Businesses and individuals often depend on professionals for expert advice in specialised areas, assuming these professionals have the requisite qualifications and expertise to offer proper guidance. As a result, professionals are expected to carry out their responsibilities with a reasonable degree of skill and care. There is a potential risk that inaccurate advice from a consultant could result in substantial adverse loss. In such instances, the wronged party may be entitled to pursue compensation for the damages sustained as a result of professional negligence.
Dealing with losses arising from an advisor’s professional negligence is often a difficult journey. However, UK’s legal framework offers a well-established set of legal guidelines designed to address these issues comprehensively.
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Professional Negligence Pre-Action Protocol
The legal system in the UK has established specific protocols for handling professional negligence claims. The Pre-Action Protocol for Professional Negligence (PAP) outlines the steps parties should generally follow before commencing court proceedings. This includes the exchange of information and documents, a clear outline of the claim and the basis for it, and attempts to settle the dispute without going to court.
The Professional Negligence PAP applies to all claims against legal professionals, accountants, financial advisers, auditors and certain other professionals, except for claims against construction professionals, (e.g. architects, engineers and quantity surveyors) as the Pre-action Protocol for Construction and Engineering Disputes is applicable instead.
It also does not apply against healthcare professionals (see the PAP for the Resolution of Clinical Disputes) or in defamation cases (see the PAP for Defamation Claims).
What is the Duty of Care?
Central to a claim of professional negligence is the concept of ‘duty of care’. A professional owes their client a duty of care, which means they must perform their responsibilities to the standard expected of a reasonably competent professional in their field. If this duty is breached, and the client suffers a loss as a result, the professional may be deemed negligent.
Duty of care – a legal obligation to take care – essentially imposes a legal obligation on individuals to act with reasonable care to avoid causing harm to others. This duty arises from a recognised relationship between the parties. The leading case of Donoghue v Stevenson (1932) established the now-famous neighbor principle, where a manufacturer was found liable for a snail found in a bottle of ginger beer consumed by the plaintiff. This landmark case highlighted that a duty of care can extend beyond contractual relationships.
Courts employ an objective test, the “reasonable person” test, to determine if a duty of care existed. This test asks whether a reasonable person in the defendant’s position would have foreseen the potential harm and acted accordingly to take precautions. Factors considered include:
- Foreseeability of harm: Could the defendant have reasonably foreseen that their actions or inaction could cause harm to the claimant?
- Proximity of relationship: Is there a sufficient level of connection between the parties to give rise to a duty?
- Nature of the risk: How serious was the potential harm, and was it fair and reasonable to expect the defendant to take steps to mitigate it?
What does a Breach of Duty of Care mean?
A breach of duty occurs when the defendant fails to meet the standard of care established by the duty of care. Courts assess a breach by comparing the defendant’s actions (or omissions) to what a reasonable person would have done in the same circumstances. If the defendant’s behavior falls below that standard, it’s considered a breach.
It’s crucial to remember that a duty of care must be established before a breach of duty can be considered. Even if a breach is found, a successful negligence claim requires proving additional elements such as causation (the breach caused the harm) and damages (financial losses or injuries).
The legal principles of duty of care and breach of duty are fundamental to negligence claims in England. Understanding these concepts is essential for both legal professionals and individuals seeking to understand their rights and obligations under the law. However, it’s important to note that duty of care can become complex in specific situations. For definitive legal advice, consulting a qualified solicitor is always recommended.
What is Causation and Loss?
To succeed in a professional negligence claim, it is not enough to show that the professional breached their duty. The claimant must also prove causation, meaning the breach directly caused the loss suffered. This can often be the most challenging element to establish, especially in complex cases where multiple factors might have contributed to the loss. Causation and loss are two other crucial elements that need to be established for a successful negligence claim in English law, alongside duty of care and breach of duty. Here’s a breakdown of each:
Causation: Linking the Breach to the Harm
Causation essentially refers to the requirement of proving that the defendant’s breach of duty actually caused the loss or damage suffered by the claimant. In simpler terms, the harm wouldn’t have occurred “but for” the defendant’s negligence.
There are different legal tests used to determine causation, with the most common being the “but for” test. Here’s how it works:
- Imagine a scenario where a lawyer breaches their duty of care by providing negligent advice on a property investment (breach of duty).
- If the claimant wouldn’t have suffered the financial loss if they hadn’t received the bad advice (but for the breach), causation is likely established.
Loss: The Detriment Suffered
Loss, in the context of negligence claims, refers to the negative consequences suffered by the claimant as a result of the defendant’s breach of duty. This loss can be financial (e.g., property damage, medical expenses) or non-financial (e.g., pain and suffering).
The type of loss recoverable will depend on the specific nature of the negligence claim. It’s important to note that losses must be both:
- Directly caused by the breach: The loss must be a foreseeable consequence of the breach of duty.
- Quantifiable: The loss should be measurable in some way, especially for financial losses.
Causation and loss are separate elements from duty of care and breach of duty. A claimant must prove all four elements to succeed in a negligence claim.
What are Damages and Mitigation of Loss?
Damages awarded in cases of professional negligence are designed to compensate the claimant by restoring them, as closely as possible, to the position they would have occupied had the negligence not occurred. This compensatory approach aims to ensure that the claimant receives a fair and just remedy for the harm suffered due to the professional’s failure to meet the required standard of care.
Moreover, the principle of mitigation of loss obligates the claimant to take reasonable steps to minimise their losses following the negligent act or omission. This means that the claimant cannot passively allow their situation to worsen or incur avoidable expenses and then seek to recover these from the negligent party. Instead, they must actively seek to reduce the impact of the negligence, thereby demonstrating a level of responsibility and fairness in the pursuit of their claim.
The types of damages awarded can be categorised as follows:
- Compensatory Damages: These are intended to compensate the claimant for the actual losses incurred as a direct result of the professional’s negligence. This could include lost profits, additional costs incurred and the cost of rectifying the mistakes.
- Consequential Damages: These cover losses that are not the direct result of the negligence but are a foreseeable consequence of it. For example, if a business loses future clients due to an accountant’s error, those lost future earnings could be claimed.
- Interest: Claimants may also be awarded interest on the damages from the date of loss to the date of payment, which compensates for the time value of money lost due to the negligence.
- Costs of Litigation: The court may order the negligent professional to pay the claimant’s legal costs, although this is at the court’s discretion and is not guaranteed.
Calculating damages in professional negligence cases is complex and varies based on the specifics of each case. Courts consider factors like the professional’s scope of duty, extent of the breach and the direct link to the claimant’s losses. The “SAAMCO cap” limits recoverable damages to those within the scope of the professional’s duty. Recent judgments, such as Manchester Building Society v Grant Thornton [2021] UKSC 20 and Khan v Meadows [2021] UKSC 21, have refined the principles of damage assessment, emphasising the duty scope and the connection between duty and loss.
Factors Influencing Amount of Damages
The amount of damages awarded in professional negligence cases is influenced by several key factors, including:
- Scope of Duty: The extent of the professional’s duty to the claimant and whether the loss falls within that scope.
- Causation: There must be a clear causal link between the professional’s breach of duty and the claimant’s loss.
- Foreseeability: The damages must relate to losses that were foreseeable at the time the professional’s duty was breached.
- Mitigation: The claimant has a duty to mitigate their losses. If the court finds that the claimant failed to take reasonable steps to minimise their losses, the damages may be reduced accordingly.
- Contributory Negligence: If the claimant contributed to their own loss, the damages awarded may be reduced. The court will assess the claimant’s actions and reduce the damages based on their level of responsibility for the loss.
- Quantification of Loss: The actual financial loss suffered by the claimant will be carefully assessed, including past and future losses, loss of earnings, and additional costs incurred as a result of the negligence.
- Legal Costs: The claimant may also recover legal costs associated with bringing the claim, although this is at the discretion of the court.
- Interest: Claimants may be awarded interest on the damages from the date of loss to the date of payment.
Precedent Negligence Case Law
- Donoghue v Stevenson [1931] UKHL 3: Established the ‘neighbour principle,’ which is foundational to the duty of care in negligence.
- Caparo Industries plc v Dickman [1990] 1 All ER 568: Refined the test for establishing a duty of care, introducing a threefold test: foreseeability of damage, a proximate relationship between the parties, and whether it is fair, just, and reasonable to impose a duty of care.
- Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964]: Recognised that economic loss resulting from negligent misstatements could be recoverable in the absence of a contractual relationship, provided there was a ‘special relationship’ between the parties.
- Bolam v Friern Hospital Management Committee [1957] 1 WLR 583: Established the ‘Bolam test’ for medical negligence, where a doctor is not guilty of negligence if they acted in accordance with a practice accepted as proper by a responsible body of medical men skilled in that particular art.
- Elliott v Hattens Solicitors (a firm) [2021] EWCA Civ 720: Considered whether a claim brought by Mrs. Elliott against Hattens Solicitors was statute-barred, depending on when the damage was sustained. The court had to determine the precise timing of the ‘damage’ for the purposes of the limitation period.
- Edwards v Hugh James Ford Simey Solicitors [2019] UKSC 54: This Supreme Court case involved a negligence claim against a firm for failing to properly advise on the settlement of a claim for Vibration White Finger (“VWF”). The court held that the claimant is required to prove the loss of a real and substantial opportunity to bring his special damages claim for services available through the government’s compensation scheme.
- BPE Solicitors v Hughes Holland [2017] UKSC 21: This decision reinforced the SAAMCO principle, limiting the liability of professional advisers to losses that fall within the scope of their duty. The case involved a solicitor who failed to clarify the purpose of a loan, leading to the client’s misunderstanding and subsequent financial loss.
More recently, several notable professional negligence cases and legal developments have shaped the landscape of law on the subject. Here are some key highlights and case law details:
- Miller v Irwin Mitchell LLP [2024] EWCA Civ 53: This case involved a negligence claim against a law firm where the client alleged that inadequate legal advice led to significant financial losses. The Court of Appeal focused on whether the law firm met the expected standard of care and adhered to the duty of care owed to the client. The decision emphasised the importance of clear and precise legal advice to avoid potential claims of negligence.
- Niprose Investments Limited & Ors v Vincents Solicitors Limited [2024] EWHC 801 (Ch): In a notable High Court ruling, several conveyancing firms were accused of negligence related to a failed property development. The court scrutinised the firms’ conduct and their adherence to professional standards. This case highlighted the critical role of due diligence and thorough documentation in property transactions to prevent negligence claims.
- Riad Tawfiq Al Sadik v Clyde & Co & Ors [2024] EWHC 818: A construction magnate’s negligence claim against Clyde & Co and associated counsel was partly dismissed, though the court ruled that certain aspects of the claim must proceed to trial. This case underlined the complexity of establishing causation and the direct link between professional advice and financial loss in negligence claims.
Common Defences used by Professionals
Professionals facing claims of negligence have use several common defences to protect them from liability, provided they can demonstrate that specific conditions were satisfied. Key defences include:
- Contributory Negligence: Argues that the claimant’s own negligence contributed to the loss or damage. If successful, it can reduce the damages payable by the professional.
- Limitation Period: Under the Limitation Act 1980, there is a time limit for filing a professional negligence claim.
- Volenti Non Fit Injuria: This Latin term means ‘to a willing person, no injury is done.’ It implies that the claimant voluntarily assumed the known risks, and therefore, the professional is not liable for any resulting harm.
- Causation: The professional may argue that their alleged negligence did not causally link to the claimant’s loss, meaning the loss would have occurred regardless of their actions.
- Contractual Exclusion: Some contracts include clauses that limit or absolve a professional from certain liabilities. If such a clause exists, it may be used as a defense against a negligence claim.
- No Duty of Care Owed: The defendant may argue that they did not owe a duty of care to the claimant, which can be the case if there was no professional relationship or if the scope of duty was limited.
- No Breach of Duty: The professional may contend that they did not breach their duty of care and that they acted reasonably and competently according to the standards of their profession.
- Exclusion Clauses: The professional may rely on exclusion clauses in their contract with the claimant to limit or exclude their liability for negligence.
Raising such defences require careful legal argument and evidence.
How to Strengthen a Professional Negligence Case?
To strengthen a case against professional negligence, a claimant can take several steps, which include but are not limited to:
- Gathering Comprehensive Evidence: Documentation is key. This includes contracts, correspondence, reports, and any other records that demonstrate the professional’s duty and the breach that occurred.
- Expert Testimony: Engaging an expert in the same field can provide a credible opinion on the standard of care expected and how it was breached.
- Clear Causation: Establish a clear link between the professional’s breach of duty and the loss suffered. This may involve detailed financial records or other forms of evidence that show the direct impact of the negligence.
- Quantify the Loss: Determine the financial impact of the negligence. This includes actual losses and potential future losses, supported by robust calculations or financial models.
- Legal Counsel: Seek advice from a solicitor with experience in professional negligence. They can guide the claimant through the pre-action protocols and the legal process.
- Adherence to Pre-Action Protocols: Follow the Pre-Action Protocol for Professional Negligence, which encourages early settlement and proper conduct before litigation.
- Alternative Dispute Resolution (ADR): Consider mediation or arbitration as a means to resolve the dispute without going to court, which can be quicker and less costly.
- Letter of Claim: Draft a comprehensive Letter of Claim that outlines the negligence, the duty breached, and the resulting damages, encouraging the adviser’s legal team to opt for an out-of-court settlement.
Recent Developments in UK Professional Negligence
1. Reformulated Scope of Duty Test – Khan v Meadows
The UK Supreme Court’s decision in Khan v Meadows [2021] UKSC 21 has significantly impacted how courts assess duty of care. The shift from a rigid “information vs. advice” approach to a focus on the purpose of the duty injects greater flexibility and practicality. It also emphasises the importance of professionals clearly defining the scope and limitations of their services in their engagement terms.
2. Increased Scrutiny of Claimant’s Mitigation Efforts
Courts are increasingly scrutinising the claimant’s actions following a negligent act. The onus is on claimants to demonstrate they took reasonable steps to mitigate losses, as this can directly impact the recoverable damages.
3. Additional Developments to Consider:
- Focus on Causation: Proving causation, or the direct link between the breach and the loss, remains a crucial challenge in professional negligence claims.
- Experts’ Negligence: Recent cases have explored the standard of care expected from experts like surveyors and accountants, with courts emphasising the specific expertise of the professional involved.
- Cybersecurity Concerns: As cyber threats grow, professional negligence claims involving data breaches and cybersecurity failures are becoming more prevalent.
These trends, alongside a continued focus on causation and the standard of care expected from different professionals, highlight the evolving nature of professional negligence claims.
Want legal advice on the merits of your case?
Your legal enquiry goes immediately to our PN litigation team in Middle Temple, London. We can’t take on low value cases or give free legal advice – our minimum fee is £1500 +VAT for a conference with a solicitor and barrister. Call us on +442071830529.