The recent House of Lords decision in Royal Brompton Hospital v Hammond and Taylor Woodrow highlights the difficulties professionals have in obtaining a contribution towards their liability as an employer from a contractor.
Brompton (the employer) engaged Taylor Woodrow (the contractor) to develop new Chelsea hospital premises. Watkins Gray International was the architect.
The contract had a completion date, obliging the contractor to pay liquidated and ascertained damages if it failed to finish on time.
Practical completion was late, but the architect granted extensions up to the date of actual completion, saving the contractors from paying liquidated damages.
The employer sued the architect, alleging it had been negligent in allowing the extensions.
The architect then tried to join the contractor, which had caused the delay in the first place, seeking a contribution under the Civil Liability (Contribution) Act [1978]. The Act says "any person liable in respect of any damage suffered by another person may recover contribution from any person liable in respect of the same damage".
The Lords had to decide if the "damage", in other words loss or harm, suffered by the employer at the hands of the architect and contractor was the same.
The claim against the architect was negligent advice and certification.
The claim against the contractor was based on delay and disruption.
Thus, the architect failed in its argument that the distinction between damage and damages was artificial.
Professionals and their insurers and advisers must therefore proceed from the outset of contractual negotiations on the basis that, if all goes wrong, the Civil Liability (Contribution) Act will be of no assistance.
Many may consider this an area for statutory reform with a view to bringing legislation that will correct this iniquitous situation.
