The rising cost of uncertainty.
Summary
Semple Fraser successfully appealed against the dismissal of its claim seeking a contribution from CBRE Ltd to sums paid by Semple Fraser in settlement of a professional negligence claim. That claim had been brought by STV relative to the rent review clause in the lease of its headquarters.
Background
In 2003, STV decided to relocate to new offices at Pacific Quay, Glasgow. Solicitor firm Semple Fraser (which is now in administration) and surveyors CBRE were instructed by STV to obtain a lease of the premises. The lease between STV and the Landlord was concluded in 2006.
The lease contained an RPI-linked rent review clause (“the clause”). However, there was an error in the clause which would have resulted in the rental costs reaching £100m per annum by 2025.
When this was discovered, STV and the Landlord entered mediation which led to a new clause being put in place. STV then raised and claim for professional negligence against Semple Fraser, who ultimately admitted liability and paid to settle the action.
Semple Fraser then sought a contribution from CBRE as a joint wrongdoer under section 3(2) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940, in light of their role in the conclusion of the lease.
Semple Fraser claimed that, as part of the professional team advising STV, CBRE had a contractual duty to provide expert advice. Alternatively, under the law of negligence, CBRE had voluntarily accepted responsibility to STV based on previous advice.
Initially, Lord Woolman dismissed the action as irrelevant, which resulted in Semple Fraser LLP making an appeal.
The Appeal
Contractual Duty
Semple Fraser claimed that it was part of the surveyors’ job to give expert advice about the wording of the RPI provision to ensure the heads of terms were accurately recorded in the lease.
The court noted that Semple Fraser had requested CBRE’s advice in relation to the wording of the RPI provision and therefore it could not be held that the surveyor’s duty did not extend to giving expert advice about the rent review provisions to another member of the professional team (when asked to do so), which could amount to indirect advice to the client.
They held Semple Fraser’s contention that CBRE owed STV a duty of care under contract in relation to the RPI clause as legitimate, although ultimately evidence would be required at proof (trial).
Negligence
As an alternative, Semple Fraser maintained that even if CBRE did not have a contractual duty to advise on the RPI formula, by volunteering their advice, which they reasonably knew would be relied upon by STV, they had assumed responsibility and so were under a duty to exercise reasonable skill and care.
The court accepted that the appropriate test to apply when considering whether the surveyors owed STV a duty of care was “the assumption of responsibility” test as set out in BCCI v Price Waterhouse (no 2) and that this question was to be determined on an objective basis.
Lady Paton noted that Semple Fraser claimed they had specifically requested advice from CBRE about the wording of the RPI provision and that CBRE did not reject the request. CBRE did not state that this advice was not their responsibility but instead, offered advice on the clause.
Semple Fraser also claimed STV knew that themselves and CBRE were working together on the wording of the RPI provision, and that CBRE knew STV understood this to be the position. STV were relying on their advice and CBRE knew (or ought to have known) that they were doing so.
On that basis, the court held that the defender had made out a sufficiently relevant and specific case for the existence of a duty of care in delict owed by the third party to STV.
The court allowed the appeal, and ordered a full hearing on the facts to take place to allow it to reach a decision on the issue.
Comment
Although Semple Fraser has now made it through the first round, it could be some time before the full hearing takes place and a decision is made. However, regardless of the outcome of this case, professionals should exercise caution when being asked to provide advice or information which may be relied upon, even if the advice is only provided indirectly.
The scope of the advice should be specified, and each question should be answered properly and clearly. Where information requested falls outwith the scope of the professionals retainer, then the professional should make this clear, for example by way of including a disclaimer and/or a restriction on who is entitled to rely on the advice.
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