What are your legal options?
If you are a professional working in the property industry, you may at some point face a claim from a disgruntled client. They could be claiming that you have been negligent in your advice to them or in your work for them. These types of claim can affect any property professional such as surveyors, estate agents, builders, conveyancers, project managers and architects, amongst others.
The property market is notoriously erratic and can change quickly, so it can be a daunting prospect to prove that you were not negligent when faced with a claim against you. Even if ultimately you successfully defend a negligence claim, litigation can take its toll and the potential reputational damage may affect your capacity to attract fresh work. Any claims should therefore be dealt with as quickly and efficiently as possible.
Our dispute resolution team looks at how negligence claims work and what you can do about them.
Who can make a claim?
A negligence claim against any property professional will only be successful if the claimant can show that you had a duty of care towards them, that you acted in breach of that duty and that the breach of duty caused an actual loss to them.
There does not have to have been a contractual relationship between you and the claimant. A property professional, like all professionals, has a general duty of care towards their clients, and
potentially third parties, which extends beyond their contractual duties.
The duty of care can extend beyond the person that engaged you, however it has to have been reasonably foreseeable that damage might be incurred by the claimant as a result of your negligence. Consequently, the more remote the relationship between you and the claimant, the less likely it will be that they can show a duty was owed by you. However, generally anyone who has suffered loss as a direct result of your negligence is likely to be able to bring a claim against you as a professional.
Time limits on a claim
One of the first points we check when looking at defending a professional negligence claim is the limitation period for bringing the claim. Generally, a claimant has six years to commence a claim from the date the damage was caused. If the damage was not apparent at that time, they have three years from the date when the claimant knew, or ought to have known, of the damage. This three year period is open to much argument and will depend on the facts of the individual matter which we can advise you on. There is a 15 year long stop time limit from the date the cause of action accrued in which a claim has to be brought against you.
What is considered negligent for a property professional?
The fact that something has gone wrong or that advice you gave did not work out does not necessarily mean that you have been negligent. Proving negligence must go beyond this. In simple terms, the general test is whether you have made an error which no reasonable member of your profession, given the same circumstances, would have made.
An example where negligence is not clear cut might be that of a valuer providing an inaccurate valuation. Valuation is not an exact science, and you are not necessarily negligent simply because you did not give a property the same value as another valuer would. A court will consider a range within which reasonable valuations will fall, depending on the type of property, and will take into account that there will always be a margin of error. It is only if the valuation falls outside of that margin of error that it may be considered negligent.
In contrast, a surveyor who fails to notice a subsidence issue is more likely to be found negligent. Similarly a conveyancer who fails to spot a right of way over a property may be negligent. These are typical issues that a reasonably competent professional is unlikely to get wrong in the same circumstances.
What has to be proved?
There are a number of hurdles to overcome to show that you were negligent in your actions or advice.
- Was there a duty of care not to cause harm to this particular claimant? This can be straightforward if you are a professional engaged by the claimant for a particular purpose. For example, an architect engaged to design a conservatory.
- Did you breach that duty of care?.
- Is there a quantifiable loss as a result of your actions/advice?
- Is there a link between the duty of care which you owed and the damage caused, so that “but for” your negligence, the claimant would not have suffered any loss.
What are the potential defences to a professional negligence claim?
You will be able to defend a claim against you if you can show that any one of the four criteria above have not been adequately proven.
1. Duty of care
Did you actually owe a duty of care to this claimant? A court will start by considering whether there was a sufficiently proximate relationship between you, and whether in all of the circumstances it is ‘fair, just and reasonable’ to find that you owed a duty of care to this person.
2. Breach of duty
If the claimant can establish a duty of care existed (often fairly easily done), they will need to prove that you breached that duty. The claimant must show that you made an error which no reasonable member of the same profession would have made in the same circumstances. You can obtain expert evidence to try and confirm that your actions were those of a reasonable professional.
3. Loss
If the claimant succeeds in showing that you breached your duty of care, they will need to show that they actually suffered a loss and that this loss was caused by the breach. The court will apply the ‘but for’ test which looks at the position of the claimant now, compared to what their position would have been had the negligence not occurred. If you can show that the loss would have occurred anyway, you likely have grounds to defend the claim.
What loss can be claimed and how is loss calculated?
The loss suffered must have been caused directly by the breach of duty owed. Pure economic loss is specifically excluded, except in certain limited circumstances. For example, compensation for loss of profit cannot usually be claimed, however compensation to rectify actual issues caused by the breach can be claimed. For example, a surveyor who negligently inspects the roof of a restaurant may be held liable for the sums required to fix the roof, but may not be held liable for the loss of profit of the restaurant as a result. Any loss must be a foreseeable consequence of the negligence and cannot be too remote.
If a claimant or another third party is found to have contributed in some way to the negligence, this can be considered by the court when deciding what compensation to award and the court may reduce any damages awarded in accordance with the claimant’s contributory negligence.
Should the claimant mitigate their loss?
Yes, there is a specific duty for a claimant to try to mitigate their loss, and equally, not to make the loss worse. It will be for you to show that a claimant did not take steps to adequately mitigate their loss, or that they exacerbated the loss by their action or inaction.
Will my insurer cover my claim?
Most professionals are insured for negligence through their professional indemnity insurance cover. You must make your insurer aware of any potential claim against you as soon as possible.
If you are insured and wish to settle a claim out of court, you will probably need the consent of your insurer. Sometimes your insurer may wish to settle, but for reputational reasons you may wish to continue to defend the claim. If you do decide to settle, often a confidentiality clause will help to avoid any problems with negative publicity. We will ensure that any settlement works for you and your business.
How we can help
If you are facing a claim for negligence, take legal advice immediately. Our solicitors have many years’ experience in dealing with claims of professional negligence, and will support you throughout the process and thereafter.
For further information, please contact Rebecca Beynon-Phillips in the dispute resolution team on 01733 882800 or email [email protected].
Rebecca Beynon-Phillips LLB, Senior Associate
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