Gillies Ramsay Diamond V PJW Enterprises Limited

The contract of engagement between the employer and the contract administrator surveyors, was a "construction contract" within the meaning of section 104(1)(b) of the Construction Act 1996
 
GILLIES RAMSAY DIAMOND v PJW ENTERPRISES LTD

Scotland, Outer House, Court of Session
Lady Paton
27 June 2002
 
The contract administrator was a firm of surveyors whose terms of appointment were contained in its letter to the employer which did not include any adjudication provisions. Disputes arose which the employer referred to adjudication. The contract administrator contended that the dispute was not one under the contract of engagement and was instead an action for professional negligence. The adjudicator determined that the disputes arose under the contract of engagement with the result that he had jurisdiction. The adjudicator decided that the contract administrator should pay the employer specified sums by way of damages. The contract administrator petitioned the (Scottish) court for a judicial review of the decision.
 
Section 104(1)(b) of the Construction Act 1996 provided that a "construction contract" meant an agreement for, inter alia, arranging for the carrying out of construction operations by others, whether under sub-contract or otherwise. Section 104(2) provided that references to a construction contract included an agreement to do architectural, design or surveying work in relation to construction operations.
 
Lady Paton held that the contract of engagement, whether viewed as a whole or as the contract administration part alone (ie on the basis of having "severed" the contract administrator's quasi-judicial functions under the building contract from the contract administration functions), was a "construction contract" within the meaning of section 104(1)(b). The contract administrator's terms of appointment set out detailed services and functions which amounted to "arranging for the carrying out of construction operations by others, whether under sub-contract... or otherwise". It was of the essence of the contract administrator's function that he "arranged" for the carrying out of construction operations by advising on consultations required, orchestrating tenders, programming, certifying and controlling finances. By carrying out contract administration services, the contract administrator entered into an agreement to do surveying work in relation to "construction operations" within the meaning of section 104(2).
 
Advice Note
Any doubt as to the nature of a claim brought against a professional consultant in an adjudication for the negligent carrying out of his duties relating to construction operations has been removed. Such a claim is not in the nature of one for professional negligence (to which the Construction Act does not apply). Instead it is a claim brought under the contract of engagement (to which the Act does apply).
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