FOR YOUR EYES ONLY
Professionals are often asked to provide advice, writes Kim Franklin. While many professionals may believe they are providing a service by 'doing stuff', it is possible to characterise a professional's entire workload as giving advice in one form or another.
Dentists advise you what needs to be done to your teeth.
Accountants give financial advice. Lawyers advise as to the law and architects as to what design most suits a client's needs and how best to achieve it. When advising, professionals usually have only the requirements of their clients in mind. They would be concerned to know that their advice was passed on to other interested parties. They would be horrified to learn that an unknown ultimate recipient had relied on their advice and suffered a loss as a result. But usually the first they hear of it is when a letter of claim from someone they have never heard of lands on the mat.
This is more or less what happened to specialist soil consultant Technotrade. It was engaged by the developer Starglade, which owned coastal land between Sandgate and Hythe in Kent, known as 'the Latchpath' because it had experienced a historical landslip. Technotrade provided Starglade with a site investigation report in 1998 and probably thought little more about it. When Starglade sold the site on to another developer, Larkstore, the local planners imposed a condition that Larkstore should obtain a report from soil specialists advising on the suitability of the land for the development.
The developer, without seeking or obtaining permission, obligingly produced the Technotrade report. In 2001 Larkstore engaged contractors to carry out the works and again without contacting Technotrade, included the report in the contract documentation.
During the work a landslip occurred, causing damage to neighbouring upslope properties. Extensive stabilisation works costing £800,000 had to be undertaken before the development could proceed. In 2003 the neighbours sued the developers. Larkstore sought to recover its losses from Technotrade, five years after it had provided their report. Was the developer entitled to claim against a consultant who was oblivious to their existence?
The court held that to succeed Larkstore would have to show that the consultant knew when it provided its report to Starglade that it would be passed on to Larkstore, or other developers, and that the advice would be acted upon without further enquiry. Larkstore argued that Technotrade's report contained no prohibition against assignment. As it was obvious the site would be developed, it must have known that other developers would rely upon it.
The judge concluded that it could not have been contemplated by Technotrade that the report would be recycled in succeeding years by a developer it had no knowledge of. The consultant owed the developer no duty of care and the developer had no claim against it.
The moral of this story is clear. Make sure any advice you give includes a prohibition against assignment - mark it 'for your eyes only'.
Kim Franklin is a barrister and chartered arbitrator at Crown Office Chambers in London. Visit www.crownoffi cechambers. com