Hunt & Others v Optima (Cambridge) Ltd

[2014] EWCA Civ 714

We first reported on this case in Issue 156. Optima were the developers for a residential block. S&P were architects in contract with Optima who had to carry out periodic inspections and produce certificates confirming that the flats were free from defects. S&P were aware that certificates would be for the benefit of the potential purchasers. However there was no contract or collateral warranty with the potential purchasers. The flats were far from defect free and the Judge held that as S&P were aware that the certificates were going to be used by the purchasers, it was clear that S&P owed them a duty in tort and that S&P were liable for negligent misstatement. The certificates said that the appropriate inspections had been carried out and that the flats were free from defects.

The CA has overturned the decision. The problem for the purchasers was this: the negligent statements relied on were the statements contained in the signed certificate eventually provided to the relevant purchaser. However, the purchasers could not have relied on such statements in committing themselves to the agreements to purchase their flats because those statements were not then in existence. The CA noted that:

“...reliance must follow representation and cannot be retrospective. If the representation is the signed Certificate it cannot be relied on before it comes into existence. A cause cannot postdate its consequence.”

There was no certificate already in place and it could not be said that the purchasers would receive a certificate on or after completion. At its highest, the purchasers, via their solicitors, received prior to purchase, an indication of the form that the certificate issued by S&P would take, not a completed certificate confirming the position relating to defects.

Further, the CA did not agree with the trial judge that it was possible to construe the certificate as a form of warranty. For example, it was described as a certificate, not as a promise, warranty or guarantee and did not contain any reference to any consideration.

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