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Top cases for architects to consider

It’s widely appreciated that architects can be appointed for a variety of different tasks, including designing a structure, specifying materials and overseeing the work required to build a structure. Essentially an architect is appointed to provide a professional service which carries with it a required duty of care. The architect must perform their duties properly and failure to do so means they may be liable for damages.

Please note, this is article covers architects in their role as designers, and not as contract administrators, this is going to be covered in a follow up article.

Below looks at few important cases where the architect’s services and duty of care have been called into question.

Riva Properties Ltd v Foster & Partners Ltd [2017] EWHC 2574 (TCC)

This case generated a lot of publicity: a world famous architectural firm versus a business man aspiring to build a five-star hotel operating through his four businesses.

In short, the Claimants (Riva) alleged that the Defendant (Fosters - architects) were in breach of their duty to exercise reasonable skill and care in their professional performance, following their appointment as architects to design a hotel at a site at London Heathrow.

The central issue in this case was the cost to build the Defendant’s design. The Claimants had a budget of £70 million but the Defendant’s initial design was costed at £195 million, the Defendant stated that the build could be value engineered down to around £100 million.

The cost proved to be impossible and the Claimants could not obtain funding. They subsequently claimed for professional fees expended in reliance on the Defendant’s advice and lost profit of the build.

The Defendant had tried to deny that a budget existed, and that they had advised that value engineering could succeed in achieving a costing of £100 million. The court found in favour of the Claimants on both of these matters of fact.

When finding on this issue, Mr Justice Fraser had to consider the scope of the Defendant’s duty towards the Claimants, and in particular the extent to which they had to ascertain the budget and/or advise their client generally about the budget and whether it was realistic or not.

The court found that the Defendant had been professionally negligent in two respects;

  1. failing to ascertain and consider the budget in its design;

  2. failing to advise the Claimants that its design could not be value engineered down to £100 million.

On the basis of that negligence, the Claimants were awarded damages of £3.6 million. They were however, unsuccessful in a claim for loss of profit as it failed on the ground of causation. It was held that in addition to the expense of the scheme designed by the Defendant, the Claimants’ inability to secure funding was partly attributable to its lack of cash reserves and to the 2007 global financial crisis. These factors were sufficient enough to break the chain of causation and prevent recovery for loss of profit.

This case stresses the importance of architects having regard to budget when scoping and designing a project and illustrates how a professional’s inappropriate attitude towards a client can flow into negligence and lead to financial liability. The court described the Defendant’s behaviour as “grubby”, “disingenuous” and “wholly unprofessional”.

The full judgment for this case can be found here.

Burgess v Lejonvarn [2017] EWCA Civ 254

In this claim, it was alleged that an architect had acted negligently in the provision of professional services for which there had been no payment.

The Claimants (Mr and Mrs Burgess) and the Defendant (Mrs Lejonvarn) had been good friends for several years when the Defendant volunteered to help the Claimants with a landscaping project for their garden. The Defendant provided professional services for free, but the relationship ended badly.

At a preliminary hearing it was established that given the lack of intention to create legal relations no contract existed between the parties, but that the Defendant did owe a duty of care to exercise reasonable skill and care in relation to the professional services she provided. This was due to the fact that the claimants relied on the Defendant to properly perform the services she provided, which reflected skills which they themselves did not possess.

The Court of Appeal upheld that decision and clarified that a professional consultant did not have a positive duty to provided services, only to carry out those services they did perform with reasonable skill and care. The architect in this case had not given ad hoc advice, the services were provided over a lengthy period of time and involved considerable input and commitment on both sides.

The judge in this case described it as a “cautionary tale”. Helping a friend for free does not however always mean that person providing the services has no liability, each case will turn on its facts and will depend on their circumstances. All professionals, not only architects, will have to pay particular care given that professional indemnity policies do not automatically cover negligence for gratuitous advice.

The full judgment for the appeal on this case can be found here.

Hunt v Optima (Cambridge) Ltd and Strutt & Parker [2014] EWCA Civ 714

This case concerns the Claimants (8 leaseholders who purchased flats in Cambridge) who brought proceedings against the Defendant (Optima (Cambridge) Ltd) a developer/landlord of a new build residential development for various defects. The Claimants also joined in an Architect (Strutt & Parker), claiming negligence in carrying out its inspections and issuing certificates.

In short, Optima had built a block of flats and engaged an Architect to carry out inspections during the course of the developments and to produce architects’ certificates for the benefit of purchasers and lenders. It was alleged that the building work was unsatisfactory and that the inspections carried out were negligent.

The court determined that the main issues were the scope of the Defendant’s contractual responsibility, its repairing covenant and the Architect’s responsibility. Judgment was given in favour of the Claimants. The judge found that the Architects owed the Claimants a duty of care for negligent misstatement contained in the certificates they issued and that the certificates also amounted to collateral warranties.

The Appellants (Defendant and Architect) appealed the decision and claimed that 6 of the 8 Claimants were not entitled to recover damages from them resulting from breach of contract, breach of duty and negligent misstatement.

It was argued that 6 of the 8 Claimants could have not relied on the certificates as they were not issued until after the purchase of their flats was complete. The Architect also argued that the certificates did not amount to collateral warranties as they did not form a contract.

The court found in favour of the Appellants on the facts above. Finding the final certificates were issued after completion of 6 of the 8 flats was key in the court’s judgment. In order to succeed in a claim for negligent misstatement, the claimant must show that they relied on that negligent statement and that it had suffered a loss as a result of that reliance.

In relation to the certificate forming a collateral warranty, the Court of Appeal did not agree with the trial judge and held it was not possible for the certificate to constitute a collateral warranty, it was described as a certificate and not a promise, warranty or guarantee and did not contain any reference to consideration.

This judgment will come as a welcome relief to architects. The case highlights the duty of care owed to buyers by architects acting for developers in addition to the responsibilities of the developer.

The full judgment for the appeal on this case can be found here.    

Conclusion

Unfortunately for architects, the potential for negligence claims is always going to be part and parcel of the services provided.

It is critical that architects understand the scope of their instructions, and the extent of the services to be provided. Failure to do this proves to be an even greater risk if the client is not sophisticated in the design and construction area and/or has incorrect or unrealistic expectations of their designer.

It is also important to design within a client’s objectives and budget; these designs also need to be realistic. It is possible that the objective for each project is going to expand as time goes on, so it is important for the client to understand that expansion and change has an impact on costs, and always avoid situations where the budget is maxed out before the client realises the budget they set is not enough.

Finally, it is essential that communication between architect and client is open and effective, this should dramatically reduce any problems which might arise. Architects should also make sure all designs, surveys, specifications and certificates are suitable and precise.

 

 

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.

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