Architects’ professional negligence

22 November, 2017
by: Cripps Pemberton Greenish

Foster and Partners are world famous architects, they have been responsible for some spectacular designs. However, in a recent case what was most spectacular was the anticipated cost of a new building which amounted to some £195 million.

The claimant had wanted to develop a five star hotel near Heathrow Airport and engaged Foster and Partners to design it. According to the claimant, a Mr Dhanoa, his budget was £70 million. Fosters’ design came in at £195 million. Mr Dhanoa increased his budget to £100 million. He did that, he said, in reliance on Fosters telling him that the costs of the project could be pushed down to £100 million through ‘value engineering’.

Unfortunately, that proved not to be the case and Mr Dhanoa could not build the Fosters design. Mr Dhanoa had paid £4 million for the production of the design. His claim was for lost profits. The hotel had not been built when otherwise it would have been and he had significant wasted expenditure.

The potential damages claim was complicated by the fact that Mr Dhanoa had acquired the site at a time that would have been ripe to cash in on the London Olympics. Further, the global financial crisis intervened to restrict his ability to obtain credit.

One of the many issues in the case concerned whether architects owe a duty of care to a client which extends to advising on costs. Further, were Fosters under a duty to ascertain and take into account the claimant’s budget?

The court found that Fosters’ duty of care extended to advising Mr Dhanoa to take advice from a quantity surveyor but did not go so far as to require them to advise on costs. Their appointment, however, included an obligation to ‘confirm key requirements and constraints’.

The court found that Fosters were in breach of their duty in that they had failed to identify one of the key constraints, being the budget. There is support for this finding in the RIBA job book.

Fosters were further negligent in advising that the project could be ‘value engineered’ from £195 million to £100 million. This was negligent advice. Additionally, as Fosters knew Mr Dhanoa expected the cost reduction to be engineered out, they should have advised him that it could not be done.

There were various other issues in the case relating to causation and damages on which we are not commenting in this blog. The element we have reported on, however, shows that architects have a duty to consider and find out key constraints of a project including its budget. They should also inform the client if they know that the client has not understood how the budget might be achieved.