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PROFESSIONAL INDEMNITY INSURANCE
……A BETTER UNDERSTANDING
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Kevin McParland ACII sheds some light on the need for PI Cover, its origins and why practising designers should be covered. Compared with fire and marine insurance the need for what is generally known as Professional Indemnity Insurance is a recent development. A landmark legal case in 1964 – Hedley Byrne v Heller and Partners – gave birth to this new class of cover.
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Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 is an English tort law case concerning pure economic loss, resulting from a negligent misstatement. Before this decision, the idea that a party may owe another a duty of care for statements that had been relied upon had been rejected. The only remedy for such losses was in contract law, provided of course that a contract was in place.
In Hedley Byrne the House of Lords overruled the previous position, and recognised liability for pure economic loss not arising from a contractual relationship, introducing the concept of “assumption of responsibility”.
So what happened?
Hedley Byrne was a firm of advertising agents. Their client, Easipower Ltd, put in a large order. Hedley Byrne wanted to check their financial position and credit-worthiness, and asked their bank, National Provincial Bank, to get a report from Easipower’s bank, Heller & Partners Ltd., who replied in a letter that was headed, “without responsibility on the part of this bank”. Subsequently, Easipower went into liquidation and Hedley Byrne lost £17,000 on the contracts. Hedley Byrne sued Heller & Partners Ltd. for negligence, claiming that the information it had provided was given negligently and was misleading. Heller & Partners Ltd. argued there was no duty of care owed regarding the statements, and in any case liability was excluded.
Judgement
The court found that the relationship between the parties was “sufficiently proximate” as to create a duty of care. It was reasonable for them to have known that the information that they had given would be likely to have been relied upon for entering into a contract of some sort. This would give rise, the court said, to a “special relationship” between the parties, in which the defendant would have to take appropriate care in providing advice in order to avoid becoming liable for negligence. However, on the facts, the disclaimer was found to be sufficient to discharge any duty created by Heller’s actions.
Because there was an express disclaimer of responsibility, there was therefore no liability. This case established the doctrine of negligent misrepresentation, but in this particular case, the disclaimer effectively barred the claim. The matter was appealed but was dismissed.
Consequences
This legal decision, which has never been overturned, means that any person, including a third party, can sue another person or organisation for a breach of their duty of care following negligent advice and for the recovery of any economic loss which flows from that breach, even though here may have been no injury to a third party or damage to third party property. This very important law case transformed the insurance landscape in 1964 and made it important for many businesses, including those far removed from the world of what we ordinarily think of as professional consultants or professional advisors, to complete their suite of liability insurances with the purchase of professional indemnity insurance.
In the subsequent 50 or so years, the evolution of case law applicable to professionals and other advisers, coupled with responsiveness of the insurance market, has provided a wide choice of insurance products at affordable prices.
When professionals purchase this cover they are, in effect, under the terms and conditions of the policy, transferring their negligence risk to the insurer providing the cover. Without the cover, professionals would be vulnerable to claims from a variety of sources. It is important to bear in mind also that even claims that have no merit require to be defended, often at significant cost – which is covered by the policy.
All professionals, irrespective of how they view the risks presented by their practice, should seek to protect themselves. Indeed, in many professions it is compulsory for practitioners to carry professional indemnity cover. The cost of this risk-transfer protection is relatively inexpensive when considering the reputational and financial damage that may emanate from a single error.
In subsequent articles Kevin will explain more specifically what considerations arise for design professionals when buying professional indemnity insurance. Care has to be taken not to miss the pitfalls that might be hidden within the small print of an unsuitable policy.
If you wish to compare your current PI cover or if you need a new quote please send your details to info@csd.org.uk
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CSD Profile
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Timothy Chan was recently granted Fellowship of the Chartered Society of Designers.
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Timothy Chan FCSD Interior Design
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Why he became a designer
"I grew up in a poor traditional Chinese family. My dad was an entrepreneur who ran a business in Decoration and Renovation trades in the 1970s, when the economy of Hong Kong was developing under the sovereignty of the UK.
To support my dad's business, I was trained to work in a family oriented environment doing amongst other things, drafting drawings for projects like residential apartments, schools, clinics, and shops etc.. I gradually discovered my strength and interest in the scope of space planning, dimensional coordination and material composition. Then, with the support of my father, I recognised that Interior Design was to be my long term interest and career.
After my graduation with a Master’s degree in Construction Management in the United States, I gained 5 years solid experience in an international interior design company. This confirmed my ultimate career longing to be in Interior Trades."
Advice to graduates entering the design interior sector in the current climate
"To encourage new-comers I would say that, practicing in design is a form of art, you should understand who you are, where your interest lies, have devotion to your work, with the result that your work will be beneficial to your customers, your coworkers and yourself!
I would encourage those with imagination, a sense of style and colour combination to consider a future in interior design."
Why he joined CSD
"CSD is a renowned professional association founded in the UK and is well recognised in Hong Kong. During the time I worked for Davis Longdon and Seah, my duties involved a substantial amount of Design Management for some considerable projects in Beijing, Shanghai, Guangzhou, and Macau. I had the opportunity to deal with internationally famous design companies such as Gensler, HOK, SOM, Aadas, etc.
With CSD professional recognition and FCSD after my name, it is easier to acquire the trust and respect and to communicate with designers, clients and those in the design sector."
City University Business Seminar Hall
"The design of the Business Seminar and the Pre-function Area was aimed at fostering a sophisticated environment for the MBA & DBA students at the College of Business. The general material scheme consists of a mixture of mid-tone coloured walnut and lighter oak veneer, trims of hairline stainless steel, grey tiles with white and grey ceiling finishes which combined to spell out youth and sophistication. The shape of the bar-counter and continuous form of the window-side study tables swiftly connects the window to the heart of Pre-function which all sit peacefully on the Malaysian oak timber floors creating a serene discussion corner where great ideas can eminate. Walking into the two seminar rooms, one finds the ceiling singing in rhythm with the gradually rising platforms. An integrated lighting and dimming system controls the LED lights illuminating from above and penetrating from the walls, providing various moods for lectures, class presentations or stimulating discussions."
City University - Senate Hall (Academic Bldg. 3) & Council Chamber (CYC Bldg.)
"Situated in the same building as the College of Business’ Seminar Rooms, comes yet another whole new integrated space for conferences – the Senate Room of the City University of Hong Kong. With adequate space to accommodate 120 participants, the Senate Room is essentially function-oriented, carefully planned, subtle, and also modern. The ceiling building services works have been moved and now function invisibly above a 3 meter headroom, leaving below a clear and spacious environment. The fan-coil units are systematically retreated around the large oval-shaped ceiling void to supply constant calibrated cool air when meetings are held. Similar to the intelligent lighting design of the Senate Room, the Council Chamber has a lighting environment managed by a dimming control system which is situated in an adjacent control room from where one can oversee the meeting with a back-up support team and generate various moods for speeches, presentations and conferences etc. The integrated set of 8 flat custom-made TV panels provides a 3-meter wide video wall which is concealed behind a motorised silent door which subtly opens like a shell revealing its pearl. Cool-toned darkened French oak veneer acoustic panels are used to provide a calm and serene environment."
Causeway Place Shopping Mall, Great George Street, Causeway Bay
"Throughout the late ‘90s to the early ‘00s, the majority of mid-sized shopping malls in Hong Kong were given 'face-lifts' with cyber-looks being a common design feature. Yet another decade has passed and the market nowadays is looking for design connections to a buildings’ geographical or architectural features. A commission by the landlord of Causeway Place definitely deserved a thoroughly brand new look to ensure it stood out amongst its neighbours on Great George Street, including the renowned Sogo Department Store. The multi-passage space planning in the shopping mall creates the idea of 'streets', where these 'streets' join naturally forming 'street corners' where pedestrians (customers) can mill around and relax during their shopping experience. The 'streets' are mainly designed to mimic the style of medieval castles as in Fairy Tales, to recreate childhood dreams. A contrasting mix of tiles, timber veneer, patterned light boxes and fabrics were used to achieve this dream, while a certain portion of modern homogeneous tiles, glazed mirrors and polished metals have been used to enable ease of maintenance. The façade is the most eye-catching item being a champagne/gold coloured proprietary cladding covering the whole side of the building emphasising the 'dream' over a 20-metre long section of the Great George Street."
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CSD Student's Profile
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BA(Hons) Interior Architecture & Design
Nottingham Trent University
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Phil Parkin
My name is Phil Parkin and I recently graduated with a first class degree in Interior Architecture and Design from Nottingham Trent University (NTU). I grew up in Reading, and when deciding on my future I was adamant that I wanted to do something I enjoyed, rather than just being good at. Always enthusiastic about art and design, it began to take over my other subjects and consumed a lot of my free time.
My work had always dealt with relief and sculpture, creating textures and arrangements that interested me. For this reason I decided on interior architecture so as to translate these forms and language into tangible spaces.
In terms of career prospects, NTU attracted me greatly, as it contained a placement year in its 4-year course. This year significantly benefited me, graduating not only with a degree but also a years work experience in my relevant field. My internship at FITCH taught me all the skills and attitude needed to succeed in my final year in Nottingham and gave me an insight into my future.
I would advise everyone going into a design degree that you have to be passionate about your subject, and willing to dedicate a lot of time to improving your trade. New design students should not be down heartened by bad grades to begin with, it is a learning curve with many modules based on opinion; the tutors need to fully appreciate your design ethos. What could appear great to one person may seem ludicrous to another. Everything needs to be considered and have reason, soon enough your student-tutor relationship will be on the same page.
I have had a brilliant few years learning about interior architecture, and I’m excited for what is next!
My early work before university looked into how landscapes are damaged and the battle between mankind and nature.
In reflection of recent government surveillance programmes, my final project aimed to find the positives of observation within Dungeness Nature Reserve. Documenting and protecting rare species of birds in a series of hides and cafe (development model).
At a geometric tangent to the existing pre-radar structure, the new build aggressively cuts through the 200ft wall and natural landscape, puncturing the sky and ground levels.
A concealed café sits on the marsh bank, offering a place to rest and watch the wildlife throughout the day and evening. Lending itself to the contours of the land, this structure emerges from the water with an arching green roof.
NTU's Interior Architecture & Design students' work can be found here: www.exit44.co.uk
The BA(Hons) Interior Architecture and Design course is one of the design courses accredited by the Society within the CSD Course Endorsement Programme.
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Events & CSD Offers
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CSD East Midlands Focus Group
21st August, 6 - 8pm, Leicester UK.
Stocks Taylor Benson, 1 Grove Court, Grove Park, LE19 1SA
Nurturing Design - Is the UK National Curriculum too broad - Are we nurturing the designers of the future early enough? For full details email us at info@csd.org.uk
HybridConf 2014
21st - 22nd August, Stockholm, Sweden.
HybridConf is a 2 day conference bridging the gap between designers and developers, with exclusive talks from industry professionals from Microsoft, Ghost, Nasa and many more.
Re:develop Conference
22nd August, 9am - 11pm, Bournemouth UK.
A one day developer conference to discuss the newest trends, techniques and future developments. Eight amazing speakers from The Guardian, Ghost, GOV.UK and more.
Sober Contest
Closing date for online submissions 1st September.
Sober is Formabilio's 36th contest for designers and furniture enthusiasts.
Reasons to be Creative
1st - 3rd September, Brighton UK.
Bringing you the world's most talented designers, coders, creatives, film makers, animators, installation builders, illustrators, and artists presenting 3 tracks over 3 full days of education and inspiration. Voted 'best conference of the year 2013'.
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