A recent Hight Court decision reminds us of the perils of relying on professional reports and services when you do not have a contract with the party upon whose care and skill you wish to rely

In the case of BDW Trading Ltd. v. Integral Geotechnique (Wales) Ltd [2018] EWHC 1915, 25th July 2018, a professional negligence claim made by a purchaser of land against a consultant who produced a site investigation report for the seller of the land was dismissed by the High Court. The purchaser claimed that the SI report should have alerted the purchaser to the possible presence of asbestos throughout the site before the purchaser proceeded with the purchase. The claim was made on the basis that the SI consultant had been aware that the purchaser would see the report and had even confirmed a willingness to give the purchaser legal recourse through an assignment. However, this had never been followed through, such that no contract existed between the purchaser and SI consultant.

Sometimes in law, you can make a negligence claim without a contract, but these situations and the damages you can obtain in such cases are limited. A duty of care independent from contract has to be established, and this is always a challenge. As indeed it proved in this case. The Court rejected the purchaser’s non-contract claim on the basis that no duty of care existed on the facts of the case.

It is now almost 30 years since the first major court rulings highlighted this limitation in the law of negligence, which gave rise to an entire ‘collateral warranty industry’. Yet, it is still common for developers and investors to rely on site investigation reports in tender information packs without the necessary contractual link with the authors of the reports. This is often overlooked or ignored on grounds of cost (the report authors often looking for an extra fee). It can prove a very false economy.