Design responsibility for Employer’s Requirements: where is the line to be drawn?

A recent TCC decision has considered amendments to a JCT Design and Build Contract seeking to impose full design responsibility for the Employer’s Requirements (the “ERs”) on the contractor. The decision considers whether a statement in the ERs as to the stage the design had reached amounted to a contractual warranty. The court disagreed with an adjudication decision obtained by the contractor and held that the statement in the ERs was not sufficient to qualify the Contractor’s assumption of design responsibility as specified in the contract conditions.

Workman Properties Ltd v Adi Building and Refurbishment Ltd

Adi agreed with Workman, under the terms of an amended JCT 2016 Design and Build Contract,  to carry out expansion works at Workman’s dairy in Gloucestershire (the “Contract”).

Differences arose between the parties regarding the scope of Adi’s design responsibility under the Contract. The design responsibility provisions of the Contract were amended from the standard JCT position as follows:

• Recital 3 stated that Adi had “examined the Employer’s Requirements” and had agreed to “accept full responsibility for any design contained in them”.
   
• Clause 2.17.1 provided that Adi was to be “fully responsible in all respects of the design of the Works including all design work proposed by or on behalf of the Employer…forming part of the Employer’s Requirements”.
   
• Paragraph 1.4 of the Employer’s Requirements (the “ERs”) stated that Adi would be fully responsible for “the complete design, construction, completion, commissioning and defects rectification of the works”. The second half of paragraph 1.4 stated that “significant design has been developed to date which has been taken to end of RIBA Stage 4…”.

A dispute concerning design liability was referred to adjudication and Adi submitted that the second half of paragraph 1.4 of the ERs amounted to a warranty from Workman that the design had been developed to the end of RIBA Stage 4 prior to the date of the Contract. Adi claimed that Workman was in breach of this warranty which would then entitle it to claim additional time, costs and/or loss and expense for the design works Adi carried out to develop the design up to RIBA Stage 4. The adjudicator upheld Adi’s claim.

Workman brought TCC proceedings to challenge the adjudicator’s decision, claiming that Adi had taken full responsibility for the entirety of the design and consequently was not entitled to any time, costs and/or loss and expense as a result of any deficiencies with the design within the ERs.

No warranty

The TCC found in favour of Workman. The court observed that all of the relevant contract terms firmly pointed to Adi taking full responsibility for the entirety of the design, save for the second section of paragraph 1.4 of the ERs. The judge considered that the words used in the second section of paragraph 1.4 were “nowhere near sufficient” to require the unequivocal provisions noted above to be read as “so heavily qualified”. That was particularly the case where those provisions were bespoke amendments that imposed far greater design responsibility on Adi than the unamended provisions of the JCT 2016 Design and Build Contract.

Conclusions and implications

Amendments such as those considered in this case are commonly made to the JCT Design and Build form. Despite their prevalence, this appears to be the first time the TCC has considered a dispute over the extent to which an employer retains liability for designs included in the ERs under such a contract.

The court’s decision highlights the need for employers in such circumstances to take great care over any statements in the ERs about the stage to which the design has been progressed (and indeed any other statements in the “Contract Documents” which might be seen to derogate from a passing of full design responsibility under the contract conditions). Employers would be well advised to remove such references or, if they cannot be removed, to qualify them subjectively (e.g. that the employer “understands” the design to have reached a certain stage) or with an express caveat that the employer gives no assurances as to the progress of the design. Order of precedence clauses will also be important to confirm that the contract conditions take priority over other contract documents.

Contractors who wish to rely on such statements in the ERs would be well advised to qualify any bespoke provisions which seek to impose full design responsibility for the ERs. To avoid uncertainty it would be best practice to ensure consistency between contract terms and the more technical contract documents to give both parties clarity on the demarcation of design responsibilities.

References:

Workman Properties Ltd v Adi Building And Refurbishment Ltd [2024] EWHC 2627 (TCC).