A Guide to bringing a Professional Negligence Claim.
We set out below a guide to bringing a Professional Negligence claim against a Professional. Whether a Solicitor, Barrister, Accountant, Surveyor, Architect or Financial adviser it is a difficult area of law so careful advice needs to be taken from a solicitor before embarking on such a claim. Carruthers Law are able to provide you with expert advice from a senior solicitor from the beginning and will provide you with an initial talk through your claim. Call us today and you can discuss with one of our solicitors as to how you are able to bring your claim and the funding options available to you to do so.
Is my claim in contract or tort?
A claim can be brought against a professional, such as a solicitor where they have acted in a certain way, or omitted to act, which falls below the required standard of care.
The lack of a contractual relationship between a client and adviser is not determinative of whether a duty of care is owed; a duty of care can be owed with or without a formal contract however with claims against solicitors and most other professionals there is usually a contract when first instructed.
A client can bring actions in both tort and in contract against the professional whom they have instructed. Often, an action is brought in tort when there are problems with the limitation period i.e. the time limit for bringing the claim as it may well extend the time to do so.
Actions may occur in tort and contact where the:
• Defendant’s undertaking is based in contract; or
• Defendant’s negligence in performing the contract that has caused loss to the client’s property or financial interests.
Once instructed by a client, there is an assumption of responsibility by the professional to owe a duty of care in tort and contract. As parties are at liberty to contract on their own terms, the contract may impose more onerous obligations than those imposed by the law of tort.
What are the differences between claims in contract and tort?
If the components in a claim in tort and a claim for contract are established, the claimant is at liberty to choose which area to bring their claim. The limitation period may be a deciding factor. The Limitation Act 1980 sets out the limitation period for claims in tort and contract as six years from the date on which the cause of action accrued.
The date on which the cause of action accrues is different in each claim and must be considered carefully and as soon as possible:
– The cause of action in tort accrues when (1) A duty of care is established; (2) That duty of care has been breached; and (3) Loss has occurred resulting from the breach of duty.
– The cause of action in contract accrues immediately once the contract entered between the parties is breached.
An example of this would be when the time for bringing a claim in contract may become statute-barred as a result of the passing of the six year limitation from the date of the breach of the contract, but a negligence claim may still be possible if the loss occurs at a later date.
Advice given by an estate agent or surveyor to sell a property for the wrong price would be a breach in contract at the time of the bad advice but in tort the loss would be sustained when the sale was finally agreed, and contracts exchanged.
The remedies available to the parties may also be a factor to consider when deciding on an action in tort or contract including the amount of damages sought and any other equitable relief. Defences available to defendants may also be another factor taken into consideration.
Contractual liability for professional negligence.
What is the scope of a professional’s contractual duty?
Once instructed by a client, it is expected of the professional to enter into a contract in written form, which would contain and form the relationship, scope, obligations, and duties owed to the client. It is not an absolute requirement to enter into a written contract, it may in fact be entered into orally but would normally be written and if it is not, alarm bells should start ringing.
What is the scope of the contract?
Ascertaining and determining the scope of duty of a professional is important, as this gives certainty to what is expected of the professional and to avoid ambiguity and uncertainty between the parties.
The scope of a contractual relationship defines the purpose of the instruction, and the obligation of work or service undertaken will be limited to that scope. For example, a solicitor instructed to assess whether a client has a potential defamation claim and provide an initial advice, is not expected to give general business advice or to consider the interests of the client generally.
A firm of solicitors who failed to carry out an Insolvency search which, if completed, would have shown that the other side to the transaction with their client was on the brink of bankruptcy had not breached their duty when acting on a property acquisition. However, a conveyancing solicitor who had information regarding a proposed property development was negligent by failing to advise their client of this fact that would have affected the decision-making process. They may not have purchased the property because of the development or may well have paid less if they had known.
When important advice is given by a professional, repetition of this important advice is not mandatory. Although, a surveyor, for example, is under a duty to inform the client of an impending deadline. Nevertheless, whilst there is no obligation to repeat advice to clients who are not experienced in that field, it would be sensible to do so when there are impending deadlines.
The scope of duty may depend on the type of client. The experience and nature of a client is one consideration which may have bearing on the extent to which a professional advises on matters relating to the contract. If the client is a lay person with little understanding as opposed to an experienced businessperson, they will have a wider scope of duty for the lay person.
Accordingly, if instructed by the businessperson then the professional may make assumptions that the scope of the duty is more limited purely to the questions or queries that are being raised by the client. However, it is important to know the client and that an individual assessment is made in each case and no general assumptions are made.
A party intending to include an absolute liability on the professional, must state this clearly, permitting the professional to understand the obligation they are accepting to undertake. There is a possibility a contract contains both an absolute obligation that a specified result must be achieved, and a qualified obligation that the professional abides by standards set by the contract. Even if a professional has acted with reasonable care and skill, liability can be present even for failing to comply with the absolute contractual obligation.
Two contrasting examples are the following cases. In Midland Bank plc v Cox McQueen [1999] 1 FLR 1002 the bank wrote to the solicitors, nominated by Mr Dukes, instructing them to obtain the signatures of Mr and Mrs Dukes to various documents, including Mrs Dukes’ signature to the charge to the bank. The charge contained a certificate to be signed by the solicitors, certifying that the document had been fully explained to Mrs Dukes, and that she had signed it of her own free will. The documents were returned to the bank apparently properly completed.
Four and a half years later the bank sought to rely on their charge and discovered that the charge had not been signed by Mrs Dukes, but by an impostor who had been introduced by Mr Dukes impersonating his wife. After an initial attempt to proceed against Mrs Dukes, the bank commenced proceedings against the solicitors and alleged non-performance by them of their retainer, on the basis that the terms of the letter of 18 March were absolute. The Court of Appeal rejected the bank’s argument that the contract imposed an absolute obligation on the solicitors to answer for Mr Dukes fraud. The court stated that the question was whether the bank had intended to ask for and whether the solicitors had intended to give a promise to answer for the fraud of the customer even if that fraud could not be detected by exercising all proper care. The answer was no, unless the language used, looked at as a whole, indicated compellingly to the contrary. The letter of instruction to the solicitor instructed them to obtain the signatures of Mr and Mrs Dukes, and to explain the implications of the mortgage to Mrs Dukes, such obligations were not likely to be absolute: they were better suited to a requirement to exercise a reasonable standard of care.
“If commercial institutions such as banks wish to impose an absolute liability on members of a profession, they should do so in clear terms so that the solicitors can appreciate the extent of their obligation which they are accepting.”
In Platform Funding Ltd v Bank of Scotland plc [2008] EWCA Civ 930 a Surveyor provided the bank with a valuation of a property, and then advanced the sum of money to the borrower based on that valuation. Later when the borrower failed to maintain the payments the property was repossessed. At that point it emerged that the surveyor had been misled by the borrower into inspecting the wrong property. The property was sold with a shortfall of around £30,000. The Court of Appeal held that, by accepting instructions to inspect and value the property, the valuer had undertaken an unqualified obligation to inspect the correct property and was in breach of contract.
Implied terms.
Terms that are not expressly stated either in written form or orally and agreed between the parties, can still be implied by:
• Statute (such as Supply of Goods and Services Act 1982).
• The officious bystander tests. This means that the term is so obvious it must be included.
• A consistent prior course of dealings. This would be when the parties have consistently done business together on certain terms in the past. The terms that applied in the past may be implied into future contracts.
• Trade custom. Different industries establish their own trade practices or usage of contract terms. A simple example would be a Plumber would bring his own tools to a job.
By virtue of s13 Supply of Goods and Services Act 1982, where a supplier is acting in the course of a business, there is an implied term that the supplier will carry out the service with reasonable care and skill to the standard of a person exercising and professing to have that special skill. This liability can be excluded or limited subject to the Unfair Contract Terms Act 1977.
Does the professional have a continuing duty?
Where there has been a failure by a professional to satisfy a term of a contract, a continuing obligation is unlikely to be imposed on them.
A single cause of action accrues when failing to protect the interests of a client, thus a new cause of action does not accrue each day thereafter. Therefore, if incorrect advice is given by a professional to a client, failure to correct that advice whilst the contract or retainer is still in existence, and whilst the client continues to seek advice from the professional, does not amount to a fresh cause of action. However, if there is an ongoing duty to register an interest by a future deadline, the professional is under a continuing duty up until that deadline.
Can there be a liability to non-clients?
A non-contracting party cannot generally sue a professional adviser in contract. However, under Contracts (Rights of Third Parties) Act 1999, third parties may have the right to enforce a contractual term if that a person who is not a party to the initial contract provided that (1) the contract provides that he may (i.e. that he is referred to) and (2) the terms purports to confer a benefit on him.
A third party, if components (1) and (2) are established, enjoys the benefit of seeking remedies against the professional as though they were the initial contracting party. The contract parties from the outset are at liberty to exclude the effect provided for under S1(1) of the said Act. In respect of the law of agency, a Principal of an Agent is not necessarily bound into a contract engaged between the agent and a third-party adviser.
Implied contracts or retainers.
Contracts or retainers can be implied in the absence of an express contract (that is oral or written form), though the courts are reluctant to do so given that parties are at liberty to enter into such a contract and include those implied terms into the contract. However, where the court is required to assess the imposition of a duty of care, they will consider whether it is fair, just, and reasonable to do so. To state that someone would be acting in the claimant’s interest is not a sufficient factor in implying a retainer between parties.
Does the advice to me need to be in writing?
No. It is not an absolute requirement that advice be given in written form; it may be given orally. Though, from a professional’s perspective, if advice is given orally, then a detailed note of what was advised, any queries or questions raised by the client and any subsequent answers be recorded, in the event that information needs to be recalled on in the future.
What are the basics of a Negligence claim?
There are three basic requirements which need to be proved by you on a balance of probabilities. Balance of probabilities means that a judge is satisfied an event occurred if he considers that, on the evidence, the occurrence of the event was more likely than not. In percentage terms, if a judge concludes that it is 50% likely that the claimant’s case is right, then the claimant will lose. If the judge concludes that it is 51% likely that the claimant’s case is right, then the claimant will win. The three basic requirements are:
• That the professional owed a duty of care not to cause the harm suffered
• That the professional breached that duty.
• That the adviser’s breach caused your loss.
There are two elements both which need to be proved as to whether the adviser’s breach caused your loss.
Factual causation: You will need to show that but for the professional’s negligence you would not have suffered the loss.
Legal causation or remoteness: That the professional adviser’s negligence was the legal cause of the loss.
These requirements are considered in more detail below.
How do I establish a duty of care?
The courts use several different tests to establish whether a duty of care is owed in tort by one party to another.
The courts are reluctant to find the existence of a duty of care where there has been no clear assumption of responsibility on the part of the adviser of the client.
Assumption of responsibility.
• The adviser has assumed responsibility towards you. It is necessary to examine the relationship between you and your adviser. That you have asked for and received advice. There should be a formal relationship established but not always. The individual circumstances will have to be looked at; How the advice was given; and What was said or written to you by the solicitor.
• The degree of reliance that was intended by the solicitor or to be expected.
• You should have relied on the advice. If you did not, then it would not have caused the loss.
• The opportunity (if any) given to the adviser to issue a disclaimer.
• The claimant’s reliance cannot be retrospective.
The test of whether a professional has assumed responsibility is an objective test, looking at what the solicitor said or did in his dealings with you.
To whom has responsibility been assumed?
It is necessary to look at the individual circumstances of the case. Clearly, if you are the client that is an easy case to identify.
However, there are exceptions so if a solicitor prepared a will improperly or delayed in implementing instructions and drafting the will and the person who was making the will died then if beneficiaries of the will, as a consequence, failed to receive their legacy then that could be a case were the solicitor owed the beneficiaries a duty even though they were not his clients.
It will be the case that responsibility is usually limited to the client; however, each circumstance must be examined to consider whether or not the requirements of reasonable foreseeability and proximity were met.
A professional may be held to owe a duty of care in tort when giving advice to a friend, although the parties had not agreed a contract, the solicitor may well owe a duty of care in tort relating to the advice even though there is no formal contract and the solicitor was providing a favour to a friend.
Pure economic loss.
Generally, a professional is not liable in tort for pure economic loss. The term pure economic loss is used to denote financial loss suffered by a client which does not stem from damage to his property. Therefore, no duty is owed by an adviser who negligently damages property belonging to a third party to a client who suffers loss because of a dependence upon that property or its third-party owner.
Examples of pure economic loss include the following:
• Loss of income suffered by a family whose main earner dies in an accident. The physical injury is caused to the deceased, not the family.
• Loss of market value of a property owing to the inadequate specifications of foundations by an architect.
• Loss of production suffered by an enterprise whose electricity supply is interrupted by a contractor excavating a public utility.
Is there a duty of care to non-clients?
Generally, a solicitor does not owe a duty of care to the other side in a transaction or litigation. A seller’s solicitors in a property purchase who incorrectly answered an enquiry before contract, were held not to be liable to the buyer. The client could however seek to sue the seller who, in turn, would sue his solicitor for the negligent act.
In litigation, there is a general duty to conduct litigation to the accepted standards of the profession. Breach of that duty could result in the court ordering the solicitor to pay compensation to a non-client.
A duty may be owed where a solicitor makes a representation or gives a report or certificate to a third party with the intention that it should be relied on. An exception to the rule could be where a solicitor voluntarily assumes a duty of care towards a third party by answering a question or tendering advice where he knows that it will be relied upon by the third party. Another exception is where the acceptance of instructions from a client who instructs the solicitor to draft a will imposes a duty of care towards a beneficiary or intended beneficiary of the will.
How do I establish a breach of duty.?
Where a duty is owed in contract or tort, the client must establish that there has been a breach of that duty. It is necessary to show that the professional did not comply with the standard of care owed. Negligence will be established only if the professional has made an error which no reasonable member of that profession would have made, in the same circumstances. So, it is not the standard of an outstanding adviser in their field but an ordinary one.
Do I need expert evidence?
Where a claim is brought for professional negligence, the court will expect in most cases to be provided with expert evidence to enable it to make its decision whether the professional has breached the relevant standard of care.
Indeed, in many cases, it will be impossible to pursue an allegation of professional negligence without expert evidence. Often the expert evidence will be required before the letter of claim is sent. So, a claim against a doctor would require the evidence of another doctor. A claim against a surveyor would usually require an expert surveyor. A failure by an Insurance Broker would require evidence as to whether he fell below the standards of reasonably careful and competent insurance brokers.
In claims against solicitors, the courts are reluctant to allow solicitors to give evidence criticising or defending the conduct of a fellow lawyer. There is an exception to this expert evidence may be admissible to prove some special practice or accepted standard of conduct in a particular area of the law.
What is the standard of care in a contract claim?
In contract, the standard may be expressed in the contract or be implied by statute. The contract may impose an absolute obligation on the professional to perform, when providing advice or some other professional service, an implied duty of reasonable care and skill is likely to apply.
A solicitor acting in court proceedings on your behalf does not guarantee success. The duty is to act with the care and skill that the client is entitled to expect from a professional. Providing the solicitor advises as to the prospects of success correctly then there would be no breach if the action fails. So, if the solicitor advises as to a 60% prospect of success then if the action fails, he is not liable providing that assessment was in the bounds of reasonable care and skill. If the prospect were in fact 10% then there would be a breach.
What is the standard of care required in a claim in tort.?
The standard is that of the reasonable man. The test is objective. That means the test does not take into account the specific attributes of the defendant. Just because the advisor makes an error does not constitute negligence. The standard is not perfection. More than a mere error of judgement must be shown. It is not enough to show that another professional would offer a different opinion.
The Bolam test.
In Bolam, it was held a doctor was not necessarily negligent if he conformed to a practice accepted as proper by some responsible members of his profession, even if other members would have taken a different view. The doctor would not have breached his duty if he acted in a way regarded as proper by a responsible body of opinion.
The test in Bolam was laid down was as follows:
“Where you get a situation, which involves the use of some special skill or competence… the test is the standard of the ordinary skilled man exercising and professing to have that special skill. A man need not profess the highest expert skill …It is sufficient if he exercises the ordinary skill of the ordinary competent man exercising that particular art.”
A valuer can only be negligent if his valuation is erroneous. It is not enough that, at some point in reaching a valuation, the valuer failed to meet the standards of the ordinary competent man. The process of valuation does not produce precise conclusions and so the valuations of competent, careful valuers may differ (sometimes by a substantial margin), without any of the valuers being negligent.
Buxton L.J.: In order to find a survey or negligent in valuing property, it had to be shown that his opinion was wrong: that is, that his figure was such that no competent surveyor would have reached. If the figure were not outside the permissible range or “bracket”, no finding of negligence could be made. If, however, it was shown that the valuer had adopted an unprofessional practice or approach, then that might be taken into account in considering whether his valuation contained an unacceptable degree of error.
With claims against solicitors, the test is that of a reasonably competent solicitor having regard to the standards normally adopted in the solicitor’s profession. That assessment is at the time of the act or omission not with the benefit of hindsight. A solicitor is expected to know the law relevant to the transaction and if he does not, then must familiarise himself with that area.
What are the factors that affect the standard of care?
The level of experience of the professional is not relevant. The standard of care to be expected is that of the reasonable competent solicitor.
A newly qualified solicitor cannot rely on his inexperience to persuade the court to apply a lower standard.
A special skill may raise the standard of care If a solicitor holds himself out as being a specialist in an area of law, they must comply with the standard of care of a reasonably competent specialist law firm.
Professional codes may help in setting out what constitutes a recognised professional practice.
A solicitor in England and Wales has a duty to observe the standard of conduct and conform to the disciplinary procedures of the Solicitors’ Regulation Authority, including the SRA Code of conduct. It has been held that a failure to follow practice set out in the Law Society’s Conveyancing Quality Scheme is evidence of negligence.
Reliance on specialist advice.
It can be a defence to a professional negligence claim against a solicitor that he relied on specialist advice such as from a Barrister and was correct to do so. It would be up to the solicitor to consider whether counsel’s advice was obviously or glaringly wrong.
Causation.
A professional may have been negligent but if his actions or advice do not cause the client loss then the claim will fail.
There are two categories of causation:
• Factual causation.
• Legal causation or remoteness.
Neither of these is sufficient to establish liability on their own.
Causation must be established on a balance of probabilities, and the burden of showing causation is usually on the claimant.
The but for test.
This test is the preliminary stage in the issue of causation. It involves comparing the claimant’s actual position with the “no negligence” position.
An easy explanation is that if the loss would have happened anyway, the breach did not cause the loss.
In Barnett v Chelsea and Kensington Hospital Management Committee a patient attended at casualty complaining of stomach pains. He had drunk tea laced with arsenic. The doctor failed to examine him and sent a message out to him to go and see his GP. Five hours later he died. A claim in negligence was brought by his widow. The court’s decision was that
(1) that the hospital owed a duty of care.
(2) that the doctor was negligent in failing to examine and admit him to hospital, and accordingly there had been a breach of that duty.
but
(3) on the facts, he would have died anyway, so that causation was not established, and the claim failed.
A situation could occur were there are two or more possible causes of a loss. If the loss is such as would be expected to flow from the negligence, a court can infer that the professional advisor’s negligence caused the client’s loss. It is up to the adviser to show that other possible causes were at least as likely to have caused the loss as his negligence.
A professional adviser may try and defend the claim on the basis that the loss was caused not by the breach, but by the intervening act of a third party or of the client. The issue to be determined is whether the intervening act broke the chain of causation.
In determining this question, much depends on whether the intervening act was:
• Foreseeable.
• In the contemplation of the parties.
• Just the sort of thing likely to happen.
If these conditions are met, it is unlikely that the intervening act would be held to have broken the chain of causation.
Loss of chance.
The doctrine is used to determine causation and assess damages in cases where the claimant has lost the opportunity to pursue a course of action, which they argue they would have pursued and had a chance of achieving some benefit which is usually monetary.
A client who has lost the chance of pursuing another party, such as if a solicitor fails to pursue one party and does not do so until a limitation period has expired or a lost transaction case where a client asserts they missed out on securing a deal with another or a property or business purchase because of negligent solicitors’ professional advice. A solicitor who failed to proceed with the purchase of a business on behalf of a client and failed to reply to correspondence and, as a consequence, the seller imposed a time limit for completion and still the solicitor did nothing and then the seller withdrew and sold the business to another, would be an example.
The Supreme Court has given guidance for future loss of a chance cases recently:
• There should not be any distinction in principle between a lost litigation opportunity case and a lost transaction opportunity case. In either case, a claimant will have to satisfy the court as to what they would have done, if non-negligently advised. The claimant’s evidence will be important in establishing this.
• That is a balance of probabilities test, and has an all-or-nothing outcome – if a claimant can prove that they would have proceeded as alleged, then the recovery will not be discounted purely because there was a real chance that they would not have done. Conversely, if that claimant does not succeed on the balance of probabilities, the claim fails entirely.
• Since proving that issue is of such fundamental importance, neither party should be deprived of the opportunity of a full trial of the issue. In this case, Mr Perry’s credibility and other evidence as to his disability were all relevant to the balance of probabilities test.
• There is a presumption that such claims will be pursued on an honest basis. A claimant, acting honestly (here, as to the extent of his injuries) would not be advised to pursue a bad claim. The court has no business rewarding dishonest claimants.
• The loss of a chance stage of the evaluation (point 3 above) is not applied to whether a claimant would have brought a claim (assessed on a balance of probabilities), but only to the assessment of the lost chance in the claim (or transaction, as appropriate). It is at this stage where a ‘trial within a trial’ is inappropriate.
The Supreme Court also held that the high bar for an appellate court interfering with a trial judge’s finding of fact was not met in this case and reversed the Court of Appeal’s findings in this respect also.
Remoteness.
If causation has been established, then it is necessary to establish whether the breach caused the loss. This is referred to as remoteness.
In contract the damages recoverable should be such damages as are fairly and reasonably considered arising naturally from the breach or reasonably have been in the contemplation of the parties at the time the contract was made. If special circumstances had been communicated between the parties, the damages would be the amount considering those special circumstances.
In tort, the test of remoteness is: what was foreseeable at the time the duty was breached? So, the loss unlike contract is later i.e. the date of the breach.
How is my loss quantified?
At what point is the loss assessed? Generally, in contract and tort, damages are assessed at the date of breach.
In professional negligence claims and in the giving of professional advice to assess losses resulting from negligent advice is found by comparing the client’s position if there had been no breach of duty and the client’s actual position. It may well be that the client would not have entered into the transaction. In a negligent overvaluation of property, the usual consequence would be that that the lender makes an advance, thinking it is secured against the property when in fact because of the incorrect valuation it is not secured as much as they had thought. In that the lender would not have entered the transaction had the valuation been correct. The damages would have been those had they not entered into the transaction, and would allow recovery of all the foreseeable losses, including those due to a foreseeable fall in the property market.
Contributory negligence.
Where a client suffers damage partly due to his own fault, the damages will be reduced having regard to the client’s share in the responsibility for the damage Contributory negligence will also apply in contract claims.
Mitigation.
The client must take reasonable steps to mitigate his loss and must not take unreasonable steps to increase the loss.
Professional negligence pre-action protocol.
A claimant wanting to pursue an action against a professional adviser should follow the pre-action protocol for professional negligence. It sets out:
• The procedure to be followed.
• The information which both parties must exchange.
• The timetable with which the parties must comply.
The purpose is to achieve an early settlement of claims, without the need for court proceedings.
Call us today and you can discuss with one of our solicitors as to how you are able to bring your claim and the funding options available to you to do so.