Valley Brook Investments Ltd & Anor v Huam Ltd

A professional may owe a duty of care where the relationship is akin to that of adviser and client or quasi-client, and reliance on the information provided is reasonable and reasonably foreseeable. The court should assess the relationship, the purpose and context of the communication, the expected reliance, and the availability of other advice by analogy with established authorities. A company may fall within the class of persons to whom responsibility is assumed even if it was not yet incorporated, provided its use for the transaction was known and the company existed when loss was suffered. The duty extends only to the purpose for which responsibility was assumed. Here, the architect owed a duty to ensure that feasibility drawings accurately represented the capacity of the existing floors, but owed no duty to the individual shareholder or in relation to the proposed additional floor.

The claimants alleged that an architectural practice supplied drawings which inaccurately represented the capacity of an office building to accommodate residential units. The first claimant purchased the property through a single-purpose company, while the second claimant owned that company. District Judge Matharu directed a trial of preliminary issues concerning whether the defendant owed either claimant a duty of care and, if so, the scope of that duty.

The central questions were whether responsibility had been assumed to either claimant, whether reliance on the drawings was reasonable and foreseeable, whether the first claimant’s incorporation after the drawings were supplied prevented a duty arising, and the extent of any duty.

1. Duty of care to the first claimant. The defendant owed the first claimant a duty of care. The applicable approach was established-case reasoning by analogy, considering the relationship between the parties and whether reliance was reasonable and reasonably foreseeable. The relationship was that of adviser and client or quasi-client. The defendant knew that the property was to be acquired through a company and that the drawings would be used for that company’s purposes.
2. The fact that the first claimant had not yet been incorporated when the drawings were supplied did not prevent an assumption of responsibility. The relevant loss was said to have been suffered when the company purchased the property, by which date it existed. A professional can owe responsibility to an identifiable but unnamed person or class where reliance on the advice for an identified transaction is reasonably foreseeable.
3. Reliance on the drawings was reasonable and foreseeable for the purpose of confirming whether the existing ground and first floors could accommodate eight residential units each. The description of the drawings as feasibility layouts did not, in this context, negate reasonable reliance. Their presentation, the defendant’s stated prior involvement with the property, the parties’ anticipated future engagement, and the absence of an effective warning requiring a further survey supported that conclusion.
4. The duty was narrower than the duty alleged in the Particulars of Claim but wider than the defendant’s fallback formulation. The defendant owed a duty to exercise reasonable care and skill to ensure that the drawings accurately represented the capacity of the ground and first floors, including the number and dimensions of the units which could be accommodated. The scope of a duty depends on the context, purpose and respects in which responsibility was assumed.
5. No duty was owed to the second claimant personally. The intended reliance was by the purchasing company, not by him in his personal capacity. The rule against recovery of reflective loss was a further, limited factor supporting that conclusion. Reliance on the proposed second floor was neither reasonable nor reasonably foreseeable and did not fall within the duty.

First-instance determination of preliminary issues. District Judge Matharu had ordered the trial of the issues concerning the existence and scope of any duty of care.