SafetyNet - Consultant Certificates: A word of warning! Griffiths & Armour News

SafetyNet - Consultant Certificates: A word of warning!

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Hunts & Ors v Optima (Cambridge)

Limited & Ors [2014] EWCA CIV

Facts

Optima had built two blocks of flats in Peterborough. Strutt & Parker (S&P) had been engaged by Optima to carry out inspections of the building in the course of the development and to produce ‘Architect’s Certificates’ for the benefit of the purchasers and lenders of the flats. S&P carried out ten inspections and certified that the construction of the flats was satisfactory but it did so prior to completion of all the works.

Optima’s solicitors advised the purchasers’ solicitors that Professional Consultants’ Certificates would be forthcoming. Purchasers then exchanged and completed and the Certificates were duly provided subsequent to completion.

Construction of the flats was poor and had been inadequately supervised. The purchasers complained of a range of issues including water ingress, excessive noise, floor movement and drainage issues. Some of the purchasers sued Optima for carrying out the building works badly and S&P for negligence in its inspection duties.

First Instance Decision

At first instance the Court found that:

  • Optima was in breach of the sale agreements with the claimants which required that the premises be completed in a good and workmanlike manner. Optima was also in breach of its repair covenants in the claimants’ leases; and

  • S&P were liable on the basis of its Certificates. The Court found that the purchasers were entitled to rely upon the fact that the Certificates were going to be provided and the Court decided that they took the form of collateral warranties. In the alternative, S&P were found to have owed a duty of care to the purchasers both in inspecting the works and in the issuing of the Certificates.

Court of Appeal Decision

It was argued by S&P on appeal that:

  • The Certificates did not contain enforceable warranties;

  • The Certificates did not amount to negligent misstatements - which had given the claimants a cause of action in tort - (as there had been no reliance by the claimants on those statements as a matter of fact); and

  • S&P did not owe the claimants a duty of care independent of the Certificates to carry out the inspections referred to in the Certificates with reasonable skill and care.

Issues arising out of the above case:

Were the Certificates Collateral Warranties?

In finding that the Certificates were not collateral warranties, the Court of Appeal attached significance to the fact that they contained no reference to any promise (but only of confirmation of steps taken in producing the Certificates) and although… (Read more)

Negligent misstatements

In order to recover damages for negligent misstatement a claimant must show that it relied on the statement in question. The Court had found at first instance that the claimants in this action had relied upon the Certificates… (Read more)

Duty of care to inspect

In addition to finding that there was a contractual relationship between the claimants and S&P (under the ‘collateral warranties’), the Court of first instance found that S&P also owed concurrent duties of care in tort to the claimants… (Read more)

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Further Advice and/or Clarifications…

If you have any questions or queries with regard to the content of this article or would like to discuss your PI insurance requirements, please do not hesitate to contact us.

Authors:

Tanya Winstanley
Director
Griffiths & Armour Professional Risks
+44 (0)151 600 2154
twinstanley@griffithsandarmour.com

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