Were architects liable to a company that did not exist when they supplied plans?

Many of those involved in the property industry will be aware that property developers sometimes use single purpose vehicles to develop land. The question that arose in Valley Brook Investments Ltd v Huam Ltd [2020] EWHC 1715 (Ch); [2020] PLSCS 137 was whether a firm of architects, which had supplied plans to a developer, owed a duty of care to the development company formed by the developer specifically for the purpose of acquiring and developing land. The firm of architects had been engaged by a seller to prepare plans and drawings showing the potential for converting a building into 16 residential units. It then provided them to the developer, when he became interested in the property, in the hope of being engaged on the project in due course. But the drawings supplied overstated the area of the building by approximately 30% and it proved impossible to redevelop the property to accommodate the specified number of apartments. So the developer, and the development company, issued proceedings for damages. The architects claimed that the development company was not in existence when they supplied the drawings. But the judge found as a fact that the developer had informed the architects that he was intending to purchase and develop the property through a company. And he explained that professionals may be liable even if they do not know the precise identity of the third parties who rely on their work, if the identity of those parties is capable of being ascertained: see Shankie-Williams v Heavy [1986] EGLR 139 and Playboy Club London v Banca Nazionale del Lavoro [2018] UKSC 43. So the fact that the company did not exist when the developer received the drawings did not prevent the court from finding that the architects had assumed responsibility to the company, in accordance with the principles laid down in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, given that the cause of action did not actually accrue until the company acquired the property. Was it reasonable for the company to have relied on the drawings? And could such reliance reasonably have been anticipated? The judge answered both these questions in the affirmative, even though the architects claimed that the drawings were nothing more than “initial feasibility layouts” and that reliance on them was not to be anticipated and was not reasonable. The judge observed that “feasibility” is a normal English word, which conveys the meaning of possibility or practicability, and there was no reason that the description should have been understood as having a more limited meaning. Indeed, the use of the word “feasibility”, without any qualification, indicated that the proposed development would be possible. Furthermore, the relationship between the parties was that of adviser and client/quasi-client, with the drawings being provided for a modest fee in circumstances where it was envisaged that the architects would be engaged on the project in due course. But the developer’s own claim against the architects was unsuccessful. There had been no reason for the architects to anticipate that the developer would rely on the drawings since he had informed them that he intended to acquire and develop the land through a company. Allyson Colby, property law consultant