Architect liable for gratuitous services; the perils of working for friends

13 Apr 2017

Lejonvarn v Burgess [2017] 

The Court of Appeal has upheld a decision of the Technology and Construction Court (TCC) that an architect, who provided services to her friends and neighbours without a contract and without charge, was nevertheless legally responsible for her negligence. 

The facts
Mr and Mrs Burgess ("the Burgesses") and Mrs Lejonvarn were former neighbours and friends. Mrs Lejonvarn was an architect*, having worked in various architecture practices and had decided to move to working on her own account as Linia Studio. For something like ten years before this dispute, the parties had done various gratuitous services for each other; Mrs Lejonvarn provided some free design services for Mr Burgess’ business; Mr Burgess loaned Mrs Lejonvarn a fairly significant sum of money which had been paid back in full.

“Highfields” was the Burgesses' residential property. In 2012 they decided to go ahead with major landscaping work to the garden. It was a substantial project, given that the site was on a steep bank so had various structural challenges and given the anticipated level of the budget. Initially Mr Enright, a well-known gardener, quoted for the works at in excess of £170,000 plus VAT including the planting.

There was concern that the quote was excessive and following discussions between the Burgesses and Mrs Lejonvarn, she became involved in the project saying it could proceed with a smaller budget and so she appointed a contractor to carry out the earthworks and the hard landscaping. She supplied plans; secured quotations and occasionally visited the site. Whilst she received no payment for the services that she provided she hoped to secure the subsequent design work for the “soft” elements such as lighting and planting for which she would charge a fee.  

Regrettably for Mrs Lejonvarn, the project never got to the planting stage while she was involved. In July 2013, with the Burgesses unhappy about the quality and progress of the work, the parties fell out. The Burgesses arranged for Mr Enright to complete the project. They went on to allege that the work done during her involvement was defective, that she was legally responsible for it and pursue a claim for the cost of the remedial works at about £265,000.     

During the case management of the dispute, the court ordered a trial of preliminary issues which focussed on whether there was a contract between the parties and whether Mrs Lejonvarn owed the Burgesses a duty of care in tort. At first instance, whilst the court found there was no contract, it was held that Mrs Lejonvarn owed a duty of care to exercise reasonable care and skill in the services she provided as an architect and project manager.   

The decision on appeal
Rather than allow the matter to now continue in the TCC and be decided there on the basis of the findings on the preliminary issues, Mrs Lejonvarn appealed. In the judgment handed down on 7 April the Court of Appeal dismissed that appeal.

There was no appeal against the finding that there was no contract. However, Mrs Lejonvarn argued that having come to that conclusion, the court was wrong to go on to conclude that a duty existed. On this issue it had been held that the test to be applied was whether there had been an assumption of responsibility and so a special relationship between the parties. The Court of Appeal agreed with that approach, commenting that;

…this was a case in which Mrs Lejonvarn said that she would provide professional services acting as an architect and project manager on the Garden Project; in which she did provide such services; in which she had confirmed that she had provided such services and which in particular the Burgesses relied on her to properly perform those services, as she knew.

Having agreed that there had been an assumption of responsibility by Mrs Lejonvarn, the Court of Appeal also agreed it was fair and reasonable to find that a duty of care arose.

Mrs Lejonvarn  also argued that having found that there was no contract, the court was wrong to conclude that there was a relationship that was equivalent or akin to a contract - a finding that was a crucial element in the conclusion there was a duty. This was rejected by the Court of Appeal – the relationship was akin to a contractual one in that services of an architect and project manager were being performed in a professional context and on a professional footing. This was the case notwithstanding that the services were being provided free of charge, particularly in the light of Mrs Lejonvarn’s expectation that it would lead to paid work and would help her to grow her business.

As for the scope of the services to which this duty applied, the Court of Appeal held that Mrs Lejonvarn should exercise reasonable skill and care in the provision of those professional services that she in fact performed as architect and project manager. There was not a generalised duty to act as an architect or project manager or in any respect - in other words she owed a duty simply in relation to what she actually did. She was not under a positive duty to provide services, contrary to the TCC’s findings that she was owed a duty in respect of all services that she promised to perform.

As for the legal scope of this duty, Mrs Lejonvarn set great store on the fact that a builder does not ordinarily owe a duty of care to protect against pure economic loss in relation to his work (i.e. losses not consequent upon injury or damage to other property). She argued that it would be anomalous for her to owe a duty of care in circumstances where the builder does not; contending that this was particularly inappropriate in respect of the supervision/inspection of the contractor’s work. Her problem however, as the Court of Appeal pointed out, lay in the distinction between a builder and a professional with her holding herself out to be the latter. Professionals expect others to act in reliance on their work product often with financial and other economic consequences and here that assumption of responsibility had been established. The Court of Appeal confirmed that a duty to protect against pure economic loss is likely to be owed by a professional and that this is not limited to ‘advice’ cases.

As regards supervision/inspection, the Court of Appeal accepted that there may well be no previous case where a duty of care to avoid economic loss has been found in respect of such a service, but said that there was no reason in principle why there would not be such a duty where that service was performed as part of a professional service, presumably in contrast to a contractor’s supervision of its own work. 

What this means for you
It is not uncommon for construction professionals to provide services on a speculative basis in the hope of securing paid work in the future. It is perhaps no surprise that a court should hold them legally responsible for those services. Equally, where services are provided on a purely gratuitous basis, it would be perilous to assume that a duty of care will not arise, particularly where services are (as here) extensive or provided on an ongoing basis, or where there is any basis on which it could be alleged that they were provided in the hope of receiving a paid appointment in the future.

Notably, the Court of Appeal differed from the TCC in finding that Mrs Lejonvarn only owed a duty in respect of those services that she did provide, not all those that she promised to provide. The significance of that difference in this case may have to be worked out at trial. Conceivably, there may not always be a clear distinction between services that were not performed and those that were performed negligently, i.e. by omission. In contrast, in claims in contract it will be the services that the professional agreed to perform that is of primary importance, although this may be influenced by actual events. The Court of Appeal did not comment on whether its approach should be applied to a claim in tort, based upon a concurrent duty of care. That may be important if the limitation period has expired for a claim in contract. In that scenario, a claimant may well argue that it is able to rely upon the contractual promises as giving rise to a duty in tort, as well as the actual performance of the services.

From a coverage perspective, while this case appears to have concerned Mrs Lejonvarn’s fledgling business (albeit not, it seems, protected by professional indemnity insurance), professional indemnity policies often define cover as being for services performed in the course of the insured’s business. In cases involving services performed gratuitously for a friend, consideration may need to be given to whether or not they were performed as part of that business. Such consideration will be acutely sensitive to the facts and the policy wording.

 

* Mrs Lejonvarn was a foreign qualified architect, not registered with the Architect’s Registration Board in the UK, so not entitled to describe herself as an architect in this country. Mrs Lejonvarn said that she only did so in an informal context and the judge found that by the time of the project in question, the Burgesses were aware of the position. He also doubted that any earlier misdescription made a difference to the Burgess’s actions because they were relying on her experience and expertise, not her title.

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Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to customers of BLM. Specialist legal advice should always be sought in any particular case.

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