Keeping to the brief: architects’ negligence

Architecture. Whilst a laudable profession, is not one in which mistakes never happen. However, what are the extent of those mistakes? Well, that depends upon the particular circumstances. However, recently, the High Court (Martin Bowdery QC ((the Judge)) to be precise) delved into such matters in the case of Freeborn and Another v Marcal [2019]We look at architects’ negligence and how the court will assess liability.

Background to the case

A couple instructed an architect to design a cinema room for their home. However, the architect then went on, without informing his clients, to transform the scope of his instruction from ‘sleek modern’ to ‘wonky industrial’. Unfortunately, for the architect, this was not an episode of ‘Changing Rooms’ where he had an unlimited brief. No; the brief was limited, and it was limited to ‘sleek modern’. Wonky industrial was, definitively, out-of-bounds. The clients’ cinema room would not meet their initial vision/expectations. Aesthetically, or otherwise.

The clients made a professional negligence claim against the architect.

Seven principles

In order to arrive at his decision, the Judge set out seven principles for assessing an architect’s liability. Those seven principles were as follows:

  1. The contract between the parties is the starting point for an architect’s duties.
  2. The architect owed the clients a duty to provide the services with reasonable care and skill.
  3. The architect is not expected to reach a standard of perfection. The standard is of reasonable care and skill. However, it is not enough for a claimant to prove that the architect made a mistake to evidence that there has been a failure to exercise reasonable skill and care. A claimant must prove actual negligence.
  4. Where the project requires specialist knowledge, an architect may recommend that the client appoints a third party with such specialist knowledge. Usually the architect will not be responsible for any work carried out by the specialist which is beyond the expertise of an architect of ordinary competence.
  5. An architect’s duty to supervise or inspect works will depend on a number of things. These will include the type of works, the terms of the contract and the parties’ confidence in the contractor.
  6. A client may only recover that loss and damage caused by the architect’s negligence (causation); and which the client has sought to mitigate.
  7. Finally, the usual damages awarded where an architect’s negligence causes defects in a building is the cost of rectification.

The Judge’s decision

The Judge concluded that an architect should produce a written brief and share this with the client. The architect should then include any changes to the design within that brief for consultation with the client. This requirement could only be departed from in exceptional circumstances with the client’s agreement. In this case, the architect had not done so.

The Judge found that the architect had indeed acted negligently and had caused loss to the claimants. He awarded damages in relation to the cinema room as follows:

  • Just over £430,000 in money spent on designing and building a cinema room that did not comply with the clients’ instructions and would be demolished;
  • £26,000 for actually demolishing the cinema room
  • Plus a further £5000 for distress and inconvenience.

The Judge varied from the usual order that the damages would be the costs of rectification. This was because the end result was “so different… from what the Claimants reasonably expected” that demolition (rather than rectification) was reasonable.

While this case hinges on what the claimants found to be ugly design, it is not the design itself that led the court to find the architect negligent, but the way that the architect went about it. Not least that the architect substantially changed the design without discussing with the claimants.

If you are concerned that your architect has not kept to his brief, or is otherwise negligent, our professional negligence team can assist. Call us today on 0800 988 7756 for a free initial chat.


The law of defamation in the digital age

As we settle into the digital era, an ever-increasing number of media outlets are being utilised. News stories are now travelling quicker than ever. Platforms such as Twitter are giving individuals a stage to voice their own opinions. However, an increase in the use of media has also been met with online tension, harassment and defamation claims.

So, what exactly counts as defamation? We set out two recent case studies involving high-profile individuals as examples.

What is the law of defamation?

Defamation concerns the publication of defamatory material that damages a person’s reputation. It’s also known as libel and slander. A defamatory statement lowers the claimant in the estimation of right-thinking people. The statement has no defence – so it would either tell the truth or would be one of honest opinion. There is a requirement that the statement causes serious harm to the reputation of the claimant. The law regarding defamation is contained within the Defamation Acts 1996 and 2013 as well as in common law – i.e. the decisions of the courts in regards to cases brought regarding the issue.

Recent cases

Defamation cases are often covered in the media when they relate to well-known individuals. There have been a number of recent cases involving such figures within the media.

Jack Monroe v Katie Hopkins

Ms Hopkins is a prominent commentator in the media with right-wing views. The claimant is a food blogger and writer who holds left-wing views.

The defamatory statement related to a tweet from Ms Hopkins which accused the claimant of vandalising war memorials. Ms Hopkins had confused the claimant with Laurie Penny – another left-wing writer. Penny had previously appeared to condone the posting of political statements on memorials in certain circumstances.

Ms Hopkins later tweeted that she did not understand the difference between the claimant and Ms Penny. The claimant pursued a claim for damages.

The court was asked to consider the following issues:

  1. The meanings borne by the tweets;
  2. Whether those meanings had a defamatory tendency;
  3. Had there been serious harm to their reputation;
  4. Should compensation be awarded.

The court held the following in relation to these 4 points;

  1. The first tweet meant that the claimant approved of vandalising war memorials;
  2. The meanings had a tendency to be defamatory. Right-thinking members of society would generally disapprove of such vandalism;
  3. The publication of the tweets caused the claimant not only real and substantial distress but also serious harm to reputation;
  4. The claimant was entitled to reasonable and fair compensation.
Twitter

Interestingly, the Monroe v Hopkins case looked at applying long-established principles regarding defamation, to Twitter. The court commented that Twitter was different from ordinary print publications.

A tweet that is said to be defamatory may contain a hyperlink. Tweets are also usually read as part of a series of tweets alongside the original tweet in question. This in turn, forms part of a multi-dimensional conversation.

It was said that to apply the principles to Twitter, it is better not to take an overly analytical approach to the meaning of tweets. Rather, it’s best to consider the impression the tweet would leave. This includes references to any links embedded within the tweets and the context of it (i.e. the conversations relating to it).

Matthew Zarb-Cousin v (1) Association of British Bookmakers (2) Malcolm George (2018)

In this case, the claimant is a prominent campaigner for greater regulation of the gambling industry. He was also a former advisor to Jeremy Corbyn.

The court was required to determine a preliminary issue in the claimant’s defamation claim. The defamatory comment had been made during a television news programme.

The second defendant claimed that the claimant was making deliberate misstatements regarding fixed betting terminals as he was funded by the casino industry. The claimant denied the claim and sued for defamation. The second defendant’s defence stated that it was obvious that his statement was one of opinion and not defamatory. The court had to determine the meaning of the words used by the second defendant. It needed to be decided whether serious harm would be caused to the claimant or whether he was simply stating an opinion.

The court held that the statement was communicated as factual. The idea that the claimant was a paid lobbyist would harm his reputation. The statement questioned the claimant’s integrity. It was concluded that there was a risk that the statement would cause significant harm.

Contact us

Sean McHale is a Solicitor in the dispute resolution team at Levi Solicitors LLP. He advises clients in relation to a variety of disputes matters including defamation and harassment. If you have experienced defamation or harassment and would like to speak to a solicitor, get in contact. We offer a FREE initial consultation.  Call us today on 0800 988 7756 (FREEPHONE) or email info@levisolicitors.co.uk.

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Obtaining an injunction for harassment

We are approached by people who are concerned they are being harassed by neighbours, former friends, ex-partners or acquaintances. As harassment is a criminal and civil offence, quite often clients have discussed the matter with the police first. It is common for the police to advise a client to speak to a solicitor to consider obtaining an injunction against the offending party. This is on the basis that if the injunction obtained is later breached, the police can intervene. Unfortunately, obtaining an injunction for harassment can be a complicated process.

What is harassment?

The Protection from Harassment Act 1997 defines harassment. Essentially, the definition is ‘pursuing a course of conduct which causes a person alarm or distress’. It must involve more than one incident of harassment and the test as to whether the conduct constitutes harassment is an objective one. In other words, if another person considered that conduct, they would consider it to be conduct which amounts to harassment. Harassment includes speech.

Many clients will consider that there is an immediacy and a need to obtain an injunction without delay. To do so, you will need to consider the following factors:

  • has there been a threat of violence?
  • Is there an immediate need for an injunction? I.e. has there been a threat, or a potential meeting of the parties?
  • Has there been an escalation in the conduct by the offending party? For example,  more aggressive or obscene conduct that is consistent and persistent.

The conduct has to be deemed oppressive and unacceptable.

Malicious Communications Act 1988

The use of social media to bully and harass people is widely reported to be on the increase. If this is the case, the offending party may have breached other Acts of Parliament. One particular Act is the Malicious Communications Act 1988.

The Act prevents the sending of communications (including online messages or letters) that convey a threat, a grossly offensive or indecent message, or false information. It applies if the sender’s intention is to cause distress or anxiety to the reader or recipient. The offending material does not need to be directly addressed to the recipient; it can be a post about that person but made to the general public. The offence covers communications that are offensive, obscene, menacing or false.

Seeking an injunction

In this context, an injunction is an order from a court for the offending party to stop the conduct complained about. We have looked at injunctions in general in a previous blog post.

It is important to bear in mind that injunctions should be a ‘last resort’ remedy. The courts prefer the parties to first seek to resolve the matter between themselves. Therefore, the ordinary course of events is to first write to the other party requesting that they cease and desist from the harassment. One would usually also seek undertakings that they will refrain from similar conduct in future. If they don’t agree to give undertakings, explain that you will seek an order for an injunction. The purpose of this first letter is twofold. Firstly, to try to stop the offending party from its conduct; and secondly, to demonstrate to a court that you have taken all reasonable steps prior to making an application for an injunction, and it is now necessary for the Court to intervene.

If it appears that from the response to the first letter that the offending party either will not stop its conduct; or intends to ignore the letter and continue with its actions, then it may then be the appropriate stage at which to seek an injunction. You may seek an injunction on one of two bases: with notice to the other party or without. It is advisable to provide notice, if at all possible.

If you are concerned that you are being harassed, our dispute resolution team can assist. Call us today on 0800 988 7756 for a FREE initial consultation.

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Pay less notices and breaches of contract: Construction case update

Over the last couple of weeks, the Courts have published two rather helpful construction law cases. The first in relation to breaches of contract, and the other regarding pay less notices. We take a quick look at both, below.

Interserve Construction Ltd v Hitachi Zosen Inova AG [2017] EWHC 2633

The case of Interserve Construction Ltd v Hitachi Zosen Inova AG [2017] EWHC 2633 (TCC) was about the termination of a contractor’s employment. Judge Jefford concluded that a contractor should be given the opportunity to remedy a breach before the contract (and his employment) were terminated.

Contract

The contract was between Hitachi (the main contractor) and Interserve (the subcontractor). The relevant clause (clause 43) in the contract stated that Hitachi:
"…may (at its absolute discretion) notify the Contractor of the default and if the Contractor fails to commence and diligently pursue the rectification of the default within a period of seven (7) Days… terminate the employment of the Contractor under the Contract."
Hitachi decided to immediately terminate Interserve’s employment due to an alleged failure to proceed diligently with the works. It argued that it had absolute discretion to do so pursuant to the above clause. The Court disagreed with Hitachi’s approach and effectively overruled the consideration that Hitachi had absolute discretion.

Court’s decision

The Court states that, in order for Hitachi to terminate the contract, it must first invoke clause 43, allowing Interserve seven days to rectify the breach. The Court did not consider it optional. It went further to say that a failure to give notice pursuant to clause 43 meant that Hitachi were simply waiving the breach and right to rely upon it.
The lesson of this case is that, depending on the wording of the contract, not giving a party opportunity to remedy a breach, may itself be considered a breach of contract.

Adam Architecture Ltd v Halsbury Homes Ltd

In Adam Architecture Ltd v Halsbury Homes Ltd [2017] EWCA Civ 1735, the court confirmed that pay less notices need to be served if a party wishes to pay less than the sum applied for.  This is even in the circumstances where it is the final application for payment. This also applies where the contract has been completed or terminated.
Halsbury Homes is a property developer, Adam Architecture is an architectural practice. The developer retained Adam to design for the construction of 200 homes.
Halsbury informed Adam Architecture that it was going to use a different architect. As a result, Adam Architecture submitted its final application for payment. Halsbury Homes failed to serve a pay less notice in response. Adam Architecture then issued adjudication proceedings and was successful on the basis that Halsbury Homes had failed to issue a pay less notice.
Halsbury challenged the decision in the Court. They argued that the pay less regime did not apply. In the first instance in the High Court, Halsbury was successful. The Court’s reasoning was that Halsbury Homes’ obligations had been discharged as Adam Architecture had accepted their breach of contract.

Court of Appeal

On appeal again, the Court of Appeal rejected this. The Court of Appeal decided that the pay less regime still applied even after termination of the contract. The decision was based upon previous authorities including Rupert Morgan Building Services (LLC) Ltd v Jervis and Harding (t/a MJ Harding Contractors) v Paice in which the court considered it sensible that the pay less regime also applied to final applications for payment.
If you have a query relating to a construction contract or pay less notices, our construction disputes specialists can help. Call us today on 0800 9887756 for a free initial consultation.
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Money talks: Considerations before issuing a debt claim

It can be extremely frustrating when someone owes you money. However, many people are quick to throw themselves into the idea of suing someone for the money that is owed to them. It is worth considering the following before taking legal action and issuing a debt claim.

Can you settle the dispute between yourselves?

In the first instance, it is always worth having a chat with the debtor. If you give the debtor a chance to explain his situation, you may be able to resolve the matter amicably. For example, if he is coming in to money the following week, you could agree to wait until then. Or perhaps you might agree an instalment plan.
Discussing matters up front can help preserve relations between parties, as well as potentially helping you achieve an early resolution.
An alternative that can be used before or after you have issued court proceedings is to attempt Alternative Dispute Resolution (ADR).  ADR includes negotiation, mediation and other methods of resolving disputes without the need for court proceedings.

How much is my claim for, realistically?

This may seem obvious, but you need to have a real cause of action in order to bring a claim. If your claim gets to court the judge will look at the accuracy of your claim, including whether you are indeed owed the whole amount.
You will need to prove your claim to the judge. Do you have evidence to show that the full sum is owing?

What can the debtor afford?

Unfortunately even if you obtain a judgment, this does not mean you are guaranteed to recover the money. It will be extremely difficult to recover anything from your debtor unless he has a job, money in the bank, or real estate for example.
Be realistic about what your debtor will be able to afford. If he has no assets, you may need to reconsider issuing a money claim. That being said, there are a number of enforcement options available depending on the debtor's circumstances.

How much does it cost to run a debt claim?

Litigation (court proceedings) should be used as a last resort, not least because there are costs involved.

Court fee

There will be a court fee for issuing proceedings. The level of the fee depends on the amount of debt that you are claiming. It can range from £25 to £10,000 for debts of £200,000 and over. You may be exempt from paying fees, depending on your level of income.

Recovery of legal costs

If you are successful, the Court is likely to order that the debtor pays your legal costs. This will include the Court fee and potentially other costs such as expert’s fees.
In claims under £10,000, the Court will usually order that the debtor pays you fixed costs. This is an amount set by the Court, dependant on the value of your claim. Fixed costs may not cover all of your legal costs, so it is important to bear this in mind before you issue.
For claims over £10,000, the Court will take a look at your legal fees and make a decision about how much you should recover. As a general rule, the Court will usually order that the debtor pays around 70% to 75% of your costs.
As with the main debt, having a costs order against the debtor is great, but not worth anything if the debtor has no money to pay it.
Our specialist debt recovery team can help you with your debt claim, whatever the size. Contact us today for a FREE initial consultation on 0800 9887756.


Professional negligence: claim against a barrister

Among professionals, barristers are some of the most highly trained, and their knowledge of the law is extensive. You should expect their expert skills, representation and knowledge to be used in your case, whether you have instructed them under the direct access scheme, or through your solicitor.
As with all professionals, unfortunately, sometimes mistakes happen. In fact, recent reports suggest that complaints about misconduct by barristers are on the rise. In some cases, you may have a professional negligence claim against a barrister.

What is professional negligence?

In some cases, a barrister may have provided poor service, but may not be negligent. In those cases, you may be able to report the barrister to his chambers, the Bar Standards Board and/or the Legal Ombudsman.
Professional negligence occurs where a professional fails to perform their responsibilities to the required expectations.  It is careless conduct, and a failure to reach these expectations, which ultimately results in a loss caused by this negligence.
We look in more detail at what professional negligence is here.

Duty of care

Professionals owe their clients a duty of care. This means that they are to perform their duties to the reasonable standard expected, and treat their clients with due care and attention.
If a barrister acts negligently and has, for example, given you poor advice on a point of law; incorrectly drafted court documents; or failed to provide the expected standard of representation in court in your case, the outcome can be shattering with lasting effects and financial loss.

Are barristers immune from legal action?

Certainly not. Historically, barristers were immune from being sued in order to protect their reputation. However, the law changed in 2000. This means that people can now bring professional negligence claims against barristers.

How long do I have to make a claim?

The limitation period in most professional negligence cases is six years which starts from the date of the negligence. This can however be extended in certain cases when the negligence only becomes apparent at a later stage.

Making a claim against a barrister

If you have suffered a financial loss because of the negligent actions of your barrister, you may be able to make a claim for compensation. If your solicitor instructed the barrister, there is a possibility that you may also have a professional negligence claim against your solicitor.
Our expert professional negligence solicitors will be able to determine if your barrister has help you find the best remedy to recover the compensation you deserve. We may be able to act on a no win no fee basis and do not charge a success fee. Call us today for a FREE initial consultation on 0800 9887756.
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Where’s my money? Recovering unpaid debt

Are you owed a significant amount of money? Reports show that 9 million people in the UK are in serious debt and the average UK household debt is now at a record of £13,000! So with this increase, how do you recover what is owed to you? We look at the steps you need to take to sue for an unpaid debt.

What will happen?

The court encourages parties to attempt to negotiate and resolve the matter without the need to start court proceedings. This can save debtors and creditors both money and time.

In October 2017, the Ministry of Justice will be introducing a specific procedure for unpaid debt matters. The Pre-Action Protocol for Debt Claims will encourage the parties to agree a reasonable repayment plan. If you cannot agree a payment plan with your debtor, the parties will be encouraged to consider using an Alternative Dispute Resolution (ADR) procedure.
On average over 3,000 consumer County Court Judgments (CCJs) are issued each day. From October, therefore, the court will expect the parties to have complied with the Protocol. The court will take into account non-compliance and may order sanctions on that party. This could include paying the other party’s costs.

What if I cannot settle my debt claim?

We often find that debtors would rather try to settle the debt without you having to issue court proceedings. However, in some cases this is just not possible. At this stage, you may wish to issue the proceedings to sue your debtor.
If the debtor does not defend the claim or pay the debt within the given period of time, you may be able to ask the Court to order a default judgment. Default judgment is a binding judgment in one party’s favour, as a result of the other party’s failure to take a specific action. In this case, it is the Court ordering that the debtor pays you the money as he has failed to defend the claim in time.
On the other hand, if the debtor does defend the claim, the claim will go to a hearing at court.
There is nothing to stop the parties continuing to negotiate a settlement in the meantime.

What should I do?

  • Speak to a solicitor, and make sure the unpaid debt claim is worth pursuing.
  • Collect evidence to show that you are owed money by the debtor.
  • Seek as much information about the debtor as you can in terms of whether they can’t or won’t pay.
  • Are you within the 6-year time limit from the date the debt became due to take action?

If you would like advice on how to recover your money, our specialist debt recovery team can help.  Call us today on 0800 988 7756.
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First things first: The letter of claim

If a professional you have instructed has been negligent, you can sue them in order to recover any losses which their negligence has caused you to suffer. However, it is not always necessary to issue court proceedings in order to recover your losses. It is often possible to reach a settlement through alternative dispute resolution (ADR) prior to court proceedings being issued. In many cases, the professional’s insurer may wish to avoid incurring unnecessary legal costs in fighting a hopeless case and will prefer to simply reach an early settlement.
Before you issue proceedings, parties should follow the Professional Negligence Pre-action Protocol process. This is a specific procedure that the courts encourage parties to follow before issuing proceedings. The idea is so that both parties know exactly where the other stands before the expense of Court. Following the pre-action protocol can assist in early settlement of professional negligence claims.
The first step in the process is writing a letter of claim. This is the Claimant’s first opportunity to set out their case to the defendant; e.g. the client’s letter to the negligent solicitor. The pre-action protocol sets out a number of criteria which the claimant must include within the initial letter of claim. We shall look at what is required within this article, using the example of a claim against a solicitor.

Details of the parties

First of all, the claimant must include in his letter of claim the obvious details such as the names and addresses of the parties involved – i.e. the client and solicitor practice along with the requisite names and addresses. Thereafter, the letter should set out details of any associated parties. These could include other parties involved in the matter or perhaps an expert who was instructed in the initial case.

Background

Within the body of the letter of claim the client should set out the background of the case. The background does not have to give every detail of the case from beginning to end. However, a clear background is required; one which would allow an objective person to understand the nature of the instruction and conduct of the professional.

Allegations

Following this, the letter should set out the allegations of negligence. It should be clear from reading the letter as to what the solicitor has done incorrectly/negligently. You should also set out what the solicitor’s correct course of action should have been.

Loss

The letter should then link the allegations of negligence to loss which the claimant has suffered. The losses should be detailed and exact figures provided. It is this loss which the client is requesting to be remedied.

ADR and time limits

The conclusion of the letter of claim should set out that the claimant is willing to engage in ADR and the dates by which the letter of claim should be acknowledged and responded to. The defendant is required to acknowledge the letter of claim within 21 days and to provide a response within 3 months of the date of the acknowledgment.
The importance of the letter of claim should not be underestimated. It is the opportunity for the client to fully set out its case and its strengths. A strong letter of claim can lead to the insurers of the solicitor deciding that it will have to reach a settlement and remedy the loss which has been suffered by the claimant.
Our professional negligence team can help you through your claim; from the letter of claim, to trial (if required). We offer no win no fee agreements and do not charge a success fee on top of your legal fees. Call us today on 0800 9887756 for a FREE no obligation chat about your claim.
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Case update: What is accidental damage?

Most buildings insurance policies will insure the owner against ‘accidental’ damage to the property. The Technology and Construction Court (TCC) has recently had to consider what amounts to accidental damage. The case, which concerned a property in Leeds, was Leeds Beckett University v Travelers Insurance Company Ltd [2017] EWHC 558 (TCC).

Background

In the 1990s, the claimant carried out development works on the site of the old Kirkstall Brewery, turning some of the old buildings into new accommodation blocks. The largest building (“the Building”) was along the bank of the Leeds-Liverpool canal. The claimant found the site difficult to develop, not least because it was wet and there were disused mine shafts on the site.
In December 2011, large cracks appeared in some of the walls and ceilings of the Building on the side next to the canal. The cracking was to such an extent that the Building had to be evacuated. Investigations were carried out, and found that an area of concrete foundations had “turned to mush”. As a result, the concrete blocks had no structural strength at all.
The defendant insured the Building, and the claimant made a claim under the insurance. The policy covered property that had been damaged, and defined “damage or damaged” as “accidental loss or destruction or damage”. There were a number of exclusions to the type of damage covered, which included (among other things) damage by gradual deterioration, defective design or materials, latent defect or wear and tear.
The defendant declined to cover the claim. In 2012, the claimant demolished the entire Building and later issued proceedings in the TCC.

Decision

The TCC had to consider whether the defendant should cover the insurance claim.
The TCC first considered whether the damage was “accidental damage” in relation to this type of insurance policy. It decided that “accidental” would not cover inevitable events. Looking at the facts of this case, the TCC held that the way that the Building was constructed meant that it was inevitable that the supporting concrete would fail. This meant, therefore that the damage could not be “accidental”.
It went further to say that even if it was wrong, and the damage was “accidental”, the damage was excluded for gradual deterioration and defective design. Unfortunately for the University, the TCC decided therefore that the insurer was correct to avoid the policy.
While the definition of a term in an insurance contract will depend on the wording in each contract, this case gives insurers and insureds some useful guidance on what the court might construe to be accidental damage.
If you have an property or insurance dispute, our specialist dispute resolution solicitors can help. Call today on 0800 988 7756 for a free consultation.
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With friends like these… Professional negligence and free advice

The Court of Appeal’s recent judgment in Lejonvarn v Burgess and Another [2017] EWCA Civ 254 decided that the Technology and Construction Court (TCC) had correctly found that a professional consultant owed a duty of care in tort for services that she performed (without charge) for her friends.

Background

Mrs Lejonvarn and Mr and Mrs Burgess had been friends for around 10 years. Over the years, the friends did various favours for each other.
In 2012, the Burgesses started obtaining quotations for landscaping works to their garden. The proposed scheme was looking to cost them over £200,000. Mrs Lejonvarn (who described herself as an architect) told her friends that they could do the works within a smaller budget. She started to provide design and project management services for the project, but the parties neverdiscussed a formal contract. Further, Mrs Lejonvarn did not ask for any payment. This was on the basis that if detailed design work were required later down the line, she would require payment.
Unfortunately, the friendship broke down over costs issues before this point and the Burgesses engaged an alternative designer to complete the works. The Burgesses sued Mrs Lejonvarn, alleging that the work carried out under her supervision was defective. They claimed for the increased cost of completing the project, including remedial works. The claim was valued at up to £265,000.

The Technology and Construction Court’s (TCC) decision

A trial of preliminary issues was held at the TCC. The judge decided that there was no contract between the parties. However, he held Mrs Lejonvarn owed the Burgesses a duty of care in tort and this duty gave rise to liability for pure economic loss.

What is pure economic loss?

By way of example, say an electrical contractor negligently cuts through cables in a factory, leaving the factory unusable. A claim for pure economic loss here would be for the potential earnings the company could have gained if the cable were not damaged, and the factory was usable.
There is a general rule that a negligent defendant will not be liable for pure economic loss suffered by a claimant. This is to prevent entirely disproportionate claims being brought. In the above example, the factory’s potential loss of earnings could be colossal, compared with the damage that was actually caused.
In cases where there is a special relationship between the parties, there will be liability for pure economic loss. A special relationship arises if there is an assumption of responsibility by a defendant (if he knows that the claimant is relying on his special skill); and the claimant reasonably relies upon the defendant’s skill.
In Lejonvarn v Burgess, the TCC found that Mrs Lejonvarn had assumed responsibility and she therefore owed a duty of care that gave rise to a liability for pure economic loss. Mrs Lejonvarn appealed.

The Court of Appeal’s decision

The Court of Appeal unanimously agreed with the TCC judge. It found that Mrs Lejonvarn did owe duties of care to the Burgesses to prevent pure economic loss. The Court of Appeal, in considering Mrs Lejonvarn's points, clarified the law on a duty of care and liability for pure economic loss. The key points to be taken from the Appeal judges’ decision are set out below.

In the absence of a contract, there can still be a duty of care

The TCC had concluded that there was no contract, but that the parties’ relationship was “akin to a contractual one”. Mrs Lejonvarn had assumed responsibility to the Burgesses and therefore owed them a duty of care in tort.
The Court of Appeal agreed and found that even if there was no contract, a duty of care could still arise in tort.

The correct test on pure economic loss

The TCC decided that Mrs Lejonvarn was liable for pure economic loss in tort as the “assumption of responsibility” test had been satisfied.
In her appeal, Mrs Lejonvarn said this was the wrong test to apply. The Court of Appeal disagreed with Mrs Lejonvarn and held that the assumption of responsibility test was appropriate in two main areas:

  1. Where there was a fiduciary relationship, and
  2. Where someone voluntarily provided services in circumstances where he knew or ought to have known that an identified person would rely on his advice.

This claim clearly fell into the second of these two cases, and therefore the assumption of responsibility test was correctly applied.

Distinction between contract and tort

A basic distinction between contract and tort is that a contract can impose positive obligations on a party (e.g. to carry out a specific job). Contrastingly, tort can only impose a negative obligation – e.g. a duty to act with reasonable skill and care.
Mrs Lejonvarn appealed the TCC’s decision on the basis that it had decided that she owed positive duties, that was only possible if there had been a contract (which the TCC had said there was not).
The Court of Appeal recognised the importance of this principle and emphasised that it did not find that Mrs Lejonvarn had a duty to carry out the services. It found that if she chose to perform the services, then she must act with reasonable skill and care.

Comment

The TCC described its own decision as a “cautionary tale” to those giving free advice to friends and family. However, it did note that this was more than a “piece of brief ad hoc advice”. The Court of Appeal’s decision reaffirms this, and helps clarify how to test whether it is reasonable to impose a duty of care.
If you have received advice or services from a professional (whether formally or not) and are concerned that they have caused you a loss, our professional negligence team can help. Call today on 0800 988 7756 for a FREE consultation.
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