Civil Engineering Reference
In-Depth Information
to base tenders on a single design, and to ensure that the selected contractor assumes
responsibilityforthepre-contractdesign.hepracticedoescreatepotentialproblems,
whichrequiretobeaddressedwithcare.Someoftheseareillustratedin
Blyth & Blyth
Ltd
v.
Carillion Construction Ltd
(2002).
Blyth & Blyth provided consulting engineering services to their employer, and after
some months this was formalized by a deed of appointment,which expressly provided
that the agreement covered the period from when services were first provided. Under
that deed, the employer instructed Blyth & Blyth to enter into a tripartite novation
agreement, the effect of which was to substitute Carillion, the main contractor, as a
party to the deed of appointment in place of the employer. When Blyth & Blyth raised
an action for payment of fees, Carillion counterclaimed for losses arising from alleged
breaches of duty, some of which related to the period before the novation agreement
was executed. It was held that the novation agreement was to be construed as an
agreement under which Blyth & Blyth were to provide future services to Carillion,
and Carillion obtained an assignation of the employer's pre-novation rights against
Blyth & Blyth. Since the building contract imposed full design responsibility on the
contractor, the employer had suffered no loss arising from the defective pre-novation
services. There was therefore no claim which could be assigned and so Carillion were
notentitledtorecoverlossesrelatingtotheperiodbeforenovation.
This case illustrates the importance, as far as the contractor is concerned, of ensur-
ing that the novation agreement contains express undertakings by the consultant to
the contractor in relation to pre-novation services, so that the contractor is able to rely
upon such direct undertakings and recover its own losses rather than base a claim for
pre-novation failures on the assigned rights of the employer. This would be of partic-
ular importance where, as is usually the case in such circumstances, the construction
contract retroactively imposes on the contractor the responsibility for pre-novation
design even although the contractor has had no involvement in such design. A num-
ber of standard industry forms of novation agreement have been published since
Blyth
&Blyth
in order to avoid the problems thrown up by that decision, most notably by the
ConstructionIndustryCouncilandtheBritishPropertyFederation.heseformsvary
in their approach but the common theme is to avoid the contractor's rights in respect
of the pre-novation services being treated as an assignation from the employer and to
provide that the consultant's obligations in respect of such services are directly owed
to the contractor.
From the employer's perspective, it may be necessary to ensure that he retains some
recourse against the consultant notwithstanding the novation, for example, if the con-
sultant has been responsible for preparation of the Employer's Requirements under a
SBC/DBcontract(ortheequivalentunderanotherformofcontract).hiscanbedone
by express provision within the body of the novation agreement or (more commonly
in practice) by a separate collateral warranty by the consultant to the employer. How-
ever, an example of the risks to the contractor arising from such a collateral warranty
is
Oakapple Homes (Glossop) Limited v DTR (2009) Limited (In Liquidation) & Ors
(2013). In that case, a collateral warranty was granted by a design consultant to the
original employer following the novation of the design consultant's appointment to
the contractor. he collateral warranty stated: 'he Consultant has no liability hereun-
der which is greater or of longer duration than it would have had if the Beneficiary had
