In a decision welcomed by architects, the Court of Appeal has overturned the decision in Hunt v Optima (Cambridge) Ltd. It has rejected claims for negligence in respect of an architect's certificates, since the purchasers were unable to show reliance on the certificates, given they were issued after purchase.
The first instance case
A group of purchasers claimed against the developer of residential flats for various defects in the properties. The claimants also joined the architect to the proceedings relating to his certificates stating that the works had been properly constructed and were in accordance with the relevant Building Regulations. The certificates were issued to the developer, who also paid for them, but were relied on by future purchasers. The purchasers had no direct claim for breach of contract by the architect and therefore needed to establish claims in tort between them and the architect.
First it was said that the certificates contained enforceable warranties. Second the certificates were said to amount to negligent misstatements which gave the claimants a cause of action in tort. Third it was said that the architect was negligent in failing to carry out the professional services referred to in the certificates with reasonable skill and care for the purpose of the subsequent production of the certificates.
The judge found that there were clear breaches of duty by the architect in not detecting obvious defects in the works, by failing to re-inspect identified defects and by relying on others to confirm that defective works had been remedied. He found against the architect and awarded the purchasers damages.
The Court of Appeal unanimously allowed the architect’s appeal on all grounds.
They found that because the certificate was not described as a warranty it could not be construed as such or relied on as if it were a contractual guarantee.
The appeal judges also held that in order to recover for negligent misstatement a claimant must show that they relied on the statement in question. The claimants were aware that they would have a certificate for the property, but committed to purchase prior to receiving the certificate. The statements therefore did not exist at the time of purchase. It was found that, at best, the claimants could have relied on an understanding that they would receive the certificate after completion or that a certificate was already in place. However, this was not enough to establish reliance.
The court concluded that a draft certificate which was as yet unsigned and unissued, and therefore capable of being amended or, possibly, not issued at all, would not incur liability for negligent misstatement. One of the judges, Christopher Clarke LJ, said “reliance cannot be retrospective. If the representation is the signed certificate it cannot be relied on before it comes into existence. A cause cannot postdate its consequences”.
As to negligence by the architect in his work prior to issue of the certificates, the court would not allow a further duty of care to arise alongside the issue of a certificate. If there was a duty to take care, it was to take care in relation to the statements in the certificate and any failings in those were dealt with by a claim for negligent misstatement. The court did not consider that a separate duty added anything and thus no duty of care was found to have arisen.
The Court of Appeal judgment is welcome news for architects and other professionals since it confirms that for a negligent misstatement claim to succeed, the claimant must be able to prove their reliance on the statement in question. In addition, the court made it clear that any professional negligence claim arising out of negligent certificates will fail unless based on misstatements in the certificate itself.