Burgess & Anr v Lejonvarn Construction Services Ltd

[2016] EWHC 40 (TCC)

This was a trial of preliminary issues relating to the question of whether a professional consultant owed a duty of care in tort when performing gratuitous services for friends.

In 2012, Mr Peter and Mrs Lynn Burgess (the “Burgesses”) obtained a quotation of approximately £200,000 for works to the back garden at their home in Highgate, London. The Burgesses had been friends for a number of years with Mrs Basia Lejonvarn (“Lejonvarn”), a Netherlands-registered architect living in London, who informed them that she believed the Works could be completed within a smaller budget. Lejonvarn, who had in the past provided gratuitous design services for the Burgesses, began providing design and project management services for the  project. She did not ask for payment from the Burgesses, but it was her intention to charge a fee for detailed design work at a later stage in the project.

As the project progressed however, the Burgesses became concerned about the quality and cost of the Works. The relationship between Lejonvarn and the Burgesses deteriorated, and ultimately the Burgesses engaged the specialist landscape designer who had provided the original quote to complete the project. The Burgesses then claimed against Lejonvarn, in both contract and tort, for the increased cost of completing the works (including remedial works). The maximum value of the claim was £265,000.

The TCC had to determine the following five preliminary issues:

  1. Was a contract concluded between the Burgesses and Lejonvarn?
  2. If so, what were its terms?
  3. Did the professional consultant (Lejonvarn) owe a duty of care in tort?
  4. If so, what was the nature and extent of her duty?
  5. Was a budget of £130,000 for the project discussed by the parties before 5 July 2013, and if so, when?

Mr Alexander Nissen QC held that there was no contract between the parties, as there had been no offer and acceptance capable of giving rise to a contract, as well as no consideration. The Burgesses’ claim in contract therefore failed.

The court further observed that the losses claimed by the Burgesses were pure economic losses, and noted that whilst there were conflicting authorities as to whether a professional designer in the construction sphere owes a duty of care in respect of pure economic loss, “the preponderance of authority is that a duty is capable of being owed” despite the decision in Payne v John Setchell [2002] BLR 498.

Lejonvarn did not deny that a duty of care could arise, but instead challenged the scope of the duty, arguing that a duty of care in respect of pure economic loss could arise from advice given, but not from a duty to perform a service. Referring to Hedley Byrne v Heller [1964] AC 465 and Murphy v Brentwood District Council [1991] 1 AC 398, Lejonvarn contended that the law distinguished between advice on the one hand and the provision of services (such as supervision) on the other, and noted that the courts had clearly rejected the notion that a duty of care should be imposed on a contractor carrying out construction work (see Murphy). It was submitted therefore that it would be illogical if a party who was generally overseeing work (in this case, Lejonvarn) owed a duty which was wider than that of those actually executing the work itself.

Referring to a number of other cases, including Henderson v Merrett Syndicates [1995] 2 AC 145 and Robinson v Jones (Contractors) Ltd (Issue 128), the court rejected Lejonvarn’s argument, finding 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”. Further, the court referred to the case of Lidl Properties v Clarke Bond Partnership [1997] Env. LR 662, where a duty of care had been found to exist with regard to the giving of gratuitous advice in the construction sphere.

The court therefore found that Lejonvarn owed a duty of care in tort to the Burgesses, and that the duty covered inter alia 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 Lejonvarn 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.

In this regard, the court held that the Burgesses and Lejonvarn had discussed a budget of £130,000 on two occasions prior to 5 July 2013, and that Lejonvarn knew the Burgesses were relying on that figure. Lejonvarn therefore assumed responsibility to the Burgesses for the accuracy of the budget figure.

Whilst this judgment clearly highlights the inherent risk to professionals in offering informal advice, it is important to note that the court emphasised that:

“this was a significant project … approached in a professional way. This was not a piece of brief 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.”