Proceed with caution when advising friends

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William Chung from TaylorWessing looks at a case that deals with the sticky subject of offering professional services to friends with no contract or fee.

The Court of Appeal recently upheld the first instance decision in Lejonvarn v Burgess [2017] EWCA Civ 254, deciding that an architect providing services to her friends without charge and in the absence of a contract still owed a tortious duty of care to exercise reasonable skill and care in delivering such professional services.

The Court of Appeal reasoned that despite the fact that there was no contract or charge for the services, the architect assumed responsibility to her friends in performing the professional services and that these were provided in a professional context. Furthermore, her friends specifically relied on the architect’s professional expertise and for the services to be performed properly.

Background 

The Burgesses and Mrs Lejonvarn were former neighbours and had been good friends for some years.

The Burgesses wished to re-landscape their garden and had received a quotation of more than £150,000 which they considered too expensive. So they asked Lejonvarn, an US qualified architect and project manager by trade, for her assistance with the garden landscaping project.

Lejonvarn agreed not to charge a fee for her services in respect of the early stage of the project. However, the project did not go well and the Burgesses claimed that much of the work done during Lejonvarn’s involvement was defective and that she was legally responsible for it. The Burgesses were unhappy with the quality and progress of the work and Lejonvarn’s involvement came to an end in July 2013. 

The Burgesses claimed against Lejonvarn in contract and tort for damages of around £265,000.

The High Court considered the following issues:

• Whether there was a contract between the Burgesses and Lejonvarn; and
• Did Lejonvarn owe a duty of care for the services she gratuitously performed for the Burgesses?

The High Court judge found that it was impossible to identify any offer and acceptance from the email correspondence between the parties. Basic elements of contract were absent and therefore the High Court determined that there was no contract between the parties. 

Although there was no contract, the High Court found that there had been an assumption of responsibility which gave rise to a duty of care in tort. In the circumstances, Lejonvarn assumed responsibility to the Burgesses for performing the professional services and they specifically relied on her for that purpose. Therefore, Lejonvarn owed a duty of care to the Burgesses to exercise reasonable skill and care in the provision of professional services in her capacity as an architect and project manager.

On appeal, Lejonvarn argued that the first instance decision had erred in concluding that a duty of care arose where there was no contract between the parties.

Counsel for Lejonvarn further argued that the test of assumption of responsibility established in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 was wrongly applied and that the threefold test in Caparo Industries Plc v Dickman [1990] AC 605 should have applied instead, namely:

• Whether the loss was reasonably foreseeable;
• Whether there was a sufficient relationship of proximity; and
• Whether in all the circumstances it is fair, just and reasonable to impose a duty of care.

The Court of Appeal judge found that, “the fact there was no contract does not mean that the parties’ relationship could not be akin to a contractual one” and therefore the test of assumption of responsibility was still appropriate in a relationship akin to a contract.

The court was persuaded by the fact that Mrs Lejonvarn had confirmed she had been providing services for her “clients” in relation to which there were “professional boundaries”. Even though the parties were friends and the services were provided free of charge, they were still provided on a professional footing – as such, the appeal was dismissed and the first instance decision upheld.

However, the Court of Appeal did stress that there was no duty placed upon Mrs Lejonvarn to provide services. The architect was not obliged to provide any services but to the extent that she did, she owed a duty to exercise reasonable skill and care in the provision of those services.

The Court of Appeal also made a distinction between a builder and a professional in relation to economic loss, citing that professionals are taken to assume responsibility for economic loss to their clients given the expectation that the professional’s work product will be relied upon. In contract, a builder does not ordinarily owe a duty of care to protect against economic loss to third parties or to his direct client.

Conclusion

This case is a clear reminder of the dangers of mixing work and friendship. 

It highlights how a professional can be deemed to assume a responsibility not to cause economic loss and provide a service which is relied upon even in the absence of a contract and a fee in a seemingly social context.

The case also illustrates the dangers in failing to document an agreement to provide professional services.

William Chung is an associate at TaylorWessing in the firm’s Construction and Engineering group specialising in non-contentions construction work

This article was first published on TaylorWessing’s website.