Clauses, 6.1, 6.2 and 6.3 of the sfa/92 Memorandum of Agreement attempt to provide for the limiting of an architect's liability in the event of a claim being made against him.
sfa/99, presented to riba Council at its January meeting, replaces these clauses with a very simple new line that reads: 'Limit of liability: £x'.
But will any of this wash with the courts for those many architects who try to limit the value of claims against them in future agreements under the new sfa/99, due to come into operation later this year?
Well, the courts have traditionally taken scant account of such limitations where the client is a private individual without expertise in development work, or in the appointment of construction consultants. So, on past record, it probably won't wash with 'private' clients.
However, a recent ruling by Mr Justice Dyson has important implications in this respect. The case under consideration related to a client who claimed damages against an architect for alleged negligence and/or breach of contract in connection with the design and construction of a new house.
There was, within the Memorandum of Agreement under sfa/92, a stipulated limit of £250,000 liability and the judge gave a decision on two issues: did clauses 6.1 to 6.3 apply to all the pleaded cases of the action? And do clauses 6.1 to 6.3 satisfy the test of reasonableness under ucta (Unfair Contract Terms Act)? The judge ruled that, in this case: 'Clause 6 and in particular the limitation (of £250,000) in clause 6.2, satisfied the test of reasonableness, and applies to all the Plaintiff's causes of action.'
In coming to his decision as to the test of 'reasonableness', Dyson stated that it was common ground that the plaintiff dealt with the defendant as a consumer within the meaning of section 12 of ucta. He quoted from those provisions as follows: '. . . regard shall be had to . . . (a) the resources which the architect could expect to be available to him for the purpose of meeting the liability should it arise; and (b) how far it was open to the architect to cover himself by insurance.'
Referring to Flamar Interocean v Denmore (1990), the judge stated that the guidelines which were of particular relevance in his deliberations were: 'the strength of the bargaining positions of the parties relative to each other . . . whether the customer received an inducement to agree the term . . . and whether the customer knew or ought reasonably to have known of the existence and extent of the term.'
Stating that the burden was on the defendant to satisfy the requirement of reasonableness, and reaching the conclusion that the defendant had discharged that burden, the judge observed that the £250,000 limit was not an arbitrary figure, but was the architect's assessment of the likely cost of construction: furthermore, because the plaintiff could have instructed any architect, he was in a stronger bargaining position than the defendant.
Finally, noted the judge, both the plaintiff and his solicitor had been aware prior to entering the agreement that clause 6 existed.
Squire & Co, a firm of solicitors specialising in pi litigation which acted for the architects in this case, suggests that architects take care when imposing any clause that restricts liability. However, it must, as in the case reported above, meet the test of 'reasonableness' if it is to receive the support of the courts.