Construction: Consultant Not Liable for Site Investigation Report
When a prospective developer is interested in purchasing a site, it is common that it will receive a site investigation report within a tender information pack. The contents of such reports vary from case to case, but there are often some key terms which the prospective developer should be aware of.
Can the report be relied on for legal recourse? Does the author need to give their consent for certain parties to be able to rely on the report?
These are simple questions every prospective developer should be asking, and they are some of the key questions which formed the basis for a professional negligence claim against a consultant in BDW Trading Ltd v Integral Geotechnique (Wales) Ltd (2018).
In 2010, Integral Geotechnique (Wales) Ltd (IGL) was asked to prepare a site investigation report (Report) by the seller, Bridgend County Borough Council (Bridgend), which IGL knew was intended to be provided to all prospective purchasers – of which BDW Trading Ltd (BDW) was one – as part of a tender package for the site.
IGL agreed to produce the report, but on conditions that excluded third party rights and which limited liability for environmental contamination.
BDW received the Report which stated that it was for Bridgend’s use only and could not be passed onto others without the express consent of IGL. If IGL had been asked, they would have provided consent for the Report to pass to BDW – however BDW did not know this for sure so did not seek IGL’s consent.
During the procurement phases for the site, BDW entered negotiations whilst relying on the Report. IGL became aware of this but did not communicate their objection. BDW failed to make enquiries in respect of the contractual terms agreed between IGL and Bridgend to find out whether it excluded or restricted third party rights or IGL’s liability under the contract.
BDW intended to obtain the consent to an assignment of the benefit of the Report from IGL, and knew that this should take place if BDW wished to place legal reliance on the report. However, this did not happen due to possible confusion or mistake within BDW.
BDW purchased the site and did so relying on the Report.
Since there was no contract between BDW and IGL, it was left for BDW to establish that IGL owed a duty of care in tort. BDW therefore brought a professional negligence claim against IGL, contending that IGL had failed to give proper advice to BDW of the risk that material containing asbestos might be present within part of the site.
The judge held that – deciding on whether or not a duty of care existed in the circumstances where IGL was not asked to (nor did it agree to) BDW placing legal reliance on the report other than through an assignment which never happened – no duty of care existed.
What can we learn from this?
This case serves as a reminder to prospective developers (who wish to rely on a site investigation report for a site they are interested in) to:-
- have a contract in place – if you intend to use a report you are likely to want legal recourse over its contents, so ensure that a contract is drawn up between relevant parties so that the courts do not need to examine the contractual relationships.
- not be afraid to enquire – it would be prudent as a prospective developer to understand the terms on which you may use a report. Also, why not enquire about having the rights to the report being transferred to you too?
- have an internal process, team or external adviser who understands and can deal with all necessary contractual steps of a project.
How can Chattertons help you?
It is important for commercial property developers to ensure that they have entered into a contract with the author of a site investigation report and not to simply assume (wrongly) that a duty of care will be available.
Our specialist solicitors will be able to provide you with professional advice on various construction contracts and help you in taking the next steps. If you would like to talk to one of our specialist solicitors, please contact your local office or complete our online enquiry form.