| Date | 3 September 1997 |
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| Judgment | Machin -v- Adams and others, C.A. 7 May 1997 (unreported) |
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| The Issue | Architects' duty of care towards third parties. |
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| Implication |
Architects and engineers may owe a duty of care to third party purchasers or funders of the project works where a reliance can be shown to exist upon their statements or advice given. |
printThe duty of an architect or engineer towards parties other than the client is perhaps best defined by reference to the 1964 case of Hedley Byrne -v- Heller & Partners. Heller were advertising agents who asked their bankers to enquire into the financial stability of one of their clients. The bankers made enquiries and gave favourable references "without responsibility". In reliance on this reference Heller placed orders with their client which resulted in a loss. The case confirmed the principle that the statement of the bankers was a negligent misrepresentation which could give rise to an action for damages for financial loss. This principle was established even although the disclaimer "without responsibility" was sufficient to negative the duty which would have been implied by law. The 1990 case of Caparo -v- Dickman, provided further clarification that persons who perform services of a professional nature possessing a special expertise may assume a responsibility giving rise to a tortuous liability irrespective of whether there is a contractual relationship between the parties. Indeed in such circumstances, a plaintiff may choose between concurrent remedies in contract or tort. Such liabilities are generally categorised under the term negligent mis-statement, and it has been said that the persons who may be potentially liable are "those persons such as accountants, surveyors, valuers and analysts whose profession and occupation it is to examine books, accounts and other things and to make reports on which other people, other than their clients, rely in the ordinary course of business". These general points were recently considered in the case of Machin -v- Adams. Mrs Machin had agreed to purchase a property from Mr & Mrs Adams providing the latter completed substantial building works to the property which were intended to convert the building for use as a nursing home. The Adams had engaged an architect and it was agreed that a certificate of the architect on completion would trigger the sale of the property. In fact the architect was never called upon to certify completion of the works and his last action had been a letter to the Adams, copied to Machin, in which he said there was about two weeks work to complete and that all materials required for completion were on site. In this letter he went on to state "all the works to date are to a satisfactory standard. I estimate that the sum of £25,000 is required to complete the works". On the strength of this letter Mrs Machin concluded the sale of the property on the agreed price less a retention of £25,000 for what she understood to be incomplete works. Soon after, however, it was discovered that there were substantial defects in the works and that the retention of £25,000 would be insufficient to cover these. In the event Mrs Machin sued the architect together with the Adams, claiming that she had relied upon his letter in agreeing to purchase the property subject to the deduction of £25,000 and that he owed a duty of care in tort in respect of this letter. Mrs Machin argued that but for the letter from the architect she would herself have obtained professional advice upon the standard of the works carried out. She argued that had she done so and learned of their defective quality, she would have sought to negotiate different terms for completing the purchase. In considering whether the architect owed a duty to Mrs Machin the Court followed the guidelines in Caparo -v- Dickman. The architect knew that the purchaser required his advice on the standard of the works. He knew that the advice would be communicated to the purchaser for the purpose of satisfying her on that point and, furthermore, he knew that the purchaser would be likely to act upon it without making independent enquiry. But none of this was enough. The architect had not been allowed to make his final inspections and had not certified completion of the works as anticipated under the original contract agreement. The Court considered this particularly telling. "In these circumstances it seems to me quite impossible to regard the architect's letter as a document upon which the architect should have anticipated Mrs Machin would rely in taking some irrevocable step or indeed one on which she was properly entitled to rely. It was rather in the nature of an interim letter of comfort." But for this consideration the Court would have held that the architect did indeed owe a duty of care to the purchaser of the property, Mrs Machin.
CJ-9732
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