Limits to the Limitation Defence: Hong Kong court rejects negligent solicitors time bar defence

In Chiu Kwai Ping v Yip, Tse & Tang [2019] HKCFI 2118, the High Court in Hong Kong has rejected a solicitor firm’s application to strike out a claim in negligence on the ground that it was time-barred. The Claimant’s case is that the solicitors failed to give advice and thus she failed to register an ancillary relief order at the Land Registry. Although the judgment is from a different jurisdiction, the reasons provided by the judge and the useful examination of UK jurisdiction cases provides a recent analysis of the principles a court utilises in determining when a cause of action in tort accrues.

Background

The Defendant solicitor’s firm acted for the Claimant in a financial dispute with her former spouse. In that dispute, the Court had ordered the transfer of the husband’s interest in the matrimonial home to the Claimant. Before the Claimant’s interest was registered at the Land Registry, the Claimant’s husband (in neglect of the order) created a second and third mortgage over his share in the property as well as entering into another loan on the security of his share of the property. Once the Claimant’s interest was registered, the Bank’s interest had already been registered and therefore took priority over the Claimant’s interest.

The order was eventually registered at the Land Registry in 2013 (5 years after it was made), but by then the encumbrances arising out of the loan and mortgages taken out by the husband had already been created and took priority over the Claimant wife’s interest in the husband’s share of the matrimonial home.

Why were the solicitors negligent?

The Claimant issued a claim in negligence against her solicitor on 20 August 2016. She claimed that the solicitors failed to:

  • advise her on the effect of the Order and the registration of the Order against the Property to protect the priority of her interest;
  • advise her on the costs of registering the Order;
  • register the Order; and
  • advise her on the right to enforce the Order.  

The solicitors failed argument: Limitation defence

The Defendant firm filed a Defence, stating that the Defendant had ceased to act for the Claimant in August 2008 and the Claimant’s husband’s mortgage was taken out in November 2012 and the court order was not registered until July 2013.

A potential breach of contract claim was time barred i.e. more than six years had passed since an alleged breach. In the claim of negligence, as is often the case in negligence claims, it was less clear when the plaintiff’s cause of action had accrued. A negligence claim should be commenced within six years of the date on which the cause of action accrued.

The Defendant denied liability but argued that if the Claimant had a claim, the cause of action accrued from the time of the alleged failure to properly advise and register the court order in 2008 and in that case the claim was time barred by the time the Claim was issued in August 2016, more than six years later and should be dismissed.

The Claimant argued that she suffered loss from when the other secured interest was created in November 2012. In that case the Claim, issued in August 2016, was not time barred.

Decision

The Court held that the Claim was not time barred and subsequently dismissed the Defendant’s application.

The Court noted that the way the Claimant had pleaded her cause of action was important. She had included a claim that had the Defendant not been negligent, she would have been able to register the court order and her interest at the latest in mid-August 2008. In that event, the Claimant’s interest would have taken priority over that of the second interest.

The Court’s decision considers the legal principles relating to when a cause of action accrues with respect to a solicitor’s failure to exercise reasonable care and skill in handling property transactions for a client. This case illustrates that the process of determining when a cause of action accrues and loss arises is a fact specific exercise.

When did the cause of action accrue?

The key takeaway is that a court cautions against a rigid application of legal principle and instead to look at the context of each case. Limitation provides a complete defence to a professional negligence claim.

A court will carefully examine when a loss occurs in calculating the limitation date. In this case, the cause of action accrued from when loss occurred.

Solicitor negligence

This case serves as a reminder for solicitors and practitioners to be aware of potential limitation dates in all cases and to protect themselves at all times.

What is the time limit for commencing a claim against a solicitor or barrister?

Time limits and limitation periods are essential to adhere to in litigation. Missing a limitation period is fatal to the chances of success of any claim and will leave a claim statute barred.

When it comes to ascertaining the limitation date for a particular claim, there are a number of factors to consider. In simple terms, the limitation period is six years from the accrual of the cause of action (section 2, Limitation Act 1980). However, if the six year time limit has passed but you have only just discovered the effect of any latent damage, then the limitation period may be extended to three years from the date of knowledge (section 14A, Limitation Act 1980).

Another complicating factor is that in almost all circumstances, a legal professional will owe a client concurrent duties i.e. a duty in both contract and tort. This means it is up to the claimant to choose whether to bring an action in contract, tort or both. The relevance is that although both contract and tort have a limitation period of six years after the relevant cause of action accrues, in contract the cause of action accrues once the relevant contractual term is breached and in tort it accrues once damage has occurred. Therefore, limitation periods for both causes of action vary.

If you have a complaint against a lawyer, then our advice is that you take independent legal advice as soon as possible.

How do I prove that my solicitor or barrister has been negligent?

Significant judgments in cases against legal professionals all highlight that three essential elements are required to prove a successful allegation against a solicitor or barrister.

The following three elements need to be proved to the civil standard of proof on a balance of probabilities i.e. it must be proven that the lawyer’s breach in the duty owed to its’ client, more likely than not caused the client to suffer loss.

1.Demonstrate that the lawyer owed you a duty of care: the boundary lines between when a tortious duty of care is owed or not owed is subject to tests that are being continuously adapted by the courts. It is safe to say that a duty of care exists where the lawyer can be shown to have objectively assumed responsibility (and the courts have demonstrated increasing willingness to find that a lawyer is liable to whomever reasonably relies on their advice). Once a lawyer accepts instructions and you have signed the client care letter, a contractual duty of care will likely be found within that document.

2. Establish that the lawyer has breached the duty of care owed to you: proving breach will obviously vary depending on the individual circumstances of the case. A claimant needs to demonstrate that the breach shows that the lawyer fell below the standards of a reasonably competent lawyer in that speciality. The particular level of experience of the lawyer (from newly qualified trainee solicitor to highly experienced partner) is not relevant- inexperience is no good argument to persuade the court to lower the standard of care. However, if a lawyer or firm hold themselves out as specialists in an area (for example solicitors specialising in conveyancing), then the court will hold them to standard of reasonably competent specialists of conveyancing law.

3. Prove that the lawyer’s breach caused loss to you: you must prove both factual and legal causation. The test for factual causation is that “but for” the lawyer’s breach you would not have suffered loss, for example if a lawyer misses a limitation date and as a result your claim becomes statute barred and you lose the chance to substantial damages in the substantive claim, factual causation is demonstrable because “but for” the solicitor’s negligence you would still have a claim that was not time-barred and still have a chance to achieving damages. Legal causation must also be proved i.e. the loss must be reasonably foreseeable at the time when the relevant duty was breached.

Case examples of Legal Professional Negligence Claims

Examples of common claims against solicitors, barristers, patent attorneys and licenced conveyancers include:

  • Failing to provide correct legal advice: a claim can be brought if a lawyer has provided a negligent legal opinion, relied upon by a claimant, which has led to personal or financial loss.
  • Failing to fully investigate or properly evidence the claim: solicitors and direct access barristers may be negligent in not gathering all pertinent information to ensure a claimant’s case is successful e.g. by not obtaining witness statements which supports the version of events.
  • Failing to fully warn the client on the risks: for example a solicitor will be negligent if a specific risk warning that a tax avoidance scheme might fail.
  • Missing a limitation date leading to a claim becoming time-barred: if the original claim had merit, then a claimant is entitled to pursue the errant solicitor or law firm for their loss of chance of success in the claim.
  • Failing to comply with a court order or deadline: if your claim has been struck out by the court after your solicitor or barrister breached an order of the Court (e.g. an unless order), then you may have a claim against the legal professional for poor performance of the litigation.
  • Poor performance of instructions: failing to adequately investigate title to property when acting for the buyer of a property; failing to advise on burdens affecting a property e.g. restrictive covenants, adverse rights burdening the property, failing to register a mortgage/debenture at Companies House if acting for a buyer client company.

Book an Initial Consultation with our Professional Negligence Lawyers

Do you have a claim against a professional? If you want expert legal advice, do not delay in instructing us so we can assess the legal merit of your case.

We can often take on such claims on a no win no fee basis (such as a Conditional Fee Arrangement) once we have discussed the claim with you and then assessed and advised you on the merits of the proposed professional negligence action.

Our expert legal team of leading Professional Negligence Solicitors & Barristers can provide urgent help, advice or representation to you. Just call our Professional Negligence Lawyers on 02071830529 or email us now.

Instruct us to bring your negligence claim

Do you have a claim against a professional? If you want expert legal advice, do not delay in instructing us so we can assess the legal merit of your case.

We can often take on such claims on a no win no fee basis (such as a Conditional Fee Arrangement) once we have discussed the claim with you and then assessed and advised you on the merits of the proposed professional negligence action.

Our expert legal team of leading Professional Negligence Solicitors & Barristers are available to provide urgent help, advice or representation. Just call our London Professional Negligence Lawyers on  ☎ 02071830529 or fill out our case assessment form.

Specialist Professional Negligence Solicitors

We are a specialist City of London law firm made up of Solicitors & Barristers operating from the only law firm based in the Middle Temple Inns of Courtadjacent to the Royal Courts of Justice. Our team have expertise in advising on claims for compensation against professionals that have fallen below the standard expected, which causes clients financial or personal loss. We are experienced in bringing successful claims against negligent solicitors, barristers, financial advisers, surveyors, valuers, architects, tax advisers and IFAs.

LEGAL CASE ASSESSMENT FORM

Just fill out our simple enquiry form; it goes immediately to our litigation team in Middle Temple, London. You can also call our lawyers on +442071830529 from 9am-6pm. Check My Case

Call Now ButtonCall Now search previous next tag category expand menu location phone mail time cart zoom edit close