Trustees of Ampleforth Abbey Trust v Turner & Townsend Project Management Limited, Technology and Construction Court
The Technology and Construction Court (TCC) has recently ruled that a project manager for a construction project had breached its duty of care to its client by not ensuring that a building contract was entered into between its client and the building contractor. The lack of a building contract meant that the client could not claim liquidated damages from the contractor when the project was completed behind schedule.
The TCC ruled that the project manager owed a duty to act with reasonable skill and care in its provision of project management services to its client. The TCC considered that the completion of the building contract was “fundamental” and, whilst the project proceeded instead on the basis of letters of intent, the lack of a building contract was “extremely unusual”. The TCC also said that although the project manager’s role varied on a case-by-case basis, it involved the use of practical judgement and common sense and, in this case, it had not shown that it had taken sufficient steps to ensure the building contract was signed.
The TCC also ruled that the project manager’s limitation of liability clause in its agreement with its client was unreasonable and therefore unenforceable. The limitation clause effectively limited the project manager’s liability to the lower of £1,000,000 and the fees paid to the project manager by the client. The TCC considered that, as the project manager had insurance of £10,000,000, the liability cap was too low in comparison and therefore unreasonable.
For a more detailed discussion of this case and its implications, Simon Weinberg and Paul Gershlick of the Commercial/IP/IT team at Matthew Arnold & Baldwin LLP recently wrote an article for the Society of Computers and Law, which can be accessed here.