South Africa: Professional Supervision Services: Negligent And Gratuitous Services

The Pitfalls of Giving Free Advice and Rendering Free Services "A Cautionary Tale"

Cases involving the giving of negligent, but gratuitous advice by professionals do not often frequent the law reports. The giving of gratuitous but negligent advice can give rise to liability and cannot therefore disregarded by the Professional in the performance of his/her duties, or in the procuring of adequate and sufficient professional indemnity cover. This article will be of interest to professionals and professional indemnity insurers.

The Case of Peter Burgess and Lynn Burgess v Basia Lejonvarn [2016] EWHC 40 TCC

The Facts

  • The Plaintiffs decided to landscape their garden.
  • They obtained a quote from a landscaper.
  • They believed the quote to be too expensive, and asked for professional assistance from their friend, an architect ("the Defendant").
  • The Defendant obtained a cost estimate from a contractor, and secured a contactor to carry out the earthworks and landscaping. The Defendant visited the site and gave instructions to the contractor.The Defendant's services were provided over a relatively lengthy period of time.
  • Much of the work done during the Defendant's involvement was defective and the final price exceeded the budget.The Defendant denied any responsibility for the quality of the works carried out on site.
  • The Plaintiffs sued the Defendant in contract and in tort (the South African equivalent being delict) for mismanagement of services provided in respect of procurement, project management, budgeting and control.
  • The Plaintiffs claimed damages, being the difference between the actual cost to the Plaintiffs, including the cost of remedial works, and what they had been told by the Defendant that the project would broadly cost.
  • The Defendant argued that she was not responsible for the provision of any of these services, and denied any responsibility for the quality of the works carried out on site.

The court found that it had been impossible to extract from the various written communications between the parties "any clear form of offer or acceptance". In the court's view there was not a sufficient consensus about the broad basis upon which the Defendant was being retained by the Plaintiffs.There had also been no discussion about the fee which was decisive in this respect.

The question therefore was: did the Defendant owe the Plaintiffs a duty of care in tort, as that would remain the sole basis upon which legal liability could arise?

The Court found that :

  • There was a duty of care in law relative to the provision of supervision services.It was clear from the authorities "that no distinction is drawn between the provision of advice and provision of services where a special skill is exercised. In the provision of supervision services in respect of construction work, a professional usually deploys a special skill, and in circumstances where there is an assumption of responsibility, a duty of care arises."
  • In all the circumstances the services had been provided in a professional context, despite the fact that the Defendant's services had been provided gratuitously.

The Court accordingly gave judgment in favour of the Plaintiffs.

It is useful to quote certain passages from the judgment as they emphasise the importance placed on the element of reliance and underscore the "Cautionary Tale":

"[The defendant] contended that she was only really involved ... on an informal basis which had to be seen in the light of the friendship which existed between her and the Plaintiffs. She said she was merely involved as a friend who happened to have a professional background".

and

"I agree that the provision of services by her was gratuitous in the sense that she only intended to seek specific payment for the second phase once the earthworks element had been completed. But I am clear that the fact that the services were gratuitously provided did not mean that they were informal or social in context. In my judgment the evidence is that the services were all provided in a professional context and on a professional footing".

and

"Although [the Defendant] denied that the Plaintiffs ever relied on her in respect of the Garden Project, I reject that submission. The Defendant was and, in any event should have been, well aware that the Plaintiffs were relying on her to properly perform those services. The trust they placed in her was manifest."

and

"And I therefore conclude that the Defendant assumed responsibility to the Plaintiffs for performing professional services in respect of the Garden Project and that they specifically relied on her for that purpose".

and

"This was not a piece of brief ad hoc advice of the type occasionally proffered by professional people in a less formal context. Instead, the services were provided over a relatively lengthy period of time and involved considerable input and commitment on both sides. They also involved significant commercial expenditure on the part of the Burgesses. It would be wrong to categorise this as akin to a favour given without legal responsibility".

Commentary

In the South African context, and with reference to the same facts our Courts may have determined that a contract had been concluded, as our Law, unlike the English Law, does not require that there be agreement on the fee (or price) in order to found a contract.

While this judgment is one of an English Court, our Courts would come to the same conclusion were they not able to conclude that a contract had been entered into.

The judgment sounds an important cautionary :

  1. Friends, family and/or laymen inherently place store in informal advice or assistance given by professionals.
  2. Where advice is given in these circumstances (apparently informally and for free) it should always be followed up by a qualification, for instance that reliance should not be placed on the advice, and any actions or decisions taken ought to be based on a proper and sound consideration of all facts and circumstances.
  3. It is in many instances prudent to refrain from giving gratuitous advice (when there is no duty to do so)

A further and important cautionary is this :

  1. Most professional bodies prohibit the giving of gratuitous advice in their respective codes of ethics/conduct.
  2. Professionals would do well to ensure that their professional indemnity policies cover liability arising out of the giving of negligent but gratuitous advice.
  3. Professional Indemnity polices in the main cover liability arising out of a negligent act in the performance of a professional duty undertaken in the course of business (which may not be inclusive of negligent but gratuitous advice) – and do not carry an automatic extension covering negligent but gratuitous advice.

Professional Supervision Services: Negligent And Gratuitous Services

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Authors
Nicole Gabryk
Kate Swart
 
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