A firm of architects has been found not to be liable to purchasers of flats who said they relied on Architects’ Certificates when buying their properties – even though the flats were subsequently found to be sub-standard.
The decision in the Court of Appeal is generally good news for architects, although it underscores the importance of taking great care when preparing and issuing certificates.Strutt and Parker was appointed to inspect a block of flats and to provide Architects’ Certificates for the benefit of purchasers and their lenders. It issued certificates which stated that the flats had been constructed satisfactorily although in reality the inspections had been conducted negligently and the quality of construction was poor.
The case was first heard in the High Court where Strutt and Parker was found liable for damages. The judge found that the certificates were enforceable warranties which contained negligent misstatements. He said that Strutt and Parker had failed in its duty of care to the purchasers by carrying out the inspections and compiling the certificates negligently.
At appeal the High Court’s decision was reversed for a number of reasons. First the Court of Appeal ruled that the Architect’s Certificate was simply a ‘representation’ rather than a ‘warranty’ as it did not contain any of the words usually used in a warranty such as ‘promise’ or ‘guarantee.
Second it said that a claimant must be able to show that he or she had relied on the negligent misstatements and had suffered a loss as a result. As the certificates were only provided to most purchasers after they had exchanged and completed on their flats, this was not the case.
Finally, it found that although Strutt and Parker had a contractual duty to carry out its work competently, it did not have a duty of care to those to whom certificates might one day be issued.
“This has been a complex case although the outcome is generally good news for the architectural profession,” said James Burgoyne, Director – Claims & Technical, Brunel Professional Risks. “However, firms must continue to take great care when preparing and issuing certificates. While the court decided the wording in the certificate in this case did not constitute a warranty – it is entirely possible that a slightly differently worded certificate could still be deemed to be a warranty.”