled to trace into property acquired with that money. The claimants sought to say against the defendant that as a result of the declarations in the earlier proceedings they had a beneficial interest in monies they had paid over and that they were entitled to trace into property representing the proceeds of those monies including into property held by the defendant. At first instance the deputy judge had concluded that the declarations in the earlier proceedings had not taken effect in rem and so could not be relied upon by the claimants to establish their beneficial interests in the relevant funds.
"…
A judgment obtained by A against B ought not to be evidence against C, for, in the words of the Chief Justice in the Duchess of Kingston's Case (I), "it would be unjust to bind any person who could not be admitted to make a defence, or to examine witnesses or to appeal from a judgment he might think erroneous: and therefore.... the judgment of the court upon facts found, although evidence against the parties, and all claiming under them, are not, in general, to be used to the prejudice of strangers." This is true, not only of convictions, but also of judgments in civil actions. If given between the same parties they are conclusive, but not against anyone who was not a party. If the judgment is not conclusive we have already given our reasons for holding that it ought not to be admitted as some evidence of a fact which must have been found owing mainly to the impossibility of determining what weight should be given to it without retrying the former case. A judgment, however, is conclusive as against all persons of the existence of the state of things which it actually affects when the existence of that state is a fact in issue. Thus, if A sues B, alleging that owing to B's negligence he has been held liable to pay xl. to C, the judgment obtained by C is conclusive as to the amount of damages that A has had to pay C, but it is not evidence that B was negligent: see Green v. New River Co. (I), and B can show, if he can, that the amount recovered was not the true measure of damage.
…"
"The appellants should be required to plead and prove all the elements of their case against the respondent that they have a beneficial interest in her property, in the same way as the claimants in Calyon were required to establish against the bank their title to the collection. Nothing in Patten LJ's analysis of the legal effect of rescission in his judgment in Independent Trustee Services supports the appellants' case that they can rely upon the Butcher Declarations against the respondent without having to plead and prove all the elements of their case against her that they have a beneficial interest in her property."
"Accordingly, applying both the rule in Hollington v Hewthorn and the wider principle enunciated in Gleeson v Wippell, I consider that the respondent is entitled to require the appellants to plead and prove all the elements of their case against her and that they cannot simply rely upon the Butcher Declarations against her."
Aecom
is the cost of putting matters right. Rather it was saying that
Aecom's
actions had put Lendlease in breach of the latter's obligations to Project Co and that the consequence of this was the liability in the amount of Joanna Smith J's judgment. I am satisfied that the approach to which Clarke J referred is applicable and that this claim falls within the "carve-out" identified in Hollington v Hewthorn. That is because the quantum of Lendlease's liability to Project Co is a matter of fact which is in issue here and which was determined by Joanna Smith J. The last sentence of the passage quoted from Hollington v Hewthorn explains how the "carve-out" operates. With the substitution of "breach of contract" for "negligence" in that sentence the circumstances here are precisely those which are being addressed. It is apparent that Goddard LJ was not saying that the "carve-out" only applied to claims of negligence but was, instead, giving an example of its operation and the same approach as set out in the example is to be followed here. I have considered whether the position is changed by the Chancellor's reference in Ward & others v Savill at [82] to the absence of prejudice. In my judgement the position is not changed and the Chancellor was not in some way seeking to confine the "carve-out" to cases where no prejudice was caused and to impose this as a further requirement.
Aecom
was in breach of its obligations to Lendlease. It is, however, conclusive as to the fact that Lendlease was in breach of its obligations to Project Co. Subject to the qualification I will address in the following paragraphs it is also conclusive as to the fact that Lendlease was as a consequence liable to Project Co in a particular amount. Lendlease has to show without reference to the judgment that
Aecom
was in breach of the latter's obligations and that this breach caused Lendlease to be liable to Project Co. However, provided Lendlease does that then Joanna Smith J's judgment provides the starting point in relation to the amount of that liability and the onus is then on
Aecom
to show that the amount of the judgment is not the true measure of Lendlease's loss by reason of
Aecom's
breach.
Aecom
of that award of a global sum? If all the Plant Room 2 Defects are established against
Aecom
then the Hollington v Hewthorn "carve-out" can safely be applied. In those circumstances the award made by Joanna Smith J can be seen as being the measure of the loss caused to Lendlease subject to
Aecom
establishing that it is not the true measure. However, very different considerations apply if Lendlease fails to establish
Aecom's
liability for all these defects. In those circumstances Lendlease will not be able to rely on the "carve-out" in respect of a smaller number of defects. That is because it cannot then be properly said that Joanna Smith J's judgment is conclusive as to the amount which Lendlease had to pay Project Co by reason of
Aecom's
breach in respect of those defects. In those circumstances it will not be possible by reference to that judgment alone to identify the amount which any particular defect caused Lendlease to have to pay. The judgment cannot then be seen as conclusive as to the amount of damages payable as a consequence of a particular breach. In that regard it is to be noted that in Hollington v Hewthorn Goddard LJ clearly had in mind the case where a single identifiable sum was awarded by way of damages and that Clarke J was considering the position in respect of a single arbitration award. In the event that
Aecom
were found to be liable for some of the Plant Room 2 Defects but not all then the burden would fall on Lendlease to show that a particular amount of the sum awarded by Joanna Smith J was caused by the defect or defects for which
Aecom
was responsible. It is hard to see how that could be shown where Joanna Smith J expressly proceeded on the footing that she was not making an allocation between the different defects.
The Consequences of the Settlement made with Engie.
Aecom.
"In my judgment the following principles can, in summary, be derived from the authorities:
(1) For C to be liable to A in respect of A's liability to B which was the subject of a settlement it is not necessary for A to prove on the balance of probabilities that A was or would have been liable to B or that A was or would have been liable for the amount of the settlement.
(2) For C to be liable to A in respect of the settlement, A must show that the specified eventuality (in the case of an indemnity given by C to A) or the breach of contract (in the case of a breach of contract between C and A) has caused the loss incurred in satisfying the settlement in the manner set out in the indemnity or as required for causation of damages and that the loss was within the loss covered by the indemnity or the damages were not too remote.
(3) Unless the claim is of sufficient strength reasonably to justify a settlement and the amount paid in settlement is reasonable having regard to the strength of the claim, it cannot be shown that the loss has been caused by the relevant eventuality or breach of contract. In assessing the strength of the claim, unless the claim is so weak that no reasonable party would take it sufficiently seriously to negotiate any settlement involving payment, it cannot be said that the loss attributable to a reasonable settlement was not caused by the eventuality or the breach.
(4) In general if, when a party is in breach of contract, a claim by a third party is in the reasonable contemplation of the parties as a probable result of the breach, then it will generally also be in the reasonable contemplation of the parties that there might be a reasonable settlement of any such claim by the other party.
(5) The test of whether the amount paid in settlement was reasonable is whether the settlement was, in all the circumstances, within the range of settlements which reasonable people in the position of the settling party might have made. Such circumstances will generally include:
(a) The strength of the claim;
(b) Whether the settlement was the result of legal advice;
(c) The uncertainties and expenses of litigation;
(d) The benefits of settling the case rather than disputing it.
(6) The question of whether a settlement was reasonable is to be assessed at the date of the settlement when necessarily the issues between A and B remained unresolved."
Aecom
causing loss which was the subject matter of the settlement; that Lendlease had acted reasonably in settling Engie's claim; and that the amount paid in settlement was a reasonable sum in respect of the breach in question. Miss McCafferty said that Lendlease had failed in particular to establish the last element.
"If this were a settlement case I would regard myself as bound to hold that the plaintiffs would have to prove that the amount for which they had settled was reasonable. It is not clear to me how far the Court of Appeal thought that the plaintiffs must go in establishing that fact. Nevertheless the Court of Appeal appears to have thought that it would not be sufficient merely to produce the settlement and that some examination of the underlying facts would be required…."
Aecom
says that even if its other defences fail it is not liable to Lendlease for the sums the latter paid to Engie because Lendlease has failed to surmount even the low hurdle necessary to establish that those sums were paid reasonably. I will turn next to that question.
The Recoverability of the Sum paid in Settlement to Engie.
Aecom
that Engie's claim against Lendlease was so weak that Lendlease acted unreasonably in negotiating a settlement involving payment. The real question is whether Lendlease has shown that the sums paid were reasonable.
Aecom
Miss McCafferty contended that Lendlease had produced no evidence to establish that the amount of the settlement agreement with Engie was the result of legal advice or the assessment of the figures by experts nor other adequate evidence to show the reasonableness of the figures.
Aecom's
quantum expert, Richard Walmsley, had been provided with more of the underlying documents though by no means all of those which he believed would have been necessary for a proper assessment of the figures. Mr Walmsley put forward figures which he contended were to be seen as reasonable settlement figures in respect of a number of the defects but in respect of some others he said that the absence of documentation meant that he was not able to provide any figure and could not say either that there had been settlement in a reasonable sum or what such a sum would have been.
Findings in respect of the alleged Defects.
Defect 1: the Construction of Plant Room 2 as a Single Fire Compartment.
Aecom's
duty and the responsibility for Rev 19 this part of the claim is statute-barred. The claim is, moreover, precluded by the Settlement Agreement because the lack of compartmentation existed and was apparent at September 2012.
Aecom
said that it would not have been liable in this respect even if the claim had not been barred in those respects. Miss McCafferty emphasised that it was common ground that the iterations of the fire strategy which had preceded Rev 19 had showed compartmentation and were compliant with HTM 81. The lack of compartmentation first appeared in Rev 19. That was correct but I have concluded that but for my conclusions as to limitation and the effect of the Settlement Agreement
Aecom
would have been liable for this defect. Although the earlier iterations of the fire strategy had shown fire compartmentation
Aecom
not only knew that there was in fact no compartmentation but it caused Rotary to omit the installation of dampers on the penetrations between the partitions. This appears from the exchange between Messrs Dean and Don which I have set out at [179] and following above. I have noted that Mr Middleton's ignorance of that exchange was relevant to the consideration of the responsibility for Rev 19 but the fact remains that
Aecom
in the person of Mr Dean knew of these matters. It was in breach of its obligations in acting as it did but the cause of action accrued by the end of August 2006.
Aecom's
contributory negligence contention addressed the contention in relation to Rev 19 and so would not have come into play in respect of the earlier actions.
Defect 2: Adequacy of the Protection against External Fire Spread.
Aecom
was in breach in this respect but accepted that no separate loss flowed from the breach and so I need not consider it further.
Defect 3: Separation of Switchgear and the Absence of a Fire Suppression System.
Aecom's
Stage D Report at the time of financial close in September 2004 had provided for a gaseous fire suppression system for the plant room. The Stage E Specification of July 2005 made no such provision. The question became one of the reason for that change. Lendlease said that it was because of a failing on the part of
Aecom
whereas the latter said that it had been the result of an instruction from Lendlease (which
Aecom
believed to have resulted from the instructions of the Trust).
Aecom
to look at alternatives such as aspirated early detection systems. In the course of cross-examination he confirmed this account saying that the change of instruction had come in 2005 or 2006 and adding that suppression had not been needed over the HP transformers "because they were of the type of cast dry resin which did not require suppression" and that "it wasn't requested in the LV room or the generator room". He added that "the only areas where we had extensive discussions with the Trust and Lendlease were in the IT rooms and PABX rooms". It was apparent that Mr Middleton's recollection of these matters was limited which was entirely understandable given the passage of time since they occurred. However, he did draw support from the minutes of a meeting held on 23rd May 2006.
Aecom
and others (though it is to be noted not Mr Middleton). It was said to be a meeting "to discuss integration [of] gas suppression system with Vesda fire detection system". Under the heading "background" Kate Khan of Project Co is recorded as having reported that "at financial close the Trust signed a contract that did not include gas suppression. During the last days of negotiations changes were made and the planned gas suppression was removed".
Aecom's
Stage D Report; the change was a significant one which is unlikely to have been the result simply of an oversight; there would be no reason for
Aecom
to have made the change unless it had been asked to do so; there is no suggestion that the omission was challenged at the time on behalf of Lendlease or by any other party; and the comments made at the May 2006 meeting provide support for the view that the removal was the result of a decision by the Trust which was then communicated to
Aecom.
Defect 4: Separation of the Service Riser.
Aecom's
design of the fire strategy. Instead it was a matter of the way in which the riser had been constructed which was the result of the approach taken by Lendlease following on from its discussions with Building Control. In light of the conclusions which I have reached as to the origin of Rev 19 and the extent of
Aecom's
responsibility to review matters and/or to warn Lendlease this is not a matter for which
Aecom
can be liable.
Aecom
Mr Morgan did not accept that HTM 81 required each fire door leading to the riser at upper levels to give 120 minutes' fire resistance and so denied that there was a breach of that requirement. I adopt Joanna Smith J's succinct explanation of why 60 minute fire doors are effective to provide 120 minutes fire resistance in such circumstances. At [281(a)] she said:
"Mr Davis' evidence, which does not appear to be in dispute, is that `usually, where a riser shaft is provided, protection to adjoining floors will be provided by a fire resisting door at the floor of origin'. This means that for a fire successfully to spread via a riser it would have to enter the riser through a 60 minute fire-resisting door (so bypassing the 120 minute compartment floor) and exit the riser at another floor through another 60 minute fire resistance door – thus giving 120 minutes fire resistance."
Aecom
so neither aspect of this defect is established.
Defects 5 and 6: Adequacy of the Plant Replacement Strategy for Transformers and RMUs(5) and Generators (6).
Aecom.
In addition it is apparent that in making her finding Joanna Smith J was particularly influenced by Lendlease's obligations under the Project Agreement: obligations which as I have explained above were not stepped down to
Aecom.
Aecom
was in breach in relation to the replacement strategy. Thus it was accepted that the strategy which
Aecom
had produced was "quite scant" (as Mr Gold described it). In light of that it was not open to
Aecom
to argue that the inadequacies of the resulting arrangements were the responsibility of Lendlease and/or Rotary. The position might have been different if
Aecom
had produced a detailed strategy which had not been implemented adequately. That was not the position: instead in respect of a location where the level of the Plant Room meant that replacement would inevitably be problematic
Aecom
had produced a less than detailed strategy. The difficulties in replacing plant in accordance with the strategy were summarised by Joanna Smith J and were not in reality disputed before me with Mr Gold accepting the real difficulties which would be involved.
Aecom
I have concluded, albeit with a degree of reservation, that if the claim had not been statute-barred or precluded by the Settlement Agreement then I would have found
Aecom
to be in breach in these respects.
Defect 7: Adequacy of the Fire-Stopping of the Ductwork leading to the Service Riser.
Aecom
had not been able to invoke those defences it would have been found to have been in breach in respect of the first element (the ductwork in the Plant Room) but not in respect of the second (the connexion to the service riser).
Defect 8: Fire Stopping of Cable Installation.
Aecom
would have been liable in this regard.
Defect 9: Absence of Segregation between Essential and Non-Essential Cables.
Aecom's
design was in breach of its obligations because it did not provide for the essential cables all to be fire-rated.
Aecom
Mr Gold said that notwithstanding Joanna Smith J's judgment he remained of the view that HTM 81 did not require all essential cables to be fire rated. He said that he regarded the contrary view as a misinterpretation of HTM 81 and that he remained of the view that HTM 81 only required those essential cables providing power to life safety systems to be fire rated.
Aecom's
obligation was to exercise reasonable care and skill. A failure to meet the requirements of HTM 81 is to be seen as a failure to exercise such care and skill in the absence of a compelling explanation but the obligation remained one to exercise reasonable care and skill. Here the fact that the approach adopted was that generally adopted by competent engineers would be such a compelling explanation.
Quantum in respect of the Plant Room 2 Defects.
Aecom
was in breach of the Consultancy Agreement in respect of some but not all of the Plant Room 2 Defects. In particular no liability would have been established in respect of Defects 3, 4, and 9.
Aecom
was liable for some of Defects 1 – 9 but not others. He had not addressed that possibility in his expert evidence for these proceedings nor had he broken down the quantification of the claim between Defects 1 - 9. Mr Somerset said that this was because he had relied on the judgment in the Project Co action and had taken the claim to be one for Defects 1 – 9 collectively. When he was pressed on how the judge in the current proceedings could determine the correct sum to be awarded in respect of these defects separately Mr Somerset said that the only way would be for this judge to look at the expert reports prepared for the Project Co case. He accepted that could not in reality be done. That is particularly so where Mr Somerset and Mr Finn, Project Co's quantum expert, were not agreed on the correct approach to allocation and where Joanna Smith J had expressly not made a determination as to the correct allocation.
Aecom
was in breach.
Defect 11: Accessibility of the Fire Dampers.
Aecom
was responsible for spatial coordination and is responsible for this defect because its design in terms of the location of other services and building structures meant that the dampers could not be installed so as to be accessible.
Aecom
says that it was responsible for setting out the principles of coordination with Lendlease and Rotary being responsible for the detailed installation. It does not accept that its design meant that the dampers could not be located so as to be accessible.
Aecom
should have reviewed the post construction testing of the dampers and the problems which were encountered. I reject that submission and find that this part of the claim is statute-barred. Any breach on the part of
Aecom
occurred at the time of the submission of its drawings or at the time of a failure to challenge the approach being taken to installation. On either view time began to run when the construction was completed because it was then that the dampers were in inaccessible locations. In addition the claim is precluded by the Settlement Agreement. Not only was the defect in existence at the time of the agreement but it had been the subject of a report in 2010.
Aecom
and Rotary's drawings to see whether
Aecom's
design precluded installation in accessible locations and whether the dampers were installed where they should have been. Instead he had relied on a survey prepared on behalf of Engie and the accompanying photographs. This survey identified 33 dampers (out of a total in excess of 2,000) which were in inaccessible locations (it appears from Mr Moseley's report that there were a further 4 which were inaccessible). Mr Bradley said that the photographs and Engie's report supported the conclusion that the defect was a consequence of
Aecom's
design because of the "sheer density" of other services around the ducts. There is some force in Mr Bradley's point but it is the starting point for the analysis rather than its conclusion. Considerably more analysis would be needed before it could be said even on the balance of probabilities that the inaccessibility of these dampers was attributable to a breach on the part of
Aecom
particularly in circumstances where the problem affected such a small proportion of the dampers. It follows that even if the claim in respect of this defect had not been statute-barred nor precluded by the Settlement Agreement I would not have found it established.
Defect 13: The Sizing of the Condensate System.
Aecom
drawings relevant to this defect were produced in July 2005 and the pipework was installed by the end of October 2005. It follows that any cause of action accrued substantially more than twelve years before the commencement of proceedings. Even if the claim had not been statute-barred I would not have found liability to be established for the following reasons.
Aecom's
drawings (and also in some respects from that shown in Rotary's drawings). The pipework was smaller in size and the installation had at least at one point taken the form of two pipes rather than one. It was also said on behalf of
Aecom
that the system as installed contained more bends than it had provided for though Mr Bradley did not accept that the bends were necessarily to be seen as a departure from
Aecom's
design.
Aecom
accepted that two of the pipes in its design had been undersized but as matters turned out Rotary had installed even smaller pipes than those.
Aecom
failed to exercise reasonable care and skill in its design but also that such failure was causative of the defect and so of Lendlease's loss. In circumstances where the system as installed did not accord with
Aecom's
design and where the departures from the design were clearly more than trivial Lendlease has not shown such causation. Any inadequacies in
Aecom's
design have not been shown to be the cause of the problems which occurred.
Defect 14: Accessibility of the Smoke Fans.
Aecom's
design while
Aecom
said that its responsibility was limited to the principles of coordination and that its design did not preclude the fans being positioned in accessible locations. In addition,
Aecom
does not accept that the extract fans were in inappropriately inaccessible locations. In that regard Mr Moseley made the common sense point that the need to displace other services to get access to the fan does not without more mean that the location is inappropriate given the limited number of occasions on which such access will be needed. Whether the fan is inappropriately inaccessible will be a matter of degree depending on the degree of displacement of other services which will be necessary and the likely frequency of the need for access.
Aecom's
design than in relation to the dampers but there is again a paucity of evidence. I do not have the material which would enable me to conclude that the fans are in fact inappropriately inaccessible let alone that this is the consequence of
Aecom's
design. It follows that even if not statute-barred nor precluded by the Settlement Agreement the claim in relation to this defect would fail.
Defect 15: Resilience of the Domestic Hot Water Plant.
Aecom
and then installed did not provide adequate resilience because of a change from the design intent as set out by Project Co.
Aecom's
Stage D design was for a single 3N+1 system serving the whole building and consisting of four 1,500 litre vessels. That was changed in the July 2005 design to two separate systems each of 2N with two 2,000 litre vessels in each system and each serving half of the building.
Aecom.
It is to be noted that
Aecom
countered that in any event the corrosion may have been caused by the action of Rotary in using stainless steel vessels rather than copper ones as provided for in
Aecom's
design.
"The issue then, really, is not whether there was sufficient water capacity, but the fact that the design change has meant that the spatial considerations did not allow for replacement if something goes wrong."
"11.1.7 Rotary installed the four 3000lt vessels, and these were put into service but were found to be suffering from corrosion problems, presumably/possibly from the chlorine dioxide22. A decision was made to replace the vessels, but I am advised that it was not possible to replace the vessels with ones of the same size owing to space constraints, mainly due to the amount of pipework above and around the vessels (the existing units had to be cut up in situ to enable them to be removed). The largest vessels that could be retrofitted were 1000lt….
"11.1.8 In summary, it is unclear why the stainless steel tanks were corroded. The levels of chlorine dioxide from the Trust's water treatment system should not have caused corrosion sufficient to require the vessels to be replaced, especially in such a short time after being put into service. But the planning of the plant in the plant room ought to have allowed sufficient space for the replacement of the vessels without having to reduce the vessel capacity from 3000lt to 1000lt. The level of space planning of the plant to facilitate replacement was a pre-construction activity that ought to have been carried out byAECOM.
…"
Aecom's
design on the size of the replacement vessels is a new contention which was not pleaded. It could only be said to be a matter of resilience by an artificial interpretation of that term and it is significant that neither expert approached the matter in that way in his initial report. It is not open to Lendlease to advance the claim on this basis without amendment. For completeness I add that even if it had been open to Lendlease to put its case this way considerably more would have been required to establish a breach in this regard. Mr Bradley's treatment of the point is confined to the short passages I have quoted above. Much more would have been needed to show not only that the replacement of the 3,000 litre vessels with other vessels of an equivalent capacity was not practicable but also that a competent designer would and could have created a design which would enable this. Both limbs of that proposition may be correct but the evidence does not show that.
Aecom.
There was no clear explanation of why there had been a change from the original single building system. It was suggested that the change may have been with the knowledge and/or at the instigation of Lendlease or Project Co. That however, was no more than speculation. There is no evidence in that regard and if such a contention were to be relied upon it would have had to be established by
Aecom.
Mr Bradley accepted that the change had not reduced capacity but said that the creation of two separate systems reduced resilience. This was not accepted by Mr Moseley. On balance I would have found that there had been a reduction in resilience accepting Mr Bradley's analysis in that regard but this does not avail Lendlease given that as already explained the breach was not causative of loss and that the claim is statute-barred and precluded by agreement.
Defect 18: Adequacy of the Fault Withstand Capacity of the Electrical Switchgear.
Aecom
is liable in this respect then the claim is statute-barred with any cause of action having accrued at the latest at the time of completion of the installation.
Aecom's
obligations in relation to the switchgear and whether they could be performed by reliance on the Schneider survey. That raises further questions of whether
Aecom
exercised reasonable care and skill in doing so and in commenting on the survey.
Aecom's
obligation in this regard was derived from Matrix 3 paragraph 1.3. It was to "provide detailed design information that shall include … HV/LV System discrimination study and fault level/protection settings".
Aecom
responsible for identifying the fault level and protection settings.
Aecom
could in principle discharge its obligation by relying on the Schneider figures and whether it was in fact entitled to do so in the circumstances of this case.
Aecom's
obligation was that of exercising care and skill. The principles applicable when deciding if there has been discharge of that duty in circumstances such as these were identified thus by Ramsey J in Cooperative Group Ltd v John Allen Associates [2010] EWHC 2300 (TCC) at [180]:
"From those decisions I consider that the following propositions can be derived:
(1) That construction professionals do not by the mere act of obtaining advice or a design from another party thereby divest themselves of their duties in respect of that advice or design.
In Moresk v Hicks the first argument was that it was an implied term of the architect's employment that he should be entitled to delegate certain specialised design tasks to qualified specialist sub-contractors. That implied term was rejected as was the alternative that the architect had implied authority to act as agent for the building owner to employ the contractor to design the structure and that the architect did just that. It was not argued that if the architect remained liable for the design then it was possible for the architect to discharge a duty to take reasonable care by relying on the advice or design of specialists provided that such reliance was reasonable.
(2) That construction professionals can discharge their duty to take reasonable care by relying on the advice or design of a specialist provided that they act reasonably in doing so.
In London Borough of Merton v Lowe the architect's decision to use Pyrok was reasonable. In commenting on the decision in Moresk v Hicks, Waller LJ distinguished that case on the basis that the architect has virtually handed over to another the whole task of design and "the architect could not escape responsibility for the work which he was supposed to do by handing it over to another."
In Sealand of the Pacific v McHaffie the decision to use the specialist concrete had been based solely on representations and guarantees from the sales representative and a pamphlet which dealt with the use of the product in a different manner and for different purposes. Any other enquiries would have disclosed that the use of the product was not sound engineering procedure. The architect appreciated that the use of the material was somewhat experimental. It was held that further enquiries should have been made. In my judgment that is a case where the court held that the architects had not acted reasonably in relying on the sales representative and the pamphlet given the circumstances of the case. If the architect had made the further enquiries and those further enquiries had supported the use of the concrete it seems that the court would not have held the architects liable. That would be the case even if the enquiries led to advice which, unbeknownst to the architects, was negligent.
In Surrey v Church the architect knew of the instability in the soils and that placed a duty to have appropriate investigations made by an expert. He selected somebody not qualified as a soils expert and despite the fact that he knew that he could engage whatever competent specialists he needed and that there were firms specialising in soil testing he did not select such a specialist. The basis of contractual liability appears to have been fitness for purpose but it was also found that the architect was negligent. Again it seems that the basis upon which the architect was negligent was that, knowing there were problems with the soils, he should have had appropriate investigations carried out. However, instead of going to specialist soil testing engineers he went to ones who were not so qualified, even though he knew that the client would authorise him to engage those who were competent. In those circumstances it is evident that the architect did not act reasonably.
In Richard Roberts v Douglas Smith Stimpson Judge Newey QC evidently did not think that the architects had acted reasonably. Their investigations were limited to conversations and letters and some telephone conversations with potential suppliers. They do not seek help from other architects or professionals or competent research institutions or trade associations. The supplier's quotation was suspiciously cheap and was not properly considered. Alarm bells were not heeded and the proposals for the lining were put to the client without any warning whatsoever. Again the conclusion is not that, if the architects had made all the necessary enquiries, there would still have been liability but rather that, because they acted unreasonably in the way in which they chose the tank lining, they did not exercise the care to be expected of ordinary competent architects.
(3) That in determining whether construction professionals act reasonably in seeking the assistance of specialists to discharge their duty to the client, the court has to consider all the circumstances which include
(a) Whether the assistance is taken from an appropriate specialist;
(b) Whether it was reasonable to seek assistance from other professionals, research or other associations or other sources;
(c) Whether there was information which should have led the professional to give a warning;
(d) Whether and to what extent the client might have a remedy in respect of the advice from the other specialist;
(e) Whether the construction professional should have advised the client to seek advice elsewhere or should themselves have taken professional advice under a separate retainer."
Aecom's
duty to exercise reasonable care and skill required it to go further than it did in checking or challenging Schneider's survey.
Aecom
made detailed and critical comments on the protection survey on 7th March 2006. It is unclear what response there was to those. The document at G1918 was a composite document. The original document had been produced by Atkins and was entitled "Comments on [
Aecom]
Protection Setting Study". To that had been added in red and dated 24th May 2006 a response from Schneider. There was no evidence from anyone who had been involved at the time and the documentary record is clearly incomplete.
Aecom's
responsibility. The settings which were provided are agreed to have been defective. Having raised questions as to Schneider's survey it can be said that the obligation to exercise reasonable care and skill required
Aecom
to follow the matter through and to ensure that the questions were adequately addressed.
Aecom
did not simply rubber stamp the results of Schneider's work but did instead raise a number of questions.
Aecom
was not obliged to duplicate the work done by Schneider and was arguably entitled to assume that the queries it had raised would be properly addressed by the specialists. In addition it can be said that in circumstances where the claim is advanced at a late stage and where it is not the fault of
Aecom
that documents are missing and evidence from those involved at the time cannot be obtained then
Aecom
is not to be criticised for its inability to provide a full history.
Aecom.
Defect 19: Smoke Detector Installation.
Aecom.
In addition it is precluded by the Settlement Agreement. The alleged defect not only existed at the time of the agreement but was a matter of which Lendlease knew or ought to have known – indeed the positioning of the smoke detectors and the question of compliance with the British Standard was referred to in an email exchange between Derek Elliott of Lendlease and Mr Middleton in December 2007.
Aecom
said that Lendlease had failed to identify the locations where smoke detectors were within 1 metre of the ventilation duct. However, Mr Moseley accepted that there were a number of locations where this was the position. He took the view that in most instances (though he was not able to say whether this was so in every case) this was a consequence of the size of the room or the presence of other necessary equipment meaning that the only practicable location for the smoke detector was within 1 metre of the duct.
Aecom
cannot say that this is necessarily a feature of installation or construction falling outside its design responsibility.
Aecom's
duty as being one of reasonable care and skill and the fact that BS5839 contemplates circumstances where it will not be possible for a smoke detector to be more than 1 metre from a duct affect what is necessary for a breach to be shown. They mean that in order to show a breach it is necessary for Lendlease to show two matters in respect of each instance where a smoke detector is within 1 metre of a ventilation. First, it must show that
Aecom's
design either precluded a gap of more than 1 metre or did not address the point. Second, it must show that if
Aecom
had exercised reasonable care and skill it would have been able to produce a design which provided for a gap of 1 metre or more. It is not enough for Lendlease to show that the smoke detectors were within 1 metre of the ventilation ducts nor even that there was non-compliance with BS5839 unless it can show that the exercise of reasonable care and skill would have led to a different design. Lendlease's evidence simply does not begin to do this and no breach of the duty of care and skill is established..
Aecom's
failure to obtain the agreement of all interested parties to the positioning of the smoke detectors. It is not clear to me that Mr Moseley is not right to say that the approach of Honeywill indicated that it accepted that there had been a legitimate derogation from BS5839. Even if that is not correct this criticism adds nothing. Unless reasonable care would have led to a different configuration the failure to obtain agreement does not advance matters.
Defect 21: Adequacy of the Earthing in Group 1 Medical Locations.
Aecom's
design addressed the earthing requirements for equipment in Group 2 locations but not for that in the Group 1 locations. Lendlease says this was a breach of
Aecom's
obligations.
Aecom
to be liable for the following reasons.
Aecom
made no provision in respect of these locations despite having done so for the Group 2 locations.
Aecom's
argument that there was no binding requirement in this regard at the time of its design does not advance matters. The relevant provisions were guidance at the time and
Aecom's
obligations as a specialist providing a design necessarily required it to take account of the guidance (as it did in respect of the Group 2 locations).
Aecom
related to the question of who should have initiated the discussions about identifying the Group 1 locations. In his report Mr Gold said that the initiative should have come from Lendlease and that there was no obligation on
Aecom
to raise the question. However, in his answers in cross-examination Mr Gold accepted that
Aecom
could and should have raised the question of the Group 1 locations with clinicians from the Trust. Even without that concession I am satisfied that at the very lowest the extent of
Aecom's
design responsibilities meant that reasonable care required it to raise the question and to point out to either the Trust or to Lendlease that Group 1 locations needed to be identified with a view to the additional bonding being included in the design. The fact that
Aecom
included such provision for the Group 2 locations shows that it knew or ought to have known that such provision would be needed in some locations. Despite having made that inclusion in the design it failed either itself to include provision for the Group 1 locations or to cause Lendlease or the Trust to specify those locations. It cannot sensibly be contended that if
Aecom
had raised the matter such locations would not have been identified nor that if identified
Aecom
was not required to make provision for them in the design.
Defect 22: Fire Damper Installation.
Aecom
is responsible for a number of instances where such ductwork passes through a fire barrier without a smoke/fire damper being installed.
Aecom.
Aecom
were put forward. Mr Bradley went further in his report. He had not himself investigated to confirm the absence of the relevant dampers. Mr Bradley took those locations from the Bolster Report. He then compared that report with the drawings prepared by
Aecom
and by Rotary to identify the reason for the omission. As a result of that exercise Mr Bradley said that there were 15 instances where the absence of a damper could be attributed to its omission from
Aecom's
design. Mr Bradley identified a further three instances where he said that
Aecom
should have picked up on the fact that Rotary's drawings did not include a damper where one should have been provided.
Aecom.
This was because he took the view that the identification of the locations at which dampers were to be installed was a matter of the detailed coordination and installation and as such went beyond the scope of
Aecom's
design responsibility. In addition Mr Moseley was of the opinion that
Aecom's
obligation to comment on Rotary's drawings when asked to do so (as it was) did not extend to checking in such detail as would have been necessary to pick up the three omissions identified by Mr Bradley.
Aecom
it was said that it was not open to Lendlease to expand its allegation in this regard beyond the three instances cited in the Scott Schedule. In addition it was said that Lendlease should not be allowed to base a claim on the Bolster Report when that had only been disclosed and provided to Mr Moseley at a late stage.
Aecom
liable for the fifteen instances where Mr Bradley had identified the absence of a damper as being attributable to its omission from
Aecom's
design but not for the further three instances.
Aecom
suffered any prejudice from the expansion of the claim nor from the late disclosure of the Bolster Report regrettable though both were. There was no suggestion that there was any reason to doubt the accuracy of the Bolster Report as to the locations where dampers were not present. Mr Moseley discussed matters at length with Mr Bradley and there was no suggestion that if the former had been given the Bolster Report earlier or had been aware earlier of Lendlease's expanded case he would have done anything other than accept Mr Bradley's analysis of the material.
Aecom's
responsibility for design was not limited to the extent that
Aecom
contended. The extent of its responsibility in relation to the location of the dampers can be determined by reference to what in fact happened. It is apparent that
Aecom's
design and drawings made reference to the positioning of some dampers. Indeed, Lendlease accepted that some of the omissions on which Engie relied had been the result of a failure by Rotary to act in accordance with the design. The fact that some provision for dampers was made is a compelling indication that this was a matter which
Aecom
was to address. Having included dampers at some locations it is unrealistic for
Aecom
to say that it had no responsibility for the omission at other locations if on a proper analysis there should have been dampers at those other locations.
Aecom
would not be liable for the further three instances. Its obligation was to comment on the drawings prepared by Rotary and provided to it for comment. That was an obligation to comment. The obligation was to exercise reasonable care and skill in that regard. It is a matter of fact and degree as to what extent this required detailed checking of the drawings. I am satisfied that Mr Moseley is right to say that it did not extend to checking in the degree of detail which would have been required to identify these omissions.
Defect 23: Absence of Break Tanks for Laboratory Hot Water Systems.
Aecom
accepts that there was a failure to exercise reasonable care and skill in the design of the hot water supply to the laboratory area. However, it says that the claim is statute-barred. I agree that limitation provides
Aecom
with a defence in this respect. The cause of action accrued when the relevant drawing was issued for construction in January 2006 or at the latest by the time of construction in accordance with that drawing. Accordingly, the cause of action accrued more than twelve years before the commencement of proceedings.
Quantum in respect of the Individual Non Plant Room 2 Defects.
The Additional Elements of the Claim for the Non Plant Room 2 Defects.
Aecom
that the particularisation of the causation of the expenditure and its relation to the defects is poor and that there is an indication that there might have been double-counting in respect of some elements of them. However, I note that for
Aecom
Mr Walmsley was able to identify relevant invoices totalling £334,525.52. On balance if liability had been established I would have been satisfied that a sum of the order of £200,000 discounted from that figure to take account of the risk of double-counting and the inadequacy of the evidence of causation was recoverable.
Aecom
for reviewing and assisting in respect of the Plant Room 2 Defects. The costs of assistance in addressing the defects would potentially be recoverable by Lendlease. However, rather more particularisation of the sums paid and the reason for the expenditure would be required before the amount could be awarded. It is also relevant that I have found that
Aecom
was not in breach of its duty in respect of Rev 19 and that even if the claim in respect of them had not been statute-barred the claim in relation to some of the individual defects would have failed on the merits. It would, therefore, be necessary for Lendlease to establish the particular sums attributable to assistance with the matters where
Aecom
was in breach. That exercise does not appear to have been done.
Aecom.
If liability had been established Lendlease would have been entitled to recover a reasonable sum paid in costs as part of a settlement and the court would accept that the range of reasonable sums would be wide. If
Aecom
had been liable for all the Non Plant Room 2 Defects then I would have found that this figure was within the range of reasonable settlement sums in respect of costs. A difficulty arises from the fact that I have found that even if the claim were not statute-barred nor precluded by the Settlement Agreement
Aecom
would not have been found to have been in breach in respect of all these defects. Indeed on the analysis set out above
Aecom would have been liable only for Defects 21, 22, and 23. It follows that Lendlease would have only been entitled to that proportion of the costs paid to Project Co and Engie which were attributable to those defects and there was no evidence in that regard.
Conclusion.
Note 1 The names of both parties and of some of the other companies involved in the underlying dealings have changed since the relevant agreements were first entered and I will use throughout the current names of those involved. [Back]