What duties of care might you owe if you offer a friend free professional advice? This question has recently been considered by the Court of Appeal in the Burgess & Burgess v Lejonvarn case which we previously reported in February 2016 and is relevant to professionals in all sectors.
The Court of Appeal dismissed an appeal against a Technology and Construction Court (TCC) finding that Mrs Lejonvarn owed a duty of care in tort for services that she performed for her friends, Mr & Mrs Burgess.
Mrs Lejonvarn, an architect and project manager by trade who offered to design and project manage a landscape gardening project for her neighbours, Mr & Mrs Burgess, who she had been friends with for many years.
The arrangement was not formally documented in writing. There were various email exchanges which were a mixture of business and pleasure. The emails described the nature of the duties to be carried out by Mrs Lejonvarn but did not contain any detail regarding the nature of the professional relationship between the parties.
As with many construction projects there were a number of problems on site and the costs escalated by 100%. The parties fell out and Mr & Mrs Burgess commenced proceedings against Mrs Lejonvarn claiming damages for the cost of remedial works together with the increased cost of completing the project.
So what, if any duties, of care did Mrs Lejonvarn owe Mr & Mrs Burgess given that she had provided her services gratuitously?
The Court of Appeal (C/A) has unanimously upheld the TCC decision. It has rejected all of Mrs Lejonvarn’s grounds of appeal and decided that she owed a duty of care to Mr & Mrs Burgess in tort even though her services had been provided free of charge. The C/A confirmed that although the services were provided free of charge, Mrs Lejonvarn had assumed a duty of care to Mr & Mrs Burgess in providing professional services on a professional footing. The judge held that firstly Mrs Lejonvarn had assumed a duty of care and secondly, that Mr & Mrs Burgess had relied upon Mrs Lejonvarn to provide those services with reasonable skill and care.
The judge confirmed that a duty of care can arise even when the services are provided free of charge. The judge also confirmed that the duty of care was owed in respect of pure economic loss on a construction project. The judge held that Mrs Lejonvarn should be judged by the standards of a reasonably competent architect and project manager.
Clearly this case should provide a stark warning to professionals in any capacity who are asked to provide free advice or services to a friend or relative as the professional may inadvertently assume a duty of care and end up liable in damages in the event that things go wrong.
However, before panicking, we need to consider some of the facts that were specific to this case. One important factor was this was not a case where a one off piece of ad hoc advice was provided. In this case, professional services were provided for a major professional project over a prolonged period.
If you find yourself in this scenario then it is preferable to agree in advance the scope of the services that you are providing and to document the arrangement in writing thus forming a legally binding contract. Without a formal contract then there is now a risk that you could owe a wider duty of care in tort. If a formal contract seems disproportionate then as a minimum you should ensure that key terms are set out in writing, be it in an email or other correspondence. It is always sensible to put in place standard terms and conditions to cover all services provided, be it with friends or business to business. This prevents future arguments down the line. If you feel awkward about imposing conditions on a friend, the best way to get round this is by explaining that the terms and conditions work to provide protection in both directions and will avoid future fall outs. A true friend surely would not question this. Otherwise, this case acts as a warning to take heed before mixing business and pleasure.
If you would like any advice about dispute resolution, dispute avoidance and/or any assistance drafting construction contracts or general terms and conditions, please do not hesitate to contact Katherine Sibley, Head of Construction & Engineering, on 01228 552600 or 01524 548494.