STATUTORY DUTIES AND LIABILITIES OF AN

ENGINEER IN CONSTRUCTION PROJECTS

Presented by K.K. Cheung, Partner and Joseph Chung, Partner
Construction and Arbitration Practice Group
Presented on 17 June 2014

Todays Roadmap

Introduction to Engineers duties KK

Statutory Duties KK
Contractual Duties & Authority Joseph
Engineer as Certifier Joseph
Engineers liability to contractor Joseph
Tort of Negligence KK
Standard of Care KK

Introduction (1)

Project Consultants include

Engineer
Architect
Quantity Surveyor
Project Manager
Claims Consultant

Todays talk will focus on the Engineer

Introduction (2)

Source of the Engineers duties:statute

contract
common law

Statutory Duties use of designation RPE (1)

The word engineer in everyday usage spreads outside

the traditional construction industry
what about the use of titles Registered Professional
Engineer or RPE?

The Engineers Registration Ordinance (ERO)

establishes a framework for the use of the title
Registered Professional Engineer or RPE
The system provides for:
registration of professional engineers
recognition of different disciplines within the profession
disciplinary control within the profession

The system is based on a central register. Those who

are not on the register, cannot describe themselves as
Registered Professional Engineer or RPE

Statutory Duties use of designation RPE (2)

ERO sets out the criteria for registration which includes

that the applicant: is a member of the HKIE or a member of an engineering
body acceptable by the Engineers Registration Board
has one years relevant professional experience
is ordinarily resident in Hong Kong
not subject of an inquiry committee or disciplinary order

Wrongful use of Registered Professional Engineer or

RPE: the Engineers Registration Board may apply to the Court
to restrain that person from wrongful use of the
designation
it is also a criminal offence. Maximum penalty - 1 yr
imprisonment and fine of HK$50,000

Statutory Duties Authorised Person (1)

In HK construction, the Government delegates part of the Governments building

control functions to statutorily recognised persons called Authorised Person (AP)
Under the Buildings Ordinance (BO), an AP must be appointed for building works and
street works where the AP will be the coordinator of such works
AP:
an individual not a company
can be an architect, engineer or surveyor
AP carries with him certain statutory duties and functions
Buildings Ordinance
AP is required to
supervise the building works or street works in accordance with the
supervision plan
notify BA of any contravention of regulations which would result from the
carrying out of any work shown in any plan approved by BA in respect of
the building works or street works
comply generally with the Buildings Ordinance
Building (Administration) Regulations
AP in respect of any building works or street works is to supply to the
contractor every plan approved by BA

Statutory Duties Authorised Person (2)

the AP for any building works or street works is to provide periodic
supervision and make such inspections as may be necessary to
ensure that the building works or street works are being carried
out in accordance with the BO and approved plans
the AP for any building works or street works is to submit to the
BA within seven days of his receipt of a notice from the contractor
that he has been ceased to be appointed in respect of the subject
works
the AP is to supply information that BA requires with regard to the
plans submitted by the AP
no AP shall act as a contractor or deal in building materials or
receive any payment, commission, advantage or benefit of any
kind whatsoever, either directly or indirectly, from any contractor,
sub-contractor or supplier of building materials or other goods
used in or in connexion with any building works or street works
without disclosing the fact, in writing, to his client
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Statutory Duties Authorised Person (3)

OFFENCES
Section 40(1AA)
knowingly contravenes section 14(1) (commence or carry out building
works without approval of plans and consent to commence works)
maximum fine: $400,000
maximum imprisonment: 2 years
maximum $20,000/day for continuing offence
Section 40(2A)
permits or authorises to be incorporated in or used in the carrying out
of any works any materials which are defective or do not comply with
the BO
deviates from the approved plan
knowingly misrepresents a material fact in any plan, certificate, form,
report, notice or other document given to the BA
maximum fine: $1 million
maximum imprisonment: 3 years
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Statutory Duties Authorised Person (4)

Section 40(2AA)
fails to notify the BA of any contravention of regulations which would
result from the carrying out of any work shown in the approved plan in
respect of building works
maximum fine: $250,000
no imprisonment
defence: he did not know, nor could reasonably have discovered, the
contravention
Section 40(5)

any person, being a person directly concerned in or with any

building works or street works, who permits the commission of
any offence specified in this section shall be deemed to be
guilty of such offence and shall be liable to the penalty
prescribed therefor
[Also new offences relating to minor works]
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Statutory Duties Authorised Person (5)

Section 40(6)
where an offence under this Ordinance committed by a body corporate is
proved to have been committed with the consent or connivance of, or to
be attributable to any neglect or default on the part of, any director,
manager, or other officer concerned in the management of the body
corporate, or any person purporting to act in any such capacity, he, as
well as the body corporate, is guilty of the offence
Section 40(6A)
where an offence under this Ordinance committed by a partner in a
partnership is proved to have been committed with the consent or
connivance of, or to be attributable to any neglect or default on the part
of, any other partner of the partnership, that other partner is also guilty of
the offence
Section 40(8)
any prosecution under the provisions of this Ordinance may be
commenced within 12 months of the commission of the offence or within
12 months of the same being discovered by or coming to the notice of
the BA

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Statutory Duties Authorised Person (6)

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AP is also required to follow the Practice Notes for

Authorised Person (commonly referred to as PNAP)
issued by BA

Contractual Duties & Authority (1)

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Civil Engineers role under infrastructure and engineering

contracts is similar to that of Architects under building
contracts. In cases of building contracts, the engineer may
serve as consultant to the architect e.g. structural and E&M
In a typical Engineers terms of engagement and
construction contract, the Engineer will have two roles: agent of the Employer;
certifier
These will be looked at in turn
The starting point for defining the duties owed by the
Engineer to the Employer and the Engineers authority is to
look at the terms of engagement

Contractual Duties & Authority (2)

Engineers authority

The scope of authority of the Engineer is strictly limited to the

terms of his engagement
Engineers authority can be: express; or
implied

Instances of presence or absence of implied authority: invitation to tender contains specification, plans, drawings and
BQ
no implied warranty that those documents are accurate
Engineer has no implied authority to warrant their accuracy

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Contractual Duties & Authority (3)

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Engineer has no implied power to bind the Employer by acceptance of a tender

As it is part of the normal duty of the Engineer to supervise work, the Engineer
has implied authority to ensure that the work is carried out in accordance with the
construction contract
Engineer has no implied authority to waive strict compliance with the construction
contract
John Liang Construction Ltd v County and District Properties Ltd (1982)
JL were contractors engaged by CDP to construct a shopping
development
JCT standard form of contract
fluctuation clause provided that QS and JL may agree what shall be
deemed to be the net amount payable to or allowable by JL in respect of
occurrence of any event specified in the contract
the contract required notice of the relevant event to be given by JL as
condition precedent
JL did not give such notice. Nevertheless, the QS agreed the amount on
the claim waiving the absence of the notice
Held: QS had no authority to waive the notice requirements

Contractual Duties & Authority (4)

Engineer has no implied authority to vary the works or to

order extras. This explains why most construction contracts
will contain an express variation clause
Engineer has no implied authority to settle disputed claims
with a contractor on behalf of the employer (Kwan Yiu
Cheong alias Kwan Yiu (t/a Chong Tai Construction Co) v
Efficiency Industrial Works Limited (1970))
Consequence of exceeding scope of authority
Employer not liable for the Engineers acts in question
Employer may ratify act

Engineer would be personally liable to the contractor for breach

of warranty of authority
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Contractual Duties & Authority (5)

Engineers Duties
The terms of engagement will usually set out
specific duties of the Engineer. They would also
usually impose a general duty as follows:exercise all reasonable professional skill, care
and diligence in the performance of all and
singular the Services

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Contractual Duties & Authority (6)

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NEC Professional Services Contract:

Clause 10:The Employer and the Consultant shall act as stated in this
contract and in a spirit of mutual trust and co-operation.
Section 2 of PSC sets out the core responsibilities of the
parties. By Clause 21.2:The Consultants obligation is to use the skill and care
normally used by professionals providing services similar to
the services
although Clause 21.2 does not contain the word
reasonable, a proper interpretation of that Clause would
imply a quality of reasonableness in the obligations

Contractual Duties & Authority (7)

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The duties of the Engineer can by and large be

categorised as:pre-contractual design
post-contractual certification, supervision,
carrying out inspections, legal compliance and
acting promptly

Contractual Duties & Authority (8)

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The Engineer has a duty to carry out his designs with

reasonable skill and care
Whilst the general principle is that the Engineer does not
guarantee that his designs will be fit for the intended purpose
of the works, this principle is often rebutted on the terms of
the subject contracts
Typical problems arising with designs that may provide a
good cause of action against the Engineer: the design adopts out of date methods
the design is not in accordance with the employers
requirements
they do not comply with relevant laws/regulations

Contractual Duties & Authority (9)

the design simply fails to work
Ronald Claud Hardwick v Spence Robinson (1975)
RH engaged SR as architects to design and supervise
the construction of their house at Silver Strand Beach
SRs design of the drainage system made no calculation
for rainfall and nor did it make provision for blockage
during heavy rain
System designed and constructed was found to be
inadequate to cope with great quantities of water and
the rubble that came down the hillside during heavy
rains
Held: SR was negligent

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Contractual Duties & Authority (10)

the design involves specification of unsuitable materials
Richard Roberts Holdings Limited v Douglas Smith Stimson
Partnership (1988)
RRH were the owners of a dyeworks in Leicestershire
RRH engaged DSS as architect for the design of
alterations to the dyeworks
a consultant engineer specialising in dyeing equipment
in particular, designing effluent tank, was not retained
DSS designed the effluent tank and used sub-standard
lining
in the event, the tank lining failed shortly after
installation

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Contractual Duties & Authority (11)

Held:
DSS were employed to act as architects for the creation of the
dyeworks and to design the tanks. If they wished to limit their role,
they should have done so expressly and in writing
DSS had fail adequately to investigate the lining proposed by the
supplier. DSS did not know anything about linings. If they felt that they
could not form a reliable judgment about a lining for the tank, they
should have informed RRH of that fact and advised them to take other
advice

The Engineers duty with regard to design is of a continuing nature and

extends until completion
the architect's duty of design is a continuing one, and it seems to
me that the subsequent discovery of a defect in the design, initially
and unjustifiably thought to have been suitable, reactivated or
revived the architects' duty in relation to design and imposed upon
them the duty to take such steps as were necessary to correct the
results of that initially defective design. (London Borough of Merton
v Lowe (1981))
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Contractual Duties & Authority (12)

The Engineer has a duty to supply drawings and information

within a reasonable time
what is a reasonable time?
this is a question of fact depending on the individual
circumstances on identifying the point of time at which the
contractor requires the information

By Clause 6(3) of the Government Civil Engineering Works:The Engineer shall issue to the Contractor from time to time
during the progress of the Works such other Drawings and
Specification as in the opinion of the Engineer shall be
necessary for the purpose of the execution of the Works and
the Contractor shall be bound by the same.

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Contractual Duties & Authority (13)

Is the Engineer under a duty to give instructions as to methods of working and
temporary works?
no. Unless the contract expressly stipulates to the contrary, the contractor is
entitled to choose his own methods of working or temporary works
in general, the Engineers duty is confined to stipulating the final permanent result
required and if this has already been done, he is under no further duty to assist
what if asked by contractor permissive vs instructive
contractors may seek to demand such instructions or even threaten to discontinue
working unless told what to do - there is no justification for this
City of Moncton v Aprile (1980)
contractor was laying pipes
contract required contractor to submit his proposed working methods for effecting
a tunnel crossing of a river for approval
after two attempts at the crossing had failed, the contractor refused to continue
working without specific instructions on what to do from the Engineer
the employer terminated the contract with the contractor on the ground that the
contractor had failed to proceed expeditiously
Held: there was no duty for the Engineer to give instructions and hence the
termination was valid

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Contractual Duties & Authority (14)

Can the Engineer then simply turn a blind-eye if he sees the
contractor using or proposing a method of working which he
considers potentially unsafe or likely to fail in its intention?
The Engineers duty to the employer will require him to balance
the advantage to the employer of the method he himself prefers
against the fact that by intervening and giving an instruction, he
may expose the employer to a financial claim if the contractor can
show that his own method would have been equally efficacious
the following circumstances may warrant the Engineers
intervention in the contractors methods of working or temporary
works: contractors methods of working are contrary to what is
specified in the specification
contractors method is likely to compromise the quality of the
permanent work
contractors method is unsafe
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Contractual Duties & Authority (15)

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Supervision - three principal areas: prevention, detection and correction of any defective work
intervention in the contractors working methods or temporary works
correction of original design errors
The Engineer is required to exercise due care during construction to
ensure that the materials and workmanship conform to the contractual
requirements
A higher degree of supervision will be required where inferior work by the
contractor has already been seen or reported:I think that the degree of supervision required of an architect must be
governed to some extent by his confidence in the contractor. If and
when something occurs which should indicate to him a lack of
confidence in the contractor, then, in the interest of his employer, the
standard of his supervision should be higher. (Sutcliffe v
Chippendale and Edmondson (a firm) (1971))

Engineer as Certifier (1)

Apart from being the employers agent, there will be certain circumstances in
which the Engineer will act as a certifier
Many matters may arise in the course of the execution of a building contract
where a decision has to be made which will affect the amount of money which the
contractor gets. Under the RIBA contract many such decisions have to be made
by the architect and the parties agree to accept his decisions. For example, he
decides whether the contractor should be reimbursed for loss under Clause 11
(variation), Clause 24 (disturbance) or Clause 34 (antiquities); whether he should
be allowed extra time (Clause 23); or when work ought reasonably to have been
completed (Clause 22). And, perhaps most important, he has to decide whether
work is defective. These decisions will be reflected in the amounts contained in
certificates issued by the architect.
The building owner and the contractor make their contract on the understanding
that in all such matters the architect will act in a fair and unbiased manner and it
must therefore be implicit in the employer's contract with the architect that he shall
not only exercise due care and skill but also reach such decisions fairly, holding
the balance between his client and the contractor (Sutcliffe v Thackrah (1974))

As between the employer and the contractor, the employer does not warrant that
the certifier will be skilful or confident
the employer only warrants that the certifier will be honest and independent in
exercising his function as a certifier

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Engineer as Certifier (2)

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The employer will therefore be in breach of contract with the

contractor if it exerts pressure or seeks to influence the Engineer in
reaching his decision as a certifier
The Engineer owes a duty to the employer to act fairly in the
certification process and he is to exercise skill and care in so acting
The Engineer is not an arbitrator in performing his role as a certifier
negligent certification will amount to breach of the duty of skill and
care
On the other hand, the certifier owes no direct duty to the contractor
as there is no direct contract between the certifier and the contractor
usually, a construction contract will make provision for the
contractor to challenge a certificate which they disagree. The
contractor will have direct course against the employer for
erroneous certificate and for breaches associated with the
certification process

Engineer as Certifier (3)

Pacific Associates v Baxter (1988)

Ruler of Dubai was the employer and Pacific was the contractor for dredging and
reclamation work in the Persian Gulf. Baxter was the Engineer
FIDIC International Civil Engineering Conditions were used which had an
arbitration clause
Condition 86 contained a disclaimer provision:neither any member of the Employers staff nor the Engineer nor any of his staff,
nor the Engineers Representative shall be in any way personally liable for the acts
or obligations under the Contract, or answerable for any default or omission on the
part of the Employer in the observance or performance of any of the acts, matters
or aims which are herein contained.

the work was delayed and Pacific may claims for EoT and additional expenses
which were rejected by the Engineer. The claims were ultimately referred to
arbitration and the Employer paid 10 million in settlement of Pacifics claim
then Pacific commenced legal proceedings against the Engineer for 45 million
being the balance unrecovered from the Employer alleging negligence and/or
breach of duty by the Engineer to act fairly and impartially in administrating the
contract
the Engineer sought to strike out the Statement of Claim on the ground that it did
not disclose a reasonable cause of action and was an abuse of the Courts
process
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Engineer as Certifier (4)

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Held: application allowed

the fact that there was a disclaimer and also an arbitration clause for
challenging a certificate issued by the Engineer suggested that the
Engineer did not assume a responsibility to the contractor
often construction contracts contain an arbitration clause. Where this is
not the case, it may be arguable that the decision in Pacific Associates is
not applicable
The decision in Pacific Associates was followed in the Hong Kong decision of
Leon Engineering and Construction Co Ltd v Ka Duk Investment Co Ltd
(1989)
Leon sued the employer on a building contract and sought to join the
Architect as a 2nd defendant
Leon claimed that the Architect was negligent that the Architect owed a
duty of care to the main contractor to give proper, timely and impartial
consideration to the contractors claims and issue all certificates in
accordance with the building contract. In performing those duties, Leon
claims that the Architect had been negligent

Engineer as Certifier (5)

In refusing Leons application to join the Architect, the
Court held:The principle which I extract from the Court of
Appeals decision in Pacific Associates v Baxter is one
which I would state in these terms: Where, first, there
is adequate machinery under the contract between the
employer and a contractor to enforce the contractors
rights thereunder and, secondly, there is no good
reason at tender stage to suppose that such rights and
machinery would not together provide the contractor
with an adequate remedy, then, in general, a certifying
architect or engineer does not owe to the contractor a
duty in tort coterminous with the obligation in contract
owed to the contractor by the employer...
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Engineers liability to contractor?

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A certifier owes no duty of care to the contractor

But there may be a cause of action against a certifier for wrongful interference with
contract
essential ingredients: knowledge of the existence of the contract
intention to interfere with the performance of it
doing of unlawful acts
causing a breach of the contract or the non-performance of primary obligation
in consequence
Lubenham Fidelities & Investment Co v South Pembrokeshire District Council
(1986)
Architects made wrong deductions in interim certificates
Court held:We would not accept the broad contention that an architect, in effecting an
interim valuation under this form of building contract, could never in any
circumstances expose himself to a claim under this head of tort.
John Mowlem & Co plc v Eagle Star Insurance Co Ltd (1992)
no decided cases yet holding the Architect/Engineer liable

Tort of Negligence (1)

Essential ingredients:duty of care

breach of that duty
breach caused damage
loss foreseeable

Physical damage
Economic loss
sufficient proximity between the parties and that it is
just and reasonable to impose liability
assumption of responsibility

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Tort of Negligence (2)

Relationship with contractual duty

concurrent liability
usually not more extensive than that imposed by the
terms of contract between the parties

Why is it necessary to pursue 2 causes of action?

different limitation periods
contract
tort

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: 6/12 years from breach

: 6 years from damage

Standard of Care (1)

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The Bolam test:- whether the defendant has acted in accordance with
practices that are regarded as acceptable by a respectable body of
opinion in the same profession
Bolam v Friern Hospital Management Committee (1957)
Where you get a situation which involves the use of some special
skill or competence the test is the standard of the ordinary
skilled man exercising and professing to have that special skill. A
man need not possess the highest expert skill it is sufficient if
he exercises the ordinary skill of the ordinary competent man
exercising that particular art.
The law does not require a professional man that he be a paragon,
combining the qualities of polymath and prophet
To be liable, the Engineer must have failed to exercise the standard of
care required of him

Standard of Care (2)

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The normal measure of an Engineers skill is that of an

ordinarily skilled Engineers
If the majority of Engineers would (under the circumstances)
have done the same thing, this normally provides a good
defence
a defendant charged with negligence may be able to clear
himself if he shows that he acted in accord with general and
approved practice
however, standard practice in the industry may not be
enough to exonerate a defendant from liability
Where there is no one accepted practice, the Engineer will not
be negligent if he acted in accordance with a practice accepted
to be proper by a responsible body of Engineers, even if
another body of competent professional opinion considered the
practice wrong

Standard of Care (3)

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If a course proposed by the Engineer is in accordance

with competent practice but has risk, the ordinarily
competent engineer should warn his client of such risks
If the possibility of damage emerging is reasonably
apparent, then to take no precautions is negligence
even though others in like circumstances had in the past
not taken precautions
Error of judgement does not equate negligence
Significant departure from Code of Conduct is prima
facie evidence of falling below the standard of care

Thank you for your participation

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Any Questions?