We engage professionals to assist us with many important matters in life. If they fail to perform their duty to the required standard and as a result we suffer a loss, they may be negligent, and we should be able to claim against them for that loss. However, given the trust we put in our professional advisors and their services, we may only become aware of a problem sometime after we have concluded our interaction with them.
There are strict time limits within which a claim against a professional may be brought. It is therefore vital to obtain advice as soon as you become aware of a potential issue, even if you are not sure whether that could amount to negligence, to avoid running out of time to seek compensation for professional negligence.
What time limits apply to professional negligence?
Limitation is the time period within which legal proceedings must be formally commenced. It is intended to encourage prompt action and to protect against the indefinite threat of litigation. The general limitation period for negligence claims is six years from the date the cause of action arises.
If we discover a problem more than six years after a professional undertook work for us, we may be able to rely on a secondary period known as “date of knowledge” which is 3 years from the date we knew or ought to have known about the negligence. There is, however, an ultimate longstop of 15 years from the date of the negligence, outside of which there is no claim.
Why is the date of loss important?
To establish professional negligence, we must prove four elements: (1) that a duty of care was owed, (2) that there was a breach of that duty, (3) that the breach caused us to suffer a loss, (4) and that the loss was reasonably foreseeable. Once all four elements are present, there is a cause of action and limitation begins to run – even if we are not yet aware that we have suffered a loss.
Determining the date of loss is therefore critical in a professional negligence claim. However, this can be complex in cases involving transactions – which is usually the work that a professional has done for us. The loss may have occurred on the date of the transaction or after that. The complexity of establishing this may prevent a claim being settled early and force a case to court.
How the type of transaction relates to the time of loss
Negligence claims often relate to transactions on which a professional was instructed, and which have turned out badly. In that situation, you may argue either that, but for the professional’s negligence, you would not have entered into the transaction at all or, alternatively, that, had it not been for the negligence, the transaction would have been a better one and you would not have suffered a disadvantage.
An example of the first situation may be where money is lent on security of a property that a professional valuer has overvalued. Except for the professional negligence the loan would have been declined and there would have been no transaction. By comparison, the second type of negligent transaction is one that would have occurred, but it has a flaw in it. For example, a house purchase may be subject to a third party right which a conveyancer did not notice, or a solicitor may have neglected to include a vital clause in a commercial agreement. These are known as "flawed transactions".
The concept of a flawed transaction is pivotal in determining when a cause of action arises and how limitation periods are applied. If the value of the flawed transaction was measurably less than the value if the transaction was flawless, then loss occurred at the time of the error. By contrast, if, but for the error by a professional, no transaction would have occurred then the point at which loss was caused may be at another time.
Flawed transactions are particularly relevant in professional negligence claims because they help to determine when the cause of action arises. This is crucial for understanding when the limitation period begins and therefore the timeframe within which a claim must be brought.
The problem with flawed transactions
When you ask a professional to undertake a transaction, any flaw will usually occur as that transaction is completed. Being flawed means that you receive something less than you think. This may not become evident or create a serious problem for many months or years, but the date that the transaction is completed is in fact the date on which you suffered loss, and the limitation clock has begun running.
Understanding the concept of flawed transactions and the date of loss is therefore vital. It may affect your ability to bring a claim within the limitation period. Failing to recognise that the limitation period starts from the date of the flawed transaction, may mean missing the opportunity to seek redress.
How to avoid losing the chance to claim for a loss
Flawed transactions play a critical role in professional negligence claims. They help to determine when the cause of action arises and, consequently, when the limitation period begins. Understanding these concepts is essential for both claimants and professionals to navigate the complexities of negligence claims and ensure timely legal action. As soon as you suspect there may have been some professional negligence seek legal advice. This will help to ensure that you do not miss the limitation period, and that you have the chance to claim for your loss.
The information provided in this article is provided for general information purposes only, and does not provide definitive advice. It does not amount to legal or other professional advice and so you should not rely on any information contained here as if it were such advice.
Wright Hassall does not accept any responsibility for any loss which may arise from reliance on any information published here. Definitive advice can only be given with full knowledge of all relevant facts. If you need such advice please contact a member of our professional staff.
The information published across our Knowledge Base is correct at the time of going to press.
