Novation Case Study no.3

A firm of structural engineers were engaged by a developer in relation to construction of new office building.

The firm provided advice to the developer up to the appointment of the contractor on a design and build basis, at which point the firm was novated to the contractor. The novation agreement included a requirement for the structural engineer to provide regular reports to the developer on the contractor’s work on site. 

During construction of the foundations, the structural engineer raised concerns with the contractor regarding some pile testing data which appeared to show a failure in two piles.

The contractor employed his own pile testing house, who disagreed with these concerns and passed the piles in question. The structural engineer remained unconvinced and was left in a dilemma. Whilst he had undoubtedly satisfied his duty to the contractor by flagging up his concerns, albeit that they had been ignored, he also had a duty to inform the developer of those concerns as well. Clearly, whistle-blowing to the developer would not do the contractor any favours who made it quite clear to the structural engineer that he would hold him responsible for any unnecessary delay to the construction that may result from such action. The structural engineer faced a stark choice: he could either stay quiet and not inform the developer of his concerns, running the risk of a future claim from the developer for negligent site inspection and possible deliberate concealment of the defect; or, he could inform the developer of his concerns souring the relationship and possible deliberate concealment of the defect; or, he could contractor for any delay costs should subsequent tests prove that the structural engineer’s concerns were unfounded. 

In the event, the structural engineer felt that the only reasonable course of action was to inform the developer of his concerns.

The developer, as it happened, chose not to take issue with the contractor so nothing further came of this, but one could easily see how similar circumstances could have led to withholding of the structural engineer’s fees by the contractor or a professional indemnity claim, or both. 

It is worth pointing out that there were no health and safety concerns with the piles in this case. Had there been any, and the contractor ignored them, then the engineer would have had no choice but to inform the developer and any relevant parties responsible for the project regardless of whether any specific site inspection duties were owed to the employer.

Turning a blind eye to health and safety concerns can lead to involvement in any subsequent criminal prosecutions for breaches of the Health & Safety at Work Act 1974 and other legislation.

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