Professional people often like to help out and offer a friend some advice and assistance in various circumstances. A recent court judgment highlights a risk of doing so.
In what the court described as a “cautionary tale”, a professional landscaping consultant performed various gratuitous services relating to her friends’ landscape gardening project. The project did not go smoothly, the relationship broke down and her former friends claimed for the cost of remedial works.
The court decided that the professional landscaping consultant owed a duty of care that covered several design and project management services. The court confirmed that a professional designer can owe a duty of care in respect of pure economic loss on a construction project. It also held that such liability is not restricted to advice given by the professional consultant, but can also cover other services that it performs.
However, the court emphasised that
“this was not a piece of brief ad hoc advice of the type occasionally proffered by professional people in a less formal context”.
This was a significant project approached in a professional way, with services provided over a relatively long period and involving considerable commitment on both sides. In addition, the professional consultant had hoped to receive payment for services that might be necessary later in the project.
In cases of negligent advice, the basic principle is to put the claimant in the position that he/she would have been in had the professional not breached the duty owed to the claimant. In other words, ordinarily a claimant will be entitled to recover the amount by which he/she is out of pocket as a result of relying on the defendant’s advice. In this case it was a substantial bill for remedial works.
Whilst each case is dealt with on its merits;
- Employers should ensure that they have appropriate internal policies in place to prohibit and ensure that they are not held responsible for any ad-hoc and usually free advice that employees may give out to ensure that they don’t face the risk of being held responsible, particularly given that the existence of professional indemnity insurance policies may make the employer business a more attractive target and
- Individuals should be very careful about assuming potentially very large personal liabilities that they didn’t envisage.