Problem: Late completing hotel build and lost significant amounts of money
I run a medium-sized construction company specialising in the leisure industry, in particular hotels. In 2014, the owner of a hotel approached me who had purchased a small hotel in 2012 and had recently gained planning permission for major renovation work, including adding a two-storey accommodation block containing 28 bedrooms.
The owner said that he wanted to engage a contractor on a design and build basis. We subsequently agreed on a price, and his original designer and project manager were novated.
However, it turns out that the project manager was not experienced in this type of work and was completely out of his depth. I eventually had to sack the project manager and engaged a Chartered Builder that I had used before. However, despite my best endeavours, the hotel was late in completing and my company has lost a significant amount of money. All of my losses are directly or indirectly to do with the original project manager and I would like to recover these losses. Is this possible?
Response: Claiming against a negligent project manager for losses
To bring a claim against the project manager for the loss incurred, it will be subject to the normal rules of law insofar that you have a cause of action. Your cause of action would lie in breach of contract. The project manager would have, no doubt, breached its obligations under the contract you had with him, having been negligent insofar that he owed a duty of care to you, that he acted in breach of that duty, and that the breach was the cause of your loss.
You would need to adduce the necessary level of evidence to demonstrate that the cause of any cost overruns/delays was the culpability of the project manager and that the breach did cause the loss. You will also need to prove the losses (subject to the rules on remoteness) and that the losses claimed flowed from the breach. On top of this, you are also under an obligation to mitigate your losses.
Such a claim, however, is complex, and I would strongly recommend that you seek expert legal construction law advice.
© Michael Gerard 2016
The advice provided is intended to be of a general guide only and should not be viewed as providing a definitive legal analysis.