|
|
Professional
Negligence Claims - Without Limitation?
Subject to certain exceptions the general rule is that
claims in contract and tort cannot be brought more than
six years after the claimant's cause of action arose.
This
provided a balance between the interests of claimants
and defendants and some degree of certainty for
professionals who, thanks largely to professional
indemnity cover, are often in the firing line.
A
series of recent Court decisions in the context of
professional negligence has rendered the six year rule
inoperative in many cases and has tipped the balance
significantly in favour of claimants.
One
of the exceptions to this rule is contained in section
32(1)(b) of the Limitation Act 1980 which provides that,
where any fact relevant to a claimant's cause of action
has been deliberately concealed from him by the
defendant, the limitation period will not begin to run
until the claimant has (or could have) discovered the
concealment.
Section 32(2) provides that a deliberate commission of a
breach of duty in circumstances in which it is unlikely
to be discovered for some time amounts to deliberate
concealment of the facts involved in that breach of
duty.
Section 32 replaced section 26 of the Limitation Act
1939 and, although the wording of the two sections is
different, it was until recently assumed that the
general sense of the old section had been preserved in
the new.
Authorities on Section 26 of the 1939 Act clearly held
that a degree of wrongdoing beyond mere negligence was
required to trigger the operation of the section. This
view was dramatically altered by the Court of Appeal's
decision in Brocklesby -v- Armitage & Guest ([2001] 1
ALL ER 172).
In
this case the defendant solicitors had been instructed
to effect the transfer of a mortgaged property from the
claimant to a company but no steps were taken to secure
the release of the claimant's obligations to the
mortgage.
The
company subsequently went into liquidation and ceased
paying the mortgage instalments. It was only at this
point that the claimant realised that his obligations
had not been released.
The
defendants argued that the claim was time barred as the
writ had been issued more than six years after the date
the cause of action accrued. In response the Claimant
relied on section 32 and, in particular on the deeming
provision of section 32(2). The Court of Appeal held
that concealment of a fact was deliberate if it arose
from an intentional act whether or not the defendant
appreciated the legal consequences.
Using this interpretation Section 32 will apply in many
professional negligence cases since professionals
generally act intentionally and clients are unlikely to
discover the relevant facts for some time.
|
|
The
Court of Appeal's decision has been criticised by
commentators but has nevertheless been followed. Mr
Justice Laddie applied the decision in Liverpool Roman
Catholic Archdiocese Trustees Incorporated -v- Goldberg,
([2001] ALL ER 182).
More
recently Mr Justice Neuberger relied on it in Gold -v-
Mincoff Science & Gold ([2000] ALL ER (D) 2412). In so
doing he appeared to express misgivings about the
current state of affairs but took some comfort from the
fact that the Court of Appeal would shortly be looking
again at the issue.
The
Court of Appeal has now done just that in a case called
Cave -v- Robinson Jarvis & Rolf ([2001] ALL ER (D) 232
(Feb)). However, there is little in its judgment which
will give professionals, or their insurers, any comfort.
In
this case the defendant solicitors had advised in
connection with the sale of a piece of land in 1989. As
part of the deal the claimant wanted to acquire
enforceable mooring rights over the land.
The
land was sold to a company which later went into
receivership. The receiver denied the existence of the
mooring rights on the basis that the claimant could only
establish a personal right against the company.
The
claimant commenced proceedings alleging breach of
contract and negligence. Limitation arose as a
preliminary issue. It was common ground that, unless the
claimant could bring himself within the provisions of
section 32 his claims would be time barred.
At
first instance the issue was resolved in favour of the
claimant, the Judge holding that he was bound by the
decision and reasoning in Brocklesby.
The
defendants appealed and invited the Court of Appeal to
hold that Brocklesby had been wrongly decided and that
it should not be followed or applied. The Court declined
the invitation holding instead that Brocklesby was
binding and had to be applied with the effect that the
claim was not time barred.
An
application for permission to appeal to the House of
Lords was refused. It remains to be seen whether the
Lords will themselves give permission for an appeal.
This
leaves professionals which something of a dilemma.
The
general feeling of certainty engendered by the six year
limitation rule has completely evaporated. In many cases
the six year rule will simply not apply.
The
difficulties inherent in defending old claims, for
example witness availability and recollection will
become more acute. Practical considerations such as how
long to keep documents and how to purchase insurance to
protect retiring partners will also cause difficulties
until such time as the Lords or the Law Commission look
again at (and do something about) this issue.
Paul
Goodman, Solicitors Insurance Practice Group, Simmons &
Simmons .
Link:
Measure of
Damages in Professional Negligence [Update]
- Suzanne Chalmers (Crown Office Chambers)
|
|
