A recent court case has passed across our desks and it is one which is certainly worth drawing to your attention, particularly if you give advice.
The judgement is attached and can also be found here.
It concerns the case of a lady who wanted a new garden designed and a friend who was an architect offering to help and to choose the contractor.
Both parties had been friends and previous near neighbours for some ten years, and when things went wrong with the garden project, the relationship deteriorated and Mr & Mrs Burgess took action to recover their losses.
Several clear points arise from the judgement: that of the basis of ‘free’ advice to family and friends, the need for a contract to define what services are to be performed, at what cost and any limitations in place for either party in any transaction and what duty of care may arise in the area of ‘free’ advice.
After reviewing all the evidence both verbal and written, Mr Alexander Nissan QC who presided over the matter, was unable to clearly identify any clear contract nor was he able to identify any discussion regarding the payment between the two parties for the services to be provided. There had been numerous exchanges of email correspondence between the two parties, but as stated by the judge, these were unclear.
However, the lack of such a contract for services to be performed or agreement for remuneration does not mean that a duty of care is not owed by the person perceived as a specialist.
The judge reaffirmed that a duty of care can be owed whenever a professional exercises a 'special skill' to assist another person, even where no fee is to be charged or sought and where there is no contract in existence.
All the architect wanted to do was to help her friend but in doing so she emphasised her specialisation and was caught on the hook of professional duty.
The simple rule is that if you hold yourself out to be a specialist and if anyone relies on your advice or guidance and in doing so suffers financial loss, then you might be liable. This is even if you are acting as a private individual and not as an employee of your own Insurance Brokerage.
It is worth pointing out that the architect did not have any Professional Indemnity cover in place and even if she did it is a moot point whether the insurer would have covered her due to the fact that she might have been regarded as reckless in giving advice without any client agreement in place.
One of the problems in not having a clear written contract is that there is no ability to rely on any limitation of liability, so an individual potentially faces unlimited liability, which is a valuable reminder.
Another point made by the Court was that because there was no formal agreement in place the professional person could not rely on protective clauses (such as limitation of liability) in her standard TOBA.
Consider the instances when you could be at a dinner party or a local charity or sports club gathering and somebody asks you for some advice and you fall into the trap of giving advice just to help out. This can be a potential hotbed of negligence claims.
So the message is clear. You should always consider making sure a TOBA is agreed with the person or firm to whom you are giving advice even if that is a friend or you are trying to help on a pro bono basis.