Dispute Resolution

Professional advisors (for example accountants, auditors, solicitors and surveyors) have a duty to provide their services with reasonable care and skill. Professional negligence occurs where a professional advisor fails to perform their responsibilities to the required standard. While failings on the part of professionals are often referred to as ‘negligence’, claims can be brought against professionals based in contract, breach of the duty of care owed in the tort of negligence, breach of fiduciary duty or breach of statutory duty.

Contractual liability

In almost every case, a party will have a contract or “retainer” with their professional advisor which should set out the scope of the professional’s duties and obligations and will be useful in determining the professional duties owed to the client. It is important that professionals and clients alike ensure that the retainer is in writing and clearly sets out the scope of the work to be carried out by the professional.

Where a contract is not in writing, it may be less clear what the professional’s duties and obligations are. However, unless it has been specifically excluded (only with non-consumer contracts) or the parties have agreed the standard of care required, there will be an implied term that the service will be carried out with reasonable skill and care in accordance with section 13 of the Supply of Goods and Services Act 1982.

It is important to check the terms of any contract or retainer with a professional advisor as, depending on the terms and the circumstances, the professional may be liable for both breach of contract and negligence.

Tortious liability

Even if there is no contractual relationship, a professional may have a tortious duty of care where they are taken to have assumed some responsibility to the party who has suffered loss or damage and the wronged party has relied on the advice being provided by the professional. However, the circumstances in which professionals owe tortious duties where there is no contractual relationship are limited and the reality is that a professional is likely to owe a duty of care in negligence as well as a duty in contract.

In order to establish negligence, a claimant will need to prove on the balance of probabilities that there exists the following:

• duty of care – that the professional owed the claimant a duty of care not to cause the type of harm or loss suffered
• breach – that the professional breached the duty owed
• loss – that the breach of duty has caused the claimant harm or loss. Even if the professional has acted negligently, If no loss has been suffered as a result of his or her actions a claimant will not be able to establish a claim for negligence.

Limitation period

The limitation period is the timeframe within which proceedings need to be started as set out in the Limitation Act 1980. The limitation period for contractual claims is 6 years and this period runs from the date of the breach of contract.

The limitation period for negligence claims is also 6 years but, unlike claims for breach of contract, the period runs from the date that the damage is suffered.

Where a party is unaware of the existence of the negligent act the limitation period is 3 years from the date that the claimant knows or ought to have known material facts about the loss suffered, the identity of the defendant and that they have a cause of action. Determining when damage has been suffered, or when the claimant has the relevant knowledge required so that the limitation period can be established, is often not a straightforward matter.

Pre-action protocol for professional negligence

There is a specific Pre-Action Protocol for professional negligence as part of the Rules governing procedure in civil actions which sets out the steps that parties are required to take before starting proceedings for professional negligence, breach of contract or breach of fiduciary duty against a professional. The purpose of the Pre-Action Protocol is to encourage parties to exchange information at an early stage and to attempt to resolve the dispute without the need for litigation. Parties are expected to comply with the Pre-Action Protocol and there may be costs consequences if parties fail to do so.

For more information contact Tim Wheeler who is responsible for Dispute Resolution at Hopson Solicitors, email tim@hopsonsolicitors.co.uk, Direct Dial 01242 505950.