Garry Winter's Case notes – Co-operative Group v John Allen Associates
Technology and Construction Court 2010
John Allen Associates (JAA) was a consulting engineer which, while employed initially by developers, had also provided a warranty to the overall client, the Co-operative Group. The warranty required JAA to exercise “reasonable skill, care and diligence” in performing its duties. Although a contractual requirement, this is the same standard as required in common law negligence.
Cost was a fundamental issue as to whether the scheme was viable. However, the ground conditions on the site in Sandwich, Kent, were such that, based upon the geotechnical report provided, to support the floor, piling or ground remediation was required. JAA chose vibro stone columns and having consulted specialists, it advised the Co-op that settlement of up
to 50mm could occur. In the event, a specialist subcontractor designed and installed the vibro stone columns.
Ultimately, the floor settled by 110mm, causing major damage to the floor, its finish, internal walls, and affecting the use of the building as a supermarket.
In court, the Co-op’s case was that JAA had failed to exercise reasonable skill and care in performing its duties. It said
JAA had failed to take into consideration the possibility of a secondary consolidation of the ground and that no competent engineer would have used vibro stone columns to support the floor. Furthermore, JAA, in handing the design to a specialist subcontractor, remained liable and in any event ought to have undertaken adequate checks or advised the Co-op to obtain advice from a geotechnical engineer.
The judge found that a reasonably competent engineer would not be expected to realise from the geotechnical report that secondary settlement was a possibility. Furthermore, from the expert evidence presented, even taking the secondary settlement into account, it was possible that vibro stone columns could support the floor within acceptable limits of settlement and that in relying on advice from a specialist subcontractor, JAA did not divest itself of the responsibility but acted in a manner consistent with practice of an ordinary, competent engineering practice. Accordingly, JAA did not breach the warranty.
The judge then considered what the hypothetical level of damages would have been.
The building was valued, in its defective state, at £950,000. In proper condition, the valuation would have been £2,840,000.
Three schemes to remedy the defect were forwarded.
The Co-op’s preferred scheme would cost £1.5m and restore the value of the store to £2,740,000.
The second scheme, to inject polyurethane to jack the floor up would cost £500,000, but would not enable the floor to carry loads in the original specification. This scheme would only marginally increase the store’s market value.
The third option, to install polystyrene blocks below the floor, would achieve the loadings in the original specification, but only increase the value of the store to £1,290,000.
The court stated that had it been necessary, it would have allowed the Co-op to recover the costs of its preferred option.
Garry Winter’s analysis
Simply because some element of a building may fail, it does not necessarily follow that the designer is in breach of contract or has been negligent. If the designer acts in accordance with the practice and views of a reasonable body of other members of that profession, this will provide good evidence that reasonable skill and care has been taken.
But if the standard is set higher, perhaps being based upon fitness for purpose, such considerations are not relevant.
Professionals, contractors and subcontractors who take on design responsibilities need to ensure they do not expressly or impliedly take on a standard higher than they can achieve.
The judge’s comments regarding damages provide an insight as to how the courts may view what is reasonable in mitigating loss and the basis of quantum of damages.
While previous cases suggest that, in accordance with the requirement to mitigate loss, the cheapest viable scheme should be chosen, this case suggests that where the reduction in the value of the property is the measure of damages it may not be unreasonable for a more expensive option to be awarded.
Garry Winter is a senior consultant with Knowles, a Hill International company. He can be contacted on 01928 756600 or 07900 277890