The Court of Appeal has upheld an earlier decision by the Technology and Construction Court (TCC) in Lejonvarn v Burgess. It found that a friend (Levonjarn), who provided free advice to the Burgesses on a landscaping project did owe a duty of care in tort relating to various services provided.
The case: Lejonvarn v Burgess
In 2012, Peter and Lynn Burgess requested professional assistance from their friend and former neighbour, Basia Lejonvarn, to landscape their garden. The Burgesses had rejected an earlier quote from another landscape gardener for being too expensive. Ms Lejonvarn agreed, but no contract was entered into and she received no payment.
By Spring 2013, Ms Lejonvarn had instructed contractors to carry out earthworks and hard landscaping, with the intention of providing design input, for a fee, when that stage was reached. The design stage was never reached and Ms Lejonvarn was never paid.
Questions then arose as to the quality of the works and failures by Ms Lejonvarn in respect of procurement, project management, budgeting and cost control. By July 2013, her involvement in the Burgesses' project was terminated and it was completed by the landscape gardener who had provided the original (rejected) quotation.
The dispute was first heard by Alexander Nissen QC in the Technology and Construction Court (the "TCC judge"), then the Court of Appeal (the “court”).
The Preliminary Hearing in the TCC
Mr and Mrs Burgess claimed in both contract and tort the sum of £265,000 being the difference between the estimated cost of their garden project, and its actual cost, including remedial works.
The TCC judge held that there was no contract in place between the parties and the claim in contract therefore failed.
Having dismissed the contractual claim, the TCC judge considered the tortious claim; namely, whether the defendant owed a duty of care in respect of economic loss. This would be the only basis upon which legal liability could exist between the parties.
The TCC judge considered the conflicting authorities as to whether a professional designer could owe a duty of care in respect of pure economic loss, concluding that the “preponderance of authority is that a duty is capable of being owed".
In the TCC judge’s view, the facts of the case could be readily applied to the above quote. In essence, the dispute concerned an offer by Ms Lejonvarn, who possessed a “special” or professional skill (in this case, design and project management services), this offer was subsequently relied upon in circumstances in which, but for the absence of consideration (i.e. payment), there would be a contractual claim giving rise to a situation where it would be appropriate that a remedy in law be available.
In his conclusion the TCC judge rejected the defendant’s argument that her role was to simply facilitate communications between Mr and Mrs Burgess and the contractors, offering only ad hoc advice. In reality Ms Lejonvarn was heavily involved in the project for a lengthy period of time.
The Court of Appeal decision
On appeal, counsel for Ms Lejonvarn argued that the TCC judge should have considered whether the losses were reasonably foreseeable and whether it was fair, just and reasonable to impose such a duty of care on her.
The Court of Appeal unanimously upheld the TCC judge’s decision. The court held that it was fair to impose such a duty because Ms Lejonvarn:
- had voluntarily tendered her professional skills
- assumed responsibility for such services
- knew or ought to have known that such services would be relied on by Mr and Mrs Burgess
- could not argue that any losses suffered would not be foreseeable.
Ms Lejonvarn did not have to provide her services but, to the extent that she did, she owed a duty to exercise reasonable skill and care in the provision of such, which she failed to do. By assuming responsibility for the services, she was held to have assumed a duty of care to prevent economic loss.
'Red flags' for those providing gratuitous services
The court listed a number of services carried out by the defendant which were deemed to constitute professional services. The below list should therefore act as a warning to a party undertaking the same or similar services gratuitously and / or in lieu of a contract.
If a party is carrying out any of the below professional services, it is likely that such a party will owe a duty of care to exercise reasonable skill and care not to cause economic loss:
- Project management, including directing, inspecting and supervising the contractors' work, its timing and progress.
- Preparing designs to enable a project to be priced sufficiently to allow a firm budget estimate to be prepared.
- Preparing designs to enable a project to be constructed.
- Receiving applications for payment from a contractor / contractors, and advising and directing an employer in respect of these payments.
- Exercising cost control by preparing a budget of works, and overseeing actual expenditure against it.
Consider the context of any gratuitous professional services being given:
- Have they been voluntarily tendered?
- Are they provided in a ‘professional context and on a professional footing’, rather than an informal or social one?
- Is there an obvious relationship of proximity between the parties?
- Are you aware or ought to be aware that such services are likely to be relied upon?
- Is it foreseeable that losses would arise from a failure by a party to exercise reasonable skill and care in the provision of these services?
- Is this ad-hoc advice or lengthy work involving considerable input and commitment from the parties?
- Will 'payment’ take the form of a fee for services at a later phase of the works?
Summary
The case provides a stark reminder for professionals providing advice or services to a client. A duty of care to exercise reasonable skill and care when carrying out such advice or services, irrespective of whether this is for little or no money, is likely to be found in law.
This article was written by Oliver Lowson.