Developer fails in negligence claim against engineers

When relying on reports drawn up by professionals, it’s important to ensure that they are liable if their advice turns out to be wrong or incomplete.

Failure to do so could prove costly, as illustrated in a recent case involving BDW Trading Ltd and Integral Geotechnique (Wales) Ltd.

The case involved a potential development site owned by a local authority. The authority hired Integral to provide a geotechnical site report. Integral was told that the report was intended to be relied on by the eventual purchaser and therefore had to be capable of assignment with warranties.

Integral’s standard conditions provided that the contract did not confer any third-party benefit or rights, and that its total liability in respect of pollution or environmental contamination claims was limited to £300,000.

Integral’s report identified asbestos containing materials (ACMs) within old building structures on the 8-hectare site but not the risk from some buildings that had been demolished several decades ago.

The report recommended further testing across the whole site once it had been cleared.

It stated that it had been prepared for the local authority's use and should not be passed to others without the defendant's express consent, but that it could be assigned to the eventual site purchaser.

BDW Trading purchased the site, but inadvertently, the report was not assigned to it.

After completion, the clearance of the site led to the discovery of several areas of ACMs in the grassed-over area and in the built-up area.

BDW claimed that Integral had owed it a duty of care in relation to the report which had been negligently prepared. If it had known of the presence of ACMs it would have been able to negotiate a reduction in the purchase price to reflect the likely or actual costs of decontamination.

The High Court ruled in favour of Integral. It found that although parts of the report were open to criticism, it was not negligent in respect of the risk of asbestos contamination as it reasonably appeared at that stage.

The court also added that no duty of care existed where Integral was not asked and did not agree to BDW placing legal reliance on the report other than through the mechanism of an assignment which did not take place.

Please contact us if you would like advice about bringing or defending a professional negligence claim.