Loss Prevention Alerts

Alert No 1

February 1998

Summary

A recent case is a cautionary tale for consultants who give informal advice, on a speculative basis and without a fee, in the hope of obtaining work.

Facts

In Lidl Properties v. Clark Bond Partnerships Clark Bond (a civil and structural engineering firm) were called to a meeting by Lidl Properties to give advice about contamination removal on a site Lidl were proposing to purchase. The meeting with CB was hastily arranged with no prior agenda circulated. There were no minutes of the meeting and it lasted only twenty-five minutes. At the meeting, Lidl indicated that they contemplated making an unconditional offer for the site but CB were not aware that Lidl were prepared to exchange contracts. Following the advice given at the meeting, CB did not offer to provide, nor did Lidl ask for, a written report or confirmatory letter.

For a number of reasons, the scheme suggested by CB at the meeting, when implemented, failed. As a result, the work on site did not deal properly with ground water containing phenols and prohibition notices under health and safety legislation was served. Ultimately, Lidl failed to gain planning permission culminating in an expensive 3.7 million-pound remediation package.

Lidl alleged:

that Clark Bond owed them a duty of care in and about the advice they had given at the preacquisition meeting, and that

Clark Bond's advice was negligent.

The Official Referee conclude that despite the fact that CB had given the advice without a fee they were under a duty of care to Lidl as they had assumed a degree of responsibility by attending.

However, the Official Referee also conclude that CB had not been negligent. Lidl alleged that CB's scheme was unworkable but the Official Referee found that the scheme failed because it was not properly put into effect by the architect, quantity surveyor, developer and contractor. Indeed, initially the sewage undertaker and the former NRA had approved CB's scheme. In any event, even if CB had been negligent, the court held that its cost estimates concerning remediation had not been decisive in influencing Lidl's decision to purchase the site.

Comment

It has long been established that a professional person who gives advice in a serious forum knowing that it might be relied on owes a duty of care even though he might not be paid for giving that advice. However, commercial pressures sometimes dictate that the usual QA procedures and normal professional rigour are omitted where advice is given on a speculative basis. For example, if CB knew that they were going to be paid a fee for giving advice they may well have confirmed that advice in writing, which would have enabled them to explain any limitations on the information, they consulted to arrive at their recommendations.

Ultimately, consultants must be aware that however they give advice, normal loss prevention procedures should be implemented - the consultant should only advise on an area where he is appropriately qualified, he should indicate the potentially relevant data fields he was not able to consult, and he should reduce his advice to writing and that written report should be checked by somebody else within the organisation. Such procedures will add to the cost of providing speculative advice. Perhaps, in the future, fewer consultants will offer it. But why should a consultant exercise judgement and take on risk without any guarantee of reward?

Reference

Lidl Properties v. Clark Bond Partnership reported in Env. Law Mgmt., 10(1) Jan-Feb 1998, page 4 and (1997) 38 Env Law Bulletin page 47 (Official Referee).