Lendlease Construction (Europe) Limited v Aecom Limited

A consultant’s contractual obligations depend on the proper construction of the appointment as a whole. An obligation requiring compliance with a client’s upstream contract may remain subject to an express reasonable skill, care and diligence qualification. Design responsibility is not necessarily confined to the preparation of an initial design where the appointment allocates continuing coordination or review tasks. Any continuing duty to review arises from the contract and, ordinarily, requires an objectively good reason for review. A contractual long-stop provision does not generally extend a statutory limitation period unless the language, read in context, clearly has that effect. A party seeking recovery of a settlement payment must provide evidence that the settlement amount was reasonable.

Lendlease claimed damages from Aecom for alleged breaches of a consultancy agreement relating to the design and construction of mechanical, electrical and fire-safety services for an oncology centre. It sought to recover sums paid or awarded in earlier proceedings concerning defects in Plant Room 2 and other parts of the project.

The principal issues were whether the consultancy agreement was executed as a deed; the scope and standard of Aecom’s obligations; whether Aecom had continuing duties to review, advise or warn; limitation; the effect of a 2012 settlement agreement; causation; and the recoverability of sums paid in settlement. The court also considered the evidential effect of the earlier judgment and the reasonableness of the settlement with Engie.

1. Deed and limitation. The Consultancy Agreement took effect as a deed. Although Aecom’s signatories were not statutory directors, they purported to execute the agreement as a deed, had authority to bind Aecom, and Aecom could not accept the agreement as binding while relying on an artificial distinction between contractual and deed execution. The applicable limitation period was therefore 12 years.
2. Contractual construction. The agreement did not step down Lendlease’s upstream obligations to Aecom as outcome obligations. Clause 4.01 imposed a single standard of reasonable skill, care and diligence. The references to statutory and regulatory requirements, including HTM 81, informed the content of that standard, but did not create a separate obligation to achieve the result required of Lendlease.
3. Scope and review. Aecom’s responsibilities were determined by the Schedule of Duties and matrices, not by a bright-line division at RIBA Stage E. Clause 6.08 excluded responsibility for documents prepared by others, but not for the care and skill exercised in commenting on them. A continuing review duty depended on the contract and would ordinarily arise only where there was an objectively good reason for review.
4. Rev 19. Aecom revised the Fire Strategy to reflect the as-built configuration after Lendlease’s instructions. In the circumstances, Aecom was not contractually required to advise against the instructed revision or warn that it was non-compliant. Aecom was therefore not in breach in producing Rev 19.
5. Other issues. The Settlement Agreement released liabilities relating to defects existing, and known or reasonably knowable, when it was made. The earlier judgment was conclusive that Lendlease was liable to Project Co in the amount awarded, but Lendlease still had to prove Aecom’s breach and causation. A settlement recovery also required evidence that the amount paid was reasonable.
6. Disposition. The claim was statute-barred or released in relation to the alleged defects. Several claims would also have failed on breach, causation or proof of loss. The claim was dismissed.