What Are The Risks Of Relying On Professional Advice Without A Contract In Place?

How safe are you relying on professional advice where there is no contract in place?

We review the latest decision in this area in the case of BDW Trading Ltd v Integral Geotechnique (Wales) Ltd [2018]. This is a reminder that whilst in principle, it may be possible to prove a duty of care in tort (where there is no contractual relationship), in actuality, it can be challenging.

Background

A local council (the Council) owned the site in question (the Site) and intended to sell the site for housing development after obtaining planning permission. Assembling a tender package, in 2010, the Council commissioned a site geotechnical report from the Defendant, Integral Geotechnique (Wales) Ltd (IGL). The report was issued on 18 May 2012. The claimant, BDW, is a residential developer and requested and received a tender package in June 2012 which included the IGL report. BDW proceeded to purchase the site in May 2014. Costly remediation works then had to be undertaken by BDW in order to remove asbestos and to decontaminate the site, to an extent that had not been anticipated by BDW. The Dispute

In these proceedings, BDW pursued a professional negligence claim against IGL claiming that IGL's investigations and report failed properly to assess and identify the extent of the possible presence of asbestos on the Site.

There was no contract between BDW and IGL so the claim was made in tort. In order to succeed, BDW had to prove that IGL had a duty of care to BDW, that the duty had been breached and that BDW had suffered a recoverable loss. Issues of contributory negligence were also to be considered.

The Decision - key issues

Duty of Care

BDW's principal challenge was to prove that IGL owed it a duty of care - if this could not be proven, all other arguments were effectively irrelevant in terms of this particular claim.

Relevant factors:

The Council had asked IGL to prepare a report capable of being assigned "with warranties", to the ultimate purchaser of the Site. IGL were informed that their report would be provided to and relied upon by the purchaser. In the event, IGL had agreed to provide the report but the finalised appointment excluded third party rights and contained a limitation on liability for environmental contamination. IGL's report stated it was for the Council's use only and could not be passed to others without IGL's express consent; it could be assigned to the purchaser of the Site. IGL's report was provided to BDW but without IGL's...