Costain Ltd v Charles Haswell & Partners Ltd

A professional consultant may assume strict contractual liability where the consultancy agreement contains an express performance warranty in addition to a reasonable skill and care obligation. The warranty applies only to designed works actually incorporated into the permanent works. It does not extend to an abandoned design which was never constructed.

A geotechnical engineer falls below the required standard by mischaracterising variable subsoil, failing to account for silts and clays, recommending pre-loading rather than surcharging without compelling economic justification, failing to warn of the risks, and failing to provide monitoring predictions. Damages for delay require proof of the loss caused by the delayed activity; critical-path delay alone does not establish prolongation of all site costs.

Costain engaged Charles Haswell & Partners Ltd to advise on and design foundations for water-treatment buildings. Haswell recommended a pre-loading ground-treatment scheme for the Rapid Gravity Filters and Inlet Works. The scheme failed, and piled foundations were subsequently designed and constructed.

Costain claimed for breach of contract and negligence, alleging that Haswell had provided a defective design and failed to exercise reasonable professional skill and care. It also claimed the additional cost of piling, delay-related losses, payments made under a settlement with a subcontractor, and other consequential costs.

The issues included whether a binding consultancy agreement existed, whether an express contractual warranty imposed strict liability, whether that warranty applied to the abandoned ground-treatment design, whether Haswell was negligent, and what losses were proved.

1. The court held that a binding Consultancy Agreement had been concluded by 3 October 2002. The parties had agreed all essential terms. The remaining disagreement about which RIBA form described the architectural services was substantially more apparent than real. Alternatively, Haswell accepted the agreement by continuing to perform and accept payment without dissent.

2. Clause 7.2 imposed the ordinary obligation to exercise reasonable professional skill, care and diligence. Clause 7.4 imposed an additional and distinct obligation of strict liability. If a part of the permanent works was constructed in accordance with Haswell’s design, it had to meet the contractual specification and applicable engineering requirements. The commercial relationship was not back-to-back with the Main Contract, and the wording of clause 7.4 prevailed.

3. Clause 7.4 did not apply to the surcharge design. That design was abandoned and never incorporated into the permanent works. The warranty protected Costain against liabilities relating to the permanent works ultimately constructed. The abandoned design remained subject to clause 7.2.

4. Haswell breached its duty of reasonable skill and care. It misinterpreted the Norwest Holst Report, treated materially different and variable soils as uniformly granular, failed to account for silts and clays and their effect on permeability, compressibility and consolidation, recommended pre-loading rather than surcharging without compelling economic justification, failed to warn Costain of the risks, and failed to provide time/settlement or height/settlement curves.

5. The monitoring data and Cone Penetration Tests showed that the treatment had failed or had been only partially effective. The settlement behaviour differed between the buildings, continued while the mound remained in place, and was inconsistent with Haswell’s design assumptions.

6. The court distinguished an extension-of-time claim from a damages claim. Critical-path delay may justify an extension of the completion date, but damages require proof of the additional costs caused by the delayed activity and any resulting delay to other activities. Costain proved eight weeks’ delay to the RGF and IW works, but not prolongation of the whole site or the claimed subcontractor settlement loss.

7. Costain recovered £163,478.51, comprising £29,615.35 for the drainage blanket and £3,488.16 for additional testing, together with £130,375 for the cost of piling. Interest was awarded from 20 November 2002, reduced by 50 per cent during twelve months of unreasonable delay. Haswell was ordered to pay 38.75 per cent of Costain’s costs and £300,000 on account.

First-instance decision in the Technology and Construction Court. No appellate history is stated in the judgment.