STEWART MILNE WESTHILL LIMITED AGAINST HALLIDAY FRASER MUNRO

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OUTER HOUSE, COURT OF SESSION

[2016] CSOH 76

 

CA162/14

OPINION OF LORD DOHERTY

in the cause

STEWART MILNE WESTHILL LIMITED

Pursuer;

against

HALLIDAY FRASER MUNRO

Defenders:

Pursuer:  Broome;  CMS Cameron McKenna LLP

Defenders:  Young QC, Duthie;  Clyde & Co

2 June 2016

Introduction
[1]        The pursuer is a developer.  The defenders are a firm of architects.  In April 2007 the

pursuer and the defenders concluded a written contract of appointment (“the Appointment”).  In terms thereof the defenders were appointed as architects in relation to the construction of a new office, workshop and leisure building development for Acergy UK Limited (“Acergy“) at Westhill Business Park, Aberdeen.  Once completed the new development was to be let by the pursuer to Acergy.  The pursuer appointed Stewart Milne Construction (“SMC”) as main contractors for the building work.  SMC was the construction division of Stewart Milne Group Limited (“SMG”).  The pursuer is a subsidiary of SMG.

[2]        Practical completion of the building works to the office building was achieved on 26 September 2008.  In December 2008 there was water ingress into the subfloor of the south wing of the office.  Certain investigations and remedial works were carried out.  In late October and early November of 2009 there was further, more extensive, water ingress into the subfloor.  On this occasion investigations disclosed defects in the tanking of the building.  Extensive remedial work was required.

[3]        On 2 September 2014 the present action was raised.  The pursuer maintains that the defenders were in breach of the Appointment, and that their breach of contract caused or materially contributed to the tanking defects.  It maintains that the water ingress in 2008 was not caused by the tanking defects;  and that it did not know within five years of raising the action, and could not with reasonable diligence have known, that it had suffered loss and damage.  The defenders deny that they were in breach of contract.  They aver that the 2008 water ingress was attributable to the tanking defects;  that that ingress was material damage which the pursuer was aware of at the time it occurred;  or that with the exercise of reasonable diligence it could have become aware that it had suffered material damage;  and that accordingly the right to reparation which the pursuer asserts prescribed before 2 September 2009.

[4]        The action came before me for a proof before answer.  I heard evidence over the course of five days, and submissions on a further day.  The pursuer led evidence from six witnesses.  The defenders also led six witnesses.  A number of agreed matters were set out in the Joint Minute of Agreement no. 43 of process.

 

The Appointment
[5]        In terms of clause 2.1 of the Appointment the pursuer appointed the defenders to provide, and the defenders agreed to provide, “the Services fully and faithfully in accordance with this agreement”.  The “Services” were described in Schedule 1.  In general, they comprised architect’s management services, services as lead consultant, contract administrator services, and architect’s design services through all of the RIBA/RIAS work stages from Stage A (initial appraisal) to Stage L (post practical completion).  The Services included (i) directing the design process;  (ii) co‑ordinating the design of all construction elements;  (iii) co‑ordinating and monitoring design work;  (iv) making visits to the works in connection with the defenders’ design;  (v) providing further information reasonably required for construction;  and (vi) reviewing design information from contractors or specialists.  In terms of clause 3.1 the defenders warranted to the pursuer that they had:

“… ‘exercised, and shall continue to exercise, in the performance of the Services all the reasonable skill and care to be expected of a properly qualified and competent Architect experienced in carrying out services for projects of a similar size, scope and complexity to the Project’…”

 

They also acknowledged that the pursuer “… has relied and will continue to rely upon the aforesaid skill and care in respect of the performance of the Services.”  Clause 15.1 provided that the Agreement embodied the complete and entire agreement between the parties.  It concluded:  “… No amendments or modifications of this Agreement shall be valid unless reduced to writing and executed as a deed by both parties.”

[6]        The defenders maintain that they provided all of the Services until Stage F, at which point they were instructed by the pursuer’s Mr David Anderson not to administer the building contract between the pursuer and SMC beyond being required to issue a certificate of practical completion as and when building works were completed.

 

The layout of the basecourse of the office
[7]        The perimeter walls of the office at basecourse level were comprised of (i) an outer leaf the lower part of which was concrete blockwork and the upper part of which was brickwork;  (ii) an inner leaf of concrete blockwork;  (iii) a cavity between the two leaves.  Within the cavity there was a rigid insulation board and there ought to have been concrete fill up to just above external ground level.  The brickwork contained weepholes.  The cladding on the external wall began above the brickwork.  The concrete floor slab intersected the inner blockwork leaf.  Above the floor slab was a void where services were laid, and on top of the void there was a suspended floor.  At regular intervals around the perimeter of the building there were steel columns, the bases of which were set in cube‑shaped concrete encasements.  The columns and their encasements interrupted the inner leaf of blockwork, and the encasements protruded beyond the exterior and interior sides of it.

 

The tanking
[8]        The defenders prepared a specification which was issued to SMC.  Section J40 dealt with flexible sheet tanking/damp proofing.  A Bentonite clay proprietary waterproofing product, Voltex, manufactured by CETCO Ltd (“CETCO”), was specified as a tanking membrane.  Section J40 further stated:

“… Consult CETCO Ltd technical literature for details.  CETCO can also provide a design and specification service and it is recommended that they are consulted early in the design process…

 

Joints: Staggered joints, 100mm min laps

 

…

 

Accessories: Bentoseal trowel grade sodium bentonite compound for detailing around penetrations and corner transitions…

 

 

WORKMANSHIP

…

 

Condition of membrane at completion:

 

- Neat, smooth and fully supported, dressed well into abutments and around intrusions.

 

- completely impervious and continuous.

…

INSPECTION

 

Give notice:  Before covering any part of the membrane with overlying construction…”.

 

[9]        The defenders also issued SMC with drawings A(1)01, A(1)02 and A(1)03 showing tanking details for the basecourse.  These dealt with external wall to subfloor detailing and showed Voltex laid below the floor slab, lapped via a 5 x 50mm Bentoseal fillet to a load bearing damp proof membrane (“DPM”) which crossed the inner leaf of the wall and emerged in the wall cavity where it was sealed to a vertical Voltex tanking membrane using a further Bentoseal fillet.  They also showed a 10mm smooth concrete render to the outer face of the inner leaf to take the Voltex tanking.  The drawings which the defenders issued did not show details for tanking at peripheral column encasements.  None of the standard details available in the CETCO literature showed tanking arrangements for peripheral column encasements.

 

The evidence
The pursuer’s case
Graeme Lawtie
[10]      Mr Lawtie was construction manager with SMC from about 2005 until about September 2009.  Between that date and about 2012 he was area construction manager.  Prior to his promotion to area construction manager his immediate superior had been his predecessor as area manager, Fraser Taylor.  Geordie Fraser had been SMC’s site manager for the office building.  Derek Anderson had been SMC’s commercial director.

[11]      Mr Lawtie’s understanding was that the pursuer had entered into a building contract with SMC to build the project.  The job had started on site in September 2007, but Mr Lawtie had had some involvement in the project since 2006.  Acergy had had a shadow design team (which had included architects and a mechanical and engineering consultant) which had taken part in meetings and had had the opportunity to comment on/disapprove any aspect of the design and construction.

[12]      Mr Lawtie confirmed that while the horizontal tanking below the floor slab had been installed by specialist installers, Andrew Cowie Construction Ltd (“Andrew Cowie”), the vertical tanking had been installed by SMC’s direct labour force.  When the horizontal tanking had been installed the installers had left sufficient Voltex sheeting at each edge of the floor to enable it to be continued vertically up the blockwork.  Mr Lawtie stated that it “simply required to be folded up”.  SMC had four or five men installing the vertical tanking.  They had used Voltex on one previous job.

[13]      Mr Lawtie had been aware that Mr McMurtie of CETCO had attended on site on a number of occasions to inspect Andrew Cowie’s work.  He knew that CETCO had sent its inspection reports to Geordie Fraser as well as to Andrew Cowie.  Mr Lawtie had seen the reports from time to time.  He had also been aware in 2007 that CETCO had provided drawings to Andrew Cowie showing how Voltex should be applied in specific situations (such as where service connections required to go through tanking).  Nonetheless, he had not thought there was any need to consult CETCO about the horizontal tanking, or to ask them to attend on site to inspect it.  He had realised that the installation would involve forming junctions and overlapping.  When asked by Mr Young whether it had been seen as an easy task which did not need inspection he said he thought it was: that, essentially, it involved folding up the lengths of Voltex which Andrew Cowie had left.  He confirmed that there were processes whereby SMC could request information or clarification from the defenders.  If SMC’s installers had had any technical query about the tanking the proper course would have been to take it to Geordie Fraser who would have raised it with the defenders.  It was less likely that Mr Fraser would have raised the matter directly with CETCO;  the defenders were the designers.  Mr Lawtie was strongly of the view that it had been the defenders’ duty to design all of the tanking details “from start to finish”.  No details for the interface of the tanking with the column encasement on the external side had been provided.  They ought to have been.  They were important details.  It would not have been correct to place the onus on SMC to work out the solution or to seek further details from the defenders.  Mr Lawtie confirmed that SMC had not given any notice to the defenders that the tanking work was available for inspection before it was covered up.

[14]      Mr Lawtie agreed that there had not been the usual relationship between the architect and the client.  The defenders had not acted as the client’s representative.  He was unaware of any discussion having taken place between the defenders and Mr Anderson.  Had it taken place he would have expected it to have been minuted or otherwise recorded.  The defenders had had some inspection duties ‑ they undertook responsibility for producing the snagging list.

[15]      In December 2008 there had been water ingress in the south wing of the office.  He could not recollect the circumstances in which it had been discovered, save that there had not been an electrical failure.  There had been “wet or damp patches” on the floor slab ‑ a number of patches in the centre of the floor plate and three patches along the front (south) elevation.  A period of heavy snowfall had been followed by a quick thaw.  The snow had banked up 600mm from ground level around the perimeter of the building at that elevation, covering the bottom of the external cladding.  SMC had checked service pipes and rainwater pipes for leaks, with negative results.  When Mr Lawtie had inspected the floor plate, Jim Taylor of Covell Mathews had been with him.  SMC had assumed that the likely cause was snow/water gaining access to the subfloor by passing above the tanking ‑ over the flashing, brickwork and blockwork.  Mr Lawtie accepted that the defenders’ Mr Scott had suggested getting CETCO in to look at the tanking in case the cause of the ingress was a tanking failure.  SMC had not done that.  He accepted that, with hindsight, it would have been sensible to do that;  and that it would have been sensible to do that before carrying out any remedial works.  Geordie Fraser and he had opened up the exterior of the basecourse in two places.  CETCO had not been present when that had been done, nor had Mr Scott.  He acknowledged that Jim Taylor had asked for a report setting out the location and extent of the ingress and the cause of it.  Mr Lawtie thought a report would have been provided, but he couldn’t recall.  He expected it would have said that it was thought that water/snow had got in above the tanking.  That was what he and Geordie Taylor had assumed.  They had not thought it was a tanking problem;  but he accepted that they had not been able to identify the cause and were not able to rule out a tanking problem.  SMC had carried out remedial works.  These had involved (i) laying a further layer of Voltex tanking along the outside face of the exterior leaf on the front elevation;  (ii) installing a field drain along that elevation;  and (iii) closing the weepholes along that elevation.  He accepted that those measures would have helped prevent groundwater getting through the wall into the cavity, but that if the problem was water getting above the tanking they would not have stopped that.  He explained that it had been a “belt and braces” approach “because we couldn’t identify exactly what the cause was”.  The floor slab was inspected in January 2009 once the remedial works had been carried out and there had been no evidence of water getting back in.  SMC had concluded that the issue had been resolved.  After that there had been no report of water ingress until October 2009.  Mr Lawtie had treated the 2008 ingress as a being “a snagging issue”.

[16]      On about 26 October 2009 there was a further ingress of water into the south wing of the office building.  The ground floor power sockets in the south wing had tripped off.  On inspection of the floor plate patches of water about 10mm deep were found there.  There was further water ingress over the following weekend and on that occasion both the north and south wings were affected, the north wing less seriously.  Overall about 80% of the floor plate was affected and the water was about 15mm deep.  Mr Lawtie accepted that the defenders’ report of 8 December 2009 contained a fair representation of the investigations and findings concerning the 2009 ingress.  The water was penetrating the tanked external basecourse wall at the junction between the internal leaf and the steel column encasements.  Ingress was also occurring through poorly formed laps in the DPM/tanking.  The ingress in 2009 was much greater than in 2008.  A solution was devised by Mr McMurtrie of CETCO and the remedial works to the tanking were carried out by specialist installers.  The problem was resolved.

[17]      At the time of the 2009 ingress the office was occupied by the tenants, Acergy.  Acergy lost the use of much of the ground floor between November 2009 and May 2010.  As works progressed during that period areas were handed back to Acergy.  It was important that remedial works were carried out quickly.  No contract was entered into between the pursuer and SMC for the remedial works.  SMC carried out the works using most of the original subcontractors.  Had they used different subcontractors the warranties which subcontractors had given would not have continued to be valid.  Mr Lawtie explained that while over most of the ground floor access to the subfloor was gained without difficulty by lifting floor panels, the reception area had ceramic floor tiles and high quality finishes.  Lifting and relaying them might have taken 12‑16 weeks.  To avoid disrupting the operation of Acergy’s business and to avoid the expense of lifting and relaying tiling, remedial works were not carried out in that area.  Instead SMC gave Acergy an extension to the warranty for that area. The 193 hours of Mr Lawtie’s time which the pursuer had attributed to the remedial works was his best estimate of the time he had spent on them.  He did not use a time recording system.  He had just gone back through his diary and estimated time spent.  The hourly rate of £60 had not been a figure provided by him.  Mr Anderson’s input would have involved processing subcontractors’ payments for the remedial works and contributing to discussions in respect of rent abatements.  Ms Barrie’s input was as financial director making cost projections as the remedial works progressed.

 

William Imlach
[18]      Mr Imlach was the managing director of SMC until 2012.  In terms of the defenders’ Appointment they had the design responsibility.  So far as he was concerned SMC’s contract with the pursuer did not contain any design element.  It was not incumbent upon the pursuer or SMC to raise a query with the defenders if a detail had been omitted from issued drawings.  Mr Imlach was not aware of Derek Anderson having agreed any amendment to the defenders’ Appointment.  He confirmed that the defenders were not issuing architect’s certificates or valuing the works.  SMC did internal valuations for the purposes of valuing the works and paying subcontractors.  The defenders were on site regularly for meetings, not just if requested.  Mr Imlach confirmed that he had spent about 90 hours dealing with the 2009 ingress and remedial works.  He had estimated that time by going through his computer diary and notebooks.  The £100 per hour rate which the pursuers were claiming for his input was a fair reflection of his salary package at the time.

 

John Irvine
[19]      Mr Irvine was the Finance Director of SMG between 2001 and 2015.  He indicated that Acergy had taken partial possession of some of the upper floors of the office in May 2008.  Possession of the remainder of the building had been taken around September 2008.  SMC performed the role of main contractor for the remedial works following the 2009 ingress, but there was not a remedial works contract with the pursuer.  SMC subcontracted out the remedial works.  Andrew Cowie carried out the remedial works to the tanking.  The sum SMC claimed for overhead costs in respect of the remedial work was £33,355.  Staff time spent was estimated and staff members charged out at rates selected by Lesley Barrie, SMC’s Finance Director.  The rate applied in his case had been £115 per hour.  The time estimates were rough estimates formed looking at email exchanges, correspondence and the like.  His own estimate of his time spent was 43 hours.  The M&E services designers’ fee of £1,612 would have related to checking underfloor cables and assessing whether they had been damaged.  Mr Irvine had negotiated rent abatements with Acergy for the periods when it had not been given full occupation of the building because of the 2009 ingress and because remedial works were taking place.  The abatements had been an appropriate proportion of the rent having regard to the areas which could not be occupied by Acergy at any particular time.  The total rent abatement costs were £313,983.28.  Rather than having the disruption and upheaval which remedial works to the reception area would have involved, Acergy had been content to accept an extension (Joint Bundle 22) of the Development Agreement Collateral Warranty it had been granted by SMG.  The effect was to extend to 25 years from the date of practical completion the expiry date for Acergy bringing proceedings against SMG in respect of defects in (a) the pedestals used to support the raised access floor;  and (b) the adhesives used to bond the pedestals to the concrete floor;  and (c) the bond between the concrete and the adhesive;  all at the ground floor of the office building, provided such defects arose directly as a result of the 2009 ingress.  Mr Irvine had not thought that the appearance of such defects was a likely scenario, but SMG had assumed the risk.  SMG estimated that the cost to it of assuming that liability was £150,000.  That was a guesstimate following discussion with its lawyers.  It was not based on any underlying valuations or assessments of risk which could be put forward to support it.

 

Alex Fleming
[20]      Mr Fleming qualified as a chartered architect in 1980.  He is a consultant with a firm of consulting engineers and architects, William J Marshall & Partners.  He is based in London.  He was instructed by the pursuer as a skilled witness in 2010.  He prepared reports dated 2 December 2010 (JB 28) and December 2015 (JB 29).  Over the past 14 years he has investigated several buildings where water ingress has occurred.  He first visited the Acergy site in late 2010 by which time remedial works had been completed.

[21]      In Mr Fleming’s opinion the cause of the 2009 ingress was that water from outside the building penetrated through the perimeter wall through discontinuities in the tanking system; and in particular that there had been systemic ingress at perimeter column locations near the column encasements and floor slab isolation joints.  He attributed the 2008 ingress to an entirely different cause.  In his view it was likely that on that occasion melted snow banked up against the exterior wall had entered the cavity at flashing level and passed above the tanking and down into the subfloor.

[22]      Mr Fleming considered that the defenders’ performance of their design duties fell below the standard of skill and care to be expected of a properly qualified and competent architect experienced in carrying out services for projects of a similar size, scope and complexity to the Acergy building.  The defenders ought to have provided tanking details for the areas adjacent to the perimeter columns.  They had not done so.  Neither the drawings the defenders issued nor CETCO’s standard detailing dealt with those areas.  Mr Fleming accepted that it was legitimate for an architect to assume that installers would not require every matter to be detailed, particularly where, as here, the architect was entitled to proceed on the basis that the work would be done by a specialist contractor.  He drew a distinction between standard features and atypical features.  With the latter the architect would be expected (i) to provide relevant detailing at the outset;  or (ii) (if such detailing was not created pre-construction) to visit the site and satisfy himself that what was proposed was appropriate, or to see that someone else (such as CETCO) did that. If on the other hand an architect and the employer agreed that an architect should not act as contract administrator or attend the site unless requested to do so, the architect ought to make clear to the client that he had not provided the relevant detailing and that the detailing proposed by the contractor would need to be checked.  Mr Fleming accepted that it was normal practice for an architect to design the details he considered the contractor required, and for him to rely on the contractor to request clarification if further details were needed.  He did not consider that a competent architect would have adopted that course in relation to tanking around the peripheral column bases.  He ought to have followed course (i) or course (ii).

[23]      Mr Fleming was present in court during the evidence of other witnesses.  He agreed that Mr Lawtie had spoken to seeing water enter between the inner leaf of the blockwork wall and the column encasement;  and that he had not spoken to observing any water ingress through the isolation joint between the lower column encasement and the floor slab.

 

Stuart Fyvie
[24]      Mr Fyvie was a former project manager with Stuart Milne Developments.  He had liaised with the tenants, Acergy, in relation to the 2009 ingress and the remedial works.  He had spent 104 hours engaged in that task.  In the calculation of overheads his time had been costed by Ms Barrie at £60 per hour.

 

Christopher Huntley
[25]      Mr Huntley is a chartered quantity surveyor.  He prepared a quantum report for the pursuer (JB 30).  In terms of para. 9 of the Joint Minute it was agreed that most of the sums detailed in Appendix C of Mr Huntley’s report were expended by SMC.  (In closing submissions Mr Young indicated that the defenders were content to agree that remedial costs were expended by SMC in the aggregate figure of £686,812 as more fully set out in Appendix C).  In relation to the overheads claim of £33,355 Mr Huntley indicated that the total figure appeared to him to be reasonable.  It was 4.84% of the remedial costs expenditure.  Overheads of the order of 5% were unsurprising on projects of this type.  If remedial works were to be carried out to the reception area Mr Huntley estimated the present day costs would be £151,194.26.

 

 

The defenders’ case
John Scott
[26]      Mr Scott qualified as an architectural technician in 1990.  He has been employed by the defenders since 1996.  He was promoted to the role of senior architectural technician, and then to associate, and then (in about 2013) to Technical Director.  At the time of the project he was an associate.  He is not an architect.  There was a team within the defenders who worked on the Acergy project.  The team comprised partners (Mr Fraser and Mr Leith), other architects and trainee architects, and architectural assistants.  Mr Scott was given the role of project leader.  During the earlier stages of the project Mr Fraser supervised it.  During its later stages Mr Leith took over the supervisory role.  The member of the team who prepared the tanking drawings was an architect, Mr Duncan.

[27]      Fraser Taylor of SMG had requested that the tanking material be Voltex supplied by CETCO.  SMC had worked with Voltex before.  The defenders discussed its use with Jim McMurtrie of CETCO.  They prepared drawings and issued them to CETCO for approval.  CETCO indicated that it was satisfied with the drawings.  The defenders completed the tender package for Substructure/Foundations/Drainage within the office building and issued it to SMG on 21 July 2006.  That package included the tanking details.  The package was issued to SMG for construction on 20 December 2006.  There was no drawing detailing the tanking at peripheral column encasements.  Mr Scott indicated that the defenders did not think that it had been necessary to produce such a detail.  It was not necessary or appropriate to detail everything that tanking installers required to do.  In the event of a contractor being uncertain as to how to proceed it ought to request further information from the defenders through the “Information Required Schedule”, or a “Request for Information”; or it should contact the supplier (in this case, CETCO) for guidance.  The relevant procedures had been used frequently where further information had been sought ‑ on this project and on previous projects with SMG.  In this case no further information or guidance had been sought in respect of the vertical tanking.  That fell to be contrasted with the approach which Andrew Cowie and SMC had taken in relation to tanking under the subfloor ‑ they had gone directly to CETCO to get additional input.  The other professionals in the pursuer’s design team (including the civil engineers) and Acergy’s shadow design team (which had included architects and engineers) had all been aware of the contents of the tender and construction packages when they were issued but no-one had indicated that particular details for tanking at peripheral columns were required.

[28]      Mr Scott recalled being in the office in April or May 2007 and hearing Mr Leith have a telephone conversation with Derek Anderson.  After the call Mr Leith had reported to him that Mr Anderson’s instructions were that the defenders were not to issue architect’s instructions or certify interim payments.  His understanding had been that the defenders were not to act as contract administrator.

[29]      The office works had been certified as practically complete on 26 September 2008.  Mr Scott had been involved with Mr Taylor (Acergy’s shadow architect) in compiling a snagging list.  The snagging process had begun in May 2008 and had continued until well into 2009.  During that period the defenders had not attended regular site meetings but had visited the site when asked to do so by the pursuer or SMG.  The defenders were not required to inspect the works on site as they progressed and they had not done that.  In particular neither the pursuer not SMC had asked him to inspect the tanking work before it was covered up;  or to attend discussions on site relating to the tanking.  Nor had they informed him when the tanking was about to be covered up.

[30]      In December 2008 Mr Scott had been contacted by Geordie Fraser following water ingress at the office.  He had recommended to Mr Fraser that CETCO be contacted.  On 23 December at 09.52 he had been copied into an email by Acergy’s shadow architect to Mr Lawtie concerning the ingress.  Mr Taylor had asked that Mr Lawtie:

“provide a brief report on your findings on exactly where/why this ingress has occured (sic) and the extent of the damage to the fabric and the services installations within the floor void…Can you also inform us of what is the extent of the remedial works SMG intend carrying out to rectify the problem, including any fabric and/or services works.”

 

At 10.06 the same day Mr Scott emailed Mr Lawtie:

“I would also suggest that Jim McMurtrie of Cetco also visit the site to confirm that the tanking is in order and prepare a report. I did suggest this to Geordie however I don’t know if it was done.”

 

[31]      In January 2009 Mr Scott visited the site at the request of Mr Lawtie.  SMC indicated that they had carried out investigations by opening up the basecourse.  They had already carried out remedial works.  Following his visit Mr Scott emailed Mr Lawtie on 12 January 2009 at 12.06:

“I was asked by Sean to visit the site last week to review the work undertaken to prevent the problems experienced with water ingress to the office basecourse.

 

I note the following:-

 

- SMC had opened up the basecourse and reported that the tanking appeared to be in order (this was no longer opened up when I visited the site).

 

- I understand that Cetco have not been asked to attend site by SMC (despite my earlier recommendation);

 

- SMC have formed a field drain along the length of the elevation and have applied a volclay membrane to the basecourse up to ground level.

 

-SMC have sealed the weep-holes with silicone sealant.

 

I would suggest that the measures undertaken will reduce the level of ground water in the area and may in turn reduce the risk of water penetrating the base course in the future. I would note however that the actual point of entry has not been located and therefore may not have been rectified by the measures undertaken.”

 

Mr Scott confirmed that the email recorded what he had been told when he attended the site.  He had not been involved when the ingress was investigated or when the remedial works were decided upon or carried out.  The ingress had been mainly along the front elevation of the south wing.  In mid‑2009 he had been asked by SMC to prepare a record drawing of the remedial works.

[32]      On 26 October 2009 Mr Scott was contacted by Mr Lawtie following the discovery of the water ingress in the south wing of the office building.  He had attended the next day and had pointed out that the flooding appeared to be in the same place as the 2008 ingress.  The following weekend there was heavy rainfall and further water ingress and on that occasion the north wing of the office was also affected.  Over the course of the next few weeks investigations continued and Mr Scott prepared a report dated 8 December 2009 on the water ingress for the pursuers.  In that report the junction of the vertical tanking, DPM, and the tanking around the column encasements was identified as the most likely cause of the water ingress.  Mr Scott also indicated that the tanking was not in accordance with the design details.  The blockwork had not been rendered before Voltex had been applied to it;  lapping was absent in places and of poor quality in others; there was no sign of Bentonite paste having been applied to joints between the Voltex and the DPC;  and the DPM at the floor slab edge had not been tape sealed.

 

Ian Fraser
[33]      Mr Fraser qualified as an architect in 1977.  At the material times he was a partner of the defenders.  He ceased to be a partner in 2012 but he then became a director of the firm.  He explained that prior to the Acergy project the defenders had worked with SMG on various projects over a number of years.  In each such project the client  had also been the contractor.  He had understood that the defenders’ role in the Acergy project would be similar to their role in the previous projects ‑ in effect the role of an architect in a design and build contract.

[34]      Mr Fraser described his personal role in the project as being heavily involved in stages A-D of the RIBA Plan of Work ‑ in effect the inception of the design, feasibility studies, outline design, and eventually a scheme design.  He attended some of the earlier design meetings but then stepped back from the design process leaving responsibility for the detailed design to the members of the team with the relevant expertise.  His involvement with the project from then on was more supervisory in nature.  In about March or April 2007 he had received the Appointment document.  That was the first time he had been made aware that the pursuers rather than SMG were to be the development vehicle.  He had signed the Appointment.  At that point the works were well progressed on site and the bulk of the drawings had been completed.  The tanking on site had been substantially completed.

[35]      Mr Fraser indicated that the defenders’ understanding was that they were to co‑ordinate the design, issue information, respond to queries, and provide further advice on design matters and users’ requirements when requested.  The defenders were to attend site when requested;  provide further information when requested; and discuss construction details, specifications and construction problems when requested.

[36]      Mr Fraser issued the Practical Completion Certificate on 26 September 2008.  He explained:

“… I was aware that we had been instructed not to inspect the works or to certify payment during the works but this was one of those rare circumstances where I would issue a Practical Completion Certificate without having inspected the works during construction, the purpose of regular inspection and interim certification is to demonstrate that the amount of work properly carried out is paid for at the agreed stages during construction. It is not a guarantee that there are no building or construction errors…In this case where the contractor and client were in effect the same person I was content to certify that, in my opinion, the building was “practically complete” without having certified any other stage payments during the course of construction. I was reasonably satisfied that the extent and content of the building works accorded with the architect’s brief and user’s requirements… That assessment was based on my team’s visits to site, their snagging reports and my own visit to see the completed building.”

 

 

James Leith
[37]      Mr Leith qualified as an architect in 1984.  At the material times he was a Regional Director of the defenders.  By the time of the proof he had been promoted to the post of Director.  Like his colleague Mr Fraser, his understanding until the Appointment document was that the client, developer and contractor were one and the same ‑ SMG.  His involvement in the detailed design stage of the project was supervisory.

[38]      Mr Leith’s understanding had been that the defenders were not to carry out the role of contract administrator, and that they would not be expected to inspect or certify the works or issue architect’s instructions.  He recalled that Mr Scott raised with him the need for greater clarity as to the defenders’ role.  Mr Leith decided to contact the client for clarification.  He telephoned Derek Anderson in April/May 2007.  He thought it was after the Appointment was signed.  Mr Anderson had advised:

“… that they [SMC] were dealing with certification and confirmed that we were not to inspect the works. We were also not to issue architect’s instructions and whilst we were to attend site meetings I was told that was only to deal with any technical queries from a detailing point of view as and when required…To me, my discussion with Derek Anderson confirmed that our role did not involve the administration of the building contract.”

 

Robert Chisholm
[39]      Mr Chisholm is a chartered engineer.  He was a partner in Cameron Chisholm Dawson Partnership until about May 2007, and he then became a partner in CCDP LLP.  Those firms were (successively) the mechanical and electrical engineering consultants for the project.  Until the formal appointment was signed in January 2007 Mr Chisholm had understood that the client was SMG.  He first became aware that it was the pursuer in January 2007.  He indicated that the same people were involved in SMG and the pursuer and that from his perspective there was no clear divide between the two.  The two people heading up the pursuer were Derek Anderson and Mr Imlach, but those individuals had both also acted throughout on behalf of SMG and SMC.

[40]      Mr Chisholm recalled that the issue of mechanical or electrical variations was not something covered in “our standard appointment document”;  but that it was something that they ordinarily did during a project, and they did it at the beginning of the Acergy project.  However, Mr Anderson had written on behalf of the pursuer and had instructed that the issuing of such variations should cease.  The letter had advised that SMC were dealing with all financial matters.  Mr Chisholm’s reading of the letter was that SMC were taking responsibility for the administration of the building contract.  Prior to the proof the letter had been searched for but it had not been found.

[41]      Mr Chisholm confirmed that he attended the site following the 2009 ingress to check that there was not a mechanical engineering defect.  His firm had invoiced SMG £1,612 plus VAT in respect of the time spent doing that.

 

James McMurtrie
[42]      Mr McMurtrie is a Technical Sales Manager with CETCO.  He has worked for many years in the construction industry and has been with CETCO for 13 years.  Prior to the Acergy project he had worked with SMG on one or two other projects where Voltex had been used.

[43]      Mr McMurtrie confirmed that in August 2006 Mr Duncan of the defenders had discussed tanking with him.  On 9 August 2006 the defenders had sent him two drawings (A(1)01 and A(1)02) containing certain tanking details for the Acergy office subfloor.  Later the same day Mr McMurtrie had replied by email saying that he had had a look and that both details were fine.  At the proof he clarified that what he had meant was that the details were fine in terms of the manufacturing guidelines and trade literature for Voltex, and that the system shown should allow the Voltex to function properly.

[44]      At the time of the Acergy project CETCO did not have a list of approved applicators of Voltex.  There were, however, experienced “ground workers” who tended to use the material on a fairly regular basis.  Andrew Cowie was one such firm.  In many instances a main contractor would apply it where the application was straightforward.  He had not been asked to make a recommendation as to applicators for the Acergy job.

[45]      Mr McMurtrie indicated that for Voltex to function properly as a barrier to water ingress it had to be confined.  One consequence was that where Voltex was to be applied to concrete blockwork a substrate of render should be applied to the blockwork.  Here that was what the defenders’ drawings indicated was to happen.  They also indicated that on the other side of the Voltex there was to be concrete infill.  Had those instructions been adhered to the Voltex would have been effectively confined.

[46]      CETCO had standard tanking details which it could make available on request.  One of the standard details which CETCO provided to the defenders (on 28 November 2006) was a detail involving a column.  Neither CETCO’s standard details nor the drawings prepared by the defenders showed tanking where a concrete column encasement intersected blockwork or a floor slab.

[47]      It was not unusual for Mr McMurtrie to provide designers or contractors with advice or bespoke details at their request.  That had in fact happened with aspects of the tanking being carried out by Andrew Cowie at Acergy, but he could not recall who had requested that further information.  He had visited the site to discuss tanking work with Andrew Cowie and to inspect the tanking under the floor slab prior to the slab being poured.  On those occasions he would always have let Geordie Fraser know that he was on site and what he was doing.  After site visits Mr McMurtrie prepared reports and sent them to Mr Fraser.  In one of those reports he had noted that some Voltex in vertical tanking in the north wing had been applied the wrong way round.  The defenders had not been present when he had his discussions with Andrew Cowie and he had not sent these reports to the defenders.  Mr McMurtrie’s visits to the site had only really involved the floors ‑ the work that Andrew Cowie was doing.  He did not recall, nor could he find any record of, having been contacted to inspect tanking at the column encasements around the perimeter of the office.

[48]      Mr McMurtrie attended the site shortly after the 2009 ingess.  He was present there following opening up works.  It was clear to him that while the horizontal tanking had been carried out to a high standard, the vertical tanking system had not been installed properly.  Voltex had been applied to unrendered blockwork.  In some places the appropriate concrete infill was absent.  The Voltex had not been applied neatly and tightly around the concrete encasements.  It was floppy.  Folding, wrapping and cutting had not been done properly and there were insufficient fixings.  There was no sign that Bentonite fillets and paste had been used where they ought to have been ‑ though after a “wash-out” it was quite difficult to determine what had been there before.  On the basis of his observations and the investigations recorded in the defenders’ report of 8 December 2009 he agreed with the conclusion that water was penetrating the tanked external basecourse wall at the junction between the internal leaf and the column encasements, and through laps in the DPM/tanking generally.

[49]      Mr McMurtrie was involved in the remedial works following the 2009 ingress.  CETCO supplied bespoke tanking details for tanking around the column encasements.

[50]      In evidence‑in‑chief Mr McMurtrie stated that if he had been contacted about the 2008 ingress at the time he would have adopted the same approach as he did in relation to the 2009 ingress, viz he would have arranged to visit the site with a view to investigating the likely causes of the water ingress and thereafter making recommendations based on what he saw.

”… If it seemed likely that the tanking could be an issue, then the only way to investigate whether the tanking is functioning properly is to carry out opening up works. I cannot force a contractor or client to do so, of course, but if I thought there might be an issue with the tanking I might recommend opening up works.”

 

In cross‑examination he accepted that opening up and remedial works involved cost.  He was asked to consider whether he would have suggested that opening up was required where (i) water ingress had not been as extensive as in 2009;  and (ii) the contractor and the architect were suggesting that the water had got in in another way which did not involve a tanking failure;  and (iii) there had been remedial works which seemed to be effective.  He replied in the negative ‑ that he would not want remedial works which were unnecessary.

 

Donald Canavan
[51]      Mr Canavan is a Chartered Architect.  He qualified in 1989.  He practised in Moray, Glasgow and Edinburgh.  In 2007 he joined the Hurd Rolland Partnership as a Construction Technology Consultant.  In March/April 2010 he was instructed by the defenders as an expert witness.  He visited the Acergy site on 12 April 2010 at which time areas of the original tanking were still in situ.  Re‑instatement of tanking was mid-works.  There were extensive areas where remedial work was yet to take place.  He prepared a report (JB 31).  He had experience of similar tanking designs.  At around the time of the Acergy project he had worked on an office building in Inverness for Scottish National Heritage which had had tanking.  He had had experience of using volclay tanking in the early 1990s.  Since then he had tended to use bitumous materials.

[52]      On the basis of the findings in the defenders’ investigation report of 8 December 2008 and having regard to his own observations at his site visit on 12 April 2010, Mr Canavan concluded that several defects in the tanking contributed to the 2009 ingress.  The vertical tanking had been applied directly to unrendered blockwork.  Laps were deficient ‑ especially at the top corners of the upper encasement.  Voltex had been loosely and poorly fixed to the column encasements resulting in voids.  There was no sign of Bentoseal fillets which ought to have been present at the laps between the DPC and the upper edge of the Voltex and between the DPM and the lower edge.  The internal corners of column bases did not have Bentoseal fillets to accommodate the changes of direction.  Mr Canavan was satisfied that fillets had not been installed and washed out.  Had they been there they would have left visible residual signs.  There had been no such signs.

[53]      The tanking defects evident in 2009 and 2010 would have been present from the date of construction.  They would have been there at the time of the 2008 ingress.  In both the 2008 and the 2009 ingresses water appears to have entered at the south elevation of the south wing;  but in 2009 the ingress was greater and more extensive (particularly after the second episode of heavy rainfall).  In Mr Canavan’s opinion it was likely that the cause of the 2008 ingress had also been the defective tanking.  In his view Mr Fleming’s theory that snow/water overtopped the tanking was a very unlikely explanation.  Mr Canavan had experience of designing buildings in the Highlands.  In his experience the phenomenon suggested by Mr Fleming was not one recognised as a significant problem in Scotland.  If snow had accumulated against the exterior wall up to or above the level of the flashing it was possible that some water could have entered through the flashing.  He would not have expected significant quantities of water to get in that way.  The exterior face of the building would tend to be slightly warmer than the ground and could melt adjacent snow, causing it to percolate down to the ground.  If melted snow did get in via the flashing it would have been likely to accumulate in the cavity or to run back outside through the weepholes.  It was very difficult indeed to envisage that enough water would have entered to fill up the cavity and overtop the tanking.  The cavity went right round the perimeter.  It was continuous and not in closed sections between the columns.  Even if it had been in closed sections the barriers between each section would not have been impervious.  If there had been so much water as to fill up the cavity it would still have had to pass through the insulation boards and over the top of the tanking.  The insulation boards were waterproof but the joints between boards were butt edged and could have permitted a small migration of water.  If water had followed the route which Mr Fleming suggested it would have wetted finishes on its way down to the subfloor and over time might have appeared as dampness at skirting level.

[54]      The remedial works which SMC carried out following the 2008 ingress comprised the insertion of a field drain and the application of tanking to the outside of the external wall.  The drain appeared to have been designed to reduce the level of ground water in the area adjacent to the elevation concerned and to prevent ground water entering through the basecourse.  The remedial works did not appear to have been designed to prevent overtopping.

[55]      Mr Canavan did not attach any great weight to the fact that there had been no reported incidents of water ingress after the remedial works in January 2009 until the 2009 ingress.  There was no evidence that the subfloor had been monitored for water during that period.  Ground water levels varied throughout the year, tending to be higher in winter and lower in summer.  The field drain would have assisted in removing ground water in its vicinity.  There had been no reports of overtopping since the 2008 ingress.

[56]      In the case of water ingress like that in 2008 it would have been normal practice for the architects involved in the project to be instructed to investigate and report on the issue.  However the defenders had not been so instructed.  On being informed of the ingress the defenders had advised of the possibility of a tanking failure and had recommended that CETCO be asked to investigate.  The defenders’ advice had not been followed by the pursuer or SMC.  Rather, SMC had investigated the matter and had devised its own remedial measures.  In Mr Canavan’s opinion the tanking defects were not discovered at the time of the 2008 ingress because the investigations and opening up work were inadequate.  Had the defenders’ recommendation been followed it was likely that CETCO’s investigations would have revealed defective tanking.

[57]      Mr Canavan considered that the defenders had fulfilled their design obligations in respect of tanking.  They had provided three basecourse tanking drawings ‑ A(1)01(which provided standard details), and A(1)02 and A(1)03 (which were specific details).  The note on drawing A(1)03 had indicated that tanking was to be installed strictly in accordance with manufacturers’ printed instructions by specialist applicators.  The Specification had contained instructions relating to tanking.  In particular, section J40 of the specification had indicated that CETCO’s technical literature should be consulted for details; and that CETCO could provide a design and specification service and that it was recommended that they were consulted early in the design process.  SMC had had all the standard details prepared by the defenders and CETCO.  It was not reasonable to expect the defenders to detail every aspect of the tanking.  Many features of the tanking installation could be assumed to be within the competence and experience of competent installers (even more so, within the trade skills of specialist applicators).  In his opinion competent installers would be able to handle the tanking of column encasements without specific detailing being provided.  Changes of direction at corners, lapping around column bases, and lapping generally were all the sorts of tasks which applicators ought to be able to do utilising CETCO’s standard details.  In Mr Canavan’s opinion it had not been incumbent upon the defenders to provide specific detailing for that work.  It was ordinary practice for architects to issue standard details of the sort the defenders had. In the event that the applicators required clarification or further details there had been mechanisms in place for them to obtain it ‑ by reverting to the defenders using the Information Required Schedule or a Request for Information, or by seeking guidance from CETCO as envisaged in the Specification.  That also accorded with ordinary practice.  There had been no request for guidance in relation to detailing of the tanking around perimeter columns.  In the whole circumstances the defenders had exercised in the performance of the Services all the reasonable skill and care to be expected of a properly qualified and competent Architect experienced in carrying out services for projects of a similar size, scope and complexity to the Project.  That was Mr Canavan’s view whether or not it was correct to conclude that the defenders’ role in the latter stages of the project had been varied by agreement between the parties in the way the defenders’ suggested.  Any such variation would not have altered the defenders’ design obligations.

 

Credibility and reliability
[58]      Each of the witnesses to fact impressed me as doing his best to assist the court.  Except where I indicate otherwise I accept the evidence of each of those witnesses on all material factual matters as being both credible and reliable.  As indicated below, I have significant reservations as to the reliability of Mr Lawtie’s evidence that the tanking appeared to be fine when he looked at it through the openings in the base course following the 2008 ingress.  Moreover, I did not derive any real assistance from Mr Lawtie’s or Mr Imlach’s views as to their understanding of the defenders’ obligations under the Appointment.

[59]      Each of the skilled witnesses appeared to me to be doing his best to assist the court.  However, as will be apparent from the discussion below, I have not accepted parts of Mr Fleming’s evidence.

 

Prescription
[60]      It is common ground that the pursuer suffered loss on the date of practical completion ‑ 26 September 2008.  On that date there was concurrence of the injuria which the pursuer avers and of damnum.  However, the action was not raised until 2 September 2014 - more than five years later.  Accordingly, the obligation upon which the pursuer relies has prescribed (Prescription and Limitation (Scotland) Act 1973, s. 6(1),(2) and Sched. 1, para. 1(d); s. 11(1)) unless it can satisfy the court that it was not aware, and could not with reasonable diligence have been aware, that loss, injury or damage had occurred until a date less than five years before 2 September 2014 (s. 11(3)).

[61]      Subsections (1) and (3) of section 11 provide:

“(1) Subject to subsections (2) and (3) below, any obligation (whether arising from any enactment, or from any rule of law or from, or by reason of any breach of, a contract or promise) to make reparation for loss, injury or damage caused by an act, neglect or default shall be regarded for the purposes of section 6 of this Act as having become enforceable on the date when the loss, injury or damage occurred.

…

(3) In relation to a case where on the date referred to in subsection (1) above… the creditor was not aware, and could not with reasonable diligence have been aware, that loss, injury or damage caused as aforesaid had occurred, the said subsection (1) shall have effect as if for the reference therein to that date there were substituted a reference to the date when the creditor first became, or could with reasonable diligence have become, so aware.”

 

It is now clear that in order for prescription to begin to run for the purposes of s. 11(3) the creditor need only be actually or constructively aware of the occurrence of loss.  Lack of awareness that the loss was caused by an actionable act, neglect or default does not postpone the running of the prescriptive period (David T Morrison & Co Ltd (t/a Gael Home Interirors) v ICL Plastics Ltd 2014 SC (UKSC) 222, per the decision of the majority; Gordon v Campbell Riddell Breeze Paterson LLP [2016] CSIH 16).

[62]      At the time of the 2008 ingress the pursuer became aware that areas in the south wing of the office had suffered water ingress.  Did that give rise to actual awareness of relevant loss, injury and damage for the purposes of s. 11(3)?  That appears to me to depend upon two matters.  First, was the loss, injury or damage material (see e.g Pelagic Freezing (Scotland) Limited v Lovie Construction Limited & Anor [2010] CSOH 145, per Lord Menzies at para. 110).  Second, was the ingress caused by the tanking defects, i.e. did the suggested breaches of contract upon which the pursuer relies cause or materially contribute to the ingress?

[63]      Mr Broome submitted that the pursuer was not actually aware of having suffered relevant loss more than five years before the action was raised.  He maintained that on the evidence the court should conclude that the cause of the 2008 ingress was overtopping rather than tanking defects.  Even if that ingress was attributable to tanking defects the pursuer was not aware at the time that it had suffered material loss.  In the whole circumstances it had not been incumbent upon the pursuer in the exercise of reasonable diligence to instruct CETCO to attend the site following the 2008 ingress.  Its response to the 2008 ingress had been reasonable and proportionate.  Even if it had instructed CETCO to attend it was unlikely that Mr McMurtrie would have insisted on opening up works having regard to SMC’s belief that the ingress had been caused by overtopping, and to the remedial works which SMC carried out (cf. Royal Bank of Scotland plc v Halcrow Waterman Ltd [2013] CSOH 173).

[64]      Mr Young submitted that it was surprising that the pursuer had led as little evidence as it had in relation to the 2008 ingress.  The only witness to fact adduced had been Mr Lawtie.  Neither the site foreman, Geordie Fraser, nor the shadow architect, Mr Taylor, had been called to give evidence.  The report which Mr Taylor had requested had not been produced.  On the evidence the court should conclude that each of the two ingresses had been caused by the tanking defects.  The loss which the pursuer was aware of in 2008 was material.  Accordingly there had been actual awareness of a relevant loss in 2008.  Even if that were not so, with reasonable diligence the pursuer could have become aware of a relevant loss before 2 September 2009.  Reasonable diligence required that it arranged for CETCO to investigate the tanking and to report.  Had it done the likelihood was that Mr McMurtrie would have found defects.

[65]      In addition to David T Morrison & Co Ltd (t/a Gael Home Interiors) v ICL Plastics Ltd, supra and Pelagic Freezing (Scotland) Limited v Lovie Construction Limited & Anor, supra counsel referred to Adams v Thorntons WS 2005 1 SC 30; Britannia Building Society v Clarke 2001 SLT 1355;  Beveridge & Kellas WS v Abercromby 1997 SC 88;  ANM GroupLtd v Gilcomston North Ltd [2008] CSOH 90;  and Heather Capital Ltd (in liquidation) v Burness Paull & Williamson LLP [2015] CSOH 150.

[66]      I am satisfied on the balance of probabilities that the water ingress in 2008 was attributable to the tanking defects rather than to melted snow overtopping the tanking system.  In my opinion Mr Fleming’s hypothesis of overtopping is an inherently unlikely explanation.  It involves the positing of what appears to me to be a sequence of improbable events.  I agree with Mr Canavan’s observations on the hypothesis and I share his scepticism.  I accept that he has more experience than Mr Fleming of the effects of snowfall on buildings in Scotland.  It is likely that from the outset defects in the tanking system were many and widespread.  It is much more likely that that was the route through which the ingress occurred.  I am not persuaded otherwise by the fact that between January and October 2009 there was no report of any further ingress to the subfloor at the elevation where the remedial works were carried out.  As Mr Canavan observed, ground water levels are subject to seasonal variation, and there is no evidence that the floor slab was in fact monitored during this period.  I attach little weight to Mr Lawtie’s evidence that when he and Geordie Fraser opened up the basecourse the tanking looked fine.  I am not satisfied that Mr Lawtie was sufficiently knowledgeable or experienced in relation to the application of Voltex tanking to provide a reliable view as to its state.  I did not have the advantage of hearing any evidence from Mr Fraser.  The absence of any evidence of water marks or damage on internal finishes is consistent with the ingress having come through the tanking rather than over it, but I do not attach significant weight to that.  Such damage would have been more likely to have been evident if there had been extensive or prolonged ingress by overtopping:  but on any view the 2008 ingress was minor.

[67]      Was the loss, injury and damage which the pursuer was aware it had suffered material?  While it was sufficiently concerning to SMC for it to carry out the investigations and to complete the remedial works which it did, it was a relatively modest ingress which SMC, as the pursuer’s contractors, treated as being akin to a snagging item.  There was no evidence as to the cost of the remedial works;  or as to who ultimately bore those costs: but it is a reasonable inference (from it being treated by Mr Lawtie as if it were a snagging item) that the cost was borne by SMC and not passed on to the pursuer.  In the whole circumstances I am satisfied that the pursuer was not actually aware that it had suffered material loss, injury and damage in December 2008/ January 2009.

[68]      The next issue is whether the pursuer ought to be treated as having been constructively aware more than five years before 2 September 2014 that it had suffered such loss.  Could it with reasonable diligence have been so aware?  As Lord Penrose observed in Adams v Thorntons WS, supra, at para 23:

“…reasonable diligence requires the taking of those steps that a person of ordinary prudence would have taken if placed in the circumstances in which the pursuer found himself.”

 

[69]      What were the circumstances in which the pursuer found itself in late 2008 and during 2009?  There had been minor and localised water ingress to the south-western part of the south wing.  After investigations SMC, the pursuer’s contractors, had attributed the ingress to the tanking system having been overtopped during a period of heavy snowfall.  The investigations had included opening up the basecourse in two places and examining the tanking which had appeared to be fine.  While, as already observed, I am not satisfied that Mr Lawtie was well qualified to proffer a view as to the state of the tanking, so far as the pursuer was concerned the contractors had looked at it and had been of the view that the problem lay elsewhere.  They had treated it as a snagging matter and had effected remedial works.  The remedial works appeared to have been successful.  The shadow architects seem to have been content that the problem had been resolved.  There is no evidence that they were pressing for anything further to be done.  No further water ingress was reported until October 2009.  The only suggestion that something else might be (or might have been) done had come from Mr Scott, in particular in his emails to Mr Lawtie of 23 December 2008 (before the investigations and remedial works) and 12 January 2009 (after those investigations and works).  While the email of 12 January 2009 noted that Mr Scott understood “Cetco had not been asked to attend site by SMC (despite my earlier recommendation)”, Mr Scott did not urge that further investigation ought to take place notwithstanding the remedial works.  What he said fell some way short of that.  He noted the earlier recommendation.  He observed that the remedial works might reduce the risk of water penetrating the base course, but noted that since the actual point of entry had not been located it might not have been rectified by the works.  The emails were directed to Mr Lawtie, but I approach matters on the basis that the pursuer was aware of them at the material times.  In my opinion it would be artificial to do otherwise given the blurring of the employer/contractor relationships which was a feature of the day‑to‑day dealings between the defenders on the one hand and the pursuer and SMC on the other.  I am satisfied that in the whole circumstances an ordinarily prudent building owner in the position of the pursuer would not have considered it necessary between December 2008 and 2 September 2009 to instruct CETCO to investigate the cause of the ingress.  While the cause of the ingress had not been definitely ascertained at that time SMC’s working theory appeared to be plausible.  Remedial works had been carried out, and the problem appeared to have been resolved.  No‑one had indicated that the suggested cause was an unlikely one.  Had Mr Scott (or anyone else) done that, or had he impressed upon the pursuer that despite the investigations and remedial works which had been carried out he considered that investigation by CETCO was essential, the position would have been different;  but he did not do either of those things.

[70]      It follows that I accept that the pursuer was not aware, and could not with reasonable diligence have been aware, that he had suffered material loss, injury or damage more than five years before the action was raised.  The obligation upon which the pursuer relies has not prescribed.

[71]      If, contrary to my view, reasonable diligence would have involved the pursuer instructing CETCO to investigate the cause of the ingress, I am satisfied that it is likely that Mr McMurtrie would have discovered that the tanking was defective.  I think it more likely than not that he would have viewed the tanking ‑ either at the locations where SMC opened it up or at locations where he directed that it be opened up.  In that event, standing the evidence (which I accept) as to how obvious and widespread the defects were, I think it probable that he would have detected defects.  Accordingly, on this alternative hypothesis I would not have been satisfied that the pursuer could not with reasonable diligence have been aware that he had suffered material loss, injury or damage more than five years before the action was raised.  I would have held that the obligation the pursuer relied upon had prescribed.

 

Breach of contract
[72]      The essence of the pursuer’s case is that the defenders were in breach of the contractual duty of care set out in clause 3.1 of the Appointment:

 

“The Consultant warrants to the Client that the Consultant has exercised, and shall continue to exercise, in the performance of the Services all the reasonable skill and care to be expected of a properly qualified and competent Architect experienced in carrying out services for projects of a similar size, scope and complexity to the Project …”

 

The pursuer avers that the defenders failed to develop and provide sufficient tanking details in relation to the column encasements at the perimeter columns (including the isolation joint) and that they thereby failed to exercise the requisite standard of care.  The nub of the complaint is that the defenders’ design was insufficiently detailed.  The case advanced is not based on a suggested breach of a duty to monitor or inspect the tanking as it was constructed.  Accordingly, while time was spent at the proof exploring whether there had been a departure from the written terms of the Appointment in respect of the defenders’ obligations during the construction stage of the project, and although I accept the evidence of Mr Leith as to the terms of his telephone discussion with Mr Anderson, ultimately I am not persuaded that determination of that issue has any real bearing on the question whether the defenders exercised the requisite degree of skill and care in carrying out their design obligations.  In those circumstances it does not appear to me to be necessary to express a view as to the legal effect, if any, of the discussion on the terms of the Appointment.

[73]      Mr Broome submitted that on the critical issue the evidence of Mr Fleming ought to be preferred to that of Mr Canavan.  Mr Canavan’s premise was that the defenders were not obliged to design the tanking detail for the perimeter columns.  That premise should be rejected as it would involve a transfer, or a delegation, of design liability to the contractor, an outcome which the law ought to be slow to conclude had been intended.  Reference was made to Keating on Construction Contracts (9^th ed.), paras 14-041, 14-033 and 14-034;  Equitable Debenture Assets Corporation Ltd v William Moss Group Ltd  2 Constr. L.R. 1, pages 21-22;  Hudson’s Building and Engineering Contracts (13^th ed.), paras. 2-044 and 2-045;  Co-operative Group Ltd v John Allen Associates Ltd (2012) 28 Constr. L.J. 27, at paras. 167, 169-174, and 180.  On Mr Canavan’s approach there would be uncertainty as to who had design responsibility.  It would be a matter for the discretion of the architect how much detail he provided.  That would be a recipe for disorder and delay on site.  An architect was entitled to leave standard detailing to a specialist contractor but he was not entitled to do that with an important specialist detail such as the tanking at peripheral columns.  On a proper construction of the Appointment as a whole, and applying the principles set out in Arnold v Britton [2015] A.C. 1619, it was clear that the defenders were to provide “a full design service”.

[74]      Mr Young submitted that Mr Fleming had given no evidence that he had design experience for the tanking of buildings of the type involved here.  The information provided in his report (JB 28) and curriculum vitae (44 of process) had been in the most general of terms.  In para. 1.2 of his report he had indicated that he was “a Chartered Architect with experience of the design and contract administration of a wide range of building projects”.  His CV indicated that he had “some 40 years’ experience of designing and detailing many different building types and specifying their construction” and that he had “administered contracts ranging from domestic alterations to major town centre redevelopments”.  While in para. 1.2 of his report he had indicated that over the last fourteen years he had investigated a number of buildings which had suffered damage from water ingress, there was no evidence that he had designed the tanking in any building, let alone any building comparable to the Acergy office.  That was significant because the relevant standard of care was that of a properly qualified and competent Architect experienced in carrying out services for projects of a similar size, scope and complexity to the Project.  On the evidence it could not be said that Mr Fleming had the relevant experience.  On the other hand it was clear on the evidence that Mr Canavan did have such design experience, both in relation to tanking using Voltex and in relation to bitumous systems.  There was therefore a good basis for the court concluding that only Mr Canavan had the requisite experience to give opinion evidence as a skilled witness on the critical issue.

[75]      If both witnesses were qualified to give opinion evidence on that issue Mr Young submitted that the court would be faced with two competing schools of thought represented by different expert witnesses in relation to an aspect of professional practice.  In those circumstances it was not the function of the court to prefer one school of thought to another (Honisz v Lothian Health Board 2008 SC 235, per Lord Hodge at para. 39;  Gordon v Wilson 1992 SLT 849, per Lord Penrose at pp. 852C- 853C).  This was particulary so here because the decision as to how much detail ought to be given involved a matter of judgment on the part of the architect.  This was not one of those rare cases where a school of thought espoused by responsible practitioners did not withstand rational analysis.

[76]      In my opinion it would not be right to conclude that only Mr Canavan had the requisite experience to offer an opinion on the critical issue.  While I agree with Mr Young that the evidence of Mr Fleming’s design experience was in very general terms, Mr Young can have been in no doubt that Mr Fleming was proffering himself as someone who possessed the experience necessary to give an expert opinion on the critical issue.  If his experience was to be questioned it ought to have been squarely challenged during cross‑examination.  Given that that was not done, I think the fair and proper course is to treat the general evidence which Mr Fleming did give as being sufficient to set up the relevant expertise.

[77]      I did not find Mr Broome’s review of the provisions of the Appointment, or his examination of the principles in Arnold v Britton, or the authorities discussing design liability, to be of any real assistance in resolving the matter in dispute.  The critical issue does not turn on rival constructions of the Appointment’s provisions.  There is no dispute that the defenders were bound to design the works, including the tanking.  However, it was common ground that they did not require to set out every detail required to construct their design.  An architect could assume that a contractor possessed relevant trade skills and experience which he would use in giving effect to the architect’s design.  That was a fortiori the case where, as here, the architect was entitled to proceed on the basis that specialist applicators would be involved.  Where the experts differed was that in Mr Fleming’s opinion the tanking at the perimeter column encasements was so difficult and atypical that it was one of the features which had to be detailed by the architect.  In contrast, Mr Canavan’s view was that in the whole circumstances an architect exercising the requisite standard of care could have proceeded on the basis (i) that a competent installer would not need to be given detailing for this part of the tanking over and above the tanking drawings the defenders issued and CETCO’s standard details;  (ii) that if in fact the installer considered that he did need such detailing he would request it.  There were systems in place for such requests to be made and responded to.  A competent installer would be aware of the limits of his expertise and experience.  He would be aware whether he would be able to install tanking at the peripheral column encasements on the basis of the standard detailing available to him from the architect and the suppliers.

[78]      I am not persuaded that there is any good reason for holding the evidence of either expert on the critical issue to be other than credible and reliable.  The position therefore is that the court is faced with two bodies of credible and reliable testimony which support differing opinions as to whether the course adopted was or was not in conformity with the required standard.  Whether an architect should spell out a specific detail of how his design is to be constructed, or be content with the provision of standard details in the knowledge that the installer has the opportunity to revert to him if he considers himself unable to complete the work without further guidance, involves an exercise of judgment.  I am satisfied on the basis of Mr Canavan’s evidence that in doing what they did in the circumstances of the present case the defenders were following a practice which would have been followed by a responsible body of architects experienced in carrying out services for projects of a similar size, scope and complexity to the Project.  I am not persuaded that this is one of those exceptional cases where a practice followed by responsible architects can be said not to stand up to rational analysis because it is not reasonable or responsible or cannot be logically supported.  In those circumstances it is not for the court to prefer one body of responsible professional opinion to another (Honisz v Lothian Health Board, supra, per Lord Hodge at para. 39;  Gordon v Wilson, supra, per Lord Penrose at pp. 852C- 853C).  It follows that the pursuer has failed to establish that the defenders breached clause 3.1 of the Appointment.

[79]      That is an end of the case.  However, lest it goes further, it is appropriate that I set out my views on causation and damages

 

Causation
[80]      Mr Broome submitted that the defenders’ breach caused or materially contributed to the ineffectiveness of the tanking system and the water ingress of 2009.  At the very least the breach had materially contributed to that single wrong or result.  They were accordingly liable for the whole damage (Grunwald v Hughes 1965 S.L.T 209;  McGillivray v Davidson 1993 SLT 693; Preferred Mortgages Ltd v Shanks [2008] CSOH 23, [2008] PNLR 20).  It had been open to the defenders to seek relief or contribution from any joint delinquent but they had not chosen to do so.

[81]      Mr Young did not dispute that if there had been a breach by the defenders and it had materially contributed to the ineffectiveness of the tanking and the 2009 ingress the pursuer would be entitled to recover damages representing the whole damage suffered.  However he submitted that the pursuer had failed to prove that the defenders’ breach did materially contribute to the damage.  It had not led evidence from the SMC tanking team that they would have followed the defenders’ detailing for column encasements had it been provided.  It could not be assumed that the team would have followed it given the failures to adhere to the details which the defenders did provide.  The tanking team had omitted render, and some of the Bentonite fillets between the DPM and the Voltex, each of which had been shown in the defenders’ details.  Contrary to the CETCO standard guidance the team had omitted Bentonite fillets from internal corners.  In those circumstances the court ought to conclude that further detailing would have been likely to have been ignored.

[82]      If the pursuer had made good its case of breach of contract I would have accepted that that breach caused or materially contributed to the tanking system being ineffective and to the ingresses in 2008 and 2009.  While I accept Mr Canavan’s evidence that there were also other causes (for which the defenders were not responsible), I would have concluded that the defenders’ breach was an effective cause of the pursuer’s loss; and that the pursuer was entitled to recover the whole of that loss from the defenders.  I would have rejected Mr Young’s submission to the contrary.  I would not have accepted that any specific detailing would have been likely to have been ignored by the defenders.  The detailing which was provided was not ignored.  Aspects of it were not complied with, but many other aspects were followed.

 

Damages
[83]      If breach of contract by the defenders caused or materially contributed to the tanking defects it was common ground that the pursuer suffered loss and damage.  However, the quantum of that loss and damage was in issue.

[84]      Remedial works to the system were carried out by SMC at a cost of £686,812. SMC incurred M&E services designer fees of £1,612.  It maintained it had additional overhead costs relating to the remedial works of £33,355.  SMG granted an extension of a warranty to Acergy in respect of the reception area.  The pursuer valued at £150,000 the additional liability assumed by SMG under the warranty.  The pursuer suffered a further loss of £313,983.28 because of rent abatement while the remedial works were ongoing.

[85]      Mr Broome submitted that each of the losses claimed had arisen because of the defective tanking.  It was nothing to the point that a related company, SMG, had paid for the work necessary to remedy the loss.  That was res inter alios acta so far as the defenders were concerned (McLaren Murdoch & Hamilton Ltd v Abercromby Motor Group Ltd 2003 SCLR 323, per Lord Drummond Young at para. 34).  There was no basis in the evidence for concluding that SMG made the payments and granted the additional warranty in order to compensate the pursuer for a breach (or breaches) of contract on SMC’s part which materially contributed to the defective tanking.  SMG’s overhead costs had been incurred because of the need for the remedial works.  The evidence disclosed how the figure of £33,355 had been arrived at, and it was clear from Mr Huntley’s evidence that the figure did not exceed the level he would have expected for overheads relating to the remedial costs expended.  The valuation of £150,000 for the extension of the warranty was a reasonable estimate of the risk which had been assumed by SMG in granting it.  It was supported by Mr Huntley’s estimate of the current‑day costs of carrying out remedial works in the reception area should they be needed.

[86]      Mr Young accepted that the rent abatement costs ought to be recoverable.  He agreed that the £686,812 and £1,612 were remedial costs incurred by SMG.  He did not accept that overhead costs of £33,355 had been properly vouched.  Nor did he accept that the warranty extension granted in respect of the reception area had a value of £150,000.  He disputed that any of the costs incurred or the estimated value of the liability assumed by SMG ought to be recoverable by the pursuer.  There was no evidence that the pursuer was under any obligation to reimburse SMG in respect of these items.  It was entirely possible that SMG had incurred the expenditure, and assumed the warranty liability which it had, in recognition of the fact that it (through its construction division, SMC) was a joint wrongdoer.  If that was so the pursuer had already been compensated by SMG for those losses.  In order to avoid double compensation credit had to be given for those sums when assessing the defenders’ liability in damages.

[87]      Had the pursuer succeeded in establishing liability I would have been satisfied that it sustained a very substantial loss as a result of the defenders’ breach.  It owned the office at the date of practical completion.  On that date the vertical tanking was defective, with the result that the pursuer did not obtain what it ought to have obtained had the defenders duly performed the contract.  The pursuer suffered that loss at that time.  There is no question of it having been sustained by a third party rather than by it.  This is not a case of a loss falling into a “black hole”.

[88]      In my opinion the measure of the pursuer’s loss is the costs of remediation together with any other losses resulting from the pursuer not having had full use and enjoyment of the office until the defects were remedied.  The complication here is that the remedial costs were actually incurred not by the pursuer but by a related company.  However, in my opinion the fact that SMG organised and paid for the remediation is res inter alios acta.  It does not affect the defenders’ liability to make reparation to the pursuer for the loss and damage caused by the breach.

[89]      I did not understand Mr Young to dispute that, in general, the res inter alios acta principle ought to apply where the costs of remedying damage a pursuer had suffered had been met by a third party.  He argued that the specialty in the present case was that payment of the costs might in fact have been made by SMG to compensate the pursuer for a breach of contract on its part (which breach may have materially contributed to the relevant loss and damage).  The difficulty for Mr Young is that no such case was pled, and there was no evidence that that was the reason why the pursuer’s parent company spent time and money on the remedial works.  (Indeed, the suggestion was not even one which was put to the pursuer’s witnesses).  In those circumstances I am not persuaded that there is any good reason to depart from the res inter alios acta principle.

[90]      I turn then to the particular elements of the claim which were disputed.  I am satisfied on the evidence that reasonable overheads costs of £33,355 were incurred by SMG in relation to the remedial works.  While I am also satisfied that, as elsewhere, the vertical tanking at peripheral columns is likely to have been defective in the reception area, I am not persuaded that the £150,000 claimed is a reasonable estimate of the pursuer’s loss in that regard.  The initial Development Agreement Collateral Warranty was not produced.  There was no evidence as to the period of that Warranty or of any of its other terms.  Only the agreement to extend it was available to the court (JB 22).  I am far from satisfied that Mr Irvine’s £150,000 guesstimate of the additional financial risk assumed by SMG provides a good indication of loss suffered by the pursuer in respect of defects under the reception area.  In my opinion a more helpful starting point is Mr Huntley’s cost estimate of £151,194.26 if remedial works were to be effected in the area at the present date.  However, on the evidence such works might not prove to be necessary;  indeed, Mr Irvine thought it unlikely that they would be.  Had I been awarding damages I would have been inclined to wield a broad axe in relation to this head of claim.  I would have awarded the pursuer £75,000 to take account of the risk that such remedial works might be needed in the future.

[91]      It follows that had I found the defenders to be in breach I would have awarded total damages of £1,110,762.28.  I would have put the case out by order to enable parties to make submissions (failing agreement) as to how interest should be applied to the constituent elements of that sum (i.e. remedial costs of £686,812, M&E fees of £1,612, overheads of £33,355, £75,000 in respect of damage to the reception area, and £313,983.28 rent abatement losses).

 

Disposal
[92]      I shall sustain the pursuer’s fifth plea‑in‑law and repel the defenders’ first plea‑in‑law (the pleas relating to prescription);  I shall also repel the pursuer’s first, second, third and fourth pleas‑in‑law, sustain the defenders’ fourth plea‑in‑law, and pronounce decree of absolvitor.  I shall reserve meantime all questions of expenses.