Novation Case Study no.2

Novation in part: Another example from our files concerns a project, which was initially for the demolition of a 1960s city centre office block, which was to be replaced with a new office and retail development.

Griffiths & Armour
20 September 2014

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The appointment from the original client was to undertake initial design work for the demolition and new build work.

Subsequent to this, the original client was able to secure funding for the refurbishment of an adjoining building and the consultant, having a good relationship with his client, had his appointment extended to include this refurbishment.

For budgetary reasons, two different contractors were appointed; one to undertake the new build and another for the refurbishment. The consultant, on the other hand, had only one appointment with the original client to undertake both elements. 

The client decided that he wanted to novate that part of the design appointment relating to the refurbishment works to the contractor, but wished to retain the services of the consultant for the new build. The rationale for this appeared simple – quite naturally, the original client wanted far more involvement in the design of the new build than the more straightforward refurbishment which was going on next door.

The consultant wanted all the work the client was able to give him so agreed to the novation of part of his appointment to the contractor. 

Disputes arose on the project which, in any other situation, might of themselves have been perfectly manageable.

However, the confusion caused by the contractual set-up has led to the situation becoming worse than would otherwise have been the case. It is argued that actions taken by the consultant in favour of the original client on the new build have had a negative impact upon the contractor responsible for the refurbishment and, conversely, actions taken in favour of the refurbishment contractor have had a negative impact on the original client. 

Outcome

The focus of the dispute centres on to whom the consultant owed a duty of care when providing advice on the two elements of the project and, in particular, advice given around the interfaces between those elements.

Establishing where the legal duty of care lies will be costly and, by its very nature, any settlement is going to be difficult to agree.