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Design liability and sub-contracting

View profile for Derryn Rolfe
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It’s not news that most design expertise in the building industry lies not with main contractors but with consultants and specialist sub-contractors. Often the expertise is such that the main contractor does little except procure and co-ordinate the various sub-contractors and the trades – and whilst that means that the various experts are doing what they do best, there is the question about who is responsible for the designs and work that they produce.

The main design and construct contracts all stipulate two things. The first is the limit on what the main contractor can only sub-contract. Sometimes the restriction is that nothing can be sub-contracted without the prior written consent of the client or the contract administrator/project manager/engineer. Sometimes the restriction only applies to design works.

Both are designed to ensure that the main contractor doesn’t bring in any old outfit, but uses competent companies who have appropriate expertise, resources, and insurance. Insurance – in particular professional indemnity insurance – is critical for design works. With the depressing rate of insolvencies in the industry at present the insurance element of sub-contractor warranties is no longer a “nice to have” but an essential protection for the client and any funders, purchasers or tenants.

If the client can get warranties from both the main contractor and the design sub-contractor then they have the best chance of recovery in the event of a problem – it would be truly unfortunate if both were to have ceased trading. The consent given by the client, though, doesn’t remove the main contractor’s responsibility for the design or the execution by the sub-contractor. It doesn’t turn them from domestic to nominated. It’s just a general right to see who’s going to be on their site, who’s going to have a hand in their building. It’s “consent” not “approval”. And that leads to the second stipulation.

The second stipulation is that whatever happens, the main contractor retains responsibility for the sub-contractor’s work. Ultimately the main contractor is being paid to deliver the works, and regardless of how they do that, the buck stops there. If they have chosen to not go to site and inspect the works, that’s their look-out. They still carry the can with the client for defects. If they fail to ensure that the sub-contractor has sufficient resources to compete the sub-contract works, the main contractor remains liable to finish them by the date for completion.

“Don’t know, mate” is not an answer. “I wasn’t there, guv” is not an answer. The main contractor is being paid to know, being paid to be there.  Anything else is going to be a breach even of the minimum, common law “reasonable skill and care” standard of duty of care that the contractor has to the client.

If you have any questions, our Construction and Engineering team will be happy to help.