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23 March 2010

The Claims Department has noted that an increasing number of claims made against architects are being made in circumstances where the architect engaged, and is therefore responsible for, the acts and omissions of its sub-consultant. In such cases, proceedings are commenced against the architect and the sub-consultant will ordinarily be joined as a third party, involving it in the dispute.

The result is a multi-party dispute which prolongs the duration of the dispute, increases legal costs incurred by the parties, including the architect and its professional indemnity insurer, and makes resolution of the dispute more difficult. Further, if the sub-consultant (a) has disappeared; (b) is insolvent; or (c) is without any, or adequate, professional indemnity insurance cover, the architect may ultimately bear the liability of its sub-consultant. Despite not being negligent, the architect will have an adverse claims record.

In a number of instances, pursuant to the dispute resolution process stipulated in the contract, the client has referred the dispute to arbitration. The consequences for the architect are that it has incurred significant costs in defending arbitration proceedings which it has had little prospect of successfully defending where its sub-consultant has been negligent. As the sub-consultant is not a party to the arbitration proceedings it is not bound by the arbitrator’s findings therefore the architect has had to pursue a separate recovery action against the sub-consultant. The result is an increase in legal costs incurred by the architect and its professional indemnity insurer.

Architects should always encourage clients to appoint consultants directly. This establishes a contractual relationship between the client and the consultant and in the event of a dispute in respect to the consultant’s services:

  • The client can deal with the consultant directly without the architect becoming involved as a party in any dispute.
  • The architect is able to continue to give advice to the client to assist in resolution of any dispute thereby maintaining a good relationship with the client.
  • The architect’s claims record will not be adversely affected.

Adele Monaco
National Claims Manager