Scope of duty, summary judgment and strike out

Summary

Lawyers in the insurance and construction fields have a little pre-Christmas reading, with the hand-down of the judgment in Glover v Fluid. This decision addresses an application for strike out/ summary judgment on two grounds, along with comments on the scope of duty that may (or may not - we will need to wait for the full trial) be owed to a party by a structural engineer to its employer.

Background

This dispute concerns a residential development in London. Glover (private individuals and not construction professionals) appointed Fluid to provide structural engineering services for their property's refurbishment, which included the construction of a new basement and other significant works.

During the project, damage and cracking occurred, leading to disputes and claims against various parties, including Fluid and insurers. Glover's claim against Fluid was for alleged breaches of duty, including failing to make adequate site visits, report on the works, and keep proper records. They contended that these failures led to a lack of clarity on how the works were performed, resulting in considerable costs for investigating matters and pursuing claims that turned out to be unsustainable. Interestingly, the issues related to the failure to warn, advise and update.

Glover issued proceedings against Fluid and claimed two separate types of loss:

• "Wasted costs".  Costs Glover say were only incurred due to inadequate inspections and record keeping being carried out by Fluid; and

• "Repayment".  Repayment of fees already paid by Glover to Fluid which relate to the specific allegations (i.e. inadequate inspections).

Summary judgment application

Fluid sought to address the matter summarily, arguing that:

• Losses from the Wasted costs fell outside its scope of duty, as they related to protecting Glover from costs/ losses that may be incurred in dealing with litigation and that nothing in Fluid's appointment agreed that reports and information could be relied on by Glover to address issues faced; and

• The allegation in relation to Repayment could only be made where no services were carried out or were 'worthless'.

The court considered the principles for strike-out and summary judgment applications, noting that no reasonable grounds for the claim or no real prospect of success are grounds for such actions. The court also highlighted that it should not conduct a mini-trial on disputed evidence at this stage.

Neither application succeeded.

• As to the Wasted costs, the court held that it was "at least arguable that, objectively speaking, Fluid was or should have been aware that the purposes of its performance of its duties in the construction phase extended to protecting the claimants' interests as a whole in relation to the consequences of the risk of damage to adjoining properties from the works".

• The court also decided the Repayment issue must also go to trial, not least due to the issues "buttressing" the Wasted costs issue.

Comment

These matters will now proceed to trial. Should the matter go to trial it would be interesting to see the commentary on the nature and extent of the losses for which structural engineers may be liable, which may include legal and other dispute-related costs. This judgment also reiterates that the threshold for summary dismissal of claims is high.

As a final comment, it is interesting (given recent caselaw mandating mediation) to see the court "urge"the parties to consider mediation in the matter both "in good faith and with open minds".