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Historical professional negligence claims - limitation

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Posted by Susan Hopcraft on 30 June 2015

Susan Hopcraft Partner

A recent Privy Council case has highlighted the difficulties encountered when suing professionals in respect of historical negligence.

Facts of the case: Maharaj v Johnson (Trinidad and Tobago) [2015] UKPC 28

The defendants, a firm of solicitors, acted for Mr & Mrs Maharaj in February 1986 in respect of a purchase of land. In February 2008, Mr & Mrs Maharaj decided to sell the land and secured an offer of $20 million from a property developer. It then transpired that the land had not been legally transferred to them as a result of the negligence of the solicitors. It took a couple of months for the mistake to be rectified, by which point Mr & Mrs Maharaj had lost the potential purchaser and the value of the land had fallen to $4 million as a result of the financial crash. Mr & Mrs Maharaj therefore sought to sue the solicitors for negligence and breach of contract.

Limitation

The case was decided on the basis of the law in Trinidad and Tobago. However, the principles applied still have application in England and Wales.

The negligence claim

The defendants sought to argue that the claimants’ action was time-barred. In England & Wales, a claim for negligence must be brought within 6 years from the accrual of the cause of action. The court therefore had to decide the date the cause of action arose.

The court considered the date at which Mr & Mrs Maharaj suffered damage as a result of the negligence. If the damage was suffered at the date of the purchase, in 1986, the claim would be time-barred. However if the damage was suffered at the date of the loss of the purchaser in 2008, the claim would not be time-barred.

The court decided that Mr & Mrs Maharaj suffered damage as soon as the transaction was entered into in 1986. This was because at that point the land was not worth as much to them than if the land had been correctly conveyed to them. Although the mistake was easily rectified 22 years later, there was always a risk that it would be difficult and costly to do so. Therefore Mr & Mrs Maharaj could have sued the defendants soon after the defective transaction was entered into. On this basis, the cause of action arose in 1986 and the claim made in 2012 was time-barred.

In this country you can bring a claim within 3 years from the date of your knowledge of a potential cause of action (this does not apply in Trinidad and Tobago). However, the Privy Council noted that if the same facts had arisen in England & Wales, the claim would still be time-barred. There is a final ‘longstop’ date of 15 years from the date of the negligence in which to bring a claim. In this case, the negligent action took place some 22 years before it came to light.

For more detail on the ability to bring a negligence claim within three years from the date of your knowledge of it, read our article on this topic by clicking here.

The claim in contract

Mr & Mrs Maharaj also sought to sue the solicitors in contract. A claim for breach of contract must be brought within 6 years from the breach. Mr & Mrs Maharaj therefore had to show that the contract remained in existence until 2008 and was continually breached by the solicitors failing to secure proper title to the land.

The court held that the claim was also time-barred in contract. This was because there had been no term of the contract obliging them to fix the issue, which would have required the participation of the original seller. The solicitors had closed their file and had no communication with Mr & Mrs Maharaj until 2008. The retainer therefore ended in 1986.

Implications

In claims for pure economic loss (money), time will start running for limitation purposes as soon as there is a reduction in value for the claimant, regardless of whether the loss is realised at that point.

This case is another reminder of the difficulty of bringing a claim in respect of historical professional negligence. In particular, you should bear in mind that:

  • A claim for negligence may be time-barred after 6 years from the date of the negligent advice, regardless of whether any obvious damage is suffered at that point (subject to the potential to claim within 3 years from date of your knowledge);
  • A claim will always be time-barred after 15 years from the date of the negligence;
  • A claim for breach of contract against a solicitor or other professional is likely to be time-barred after 6 years unless there is a specific term of the contract requiring further advice to correct poor work

If you think you have received negligent advice from a solicitor or other professional, you should investigate it immediately. Any delay could mean that you are time-barred from making a claim.

About the author

Susan is a disputes and professional negligence lawyer, mainly in the financial services sector.

Susan Hopcraft

Susan is a disputes and professional negligence lawyer, mainly in the financial services sector.

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