Contact one of our advisors now Call 0800 088 6004

Phone or video appointments available. Visitors by appointment only please. COVID19 risk assessment - CLICK HERE

Professional negligence – calculating the cost of foreseeable damage(s)

  A case at the end of 2015 called Wellesley Partners LLP v Withers LLP [2015] has been causing a stir amongst those advising victims of professional negligence.

For any claim to exist it must be one capable of actually being brought in the first place. Many ask “Do I have a claim?” and lawyers hear:

  1. Is there a recognised claim to bring?
  2. Has something gone wrong?
  3. If yes, whose fault was it?
  4. Did the thing that went wrong cause a loss?

The first question can have three positive answers, in that there can be a claim in:-

  1. Contract – alleging that the adviser did not discharge their responsibilities under contract properly.
  2. ‘Tort’ – the law of negligence. Alleging that the advisor owed a duty of care to the person seeking to bring a claim, as (for example) a solicitor owes a duty of care to their client.
  3. Equity – a complex, historical last chance saloon that seeks to provide remedies based on fairness and justice. Often expressed as set principles. For example, ‘it is just not right that X should get away with that because of the equitable principle of Y.’

The second question, has something gone wrong, is often straightforward.
The third, about fault, is a battleground for negotiation or trial.  It is the final question, about whether or not a particular loss was caused by the advice (or lack of it) complained of that this article focuses on. The difficulty arises when a claim is based on contract and tort, and damages go on beyond the initial impact of the event complained of. For example, a business may lose a set amount of money but if that money would have allowed investment that would have given a return, can any profit on that return be claimed?
The Court of Appeal
The Court of Appeal confirmed in Wellesley that the rules for each of tort and contractual claims are different so that:

  • Contract: ‘a contract breaker is liable for damage resulting from his breach, if at the time of making the contract, a reasonable person in his shoes would have had damage of that kind in mind as not unlikely to result from a breach.’
  • Tort: ‘the primary rule which determinates what damage is recoverable in tort remains that of reasonable foreseeability,’ but this is not the ‘sole criterion’…(it has been) held that the scope of the duty is determined by assessing ‘the purpose of the rule imposing the duty.’

The difference between the two tests is that the contractual test is harsher and more narrow. It talks about ‘reasonable contemplation’ rather than the tortious test of ‘reasonable foreseeability.’ The Court explained that “damage may be of a kind which is reasonably foreseeable (and therefore recoverable in tort) yet highly unusual or unlikely (and therefore irrecoverable in contract).”
The decision
The Court decided that “where, as in the present case, contractual and tortious duties to take care in carrying out instructions exist side by side, the test for recoverability of damage for economic loss should be the same, and should be the contractual one.”
Implications
Bizarrely, because each type of claim has a different time limit within which it can be brought.  Will claimants decide to wait until the contractual claim has expired before bringing a claim in tort??! Hopefully not.
None of this will have an immediate impact on the man or woman on the street, but it does have an impact on how their claim would be made should they ever be let down by an advisor. Fighting the wrong fight, or shooting for the moon when it can never be reached, will incur costs and delay which can be avoided by a realistic assessment of the case at an early stage by an experienced professional negligence solicitor.
Guidance
The law is a minefield through which to be guided, and Wilson Browne Solicitors have the largest team membership of the Professional Negligence Lawyers Association in the county. The team ensures that clients are given the right commercial, practical and time sensitive advice alongside a wide range of funding options, including no win no fee. Partner Kevin Rogers leads the Professional Negligence Team, and has represented victims of negligence since 1998.
For advice or information please contact Kevin Rogers.