In a recent decision by the NSW Court of Appeal, Morris v Leaney [2022] NSWCA 95 considered an architect’s duty to advise in the context of estimating renovation costs.

In this case, Mr Leaney, was engaged as an architect to design home renovations for Mr and Mrs Morris. The architect informed the homeowners that they would not be able to achieve their desired renovation scope within their set budget of $300,000.

The architect later provided an ‘opinion on probable cost’ based on a preliminary design that estimated the cost to complete these renovations to be $590,000 (ex GST). The homeowners subsequently revised their set budget to $600,000.

A builder was later engaged and advised that the cost of renovations would exceed $1,000,000. In order to reduce costs, the homeowners decided not to pursue the entirety of their initial renovation scope.

The renovations ultimately cost $780,000. However, the value of the house was only increased by $330,000.

The court held that the architect breached his duty to advise the homeowners on the likelihood of achieving their budget. The architect was expected to inform his clients should he have felt “unable or unqualified to give an accurate estimate of costs” and advise that they “obtain an estimate from a properly qualified professional”.

Nevertheless, the court was not satisfied that the homeowners would not have undertaken the renovations even in the event the architect had informed them that it was not possible to complete the renovations without exceeding the set budget of $600,000.

To Consider

This decision is a timely reminder to architects of the importance of adequately advising clients and, if an architect is unable to accurately estimate the costs of works, obtain estimates of costs by properly qualified professions. This is particularly relevant in the current construction climate where material costs have increased exponentially.

This is also reflected in the NSW Architects Code of Professional Conduct which requires an architect to advise on the likelihood of a client achieving their objectives, having regard to their budget and time requirements. Given a failure to satisfy this requirement can result in architects being liable for significant amounts claimed by clients (as well as legal costs in defending those claims), it is important that architects continually advise on costs as works progress and design changes occur.