Giving professional advice to friends - a case study

The article 'How to give professional advice to friends', offers guidance on what to do when friends approach you for professional advice, and the issues that can arise.

Paul Greenwood MCIAT reflects on a situation that happened between friends.

Let’s imagine a Saturday night out between friends Nora (a consumer) and Alan (who is a chartered architectural technologist). They are both good friends and Nora mentions to Alan about a two-storey extension she is thinking of adding to her country retreat.

Alan is very experienced in extensions of this type and assured her there would be no problem with obtaining planning permission and passing building regulations. He would also be able to obtain both these approvals in good time to start building in the spring, so that it would be finished 12 weeks later when her parents were due to move out of their extortionately expensive penthouse in the Lake District.

Very helpfully, Alan gave a budget cost for Nora to work to so she could raise the necessary finance (about £50,000). Like a true friend, he wasn’t going to charge for his design. He could do this sort of work in his sleep so it was no big deal.

He would just charge on an hourly basis for inspecting the work during construction so he could issue a Council of Mortgage Lender’s (CML) Certificate when the work was complete.

Alan duly prepared his drawings and submitted them for planning. Unfortunately, planning was refused. It was, however, approved on appeal some nine months later. The building regulations application didn’t fare much better. The ground was an old dye works which was contaminated and needing remediation. If that was not bad enough, the ground was filled and needed piling.

Alan engaged the necessary specialists to resolve the issues of remediation and produced the design for the piling. Not surprisingly, he sent Nora the bills he received, politely explained what had happened and asked her to pay these. He also sent a bill of his own (very modest in the circumstances), and asked her if she would pay this as well because the work he had undertaken was well beyond what he had expected to do free-of-charge. They were good friends and he knew she would understand.

Clearly, Alan had dug a hole for himself.

Firstly, it’s worth considering the case of ‘Mr and Mrs Burgess v Mrs Lejonvarn’.

In 2012, Mr and Mrs Burgess decided to landscape their garden and got a quote from a landscaper of £200,000. It was too high so they consulted their friend and former neighbour Mrs Lejonvarn, a Netherlands-registered architect living in London.

Mrs Lejonvarn considered the work could be done on a much smaller budget and proceeded to provide design and project management services; there was no formal contract. She did not ask for payment but it was her intention to charge a fee for detailed design work at a later stage.

As Mrs Lejonvarn’s work progressed, the Burgesses became concerned about the quality and cost of the work. The relationship between them deteriorated to the point the Burgesses engaged the original landscaper to finish off the works at a significant cost. The Burgesses sued Mrs Lejonvarn and the court held that a professional person did owe a duty of care when performing gratuitous services.

So, what is likely to happen to Alan in relation to the poor advice he gave Nora about the cost of the project and the time to construct it? He probably doesn't stand much chance of recovering the money he has paid out to other consultants, nor the modest fee he charged. Who is going to have to pay for the extra rent on the penthouse in the Lakes? (Alan knew about this and made provisions for damages in the building contract).

Some might think they wouldn’t fall into that trap. But they would do well to remember the Consumer Rights Act 2015?

Alan rashly ‘promised’ that planning and building regulations were no problem and the extension would only cost about £50,000. But with all the ground remediation and piling and the cost of delay (not to mention work starting before planning was approved and building regulations being under a Building Notice — so it wasn't exactly straight forward), the final cost came in nearly ten times the original estimate.

Section 50 of this Act, section (1) states:

‘Every contract to supply a service is to be treated as including as a term of the contract anything that is said or written to the consumer, by or on behalf of the trader, about the trader or the service, if—

(a) It is taken into account by the consumer when deciding to enter into the contract, or

(b) It is taken into account by the consumer when making any decision about the service after entering into the contract.’

It should be evident that Alan is likely to be in serious difficulty and probably on the wrong end of a claim for the increased costs running to about £500,000 if Nora relied on Alan (as she did) in going ahead with the project based on an estimated cost of £50,000.

Some might think they wouldn’t fall into that trap either. However, the cancellation provisions in the Consumer Rights Act 2015…

If your contract is one which requires you to set out the cancellation rights of the consumer (which is one of the contracts that a technologist is likely to enter into for residential work), and you don’t set out the cancellation rights (and Alan didn’t), then you (and Alan) are in for a big surprise. The Act states:

‘31.2(1) This regulation applies if the trader does not provide the consumer with the information on the right to cancel required by paragraph (l) of Schedule 2, in accordance with Part 2.

(2) If the trader provides the consumer with that information in the period of 12 months beginning with the first day of the 14 days mentioned in regulation 30(2) to (6), but otherwise in accordance with Part 2, the cancellation period ends at the end of 14 days after the consumer receives the information.

(3) Otherwise the cancellation period ends at the end of 12 months after the day on which it would have ended under regulation 30. [Regulation 30 states a 14 day cancellation period]’

The effect of the above provision is to extend the cancellation period up to 12 months and 14 days if the cancellation rights have not been provided to the consumer.

Alan, who must be pretty fed up with how things have gone, can at least bill for the inspections that he carried out, which he did. He then receives a letter from Nora (which arrived 12 months and 13 days after they met in the pub), stating she was cancelling her contract with Alan with immediate effect.

The consequence of the above provision means that Nora could cancel her contract at such a late stage — even after Alan had done chargeable work. The contract Alan thought he had now never existed and as a result, there was no entitlement to be paid any of the fees that had been agreed.

Alan learnt three very valuable and expensive lessons and will unlikely embark on a similar course of action.

This article was originally published in AT Journal Spring 2017 edition.

--CIAT

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Comments

You didn't mention that in the Burgess vs Lejonan case, the court overturned the original decision after appeal, in favour of Lejonan.

Thanks for your comment. That is not the case. Briefly, the Court of Appeal dismissed Mrs Lejonvarn’s appeal to the effect that even though there was no contract involved, Mrs Lejonvarn owed a duty of care as she was acting in a professional manner. So the judge's original decision was upheld.

For full details see:

https://www.crownofficechambers.com/2017/04/27/love-thy-neighbour-not/