THE BUILDING CONTROL AMENDMENT REGULATIONS. Martin Waldron BL

MARTIN WALDRON BL FCIArb MSCSI MRICS Accredited Adjudicator & Mediator Law Library The Four Courts Dublin 7 +353(1)8177865 +353(86)2395167 www.waldron.ie martin@waldron.ie THE BUILDING CONTROL AMENDMENT REGULATIONS Legal Implications for Assigned Certifiers By Martin Waldron BL FCIArb Anthony MSCSI Hussey MRICS Arbitrator, Solicitor Accredited Chartered Adjudicator Arbitrator & Mediator SCSI Seminar on Construction Contracts Act June 17 th 2016

Topics General principles of legal liability The duties of the Assigned Certifier incl. Ancillary Certifier issues Mitigation of liability Summary

LEGAL PRINCIPLES Legal liability Contract Tort Negligence Negligent misstatement Breach of statutory duty

LEGAL PRINCIPLES Legal liability Contract Tort Negligence Negligent misstatement and pure economic loss Breach of statutory duty

LEGAL PRINCIPLES Contract Express terms imposing liability Express terms limiting liability Implied terms imposing/limiting liability Officious bystander test Business efficacy test

LEGAL PRINCIPLES Legal liability Contract Tort Negligence Negligent misstatement and pure economic loss Breach of statutory duty

LEGAL PRINCIPLES Negligence Donoghue v Stevenson [1932] AC 562 The rule that you are to love your neighbour becomes in law, you must not injure your neighbour; and the lawyer's question, Who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law, is my neighbour? The answer seems to be persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question.

LEGAL PRINCIPLES Professional Negligence Dunne v The National Maternity Hospital [1989] IR 91: paraphrased (a) A professional is negligent only if guilty of such failure as no other practitioner of equal specialist or general status and skill would be guilty of if acting with ordinary care. (b) Negligence is established by proving a deviation from a general and approved practice only upon proving also that the course taken was one which no other professional of like specialisation and skill would have followed when taking the ordinary care required from a person of his qualifications (c) Even if (b) is defeated, a professional is nevertheless negligent if the plaintiff establishes that such practice has inherent defects which ought to be obvious to any person giving the matter due consideration. (d) An honest difference of opinion between professionals as to which is the better practice does not ground an action in negligence. (e) It is merely for a judge or jury to decide whether the practice, on the evidence, complied with the careful conduct of a professional of like specialisation and skill to that professed by the defendant. (f) Where there is an issue of fact, as to whether a particular practice is or is not general and approved, that issue must be left to the judge or jury.

LEGAL PRINCIPLES Professional Negligence in Construction Crowley v Allied Irish Banks [1988] ILRM 225: Architect, as a third party to the proceedings, found 30% liable as a concurrent wrongdoer for designing a flat roof from which a child fell while playing football. Overturned in the Supreme Court on the basis that the Defendants (AIB) were aware that children played on the roof yet they did nothing to stop this. See: mitigation section for Supreme Court s commentary on limitation of liability

LEGAL PRINCIPLES Legal liability Contract Tort Negligence Negligent misstatement Breach of statutory duty

LEGAL PRINCIPLES Negligent misstatement McGee v Alcorn & Anor [2016] IEHC 59 There is a principle in Irish Construction law that a party will not be able to recover damages for pure economic loss (damage to their property in absence of damage to other property or personal injury) pertaining to a property in a negligence action; however, it s application is less than certain. There is one large exception to this principle and it arises in the instance of negligent misstatement where pure economic loss is recoverable.

LEGAL PRINCIPLES Negligent misstatement McGee v Alcorn & Anor [2016] IEHC 59 There are two leading Irish authorities on this matter that need to be briefly considered before looking at the recent case of McGee v Alcorn: Ward v McMaster [1985] IR 29 & [1988] IR 337 - OLD Glencar Exploration v Mayo Co Co (No. 2) [2002] 1 IR 84 - NEW

LEGAL PRINCIPLES Negligent misstatement Ward v McMaster [1985] IR 29 & [1988] IR 337 The facts The plaintiffs purchased a house from the defendant, with a loan from their local authority (where the local authority engaged the services of an auctioneer to carry out the service that would normally be carried out by a building surveyor), only to discover later that the property had numerous defects.

LEGAL PRINCIPLES Negligent misstatement Ward v McMaster [1985] IR 29 & [1988] IR 337 The facts They sued both the builder for negligence for the works it carried out on the house. They also sued the local authority for using an incorrect professional to survey the property prior to granting the loan.

LEGAL PRINCIPLES Negligent misstatement Ward v McMaster [1985] IR 29 & [1988] IR 337 Decision Costelllo J in the High Court found in favour of the plaintiffs for the pure economic loss suffered. The local authority appealed and the Supreme Court dismissed the appeal. The decision was primarily based on the special relationship between the parties. The Supreme Court applied the test from an English case Anns v Merton London Borough Council [1978] AC 728 in reaching its decision:

LEGAL PRINCIPLES Negligent misstatement Ward v McMaster (Anns v Merton London Borough Council): Test 1. Is there a sufficient relationship of proximity between the parties such that the wrongdoer ought to have considered in its reasonable contemplation that its carelessness may be likely to cause damage to the other party, if so a prima facie duty exists; and 2. This being the case, are there any factors that ought to negative or reduce the scope of the duty or the class of persons to whom the duty is owed (public policy reasons).

LEGAL PRINCIPLES Negligent misstatement Glencar Exploration v Mayo Co Co (No. 2) [2002] 1 IR 84 The law as stated by the Supreme Court in Ward v McMaster was thrown into doubt in Glencar where Keane CJ, as he then was, rejected the recovery of pure economic loss in negligence per the test from Anns, stating that: To hold otherwise would be to expose the original seller to actions from an infinite range of persons with whom he never had any relationship in contract or its equivalent.

LEGAL PRINCIPLES Negligent misstatement Glencar Exploration v Mayo Co Co (No. 2) [2002] 1 IR 84 He did soften the blow by stating that recovery could be possible in cases of negligent misstatement. It is very possible that the statement by the council, via their auctioneer agent, in Ward v McMaster would have been accepted by a court under this stricter test as a negligent misstatement and so the result would have been the same.

LEGAL PRINCIPLES Negligent misstatement Glencar Exploration v Mayo Co Co (No. 2) [2002] 1 IR 84 Keane CJ did nonetheless restrict the recoverability of damages for pure economic loss and also applied a different 3-stage test to establish liability. The third limb of the test being to consider whether, in all the circumstances, it is just and reasonable that the court should impose a duty of a given scope on the defendant for the benefit of the plaintiff

LEGAL PRINCIPLES Negligent misstatement McGee v Alcorn & Anor [2016] IEHC 59 The facts The defendant was an architectural technician who provided certificates stating that he had inspected the foundations and that they were sound. In fact the foundations were manifestly unsound.

LEGAL PRINCIPLES Negligent misstatement McGee v Alcorn & Anor [2016] IEHC 59 The decision O Malley J held that the defendant was liable for the economic loss suffered by the plaintiff; on the grounds of negligent misstatement; the certificate being the negligent misstatement.

LEGAL PRINCIPLES Legal liability Contract Tort Negligence Negligent misstatement Breach of statutory duty

LEGAL PRINCIPLES Breach of Statutory Duty Section 21 Building Control Act 1990: A person shall not be entitled to bring any civil proceedings pursuant to this Act by reason only of the contravention of any provision of this Act, or of any Order or Regulation made thereunder. Does not prevent the actions outlined above under contract. The actions are based upon breach of contract. The principle of negligent misstatement is founded upon an assumption of responsibility and it is my opinion that section 21 does not negate that principle.

LEGAL PRINCIPLES Breach of Statutory Duty The principle of negligent misstatement is founded upon an assumption of responsibility and it is my opinion that section 21 does not negate that principle. However, that may not be the end of the matter. There is an argument that the certificates are not statements meant to be relied upon by anyone other than the Building Control Authority; this is beyond the scope of this talk and it would be foolhardy for a professional to approach their practice on this basis.

LEGAL PRINCIPLES Legal liability Summary An Assigned Certifier may be open to an action for breach of contract it they fail to fulfill the terms of their contract that they would provide a building in compliance with the building regulations that results in damage to the building. An Assigned Certifier may be open to an action in negligence if they make a negligent misstatement that results in damage to the building. An Assigned Certifier may be open to an action in negligence if they carry out their work negligently and this results in damage to persons or property other than the building.

DUTIES OF ASSIGNED CERTIFIER Duties of the assigned certifier Section 6(2)(a)(i) of the Building Control Acts 1990-2007 building control regulations may make provision requiring the submission to building control authorities of certificates (in this Act referred to as certificates of compliance ) being certificates relating to compliance with the building regulations prior to the commencement of, during, and after the completion of, the construction of any buildings

DUTIES OF ASSIGNED CERTIFIER Duties of the assigned certifier - 2014 regulations Part II Commencement notice (article 7 amending article 9) 7-day notice (article 10 amending article 20A(2)) Part IIIC New Certificate of Compliance (article 12 inserting Part IIIC)

DUTIES OF ASSIGNED CERTIFIER Duties of the assigned certifier Pre construction, articles 7 2014 Regulations (commencement notice) 9. (1) A commencement notice shall be filed accompanied by (i) such plans, calculations, specifications and particulars as are necessary including (I) general arrangement drawings (IV) the preliminary Inspection Plan prepared by the Assigned Certifier, and (ii) the following certificates and notices in the appropriate forms set out in the Second Schedule (I) a Certificate of Compliance (Design) (III) a Certificate of Compliance (Undertaking by Assigned Certifier)

DUTIES OF ASSIGNED CERTIFIER Duties of the assigned certifier Certificate of Compliance (Undertaking by the Assigned Certifier) In accordance with the Code of Practice for Inspecting and Certifying Buildings and Works, or equivalent, I undertake to use reasonable skill, care and diligence, to inspect the building or works and to coordinate the inspection work of others and to certify, following the implementation of the inspection plan by myself and others, for compliance with the requirements of the Second Schedule to the Building Regulations insofar as they apply to the building or works to which the accompanying Commencement Notice together with the plans, calculations, specifications, ancillary certificates and particulars listed in the schedule thereto refer.

LEGAL PRINCIPLES Supervision or Inspection Brown & Brown v Gilbert Scott & Payne 1993 3 Con LR120 Inspection involves looking and noting, and possibly carrying our tests. Supervision, however, not only covers inspection, but also the issuing of detailed directions regarding the execution of the Works.

DUTIES OF ASSIGNED CERTIFIER Duties of the assigned certifier Post construction, articles 12 2014 Regulations (Certificate of Compliance on Completion) a Certificate of Compliance on Completion shall be submitted to a building control authority in the form specified for that purpose in the Sixth Schedule

DUTIES OF ASSIGNED CERTIFIER Duties of the assigned certifier Certificate of Compliance on Completion I now confirm that the inspection plan, drawn up having regard to the Code of Practice for Inspecting and Certifying Buildings and Works, or equivalent, has been undertaken by the undersigned having exercised reasonable skill, care and diligence, and by others nominated therein, as appropriate, on the basis that all have exercised reasonable skill, care and diligence in certifying their work in the ancillary certificates scheduled. Based on the above, and relying on the ancillary certificates scheduled, I now certify, having exercised reasonable skill, care and diligence, that the building or works is in compliance with the requirements of the Second Schedule to the Building Regulations, insofar as they apply to the building or works concerned.

DUTIES OF ASSIGNED CERTIFIER Duties of the assigned certifier The Minister s view Phil Hogan, who was the Minister for the Environment at the time of the 2013 draft of the Regulations, was very clear in his view of the matter: While this is likely to add a relatively small amount to the overall cost of a project, the consumer will ultimately benefit as at every stage they will have a rolling set of guarantees from those who can be held responsible for any issues that might subsequently arise The new approach establishes a clear chain of responsibility for building works prior to commencement through to completion

DUTIES OF ASSIGNED CERTIFIER Duties of the ancillary certifier Certificate of Compliance (undertaking by Ancillary certifier) Wording: NONE - in fact no undertaking required from Ancillary Certifiers There are versions issued by the RIAI, ACEI, Engineers Ireland, CIF and SCSI; which are mandatory for members of those bodies to use; it is arguable that they have no statutory basis and so are open to amendment despite the prohibition on so doing noted in the document cover note - however, given the limitation on persons who can be AC s, this is highly unlikely.

DUTIES OF ASSIGNED CERTIFIER Duties of the ancillary certifier Certificate of Compliance on Completion Wording: NONE There are versions issued by the RIAI, ACEI, Engineers Ireland, CIF and SCSI; which are mandatory for members of those bodies to use; it is arguable that they have no statutory basis and so are open to amendment despite the prohibition on so doing noted in the document cover note - however, given the limitation on persons who can be AC s, this is highly unlikely.

DUTIES OF ASSIGNED CERTIFIER Duties of the Assigned Certifier - Summary To ensure the documentation issued with the Commencement Notice will suffice for the purposes of the issuing of the Certificates of Compliance on Completion. To issue an undertaking (referred to as a Certificate of Compliance) to inspect the works and issue a Certificate of Compliance on Completion. To prepare and issue a Preliminary Inspection Plan. To issue a Certificate of Compliance on Completion. To coordinate the inspection of work by Ancillary Certifiers. To implement the Inspection Plan. To carry out its duties using reasonable skill, care and diligence.

MITIGATION EXISTING CONTRACTUAL PROVISIONS Mitigation - Limiting the Liability By the facts of the matter. By doing so in contract. By amending the Certificates - is this possible?

MITIGATION EXISTING CONTRACTUAL PROVISIONS By Fact Crowley v Allied Irish Banks [1988] ILRM 225: C.J. Finlay referring to Conole v Red Bank Oyster Company [1976] I.R. 191: Assuming that Fairway were negligent in sending forth an unseaworthy boat, reliance on this negligence must, on the authorities, be confined to those whom Fairway ought reasonably to have foreseen as likely to be injured by it. Furthermore, the negligence must be such as to have caused a defect which was unknown to such persons. If the defect becomes patent to the person ultimately injured and he chooses to ignore it, or to an intermediate handler who ignores it and subjects the person ultimately injured to that known risk, the person who originally put forth the article is not liable to the person injured. In such circumstances the nexus of cause and effect, in terms of the law of tort, has been sundered as far as the injured person is concerned.

MITIGATION EXISTING CONTRACTUAL PROVISIONS By Contract Include a clause in your terms of engagement excluding liability for any negligent actions of Ancillary Certifiers. Would an owner accept such a term?

MITIGATION EXISTING CONTRACTUAL PROVISIONS In Negligence Refer back to the law of negligence in the earlier slides. One purpose of the law of negligence - to provide a remedy for 3 rd parties affected by negligent actions, but where no contract exists between the 3 rd party and the wrongdoer. If contracting parties have excluded the liability for the negligent actions of Ancillary Certifiers that should be the end of that matter in contract, but it does not extend to 3 rd parties.

MITIGATION EXISTING CONTRACTUAL PROVISIONS In Negligence Refer back to McGee v Alcorn: It is highly probable that a certificate will be held to be a negligent misstatement if the building transpires not to be in compliance with the building regulations. On this basis the Assigned Certifier may find themselves liable for consequential damages including damages to the building itself.

MITIGATION EXISTING CONTRACTUAL PROVISIONS In Negligence It will be open to the Assigned Certifier to put forward the argument that they are not liable for the negligent actions of Ancillary Certifiers, for the reasons outlined earlier, only coordinated, etc However, would it not be better to amend certificates so the 3 rd party is unable to claim it was relying on the Ancillary Certifiers coming under the Assigned Certifier s remit. Is this permissible? Probably not. In addition, would it not be desirable to limit the assignability of the certificates. Is this permissible? Probably not.

MITIGATION EXISTING CONTRACTUAL PROVISIONS In Negligence and Contract Ancillary Certifiers - what is happening Insist that Ancillary Certifiers are signed up to like for like provisions. Use wording, in accordance with the documents prepared by the RIAI, SCSI, ACEI, Engineers Ireland, CIF, providing back to back liability the Assigned Certifier certificates. Provide undertakings on appointment.

MITIGATION EXISTING CONTRACTUAL PROVISIONS Mitigation Summary Limitation of liability in terms of the contract. Amendment of certificates to exclude liability for 3rd party services. Amendment of certificates to prohibit assignment. Engagement on the basis that Ancillary Certifiers provide certificates covering their own liability mirroring the liability of the Assigned Certifier s certificates. Engagement on the basis that Ancillary Certifiers carry adequate insurances. Reliance on the limitations in article 7 of the 2014 regulations. Getting comprehensive insurance, if they accept the final point above, then the matter should not be of as a great a concern.

SUMMARY DISPUTES SUMMARY 1. The Assigned Certifiers may find themselves liable in contract, in negligence generally or for making a negligent misstatement. 2. The primary duty of the Assigned Certifier is to certify the building as compliant with the building regulations. 3. This includes certifying the building as compliant with the building regulations, taking into consideration the Ancillary Certificates, prepared by other over whom the Assigned Certifier has limited control. 4. There is a real risk that the Assigned Certifier is taking on the liability of Ancillary Certifiers and they must address this through terms of their contract, amendment of their certificates, engagement of Ancillary Certifiers on a full like for like liability basis, or insurance.