REUTERS | Fayaz Kabli

With friends like these… Lejonvarn v Burgess: the parable for construction professionals continues

In Lejonvarn v Burgess, the Court of Appeal upheld the first instance decision (which Oliver Pearson blogged about) that an architect/project manager providing services gratuitously and in the absence of a contract owes a tortious duty to exercise reasonable skill and care in performing those professional services.

The Court of Appeal also clarified the relevant test to apply in cases involving a relationship that was “akin to a contract” and made some interesting points about the scope of the duty that Mrs Lejonvarn owed which may have a wider application.

The garden project

Mr and Mrs Burgess wanted to re-landscape their garden. They were planning to use a well-known garden designer who quoted around £150,000 for the works. This was a little steep according to their friend, Mrs Lejonvarn, a project manager and architect by trade. Mrs Lejonvarn had been involved in previous projects for Mr Burgess’ business and when he asked her if she could carry out the garden project for them, Mrs Lejonvarn agreed to do so and that, at least for the early stages of the project, she would not charge for her services as project manager.

The project did not go well. The costs of the project significantly overran. Relations between the two deteriorated and Mrs Lejonvarn was eventually replaced with the original garden designer. The Burgesses claimed against Mrs Lejonvarn in contract and tort for the increased cost of completing the works (£265,000).

First instance decision

The first instance hearing had been limited to preliminary issues relating to whether a contract was concluded between the parties and whether Mrs Lejonvarn owed a duty of care for the services she gratuitously performed for the Burgesses. The judge concluded that there was no contract between the parties but Mrs Lejonvarn nevertheless owed the Burgesses a duty of care in tort.

The Appeal

On appeal, Mrs Lejonvarn argued that the judge had erred in holding that a duty of care existed where there was no contract between the parties. There were other grounds of appeal based on the specific duties that Mrs Lejonvarn was said to owe.

Counsel for Mrs Lejonvarn submitted that the judge had wrongly applied the test of assumption of responsibility, and that he should have applied the threefold test set out in Caparo Industries v Dickman [1990] 2 WLR 358, namely whether:

  • The loss was reasonably foreseeable.
  • There was a sufficient relationship of proximity.
  • In all the circumstances it was fair, just and reasonable to impose a duty of care.

Mrs Lejonvarn argued that it was not fair, just and reasonable to impose a duty of care in circumstances where:

  • The parties did not intend to create a contractual relationship.
  • The builders would not owe an equivalent duty in respect of their works (see Robinson v PE Jones (Contractors) Ltd).
  • The original garden designer would not owe an equivalent duty either.

The other issue emphasised by counsel for Mrs Lejonvarn was the distinction between duties in contract and tort. Contracts involve undertaking positive obligations while the tort of negligence is concerned with imposing a negative duty to avoid doing something entirely or to avoid doing something badly.

Decision

The appeal was dismissed. Lord Justice Hamblen said that:

“The fact that there was no contract does not mean that the parties’ relationship could not be akin to a contractual one.”

The court concluded that the absence of offer and acceptance, consideration and intention to create legal relations is not determinative of whether there has been an assumption of responsibility: other circumstances are relevant too.

The first instance judge was entitled to conclude that there had been an assumption of responsibility in light of the findings he had made that Mrs Lejonvarn:

  • Agreed to provide professional services on a professional footing (that is, not in an informal or social context).
  • Provided, and confirmed that she had provided, those services.
  • Knew that the Burgesses were relying on her to perform those services properly.

An email sent by Mrs Lejonvarn was particularly persuasive in the court’s finding in this regard. In that email Mrs Lejonvarn confirmed that she had been providing services for her “clients” in relation to which there were “professional boundaries”. She emphasised that there would be clear risks in allowing the work to continue without someone, such as her, with “knowledge of technical, logistical and design solutions” to manage site problems and prevent cost increases and unacceptable results.

What can we take away from this case?

The Court of Appeal clarified the relevant test to apply in cases involving a relationship that was “akin to a contract” and made some interesting points about the distinction between professionals and builders and the scope of the duty that Mrs Lejonvarn owed which are likely to have a wider application.

Appropriate test to apply where relationship is akin to a contract: The Court of Appeal concluded that the appropriate “test” in this type of case was the assumption of responsibility test. Hamblen LJ referred to the judgment of Lord Mance in Commissioners of Customs and Excise v Barclays Bank. Lord Mance commented:

“… there is no single common denominator, even in cases of economic loss, by which liability may be determined. In my view the three-fold test of foreseeability, proximity and fairness, justice and reasonableness provides a convenient general framework although it operates at a high level of abstraction. The concept of assumption of responsibility is particularly useful in… two core categories of case… when it may effectively subsume all aspects of the three-fold approach.”

The two core categories are where:

  • There is a fiduciary relationship.
  • The defendant has voluntarily answered a question or tenders skilled advice or services in circumstances where it knows or ought to know that an identified person will rely on those answers or advice.

This was a case which fell within the second category.

The distinction between professionals and builders: The court noted that there was a distinction between professionals and builders. Professional persons are taken to assume responsibility for economic loss to their clients because typically, they give advice, prepare reports, draw up accounts, produce plans and so on that they expect their clients and possibly others to act in reliance upon, often with financial or other economic consequences. Although a typical builder would offer a warranty in relation to defective works it is not usually able to provide this type of professional service. This was precisely the position in this case. Contrast this with the position of the design and build contractor, the well known garden designer in this case. The court commented that this person was a “one stop shop” who was:

“providing all the work and services required and would have been contractually responsible for their proper performance regardless of by whom they were in fact carried out.”

As a result, it was irrelevant that the original garden designer would not have owed tortious duties of the type imposed on Mrs Lejonvarn as there was no direct comparison between the two.

Scope of the duties owed: Hamblen LJ made clear that Mrs Lejonvarn’s duty in tort was not a duty to provide her services as an architect and project manager. It was a duty to exercise reasonable skill and care in performing the services that she did in fact provide. In other words, she was not under a positive obligation to provide those services but having chosen to do so, she owed a duty to exercise reasonable skill and care. Expressed in those terms, imposing a tortious duty does not trespass on the realm of contract.

However, the court found that the first instance judge had gone too far in defining Mrs Lejonvarn’s positive obligations in relation to design work and had been drawn into matters which depended on a more detailed consideration of the evidence and the facts. There was no obligation to carry out design work, but the design work which was done had to be done with reasonable skill and care so as “to enable a fairly firm budget estimate to be prepared”.  The Court of Appeal recast the duty:

“In so far as Mrs Lejonvarn provided designs to enable the Garden Project to be constructed, thereby performing a professional service acting as an architect and project manager, she owed a duty to exercise reasonable skill and care”.

In all other respects, the Court of Appeal rejected the appeal.

Lessons learned

If you take one thing away from this case, it should be the point that we made in our earlier blog post: beware of the dangers of mixing work and friendship. This case demonstrates that a professional can assume a responsibility not to cause economic loss when providing services for free and without a contract.

However, as is often the way, this was a case that turned on its facts and on the evidence. Mrs Lejonvarn had done previous work for Mr Burgess and had written him emails acknowledging that she was providing professional services and that the Burgesses would be relying on those services to “prevent cost increases and unacceptable results”.

Berwin Leighton Paisner LLP Jennifer Varley

Leave a Reply

Your email address will not be published. Required fields are marked *