J. Jarvis and Sons Ltd v Castle Wharf Developments Ltd; Gleeds Management Services Ltd; Franklin Ellis Architects Ltd

A professional agent may owe a contractor a duty of care for negligent misstatements made to induce a tender, but liability depends on all the circumstances, including the terms and context of the statements. Reliance must continue despite information which reasonably puts the claimant on enquiry; subsequent knowledge may prevent both reliance and causation. An experienced design-and-build contractor who knows that planning approval remains outstanding cannot ordinarily establish loss caused by earlier representations. Where the client is experienced in the relevant field, an architect’s duty to advise on planning matters may arise only when advice is sought. An appellate court may set aside findings where the trial judge failed to address principal evidence or gave reasons incapable of supporting causation.

Jarvis tendered to construct a development for Castle Wharf. It alleged that Gleeds, Castle Wharf’s quantity-surveying agent, negligently represented that the tendered scheme was acceptable under the planning consent and that the planners had agreed to it. Jarvis also alleged that Franklin Ellis, the project architects, breached contractual duties by failing to advise on the planning position and by mishandling subsequent planning information.

The Technology and Construction Court held the defendants liable on various bases, including negligent misstatement, breach of contractual duty and restitution. Each defendant appealed. The central issues were whether Gleeds owed and breached a duty of care, whether Jarvis continued to rely on the alleged misstatements, whether that reliance caused loss, and whether Franklin Ellis’s alleged breaches caused recoverable damage.

1. Appeals allowed. The order below was set aside. Jarvis’s claims against Gleeds and Franklin Ellis were dismissed, as was its claim against Castle Wharf for damages. Issues between Jarvis and Castle Wharf concerning the quantum claim remained for trial.
2. A professional agent of an employer may in principle owe a contractor a duty of care for negligent misstatements made to induce a tender. Whether such a duty arises depends on all the circumstances, particularly the terms and context of what was said. The court nevertheless assumed, without deciding, that Gleeds owed and breached such a duty.
3. The alleged representations inferred from the September letters and the 30 October meeting did not necessarily follow from the words used or the surrounding circumstances. The findings concerning the 1 November representations were insufficiently clear to establish the factual basis for a novel duty of care.
4. Jarvis did not continue to rely on the alleged misstatements after receiving the planning correspondence and drawing 24F. The letter of 4 October and the subsequent warnings made clear that approval remained conditional and that construction proceeded at Jarvis’s risk. A judge must address the principal important evidence relied on; failure to do so is an error of law.
5. Because continuing reliance was not established, causation failed. In any event, the likely consequence of the alleged negligence was only an under-priced tender, not liability for the whole cost of the works. Jarvis would probably have adjusted its tender, and its later contractual and restitutionary rights addressed payment for work performed.
6. Franklin Ellis’s alleged breaches were not supported by sustainable findings or causation. Jarvis knew that approval and compliance with condition 2 remained outstanding. As an experienced contractor, it was under no general entitlement to unsolicited advice on matters it understood and had not asked the architects to explain. The alleged errors in the January schedule were corrected before reliance could cause loss, and the evidence did not support the judge’s conclusions about delay or the enforcement notice.

Jarvis was ordered to pay the defendants’ costs as specified in the order.

• Technology and Construction Court: His Honour Judge Newman Q.C. held the defendants liable on various issues following a preliminary-issues trial and made an order on 23 May 2000.
• Court of Appeal (Civil Division): The appeals were allowed. The order below was set aside and the relevant claims were dismissed.