Traffic Accident and insurance concept, Insurance agent working on report form with car accident claim process.A division of Barratt Homes has failed to win damages after an environmental survey missed serious asbestos contamination.  The engineering firm which undertook the survey had a contract which provided it with a defence against third-party negligence claims.

Bridgend Council was selling land in the Vale of Glamorgan for residential development.  It had previously been used as a residential education centre and had some buildings on the site.  Others had been demolished and grassed over and a ski slope built.

In preparing the site for sale, the Council commissioned engineers, Integral Geotechnique (Wales) Limited (IGL), to undertake a geotechnical survey.  The survey was intended to provide information about the potential for contamination on the site.

IGL’s contract with the Council stated that the report was prepared for the use of the Council and could not be relied on by third parties.  It also stated that the contract could be assigned on request, so that the third party could rely on the findings.  Liability was limited to £300,000.

IGL reported that there was the potential for asbestos contamination in some of the buildings but made no mention of the potential for contamination in the ground.  The report was provisional and it recommended that further investigations were undertaken once the site was cleared.

BDW, a division of Barratt Homes, bought the site.  Due to an oversight, IGL’s report was not assigned to BDW as part of the sale.  When BDW cleared the site, it discovered significant asbestos contamination in the ground as well as the remaining buildings.

BDW brought an action for negligence against IGL.  As BDW did not have a contractual claim against IGL, it argued that IGL had a common law (tortious) duty of care to any purchaser of the site as it knew that a buyer would rely on the report.

The judge threw out BDW’s claim.  He said that IGL’s contract had made it clear that it was happy for the buyer to rely on the report, but only if it was properly assigned to the buyer.  As this had not happened, IGL did not have a common law duty of care to the purchaser and BDW was unable to rely on the report.

IGL was successful in defending the negligence action as it had clear statements regarding what was required for a third party to rely on the report.” said James Burgoyne, Director – Claims & Technical, Brunel Professions.  “It is all too easy for a professional’s work to be distributed widely, and especially in electronic form. A report or survey can easily end up somewhere the professional did not intend, and they may find that a third party relied on the information to their detriment, and then attempts a claim against the professional. All professionals should therefore take note of this finding.”

Reports on the case have been published by Barlow Robbins, Lamb Chambers and CMS Law-Now.

Brunel provides a wide range of PII broking services to construction professionals.  Click here to find out more or call Jonathan Filer on +44 (0)117 325 0752.