Case analysis: Multiplex Construction Europe Ltd v (1) Bathgate Realisations Civil Engineering Ltd (2) BRM Construction LLC (3) Argo Global Syndicate 1200 [2021] EWHC 590 (TCC)
Facts
Multiplex Construction Europe Ltd (“Multiplex”) was the main contractor on a project at 100 Bishopsgate, London (“Project”). The Project included three buildings, one of which was forty storeys high.
Multiplex engaged Bathgate Realisations Civil Engineering Ltd (“Bathgate”) in 2015 to design and build the concrete substructures and superstructures on the Project. (Bathgate was at the time named Dunne Building and Civil Engineering Ltd but for simplicity this article will refer to Bathgate only.) Part of Bathgate’s scope of works was the concrete core of the 40-storey building, which was to be constructed using a slipform rig. Bathgate engaged BRM Construction LLC (“BRM”) to design the slipform rig. Bathgate also engaged RNP Associates Ltd (“RNP”) to carry out checks on the design of the slipform rig.
In July 2016 Bathgate went into administration, prompting Multiplex to terminate its sub-contract and engage another contractor to complete Bathgate’s works. RNP subsequently entered into liquidation in October 2018.
Following Bathgate’s sub-contract being terminated Multiplex discovered that some of Bathgate’s works were defective and had to be replaced. This included the slipform rig. Multiplex subsequently issued a claim for £12m for remedial work, delay, disruption and consequential losses. Multiplex’s claim was focused on Argo Global Syndicate 1200 (“Argo”), RNP’s insurer, as Bathgate and BRM were insolvent and had no insurance respectively. Argo therefore represented the most likely route to recovery.
Issues
There were two main issues in the case:
- Did RNP owe any duties or obligations in tort to Multiplex for design checks that it carried out for Bathgate?; and
- Did RNP provide any contractual warranties to Multiplex?
Issue 1
The judge, Fraser J, approached this issue from first principles, noting that there was no established authority to say that an independent design checker owes a duty of care to a main contractor. Fraser J said that for RNP to owe a duty of care to Multiplex for its economic losses, it must have assumed responsibility to Multiplex within its design check certificates.
The judge held that RNP did not assume responsibility to Multiplex and therefore no duty of care was owed. Some of the key relevant factors leading to the judge’s conclusion are listed below:
- Bathgate had full design responsibility (including for the slipform) within its own sub-contract. RNP’s role was a narrow one and its work simply fed into Bathgate’s overall responsibility;
- There was no contractual link (for example a collateral warranty) between RNP and Multiplex. Multiplex could not “short circuit” the contractual relations to make a claim against RNP;
- The Project had a large number of participants and a complex web of contracts beween them. The judge considered that the contract between RNP and Bathgate sat outside of that web; and
- RNP had only assumed responsibility in its design checks to Bathgate and not Multiplex.
The judge also considered RNP’s modest fee (£3,978) and its minor role in the Project overall as relevant points.
In coming to this finding the judge pointed out that Multiplex still had a cause of action against Bathgate and that, as to Bathgate being in administration, the law did not consider matters such as fairness when considering the financial durability of a possible defendant.
Fraser J also noted that as a matter of policy, a duty of care should not be imposed on a design checker such as RNP due to its limited role and that a main contractor should pursue the sub-contractor with the overarching design obligation (in this case, Bathgate). He also noted that to impose such a duty would result in significantly higher insurance premiums for small design checkers.
Issue 2
Fraser J dealt with this issue shortly. He emphasised again that no evidence had been provided to demonstrate that there was a direct contract between RNP and Multiplex.
The judge also again noted the “detailed contractual arrangements” on the Project and that RNP had no liability to Multiplex for an obligation that was in fact Bathgate’s.
As to warranties, Fraser J stated that a warranty is a “statement made with a contractual purpose” and that any statement in RNP’s design certificates were not warranties to Multiplex.
Analysis and practical tips
Multiplex v Bathgate shows the difficulties to be faced when looking to bring a tort claim in relation to a construction project with a complex web of contracts between the participants.
Employers and/or main contractors should consider the overall package of project security, including collateral warranties with sub-contractors and consultants. (Note however that a collateral warranty may not have been sufficient for Multiplex to recover its full loss in this case as it may have included a limit of liability and/or net contribution clause).
Particular focus should be on those sub-contractors with large works packages with broad design obligations, such as Bathgate in this case. Design and build procurement is premised on a “single point of contact” model, although this exposed when that contractor becomes insolvent.
Conversely, designers and design checkers should be mindful of providing warranties to third parties unintentionally. Methods of effecting this could be to exclude any third party rights and ensure no communications with third parties.
The judgement in this case will also be welcome news for insurers of designers of discrete elements of an overall project and design checkers who will not be exposed to broader liability.
