Articles from the Silver Shemmings Ash Team on contractual matters, recent case law changes and items of interest in the construction and property world

Employer’s Agent (“EA”) and agreements for lease

May 3, 2019 | Silver Shemmings

This article considered two cases which clarified the position in respect of the certifier’s role and obligations.

  1. Scheldebouw BV v St James Homes (Grosvenor Dock) Ltd in which Jackson J held (in respect of construction management contracts): 

Generally the decision-maker is not, and cannot be regarded as, independent of the employer.

When performing his decision-making function, the decision-maker is required to act in a manner which has variously been described as independent, impartial, fair and honest. These concepts were overlapping but not synonymous. They connote that the decision-maker must use his professional skills and his best endeavours to reach the right decision, as opposed to the decision which favours the interests of the Employer.

In my judgment, these propositions are all applicable to the construction manager in the present case. The fact that the construction manager acts in conjunction with other professionals when performing his decision-making function does not water down his legal duty. When performing that function, it is the construction manager’s duty to act in a manner which is independent, impartial far and honest. In other words, he must use his best endeavours to reach the right decision, as opposed to a decision which favours the interests of the employer.

  1. Imperial Chemical Industries v Merit Merrell Technology in which Fraser J held that “exactly the same analysis applies…to most if not all of the standard contract forms in this field.” 

The author then recommended several key protections for tenants under Agreements for Lease:

  • Obliging the landlord to procure third party rights or collateral warranties from the EA.
  • Including a term in the EA’s appointment that they will act independently and impartially when exercising any discretion as between the Employer and a third party. 
  • Provision for delaying the rent commencement date commensurate with any extension of time under the building contract. 
  • Provision for liquidated damages to be paid by the landlord to the tenant in the event of any delay to the access date, save in instances of tenant delay. 

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