Does a contractor have a duty to inform the employer or his agent of defects in design?

There is continuous debate around this question on many construction projects where disputes have arisen regarding possible errors in client or agent supplied drawings, specifications, design defects or limited / lack of detail instructions. 

Would it be a contractor’s obligation to inform accordingly, if known, and if so, when and how? Tender stage, construction drawing issue stage or during the project when noted?

Or should he/she remain silent?

 The answer to the question may well lie in the express terms of the contract.

 An express contract is a term that is directly acknowledged and stated by both parties. They consist of the direct promises made by either party to the other, and they are binding. Express contracts can be written or verbal. Either way, they must be understandable by both parties.

1. For example, within a written contract, such as the JBCC Series 2000 Edition 6.2 May 2008, Principal Building Agreement, the following is stated;     

Clause 7.1 “The Contractor shall not be responsible for the design of the works other than the Contractor’s or his Subcontractor’s temporary works.”

Clause 7.2 “Any design responsibility undertaken by a subcontractor shall not devolve on the contractor”

2. In addition, within this JBCC contract the responsibility rests with the contractor for the timeous submission documentation by a selected subcontractor (not direct or nominated) for acceptance and coordination by the principal agent and /or agents (read approval as this may have an impact on revision of practical completion where there exists a late acceptance of said design by agent where the contractor’s performance has been met viz clause 23.2.8)

3. In the use of general contracts this answer, may be silent on the matter and the position certainly is not so clear and could lead to dispute resolution processes.

4. However the JBCC Edition 6.2 does make reference to the contractors obligations in terms of Clause 12 : Execution, however interpreted, in our view under clause 12.1, sub-clause 12.2.6,12.2.7,12.2.11 and clause 12.3 would require the contractors due diligence in common law, to report back on design defect queries if it could be proved that he should have been aware of such error or defect of design during the project.

5. The House Building and Small Works Contract Agreement (March 2005) Master Builders South Africa, Clause 5.7 includes the wording, that the “contractor does not indemnify the employer where the liability for loss, claim or proceedings arises from any of the excluded circumstances listed hereunder and the Employer shall indemnify the Contractor in such circumstances “This includes sub para 5.7.1 – 5.7.9 and in our view includes defects in design.

6. The MBA Renovation and Refurbishment of Work to Exiting Premises May 2010, although referenced to “extensions and renovations” is in its character, for simpler contracts which are not complex, the value being below the benchmark of

R1 million rands and the period does not or should not extend longer than 3 months. There is no reference to “agents” representing the employer.

7. The contract does make provision under Description/Supporting documents for the specifications, schedules etc to be agreed and provided as part of this contract at tendering time. Clause 3 further alludes to “delayed fault of employer” and again one must consider one of the prime objects of a contractual agreement between parties being “complete” as in clear and unambiguous, referenced as the parol evidence rule [1]

8. Although an agent may be appointed to oversee these works [2], the contractor generally has a direct relationship with the employer in their absence and as such the employer would be deemed responsible for the provision of designs through the submission of detailed drawings for approval with Council where agreed.

9. In many cases design is restrictive and this then opens the question once again as to the liability of design defects and accountability.

Summary Comment

A contractor who knows or should know that compliance with plans and specifications is likely to result in a defect or failure [3] should, as a duty, bring that deficiency query to the owner’s (or Agents) attention before performing the work – but at what point would he or could he be held accountable for not either identifying the defect or being aware of the defect himself. [4] [5]

Of interest, the incorporation of a fraudulent misrepresentation (which is a delict) in a contract as a term does not confine the innocent party to his remedy for breach of contract.

He may choose to sue on the delict or on the contract, whether or not the measure of relief differs.

A voetstoots clause in the building contract will not bar the delictual remedy, but a suitably worded no representation clause may bar both remedies.[6]

It is therefore read that an Agent representing the employer creates a breach of contractual duty to perform professional work with due diligence, which impacts on the economic loss for the client.

Does this then apply equally to a Building Contractor who fails to inform the Client and/or Agent on a design failure within an appropriate time (mora)?

Our view supports the obligations imposed by the terms of the agreement (read contract) which are meant to be performed, and if they are not performed at all or performed inaccurately or late or performed in the wrong manner viz design/application the party on whom this performance lay (Client/Agent or Contractor) is said to have committed a breach of contract.

Remembering that in law “he who avers(claims) - must prove”. 

Case Study

In the following case strict compliance with drawings and the instructions of a professional consultant proved not to be a complete defense for the Contractor.

In Lindenberg v Canning and Others (QBD -UK 1992), a property developer, Edward Lindenberg, entered into an oral agreement with Mr. Canning, a builder with considerable experience of conversion work in old buildings. 

That agreement required Mr. Canning to carry out some preparatory work for the conversion of the basement of a block of flats in Hyde Park Gate, Kensington. 

Mr. Lindenberg employed a building surveyor who prepared a drawing, describing the work to be carried out by Mr. Canning which included the demolition of certain walls. 

The plan showed the external and some internal walls in continuous lines, but other internal 230mm brick walls and a chimney breast were marked with broken lines.

A note which was linked by a wavy line to one of the walls shown with a broken line, read “include for removing non-load-bearing walls were indicated and allow to make good all disturbed surfaces.” 

Mr. Canning interpreted the plan as meaning that the walls shown with broken lines were non-load bearing and should be removed.  Mr. Canning’s men began to demolish the 230mm walls using hand tools and manual labour. 

They did not provide any temporary propping for the ceiling because the plan had indicated that the walls were non-load bearing and showed no permanent replacement for them.  In fact, the walls were load bearing and their collapse caused damage to the floor.

Mr. Lindenberg claimed damages in respect of sums he had paid out to the owners of the building under an indemnity agreement, together with fees paid to a consultant engineer and solicitors.

He also claimed money he had already paid Mr. Canning in advance of his carrying out the work.

The basis of Mr. Lindenberg’s claim was that Mr. Canning was in breach of an implied term in his contract to carry out his work with due care and skill.

His Honour, Judge John Newey QC held that, in view of the inadequacy of the plan and the likelihood that walls which were 230mm thick were supporting the floor above,

Mr. Canning should have proceeded with the greatest caution.

Although the judge found that the plan with which Mr. Canning was supplied showed that  all of the walls marked with broken lines were non-load bearing, this was such an obvious error, particularly in relation to the chimney breast wall, that Mr. Canning should have had grave doubts about the plan.  He should have realized that the 230mm walls had not been erected simply to separate stores, but to carry the weight of the floor above them.

He should therefore have at least raised with the surveyor doubts as to his plan and asked whether the surveyor was sure that the walls were not load bearing. 

Even if assurances had been given, Mr. Canning would have been prudent to put up temporary propping, but in the absence of such assurances, he should undoubtedly have done so.

By failing to do so, he behaved with what the judge described as “much less care than was to be expected of the ordinarily competent builder” and he therefore acted in breach of contract.

As a result, Mr. Lindenberg was entitled to recover damages from Mr. Canning. 

However, the judge held that the surveyor should bear 75 per cent of the responsibility for the damages under the rules of contributory negligence, and so Mr. Canning was liable to pay only 25 per cent of the damages suffered by Mr. Lindenberg.

Conclusion

It is particularly instructive that the judge in this case commented that, as no assurances       had been received from the person who had prepared the plan that the walls were in fact not load-bearing as the note indicated, the Contractor should, on his own initiative (and presumably at his own cost), have taken his own precautions.

There is doubt that even a provision such as clause 7 of the JBCC Series 2000 Principal Building Agreement would have come to the aid of the Contractor in this case, since he would remain responsible for his own temporary works (propping), the absence of which was proved the cause of collapse.

A conclusionary note is that the benefits of using industry standard contracts, is that firstly the oversight management of the dispute is covered by a well-versed dispute resolution clause and that secondly, ADR professionals appointed to this position are specialist in building/construction methodology and contract law in South Africa.

[1] The Building Contract 3rd Edition -Finsen

[2] MBA Addendum to House Building and Small Works Contracts Document -Appointment of Agent March 2005 Edition

[3] Lindenberg v Canning and Others (1992) 62 BLR 147 Queen’s Bench Division UK

[4]https://www.concreteconstruction.net/projects/commercial-industrial/failures-during-and-after-construction_o

[5] https://www.constructionnews.co.uk/archive/contractors-must-sound-a-clear-warning-on-defects-10-02-2000/

[6]Lillicrap, Wassenaar and Partners v Pilkington Brothers (SA)(Pty)Ltd 1985 1 SA 475 (A)

Further reading - Case Law

• SM Goldstein & Co (Pty)Ltd v Cathkin Park Hotel (Pty)Ltd and Another 2000(4) SA 1019(SCA)
• Algoa Millig Co Ltd v Arkell & Douglas 1918 AD 145

Barry Livsey

Ch. Building Surveyor/Dispute resolution practitioner