Author: Christian Charles
It is not uncommon for professional consultants such as architects, engineers, project managers (and even lawyers) to provide services for friends, contacts and clients free of charge. We do this for a number of reasons, often with a view to securing profitable, fee earning work in the future. However, a recent decision of the Technology and Construction Court has confirmed that professionals who provide such gratuitous services can, in certain circumstances, owe a duty of care to their client in tort, even where they have not entered into a contract for those services.
In Burgess & Anr v Lejonvarn  EWHC 40 (TCC), the court was asked to decide a series of preliminary issues, including whether an architect owed a duty of care in tort when providing gratuitous services for friends.
The facts of the case are remarkable and, indeed, made the pages of the national press. In short, Mr and Mrs Burgess were very good friends with their former neighbour, Mrs Lejonvarn, a Netherlands-registered architect living and practising in London. The Burgesses wanted to carry out substantial works to the garden of their home in Highgate. Having obtained a quote for roughly £200,000, Mrs Lejonvarn informed the Burgesses that she believed the works could be delivered within a much smaller budget of circa £130,000. Mrs Lejonvarn proceeded to provide design and project management services for the Burgesses, including appointing the groundworks contractor, supervising the works and administering payments. Whilst the parties did not enter into a formal contract, it was accepted in court that Mrs Lejonvarn intended to charge a fee for detailed design work later on in the project.
The initial groundworks commenced in May 2013. However, by late June the Burgesses had become concerned about escalating costs and the poor quality of the works. Relations between the parties started to deteriorate and eventually broke down completely. The Burgesses ended Mrs Lejonvarn’s involvement in the project in July 2013.
Subsequently, the Burgesses engaged another landscape designer to complete the project and issued proceedings against Mrs Lejonvarn to recover the cost of remedial works and the increased costs of completing the project.
The TCC was asked to determine the following preliminary issues:
The court concluded that, in relation to issues 1 and 2, the parties had not entered into a contract for the design and project management services. In particular, there was no offer which was capable of acceptance, the terms of the parties’ agreement were not sufficiently certain and, furthermore, there was no consideration. Accordingly, the basic ingredients for the formation of a contract were missing.
In relation to issues 3 and 4, however, the court concluded that Mrs Lejonvarn did owe the Burgesses a duty of care in tort. In reaching its decision, the court rejected Mrs Lejonvarn’s argument that no duty could exist where the losses claimed were “pure economic losses”. In particular, Mrs Lejonvarn contended that (a) the law draws a distinction between liability for giving advice on the one hand and providing services on the other, and (b) the courts have long refused to impose a duty of care on a builder carrying out physical works, and that there was no justification for treating a professional any differently.
Whilst the court acknowledged that there was conflicting case law on this point, the balance of the authorities was plainly in favour of a duty of care being owed. The court refused to draw a distinction between a professional’s liability for providing advice on the one hand, and liability for performing a service which required special skill, on the other.
As for the final issue, the court held that the parties had discussed a budget of £130,000 for the project and Mrs Lejonvarn knew that the Burgesses had relied on that figure. Having decided these preliminary issues, the court encouraged the parties to settle their dispute, with the Judge noting that “I cannot think of a more appropriate case to which mediation is suited”.
This case serves as a valuable warning to all professionals who give advice or perform services free of charge. The facts are undoubtedly at the more extreme end of the spectrum, with Mrs Lejonvarn providing a wide range of free design and project management services over an extended period of time. However, whilst each case will be decided on its own facts, the court was clear that a liability can arise in tort notwithstanding the absence of a contract between the parties.
Professionals who are about to embark on significant services for free should therefore consider entering into a contract for the delivery of those services. This would provide both parties with greater certainty about the services to be delivered and it would also enable the parties to agree appropriate limitations on liability. Professionals should also satisfy themselves that adequate insurance cover is in place to protect against potential liabilities.
For lawyers, the judgment also provides a helpful clarification as to the extent of a professional’s duty of care not to cause pure economic loss. It is now tolerably clear (if not certain) that a professional consultant can be liable in tort for pure economic losses which arise as a result of the negligent performance of services. In that respect, the law draws a distinction between the duties of professionals providing services and contractors carrying out building works.
Christian Charles, Associate, Fladgate LLP (firstname.lastname@example.org)