Property and construction professionals should exercise caution when providing professional assistance to friends. Stuart Pemble tells a cautionary tale of woe
Key points
- Property and construction professionals should be cautious about giving free advice to their friends.
- If the advice is wrong, they could end up losing both a significant amount of money and their friendship.
Most law students will have a few cases that get stuck in their minds indelibly. Speaking personally, the Court of Appeal’s decision in Chaudhry v Prabhakar [1989] 1 WLR 29 really made me sit up and take notice. Before studying that judgment, I had failed to appreciate how the law of tort could impose itself on most aspects of our daily lives. Afterwards, I often deceive myself into thinking that I am an expert in spotting previously well-hidden duties of care.
Be car-eful
Chaudhry is one of a number of cases dealing with the potential consequences in the tort of negligence where one friend relies on help given by another for free. C had just passed her driving test and wanted a secondhand car that had not been involved in an accident. P (a close friend) offered to help. He recommended a car with a bonnet he knew had been straightened or replaced. P was not a mechanic. He did not ask the seller whether the car had been involved in an accident. C bought the car on P’s advice. The car was not roadworthy. Because of C’s reliance on P’s recommendation as well as a concession by P’s barrister that his client did owe C a duty of care (and notwithstanding the fact that the advice was given for free), the Court of Appeal awarded damages against P.
Chaudhry was not without controversy. In his judgment, May LJ queried whether the concession regarding the existence of a duty of care between friends where one gives another free advice might not have a negative effect on normal social relations. Notwithstanding that judicial caution, it remains (for this legal geek at least) an important reminder of the fact that offering to help your friends can have terrible consequences for both your bank balance and, perhaps more importantly, your friendships.
When things go wrong
The issue of one friend providing free assistance to another has been recently considered by Alexander Nissen QC, sitting as a deputy High Court judge, in Burgess and another v Lejonvarn [2016] EWHC 40 (TCC); [2016] PLSCS 21.
Mrs Lejonvarn is an architect (registered in the Netherlands, not the UK) and a former neighbour of the claimants, Mr and Mrs Burgess. Mrs Lejonvarn had provided professional assistance to Mr Burgess’s business. Some of this work had been done for free and some of it had resulted in a payment to the firm which Mrs Lejonvarn was working for at the relevant time.
In 2012, the claimants obtained a quote of more than £200,000 for landscaping work in their back garden. Mrs Lejonvarn, who was at the time setting up her own business, suggested it could be completed for a lesser cost. Although Mrs Lejonvarn disputed this, Mr Nissen QC held that she then provided the Burgesses with design and project management services. No formal agreement was ever signed and Mrs Lejonvarn never asked to be paid for the work she was doing.
The project did not progress well. The Burgesses were concerned about increasing cost and poor quality. Their friendship with Mrs Lejonvarn took a sharp turn for the worse. The Burgesses engaged a landscape designer to complete the work and sought to claim up to £265,000 (the increased costs of completing the project as well as remedial work) from Mrs Lejonvarn. The claim was for both breach of contract and tort.
As Mrs Lejonvarn had not carried out the work under the auspices of the business she was in the process of establishing, she would have to satisfy any damages awarded against her personally. For very understandable reasons, Mrs Lejonvarn resisted the claim.
The judge’s findings
Having decided that the facts did not support the existence of a contract (there was no offer or acceptance), Mr Nissen QC was persuaded that Mrs Lejonvarn owed a duty of care in tort. The judge accepted that the Burgesses’ claim was for pure economic loss and he was persuaded (relying on the well-known line of cases stretching from Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 through Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 to Robinson v PE Jones (Contractors) Ltd [2011] EWCA Civ 9; [2011] 1 EGLR 111) that the relationship between the parties was sufficiently close to entitle the Burgesses to recover pure economic loss.
The judge emphasised that the advice could not be categorised as informal: “This was not a piece of brief ad hoc advice.. proffered… 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… It would be wrong to categorise this as akin to a favour given without legal responsibility.”
Lessons to be learned
While Chaudhry and Burgess arguably represent two extreme (and opposite) examples of the types of situation where free advice from a friend can result in a successful damages claim in tort, both contain the same stark warning for construction and property professionals who are asked to help their friends for free.
There are two practical steps you can take to protect yourselves from a similar fate. First, if you are being asked to give professional advice, agree a formal contract and get paid for your expertise. And, if it is really one of those “less formal” situations referred to by Mr Nissen QC, stress that you are not giving advice that is intended to be relied on. If friends want to rely on your advice, they should pay for it.
Stuart Pemble is a partner at Mills & Reeve LLP
