Sweett (UK) Ltd v Michael Wright Homes Ltd [2012] EW Misc 3 (CC)

MWH engaged Sweett to act as the employer’s agent and provide quantity surveying services for a housing development. It was an express term of Sweett’s appointment that they would:

“Prepare contract documentation and arrange for such documents to be executed by the parties hereto”

Sweett made it clear to the contractor during pre-contract negotiations that a performance bond was required and ultimately it was an express term of the building contract that a bond would be provided. Despite numerous attempts by Sweett to secure the bond, the contractor failed to provide the bond. As a result of unpaid fees, Sweett terminated its agreement with Michael Wight Homes. In September 2008 Sweett commenced proceedings. The parties settled all aspects of the claim, save for Michael Wight Homes’s counterclaim in respect of Sweett’s failure to secure the bond. The contractor then went into liquidation in June 2009. The principal issue before the county court was whether Sweett had acted in breach of their duty in relation to the provision of a performance bond by the contractor.

MWH argued that either Sweett owed an absolute obligation to ensure that the performance bond was provided by the contractor or even if there was no absolute obligation, Sweett still had a duty to take reasonable care to see that the bond was provided by the contractor. MWH further argued that Sweett should have at least withheld payment from the contractor in order to apply pressure on them to provide the bond.

Sweett argued that there was no absolute obligation to ensure that the contractor provided the bond. Its sole obligation was to take reasonable care to ensure that the performance bond was provided, and that by making numerous requests to the contractor they had successfully discharged this obligation.  

HHJ Wildblood QC held that Sweett did not owe an absolute duty to ensure that the contractor provided the bond. He considered the defi nition of “arrange” and found that Sweet’s obligation stopped short of the requirement to “ensure”. Provided they put in place the necessary steps for the bond to be executed (which on the evidence it did) Sweet would eff ectively have discharged its duty to “arrange” under its appointment, and therefore any breach would be limited to the consultant’s common law duty to exercise reasonable skill and care. Here the court noted the extensive steps that Sweet took in this case to try and secure the bond from the contractor. Here, Sweet made numerous attempts, including attending several meetings with both MWH and the contractor, and chased the contractor for updates on a regular basis.

This was sufficient to discharge the duty to “arrange” and to act with reasonable skill and care, by making numerous attempts to secure the bond.