Hunt v Optima (Cambridge) Ltd & Ors

Liability for negligent misstatement requires reliance on an existing representation. A purchaser cannot rely retrospectively on a certificate issued after contract and completion, unless the claim is instead based on a distinct pre-contract representation or assumption of responsibility that was properly pleaded and proved. An architect’s certificate is ordinarily a representation, not a collateral warranty, where its language contains statements and confirmations rather than promises. The professional’s duty is to take care that the certificate is accurate, including the work underlying it; it is not ordinarily a free-standing tortious duty to inspect owed to future certificate holders before any representation is made. For limitation, a single negligent report gives rise to one cause of action, so knowledge of sufficiently serious damage may start time for the claim as a whole under the Limitation Act 1980 s 14A.

Eight purchasers of flats sued the developer and Strutt & Parker, the firm engaged to inspect the construction and issue architects’ certificates. Akenhead J held that the certificates gave rise to liability in negligent misstatement and collateral warranty, and that Strutt & Parker owed an additional inspection duty. The appeal concerned the claims against Strutt & Parker and Mr Egford, other than the unappealed judgment in favour of the Sahi claimants.

The Court of Appeal considered whether certificates issued after exchange and completion could found reliance, whether the certificates were contractual warranties, whether an independent inspection duty existed, and whether Ms Wyatt’s claim was barred by limitation under s 14A of the Limitation Act 1980.

1. Disposition. The Court of Appeal unanimously allowed the appeal and dismissed the claims against Strutt & Parker and Mr Egford. The judgment in favour of Mr and Mrs Sahi was not appealed.
2. Negligent misstatement. Reliance must be placed on the statement relied upon, and must cause the claimant’s loss. The signed certificates supplied to the relevant purchasers after exchange and completion could not have operated on their minds when they committed themselves to purchase. Reliance on an understanding that a certificate already existed, or would later be provided, was not reliance on the statements in the later certificate. A different claim might have been based on a pre-contract draft or representation if Strutt & Parker had assumed responsibility for its accuracy, but that case was neither pleaded nor proved. The point was especially clear in the case of the Peaces, who received no draft or pre-contract representation from Strutt & Parker.
3. Collateral warranty. The certificates, construed as a whole and in their professional context, were representations rather than warranties. They contained statements and confirmations, not promises. The absence of language concerning consideration or assignment, and the wording of the liability clause, did not establish an intention to create contractual relations. If a certificate had amounted to a contractual promise, consideration would not have been past for an original purchaser because the purchase formed part of the transaction in return for the property and certificate. That reasoning did not assist a subsequent purchaser who gave no consideration for an earlier certificate.
4. Inspection duty. Strutt & Parker owed Optima a contractual duty to inspect competently. It did not thereby assume a separate tortious duty to future certificate holders before making any representation. The relevant responsibility arose when a certificate was issued and depended on the law of negligent misstatement and reliance. The work underlying a certificate had to be competently performed for the statements to be accurate, but there was no free-standing duty to inspect owed to persons who did not rely on the certificate in entering a transaction. Tomlinson LJ emphasised that Strutt & Parker assumed responsibility when speaking carefully, not a general responsibility to speak.
5. Limitation. Under the Limitation Act 1980 s 14A, the negligent-misrepresentation claim arose from one cause of action: purchasing on the faith of a negligently prepared certificate. The knowledge-related starting date was not separately calculated for each head of damage. Ms Wyatt knew of leaks, but the judge had not found that the known damage was insufficiently serious to justify proceedings against a solvent defendant. Her claim under that head was therefore time-barred. A genuinely independent inspection duty might have produced separate causes of action for different categories of damage, but no such duty existed here.

1. Court of Appeal (Civil Division) — In [2014] EWCA Civ 714, the court unanimously allowed the appeal and dismissed the claims against Strutt & Parker and Mr Egford, save that the judgment in favour of the Sahi claimants was not under appeal.
2. Queen’s Bench Division, Technology and Construction Court — In [2013] EWHC 681 (TCC), Akenhead J held that the certificates supported claims in negligent misstatement and collateral warranty and that an independent inspection duty was owed.