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High Court rules liability is not applicable to non-assigned site reports

General - Gavel

A landmark High Court judgement has ruled that a contaminated land site report prepared for Bridgend County Borough Council by consultants Integral Geotechnique (Wales) Ltd could not be the subject of a claim in tort by purchasers BDW Trading Ltd for failure to identify ground contamination by asbestos as it had not requested its assignment with warranties.

Judge Stephen Davies also ruled that while some aspects of the site investigation were open to criticism, there was no evidence of professional negligence. 

A key legal judgement handed down on liability for alleged professional negligence failings in a geotechnical engineering consultant’s contaminated land site report concluded that a purchasing third party cannot hold that consultant responsible unless the report has been formally assigned to it.

The case in question, BDW Trading Ltd v Integral Geotechnique (Wales) Ltd [2018] EWHC 1915 (TCC), published in September 2018, has provided useful guidance as to where duty of care lies when a consultant prepares a report for a vendor that is subsequently relied on by the purchaser and on negligence in terms of their preparation.

The land in question was owned by Bridgend County Borough Council, which engaged Integral Geotechnique (Wales) Ltd to prepare a site report. Once remediation work on the site was completed, the council put the land out to tender for development. Developer BDW Trading Ltd, part of the Barratt Group, received the tender package, including the report by IGL, in June 2012, and bought the land almost two years later for £4.5m. During this time, the complainant made no request to the council for an assignment of the benefit of the report, nor any other legal document that would allow them to rely on it, but it did query certain parts of it with IGL.

In 2014, groundworks began ahead of development, and extensive contamination with asbestos was discovered in grassed-over parts of the site. The developer then accused IGL of negligent reporting and brought an action for damages, arguing that had the risk of asbestos been acknowledged in the report, the purchaser would have negotiated a lower price for the land. It argued that IGL therefore owed it a duty of care in tort.

In the High Court, Judge Stephen Davies noted that it was clear the council had made IGL aware the report was likely to be used by developers, but "it is also clear that it was envisaged that the mechanism for giving the successful purchaser and, indeed, any further purchaser comfort that it could place legal reliance upon the report was through the mechanism of an "assignment with warranties"". He considered IGL had anticipated it would be approached for an assignment "in due course", and that had this occurred, "in principle IGL would have had no objection to so doing".

Judge Davies was critical of the failure to highlight potential ground contamination by asbestos-containing materials (ACMs). He noted: "Since ACMs within the building structures were identified as a potential contaminant source in section 4.5 and since it was known that former building structures had been demolished, and since there was a risk that the products of demolition remained in made ground, then the risk of ACMs being present within made ground should also have been identified as a potential contaminant source."

Even so, he added that "it is important in my view not to cherry-pick and read sections of the report in isolation… This section was never intended to be read as the last word on the subject, as opposed to recording one of the steps along the way to the eventual conclusion". Nor did trial pits identify any evidence of contamination, he noted. He rejected the argument that the work was a "main investigation" rather than an "exploratory investigation" under the Investigation Code, and was therefore obliged to conduct grid testing at a spacing of between 10m and 25m, noting the scope was set out in the contract. It was unreasonable to expect a comprehensive assessment to identify hotspots in the absence of the site being fully cleared.

The contract with IGL was carried out under its standard conditions. These followed the Association of Consulting Engineers Conditions of Engagement 1995 or updates to them, unless otherwise stated. Clause 5 stated that: "Nothing in [this contract] confers or purports to confer any third-party benefit or any rights to enforce any term of this contract."

Total liability in relation to claims for pollution or environmental contamination was limited to the lesser of either the client’s [Bridgend] direct costs of clean-up or the amount recoverable, if any, from IGL’s professional indemnity insurance (capped at £300,000). The claim value would have been £1m.

Crucially, the ACE conditions of engagement state that "neither party may assign or transfer any benefit or obligation under this agreement without the prior written consent of the other party".

Concluding, Judge Davies rejected the argument that IGL as defendant had any liability for a third party acquiring the site in the absence of an assignment of the benefit of its report to the purchaser. He also concluded that there was no evidence of negligence in preparation of the report given the scope, but was critical of its failure to highlight potential for contamination of ground given asbestos was identified in demolished structures.

 

 

 

 

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