Civil Engineering Reference
In-Depth Information
was not materially different from the model clause set out above. The defenders, who
were structural engineers and had granted a collateral warranty in favour of tenants
of the development, contended that, notwithstanding the absence of an express ref-
erence to the contractors in the clause, the contractor's contribution to the tenant's
loss following the discovery of defects should still be taken account of in assessing the
defenders' contribution to the overall losses. Lord Tyre rejected that argument, but in
considering
obiter
theabovepassagehesaid:
In my reading of the clause, the reference to 'the extent of their responsibility' at the
end of the clause is not a reference to responsibility for design but rather a reference
tothesamekindofresponsibilityashaspreviouslybeenreferredtointheclause,i.e.
responsibility for the claimant's loss. he contractor would not, therefore, if named
as one of the parties, be deemed to have paid more than his just and equitable pro-
portion of the total loss and the consultant with the benefit of the clause would not
escape liability for his own just and equitable proportion.
But if the contractor is a design and build contractor responsible in terms of the
underlying building contract for the design carried out by the consultants who are
acting as his sub-contractors, is it not the case that the 'just and equitable proportion'
of the total losses arising from a design defect for which the contractor is deemed
liable under a net contribution clause is the whole of these losses? This seems con-
sistent with the observation by Lord Drummond Young in
Scottish Widows Services
Ltd
v
Harmon/CRM Facades Ltd (in liquidation)
(2010), and repeated by Lord Tyre,
that a net contribution clause in effect restricts joint and several liability by limiting
a co-obligant's liability to a fair assessment of the consequences of his own breach
of contract. In the case of a design and build contractor, a breach by the consultant
results,atleastinmostcases,inabreachbythecontractor.Itmaywellbethatacourt
may not accept such a consequence of including a design and build contractor in a net
contribution clause on the grounds that it offends commercial common sense, but we
must respectfully disagree with Lord Tyre that it is not an arguable position.
A net contribution clause is intended to reflect the principles of section 3 of the
Law Reform (Miscellaneous Provisions) (Scotland) Act 1940 which gives the court
the power to apportion damages against joint wrongdoers, and the clause may, on
the face of it, seem equitable. However, unlike the 1940 Act, the clause places on the
beneficiary the onus of obtaining similar warranties from the other parties 'on terms
no less onerous' and also the risk that recovery may not in fact be made from one of
the relevant parties, notwithstanding that liability of the other parties is calculated on
the basis that it is deemed to be so made.
There have been some concernsexpressed regardingevidence that may be admitted
bythecourtsandthepotentialofadecreebeinggrantedagainstanunrepresented
party. Some professional indemnity insurers will insist upon the inclusion of a net
contribution clause in collateral warranties before extending cover to liabilities arising
out of them. There are also attempts to extend such clauses to appointments, which
are normally met with resistance.
Reliance on a net contribution clause contained in the standard ACE conditions
of appointment was challenged in
Langstane Housing Association Limited v Riverside
