Although generally only a client of a professional will have standing to bring a claim in negligence against professionals such as solicitors, barristers, tax advisers, accountants and surveyors, there are situations where a third party (i.e. not the direct client) can bring a professional negligence claim.
A third party claim for compensation arises as a result of the actionable duty of care owed by all professionals in negligence, under tort law. There is a plethora of case law (especially in claims against solicitors) that holds that professionals can be liable to third parties with whom they have not acted for under a retainer. Cases include beneficiaries in a will or under a trust or (rarely) where professionals have given informal advice.
If you have a third party claim our dual-qualified Solicitor & Barrister team assess your case at the outset. We will quickly determine the merits and prospects of the claim and then also advise you on how to obtain an optimal settlement (often on a no win no fee basis).
What is a third party claim?
A third party claim in negligence is where a party that is not a direct client of the professional is nevertheless owed a duty of care and suffers loss as a result of breach of that professional’s duty of care (which can be either expressly set out in contract or implicitly through acting in the role of professional).
When can a professional owe duties to third parties?
There are occasions when, in addition to the named client, there are also others who will foreseeably be harmed by the negligence of the professional. In such cases a duty may exceptionally be owed to them too.
In the case of foreseeable physical damage to a third party the case law has ordinarily long recognised a duty of care.
Can a third party bring a claim in negligence for purely economic loss?
It is difficult to gauge where a third party suffers only economic loss as a result of a negligent act or omission of the professional, since the modern policy of the law takes a restrictive attitude to the recovery of (pure) economic loss.
In Caparo v Dickman [1990] 2 AC 605, Caparo Industries purchased shares in Fidelity Plc with faith they would be successful as the accounts that the company stated showed the company had made a pre-tax profit of £1.3 million. However these accounts were not correct and in reality Fidelity had made a loss of £400,000. Caparo v Dickman is a key authority to cite when making submissions about proximity (which tends to be an argument raised by defendants in many negligence proceedings).
A three-fold test for the existence of a duty of care was established in relation to the provision of negligent mis-statements. The requirements being:
- foreseeability of loss at the time when the statement was made;
- sufficient degree of proximity between the parties; and
- whether it is fair just and reasonable for the duty to be imposed.
What does a third party need to show to bring a negligence claim against a professional?
The case law is slow to impose duties owed to an indeterminate classes of persons or transactions (Smith v Eric S Bush [1990] 1 AC 831). Therefore, any duty in tort is ordinarily limited to situations in which:
- the statements or advice have been given to a known recipient
- for a specific purpose of which the maker of the statement was aware, and
- upon which the recipient had relied and acted to their detriment.
Can a third party bring a negligence claim where the duty to the client conflicts with the duty to a third party?
Generally not. In professional situations where the claimant is not the client, it will also usually be necessary that the alleged duty to the third party should:
- not conflict with the duty owed to the client, and
- not conflict with nor undermine any contract between professional and client (or indeed any other relevant contract such as between client and the third party).
Can a third party bring a claim where the professional’s duty to the client involves conferring a benefit to a third party?
Yes, the courts have exceptionally recognised a duty of care to a third party where the professional’s duty to the client involves conferring a benefit on that third party and even then generally only where the third party has no other remedy for its loss, andthe professional is not liable also to the client.
Case studies: Successful claims against solicitor brought by beneficiaries to a will
In White v Jones [1995] 2 AC 207 , the Lords allowed a disappointed beneficiary under a will to recover damages in compensation for the lost legacy under a will which the solicitor was instructed by the testator to prepare. A solicitor drawing a will may be liable in negligence to a potential beneficiary, having unduly delayed in the drawing of the will. The Hedley Byrne principle was “founded upon an assumption of responsibility.’ Obligations may occasionally arise outside the terms of the retainer or where there is no retainer at all.
By accepting instructions to draft a will, a solicitor does come into a special relationship with those intended to benefit under it in consequence of which the law imposes a duty to the intended beneficiary to act with due expedition and care in relation to the task on which he has entered . . . the assumption of responsibility referred to is the defendants’ assumption of responsibility for the task not the assumption of legal liability.
Lord Browne-Wilkinson, White v Jones [1995] 2 AC 207
Case study: Third parties can claim compensation for misrepresentations made by solicitor
In Bennetts v Chris Harrison Law [2015] EWCA Civ 1199, solicitors misrepresented a list of the claimants’ supposedly outstanding debts to the Bankruptcy Protection Fund Ltd, whom the claimant had retained to secure an annulment of his bankruptcy. Although the trial judge held that a misrepresentation had been made by the solicitors, they had not owed a duty of care to the claimant. The Appellate Court upheld this finding. It stated that there were some circumstances where:
‘The court has widened the class of those who may rely on a solicitor’s advice to those beyond the immediate client—see for example White v Jones, in which the intended beneficiary of a provision in a Will was entitled to complain of the negligence of a testator’s solicitor in drafting the Will. But the present case is miles away from that.
Bennetts v Chris Harrison Law [2015] EWCA Civ 1199
Book an Initial Consultation with our Professional Negligence Lawyers
Do you have a third party 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.
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Instruct 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 Inn of Court adjacent 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, insurance brokers, surveyors, valuers, architects, tax advisers and IFAs.
