What happens if the nominated team leader for a project leaves during the course of the project?

Facts

In this UK case, a firm of architects nominated a project leader who then did not lead the project in question. The owner sought to refurbish a private members' club in London and entered into discussions with the architects, Fitzroy Robinson. The architects represented both orally and in bid documents that Mr Blake, who was a director of the company, would be the team leader for the project.

Mr Blake tendered his resignation to the company in March 2006, at about the time when Fitzroy Robinson was to commence works and before contracts had been finalised. Mr Blake's contract of employment required him to stay on for a further 12 months after tendering his resignation.

The contract between the owner and Fitzroy Robinson for the provision of professional services was signed in May 2006. Fitzroy Robinson did not inform the owners until November 2006 that Mr Blake had resigned. Mr Blake continued employment with Fitzroy Robinson until March 2007, but at this time the project had at least two years left to run.

Disputes arose between the parties, partly due to the significant delay that had occurred in procuring the planning approval for the project. Fitzroy Robinson brought an action to recover its fees. The owner counterclaimed in the action for, amongst other things, fraudulent misrepresentation in connection with Mr Blake's resignation, stating that Fitzroy Robinson "knew when it signed the contract that Blake had resigned but decided not to tell us until six months after the contract had been entered into."

Findings

It was held that in the time prior to the execution of the contracts, Fitzroy Robinson knowingly and dishonestly failed to correct the false representation that was made that Mr Blake was going to remain as team leader throughout the course of the project. In the view of the court, there was a false representation that was deliberate, and made for the specific purpose of ensuring that Fitzroy Robinson was awarded the work. On this basis, the test for fraudulent misrepresentation was satisfied.

Application

Any commitment to involve certain personnel in a project will be binding and the significance of providing assurances in relation to the involvement of key personnel is highlighted by this case. Where an individual is identified as taking a central role in a project team, it is preferable that it be made clear that members within the team may change from time to time.

However, this may be unacceptable to a client who seeks greater certainty that a key individual will remain involved in the project. In these circumstances, it is advisable to seek a commitment from key personnel that they will remain employed throughout the duration of the project.

Further, an unavoidable loss of a key member of the project team should be immediately communicated to the principal, especially if the contract has yet to be concluded. A failure to notify of the resignation of a key team member may give rise to a damages claim for fraud, based on this authority from the English High Court.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.