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What is an architect’s duty of care to third parties?

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Architects and building professionals who issue certificates or other documentation during, or on completion, of construction projects will be breathing a sigh of relief following a recent Court of Appeal decision.

The decision found that a firm of architects were not liable to the third party purchasers of individual properties within a development for failing to identify or remedy defective works at the completion of this particular project.

However, the judgment still leaves open the prospect of extending the extent, and scope, of the liability of those professionals to third party purchasers for negligent misstatement in certain circumstances.

What was the original decision?

The dispute concerned two blocks of residential flats in Peterborough that required significant remedial works due to defects with the roof, guttering, deflecting floors, acoustics, riser ducts, water leaks and plumbing.

Eight purchasers of the flats brought contractual claims against the developer Optima for the cost of those remedial works. However, the claimants also brought contractual and tortious claims against the architect Strutt & Parker in relation to certificates confirming the satisfactory construction of the flats. The claims against Strutt & Parker were that it breached its duty of care in tort to the claimants in its inspection services and subsequent certificates.

The Technology and Construction Court (TCC) held that the majority of the claimants were entitled to recover damages for breach of contract from Optima, but that provided little remedy because the developer was by then in administration. However, the TCC also held that the claimants could recover damages from Strutt & Parker. In reaching this decision, the TCC held that:

1. The certificates contained contractual warranties that were enforceable by the claimants.

2. Strutt & Parker also owed a duty of care to carry out the professional services referred to in the certificates with reasonable skill and care for the purpose of the subsequent production of the certificates.

3. There were clear breaches of that duty of care by Strutt & Parker in not detecting obvious defects in the works, by failing to re-inspect identified defects and by making assumptions and over relying on others to confirm that defective works had been remedied without actually carrying out confirmatory checks before issuing certificates.

4. The certificates therefore amounted to negligent misstatements for which the claimants were entitled to damages, notwithstanding that six of the eight claimants had received the certificates after they had purchased the property.

What was the Court of Appeal’s judgment?

The Court of Appeal’s judgment is significant in three respects.

Firstly, it ruled that the certificates did not amount to contractual warranties, disagreeing with the TCC’s finding that the certificates were written in a way which was akin to a contract, which would have provided the claimants with a claim based in contract, rather than in tort. The certificates were not described as a promise, warranty or guarantee.

Secondly, it dismissed the finding that the certificates were negligent misstatements. In order to recover damages for negligent misstatement a claimant must show reliance on the statement in question. The Court of Appeal held that the six claimants who purchased the property prior to the issue of the certificates could not have relied on the statements in the certificates when completing that transaction because the statements were not then in existence.

Thirdly, the Court of Appeal found that Strutt & Parker owed a contractual duty to Optima in respect of its certification of the works but that did not necessarily mean it owed future certificate holders a similar duty in tort. To impose an extended tortious duty in relation to Strutt & Parker’s inspections went too far in what was essentially an assumption of responsibility to take care in making a statement upon which persons will place reliance.

What are the lessons for architects and other construction professionals?

The Court of Appeal’s decision provides a useful reminder that a claimant must prove reliance on the actual statement in question as a necessary component to liability for negligent misstatement. However, this judgment does not rule out the prospect of construction professionals owing a duty of care to purchasers of property for the accuracy of certificates and other documents issued during the course of a project when the purchaser can establish reliance on that documentation. The following points are interesting to note in this regard:

1. Strutt & Parker did not seek leave to appeal the finding against it concerning two claimants to whom a certificate had been provided before the sale agreement was signed, which leaves open the question of whether the extended tortious duty would exist where the purchaser could establish subsequent reliance on the certificate when purchasing the property.

2. The Court of Appeal’s judgment gave an indication that the claims might have succeeded against Strutt & Parker had they been pleaded in a different way, for example that the architects assumed a responsibility to the purchasers for the accuracy of the statements in the draft certificate that had been issued at the date of the sale agreement.

Architects, and construction professionals should therefore be aware of the risk of a successful claim for negligent misstatement by third parties (in addition to any contractual liability they may have) if they fail to identify or remedy defective work and the third party can prove reliance on certification or documentation issued by those professionals in respect of that work.

For more information on an architect’s duty of care to third parties, or any other property or construction litigation matter, contact Colin Fenny on 01772 258321


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