Making an Architect Negligence Claim
An inadequate, inaccurate or defective plan can lead to additional building costs, expensive rectification works or a diminution in the value of the property. Where these losses arise, an architects compensation claim can be made.
Not all architects are the same. Many people instruct a professional to prepare plans and drawings believing them to be qualified architects, only to find out at a later date that they are not. It is therefore vitally important to establish the credentials of the professional you have been dealing with and, above all, obtain confirmation that they have professional indemnity insurance that will cover them for an architects negligence claim.
Helpline for architect negligence claims
If you feel that you have been a victim of architect negligence call professional negligence solicitors on 0808 139 1595 or email us at [email protected] for a free initial assessment of your case and details of No Win, No Fee funding.
Case Study: Is an architect negligent if they don't design to a budget?
A case has recently been decided in the Technology & Construction Court of the Bristol District Registry on whether an architect can be negligent for designing a property that could not possibly have been built within the client’s expressed budget.
In the case of Riva Properties Ltd & Others –v- Foster & Partners Ltd  EWHC 2574 (TCC), there was very little that the parties could really agree upon other than the fact that the Defendants were well renowned international architects with a string of awards to its name as well as being the designers of some pretty prestigious buildings and structures including, for example, the Millenium Bridge in London. It was because of this renown, that the claimant wanted Fosters to design an “iconic” hotel.
Mr Dhanoa, who owned the various claimant companies, had been responsible for a number of larger builds although – as HHJ Fraser pointed out – nothing really on the large scale that Fosters were used to. Unfortunately, this resulted in a “high-handed attitude” by the Defendant who “seemed to see Mr Dhanoa as somewhat beneath them as a client” , with the judge describing at one point, their behaviour as being “grubby” .
The client's budget was £70m, the build cost was £195m
The point about the claim is that Mr Dhanoa commissioned Fosters to design a 5* hotel, the build cost to be about £70M. The resulting design by Fosters was costed at £195M but they assured Mr Dhanoa that the project could be “value engineered” down to a price of about £100M. Aside from the fact that, as the judge later found, it would have been impossible to “value engineer” a project of this size down by almost half its cost, Mr Dhanoa had considerable difficulty finding funding for the project and so at the time of the trial, it had still yet to be built. What was clear to Mr Dhanoa was that the whole project would have to be re-designed so the £4M in fees that he had paid to Fosters and other professionals would have to be incurred again. He therefore brought proceedings for recovery of those fees and also for the loss of the profits that he could have obtained had the project been designed and built correctly, and been up and running for the past few years.
The main argument by Fosters was that they were never told there was a budget and it was not up to them to determine whether there was one. Aside from the fact that the judge found very clearly that they had been told and that it was an obligation within their contract with the claimant to find it out, it was “common sense” that they determine the budget. It is an obvious constraint to any building project and so even if it had not been a requirement of the contract, it was up to them to find it out.
HHJ Fraser even pointed to the RIBA Job Book that says cost is a key constraint that must be identified and considered at the outset, quoting it as saying “a client can find itself incurring high fees by the end of Stages C and D to produce a design that has failed to take into account of such basic constraints as budget”.
Loss as a result of architect negligence
The Court therefore found that Fosters had breached their (contractual) duty to Mr Dhanoa but the next big question was the amount of loss the claimant had suffered.
The judge was pretty clear that the Claimant could recover most if not all of the fees that had been spent on the design, but the bulk of the losses claimed were the loss of profits and he spent some time in his judgment dealing with this. The 33 paragraphs on causation can be summed up very neatly though in two words: “credit crunch”. The search for funding for the project began just as the credit crunch hit when a much more cautious banking market appeared with financial institutions being reluctant to lend. Mr Dhanoa and his companies had insufficient equity to match any prospective lending and so it was this, the unavailability of funding, which prevented the project being built.
The judge specifically stated that even had Fosters produced a design for a hotel that cost the agreed budget of £100M, funding would still not have been available.
Architect has a duty to identify client's budget
Although this case is really about the contractual obligations of the architect, there is a lot in the judgment which makes it clear that even if there isn’t a contract between the parties, it is only “common sense” that the architect identify a budget for the project. Failure to do so or to design something outside of the budget would lead to “architect’s risk” by which the architect would be required to do the design again at their own cost. Failure to do that could lead to a claim for negligence.
As for loss of profits, that is something which could be entertained but the Court is going to be looking carefully at causation to see if there are any other reasons why the project could not be completed.