1.            Architect commissioned on minimum terms basis for about 30 townhouses of three basic plan formats and three varying cladding types in several blocks on a site with varying levels excavated out of sloping land.  “Typical” plans elevations sections and retaining walls only provided – almost all at 1:100 – with 1:20 details at a few critical/typical junctions; generic specification with “choices” all left for construction phase.  Developer runs the whole of the tendering/contract admin/project management using NZS3915 (no “engineer to contract”):  directly contracts out the bulk excavation which is done as the tenders are submitted for the building construction.  Disputes arise when contractor seeks variations as follows:

a.            Recessed shower bases (ie cut 12mm or so into the walls – not detailed) compromise fireratings at timber inter-tenancy walls and require substantial nogging and adaption of prenailed frames

b.            Chosen kitchen extract requires ducting to end wall of unit, boxed out ceilings, adaption of prenailed  frames, additional gib fixing and finishing

c.             Elevations show where the different claddings were to be used, but there are additional costs of detailing to deal with changes in cladding types within the plan types (typical details apply to cladding types but not junctions between them)

d.            Additional costs to accommodate trimming of bulk excavation

e.            Additional costs of retaining walls varying between architect’s drawings and final levels created by bulk excavation.  Ditto various site-directed stormwater items required to suit.

f.             Additional costs because the bulk excavation creates a steep embankment for which no retaining wall is provided in the contract until after there is a subsidence and damage sustained to the main contractor’s half-built work.

2.            Architect engaged for gym with specialist sprung floor system.  After much research, local franchisee of global brand is appointed as nominated subcontractor, at least partly on the basis of the warranty available.  Construction proceeds to completion to everyone’s satisfaction and the warranty formalities are actioned.  A few short years afterward it is apparent that the floor is failing, and the only remedy is total replacement at a significant sum.  Local franchisee immediately folds, and the global principal is called upon to make good the warranty.  Polite letter by overseas airmail points out that the global entity unconditionally stands by their product but offers no underwriting of franchisee performance and therefore from their point of view the matter is at an end.

3.            Clients engage architect for fancy house on their existing site and on the basis of a very preliminary chat about psm costs which sets the preliminary budget.  Many changes by the client along the way  substantially add to costs, but the architect is determined to create a masterpiece nevertheless.  Clients independently seek builders estimate at an early stage, arrange finance and update architect on that basis, shift out to another house they owned and had previously rented out, and demolish existing house.  18 months delay while client diverts available funds into unrelated business opportunity.  Project recommences and is eventually put out to tender.  Wildly varying tenders received, but the lowest is significantly above any expectations:  the client abandons the project and seeks damages from architect.  (It later transpires that the business has sucked them dry also, and that they are content with minor alterations to their alternative accommodation instead).

4.            Structural engineer designs steel beam (ie calculations, PS1 and pencil sketches) for architect to incorporate into drawings.  House completed (to the delight of the clients), but the floor over the beam is very bouncy and gib ceilings crack.  Ceilings pulled away, beam strengthened, clients have to move out and pay for motel while the remediation is completed at engineer’s cost.  Architect’s final fee claim returned unpaid and with a short note that if it is pursued there will be a counter-claim.

In a recent newsletter to engineers there was a case study from the late 1970s that is still relevant – even to architects – today.  (a contribution from Board Member Michael Davis)

The Facts

An engineer was engaged by a contractor to design temporary works for a bridge project.  After some work was carried out it was discovered that it had been incorrectly set out.  The engineer agreed that they had made an error and to pay for the correction of the fault.  This was done as a verbal agreement, and the engineer did not consider it worthy of advising their insurer because the matter had been settled amicably.

The bridge was eventually completed but at the same time the contractor’s company went into liquidation.

The appointed receiver then laid a claim against the engineer alleging that their error had contributed to the delay and the company’s financial difficulties.

The liability that arose from this (including all the legal fees to defend the action) was not covered by the engineer’s insurance because they had not advised their insurer.

What are the Professional Liability Lessons?

In the first instance, the engineer should not have admitted liability – regardless of how obvious the error might have been.  The engineer should also have notified their insurers of the event as soon as they were aware of the likelihood of a claim being made against them.  Both issues are a standard requirement of your contract with an insurer for Professional Indemnity. 

Further, in trying to settle the matter quickly and amicably, the engineer should have obtained a written discharge from the contractor in respect to the claim and any matters arising from the claim.  In the absence of that, and of some insurance and legal advice on the wording of such an agreement, the engineer left the door open for a further claim.

A few examples of site and survey matters:

Architect designs a building to the maximum allowed by height to boundary controls.  One or more of the following happens (ie these have all happened on one or more jobs!) and the breach will result in replanning/rebuilding/resource consent with attendant costs and delays:

Owner points out boundary position lies just inside a thick wide hedge.  Regrettably, owner is mistaken, and the boundary is at the other side of the hedge, and at a much lower level.

Architect obtains survey and designs to it.  Surveyor wrongly draws up the site plan (or draftie wrongly reads it) to show the boundary at the top of a retaining wall instead of at its base.

Builder thinks the architect is a wally, and after discussion/agreement with the owner helpfully raises the floor level 200mm without the architect being told or noticing on a site visit.

Boundary levels are more or less consistent, except for a small section which has a pronounced dip about 1.2m across and 400mm deep.  Architect ignores it but the council doesn’t!

Construction proceeding smoothly, framed up with roof about to go on.  Some bright spark in the check-box department of the local council realises that they have not yet got a certificate from a surveyor to verify the HIRB and sends out a routine letter.  Surveyor duly reports to architect that the horizontal dimension between the building and the boundary is 700mm less than the architect used for the roofline.  Architect sadly discovers that at 1:100 scale the dimension line drawn parallel to the boundary is exactly 700mm from it!

Old house in poor condition is to be repiled, refurbished and extended along the boundary. Site levels are taken before the design is started.  Floor level of the extension is later designed to be level through to the existing old house.  After the repiler has straightened and levelled things up, the old house floor level where it meets the new extension is rather higher than before.

Here are some recent or memorable claims arising out of site information.

1. Ancient large bricked stormwater main was not where it was expected to be:  collapsed during site excavation
2. Public drain position plotted on council records.  Test drills identified “safe” locations for larger diameter piles which in due course were driven.  Two went through the known but mis-recorded drain, and on review it was discovered that the test drills self-plugged the hole they had made:  so the drain was found, but that was not known at the time.
3. Piles drilled, reinforcing placed, concrete pour underway.  The volume of concrete in one pile was significantly more than expected:  it turned out that it had been steadily blocking up a public drain seven metres below ground level.
4. Until a justifiably grumpy roofer complained, no one had flagged the issue that the roof was far too close to overhead power distribution lines.
5. Infill house on rear site built in a dip, which later proved to be an unrecorded overland flow path, later blocked by well-meaning landscaping efforts, thus creating a local lake around the house.
6. House built according to the local authority wind zone requirements, but the specific site had a much higher wind exposure.  The cladding details and structural bracing proved inadequate despite a structural engineer’s involvement.
7. Uphill site retaining wall of non-critical setout but defined height was built ahead of setting out the house.  The builder ignored the (perhaps sparse) drawing information defining the house floor levels and instead set it out from the retaining wall:  a difference of 500mm.
8. Builder issued with consent-application set of drawings to quote from.  During consenting, the Council required the building to be lifted by 500mm to avoid flooding.  Builder ignored the consent-issue drawings and built from the ones they had quoted on.  Not discovered until the pre-line inspection.
9. Mis-understood or mis-dimensioned setout drawings, discovered (a) after piles driven (b) after major project boxed and reinforced but in final pre-pour check (c) after slab poured (d) in the attempt to join up the new roof to the existing one.
10. Mis-understood height control lines:  (a) drafting line wrongly assumed as boundary (b) boundary assumed at top of a retaining wall instead of the bottom (c) position of boundary assumed within large unruly hedge which also concealed a steep drop (d) builder unilaterally decided to set the floor level higher than designed for (e) neighbour (and therefore council) placed significant importance on what reasonably seemed to be an insignificant dip in the boundary profile (f) protracted neighbours dispute over what was the “natural” level at the boundary, and at what date that should apply.