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What Is Professional Negligence?

 

Professional negligence occurs when a professional, such as a solicitor, surveyor or an accountant, does not carry out their professional duties to the required standard which consequently results in a loss.

 

What are the elements of professional negligence claim?

A professional negligence claim may be contractual (stemming from a breach of contract between you and the professional), statutory (stemming from their statutory duties) or tortious (resulting from a breach of the professional’s duty of care owed to you).

 

Contractual claim

Most commonly, a professional negligence claim arises from a breach of contractual and/or tortious duties. In order to prove that the professional is in breach of their contractual duties, you would need to be able to show that you had entered into a contractual arrangement with that professional and that the professional had breached the terms of the contract with you.

A professional may be in breach of the express and/or implied terms of their contract with you.

Express terms, simply speaking, are those expressly agreed to between the parties, be it orally or in writing.

Implied terms, on the other hand, are terms which are not expressly stated within the contract, but are expected to apply, nonetheless. The court may imply certain terms into the contract even though they were not specifically agreed by the parties.

 

Tortious claim

In order to prove that you have a tortious claim against a professional, you would need to be able to prove that the professional owed you a duty of care and that they have breached that duty.   

In most circumstances you will find that a professional owes their client both contractual and tortious duties.

 

What is professional negligence give an example?

Examples of potential negligence include:

  • A solicitor providing negligent advice or missing an important court deadline.
  • An accountant failing to correctly advise on tax relief or providing incorrect valuation of the business assets.
  • A surveyor missing apparent defects in the property or providing an incorrect valuation.

 

How to prove professional negligence?

To succeed in an action for negligence, you need to establish that:

  • The professional owed a duty to you (either contractual or tortious).
  • The professional breached the duty owed to you.
  • The professional’s breach of duty caused you to suffer loss.
  • The loss caused by the professional’s breach of duty is recoverable.

 

Breach of duty

Essentially, a tortious breach of duty arises when the professional in question makes an error which no reasonable member of that profession would have made.

In negligence, an objective test of a “reasonable man” is applied. The mere fact that a professional made an error does not amount to negligence. The legal test is whether the advice/service provided to you would have been provided by any responsible body of professionals in given industry. It is not a question of whether you should have been provided with the best service possible but whether you have been provided with service that would be deemed to be below the acceptable level of care.

In some cases, expert evidence will be required to establish whether or not the standard of care provided by a given professional fell below the reasonable level.

 

Pre-action Protocol for professional negligence

If you wish to pursue an action against a professional adviser (other than construction and healthcare professionals), you should follow the Pre-action Protocol for professional negligence (“the Protocol”).

The Protocol sets out:

  • The procedure to be followed.
  • The information which both parties must exchange.
  • The timetable with which the parties must comply.

The aim of the protocol is to assist the parties to resolve the dispute sooner, without resorting to court proceedings.

 

What are the time limits for a professional negligence claim?

Whilst there are some exceptions to the time limit rules, generally, you have:

  • six years from the time of breach of the contract; or
  • six years from the time you suffer damage as a result of the professional’s negligence

to bring a claim.

If you have a tortious claim then you may also be able to pursue a claim within three years from the date when you became aware of the damage, i.e. when you have enough material facts to suspect that the professional might have been negligent or did something wrong.

In most circumstances, regardless of whether your claim is in contract or tort, your claim must be issued in court within15 years of the negligent act.  After that time, you claim is likely to  be statue-barred.  

How much can I claim for professional negligence?

The amount of compensation awarded will vary in each case, as it is dependent on the loss suffered. However, as a claimant, you are entitled to an award of damages which would put you in the position in which you would have been had the professional not breached their duty. If the loss would have happened in any event, regardless of the breach of duty, it would not be possible to say that the loss was caused by that breach. It is important to note, however, that you are required to try and mitigate any loss suffered as failure to do so may prevent you from recovering the loss in full. 

 

Examples of professional negligence cases

Orientfield Holdings Ltd v Bird & Bird LLP [2015] EWHC 1963 (Ch)

A solicitors' firm was found to be in breach of its duty of care having failed to notify its client (a buyer of a property) of the contents of a search  report which revealed  plans to redevelop of two nearby schools into a big six-storey academy for nearly 1,500 students which would have significant impact on the value of the buyer’s investment

Had the buyer been made aware of the development plans, she would have sought independent advice in that regard and would not have proceeded with the transaction, in light of the repercussions that the redevelopment had on the value of the property.

 

Manchester Building Society v Grant Thornton UK LLP

A building society successfully appealed against a decision that its auditor was not liable for the society’s losses suffered due to the society’s reliance on the auditor's negligent advice.

The auditor had negligently advised that by preparing their accounts "hedge accounting" would represent a true and fair view of the society's financial position. As a result, the society entered into long-term interest rate swap contracts as a hedge against the cost of borrowing money to fund mortgage lending.

Following the 2008 global financial crisis, the interest rate fell significantly which resulted in the value of the said swaps became negative. Having discovered the error, the society was forced to close out the swaps early and, consequently, pay the losses made on the swaps and any fees that arose for breaking them early which, altogether, amounted to £32.7 million.

Key contact

Richard is a Partner and an elected partner on the firm’s board of management. He is also Group Head of the ever expanding dispute resolution team at Hugh James. He conducts major commercial disputes frequently with an international flavour including commercial claims, mining disputes, shareholder and partnership disputes, professional negligence claims, contentious IT disputes, injunctive relief and insolvency.

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