Hong Kong – Professional Consultants – Beware When Performing Gratuitous Services.

2 July, 2016

 

In the recent case of Peter Burgess and Lynn Burgess v Basia Lejonvarn [2016] EWHC 40 (TCC), England’s Technology and Construction Court decided as a preliminary issue that a professional consultant (designer) owed a duty of care in tort when performing gratuitous services for friends. The case highlights the risks to professionals where they offer informal advice gratuitously, although here, the Court found that the advice given was not brief ad hoc advice of the type occasionally proffered by professional people in a less formal context.

 

Background

 

The Claimants, asked their friend and former neighbour, who was a designer and qualified as an architect in Canada, for professional assistance in relation to a landscaping project in their garden. The designer secured a contractor to carry out the earthworks and hard landscaping, her intention being to provide subsequent design input in respect of the “soft” elements of the project, such as lighting and planting, for which she intended to charge a fee. Her involvement in the project was brought to an end by the Claimants before that stage was reached.

 

The Claimants alleged that the work carried out by the contractors, during the period of the designer’s involvement in the project, was defective and that the designer was legally responsible for it. The Claimants also made criticisms in relation to procurement, project management, budgeting and cost control of the project, but the designer denied being responsible for any of those services. She also denied being responsible for the quality of the contractor’s works.

 

Preliminary Issues

 

The Court had to determine five preliminary issues, namely:

 

(i)               Was a contract concluded between the Claimants and the designer?

(ii)             If so, what were its terms?

(iii)            Did the designer owe a duty of care in tort?

(iv)            If so, what was the nature and extent of her duty?

(v)             Was a budget of £130,000 for the project discussed by the parties?

 

Was a contract concluded between the Claimants and designer?

 

No. The Court held that there was no contract between the parties, as there had been no offer and acceptance capable of giving rise to a contract and no consideration. The Claimants’ claim in contract therefore failed.

 

Did the designer owe a duty of care in tort?

 

Yes. The Court said that in the provision of supervision services in respect of construction work, a professional usually deploys a special skill and, in circumstances where there is an assumption of responsibility, a duty of care arises. That is the case, the Court said, even though the contractor who creates the defective construction work in the first place owes no such tortious liability. The Court concluded that in law it was established that a duty of care extends to the protection against economic loss in respect of both advice and any service in which a special skill is exercised by a professional. The duty, the Court said, can extend to negligent omissions as well as the performance of negligent acts. For present purposes, the relevant ingredients giving rise to the duty were an assumption of responsibility by the provider of the service coupled with reliance by the recipient on the service, all in circumstances

which made it appropriate for a remedy to apply in law. A duty of care may arise, the Court said, even where the services were performed gratuitously and in the absence of a contract.

 

Here the Court found that over a period of time, the designer had agreed to and did in fact provide a series of professional services to the Claimants in respect of the garden project and that she saw this both as an opportunity to provide professional services for her good friends and enable her to develop her nascent architectural practice. Although the Court accepted that the only specific financial remuneration she was expecting was for the design work at a later phase (which never eventuated), that did not mean that the services were not part of a professional relationship.

 

The Court found that the designer was the Claimants’ representative for the purposes of dealing with, instructing and approving payments to the contractor and was acting as project manager. The designer was (and in any event should have been), the Court said, well aware that the Claimants were relying on her to properly perform those services and the trust they placed in her was manifest. The services that the designer provided reflected the skills which the Claimants themselves did not possess, the Court said.

 

The Court therefore concluded that the designer had assumed responsibility to the Claimants for performing professional services in respect of the garden project and that they specifically relied on her for that purpose. The Court was also satisfied that the circumstances were such that it was appropriate for a tortious remedy to apply in law. This was a significant project, albeit in a residential setting, and was being approached in a professional way.

 

This was not, the Court said, a piece of ad hoc advice of the type occasionally proffered by professional people in a less formal context. Instead, the services were provided over a relatively lengthy period of time and involved considerable input and commitment on both sides. They also involved significant expenditure on the part of the Claimants. It would be wrong, the Court said, to categorise this as akin to a favour given without legal responsibility.

 

The Court said that it was relevant to the context that the designer did hope to receive payment for the soft design services that would later be provided. She therefore had a direct interest of her own in properly performing services for the Claimants.

 

What was the nature and extent of the designer’s duty?

 

The designer owed the Claimants a duty of care to exercise reasonable skill and care in the provision of her professional services acting as an architect and project manager on the garden project.

 

The Court held that the designer’s duty covered the selection and procurement of contractors and professionals, project management and supervision of the works, and detailed design work. The Court qualified the duties which it had identified by holding that the designer should be judged by the standards of a reasonably competent architect and project manager, and not by the standards of a structural or geotechnical engineer. The Court said that to the extent that the services which the designer had agreed to undertake involved a degree of specialist expertise beyond the remit of a reasonably competent architect or project manager, she was entitled to rely on the specialist experience of others in respect of such matters provided that she had reasonable grounds for doing so.

 

Was a budget of £130,000 for the project discussed by the parties?

 

The Court found that the designer had discussed with the Claimants a budget of £130,000 and that the figure was the subject of a detailed calculation by the designer and she knew that the Claimants were relying on that figure. The designer therefore assumed responsibility to the Claimants for the accuracy of the budget figure, the Court said.

 

Comment

 

Facts similar to those in the above case are not uncommon in Hong Kong. In order to secure work for a project, construction professionals sometimes offer to provide services free of charge at the initial stage. The judgment is a good reminder that even if there is no contractual relationship with the employer, the professional may still be liable for its negligence in tort. It is therefore important for him/her to disclaim liability expressly when providing gratuitous services to prospective clients, which should normally be effective according to the decision in Hedley Byrne Co Ltd v Heller.