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13 Jul 2021

Limitation in professional negligence: (Sciortino v Beaumont and Elliot v Hattens)

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Professional negligence claims (whether based on contract or tort) are generally subject to a six year limitation period under the Limitation Act 1980. However, the precise date on which a cause of action accrues can be complicated. In the recent cases of Sciortino v Beaumont1 and Elliott v Hattens Solicitors2, the Court of Appeal examined: 1) whether a separate cause of action accrues each time a professional provides the same or similar advice; and 2) whether a cause of action in tort accrues at the time a mistake is made, or when the claimant becomes aware that a loss has arisen.   

Sciortino v Beaumont

In this case, a barrister (Mr Beaumont) provided advice on the prospects of an appeal. Some six months later, he provided further written advice on the same topic. The appeal was not successful. Mr Sciortino issued a claim against Mr Beaumont in negligence. The claim was just within the limitation period for the later, written advice but over six years since the original advice.

The Court of Appeal held that the claim was not time-barred. The second advice gave rise to a claim for a second breach of duty within the limitation period.

Mr Beaumont could, the court held, have changed his view on the prospects on the appeal (further documentation having been provided to him before that second opinion was given) and the claimant was not committed to pursuing the appeal (per the initial advice). A claim for the cost consequences from the second advice onwards was therefore a claim referable to that advice, regardless of the earlier advice to pursue the appeal.

The court distinguished the decision in Khan v Falvey [2002] EWCA Civ 400.  In that case, the court held that where a negligent act or omission causes actionable damage outside the limitation period - and further attributable damage inside the limitation period - only one cause of action accrues which is statute-barred. In Sciortino v Beaumont, there were two allegedly negligent acts causing actionable damage, although the court did signal that the decision could have been different had the pleadings not differentiated the two advices.

The continuing duty of advice?

Although potential liability was found in Sciortino v Beaumont, the Court of Appeal confirmed that there is no “continuing duty” to review or revisit earlier advice. Subject to the specific terms of the retainer, professionals are not therefore under a general duty to review previous advice for latent errors. If negligent advice causes loss arising outside of the limitation period, the claim will (generally) be time-barred. That result cannot be avoided by arguing that the professional was under a continuing duty to review their previous advice.

However, where there are two alleged breaches of duty, one outside the limitation period and one within it, a claim for damages caused by the later breach may succeed. In Sciortino v Beaumont, the court held “there is no general principle of logic or common sense which requires any sort of ‘relation back’, such as to say that the limitation period was triggered by the first occasion on which the negligent advice was given, regardless of any subsequent breaches of duty.”  

Plainly, however, liability will depend on the facts of a case. Where a claimant is “irretrievably committed” to a course of action based on initial advice, similar later advice may not amount to a separate breach.

Elliot v Hattens Solicitors

Hattens was retained to act for Mrs Elliot in connection with a property transaction: her husband was to grant her a lease and she would then grant an underlease to a Mr Malster. The buildings on the premises were effectively destroyed by fire later that year, following which Mr Malster vacated the property without undertaking repairs and Mrs Elliot lost rent. It was alleged that Hattens had failed to: (a) ensure that Mr Malster’s parents entered into a guarantee; and (b) advise Mrs Elliott on her insurance obligations.

Mrs Elliot brought proceedings against Hattens more than six years after the lease and underlease were executed, but less than six years after the fire. The issue before the Court of Appeal was therefore when the cause of action accrued for the purposes of limitation; in particular, when the negligence first caused actionable damage.

Hattens argued that she suffered damage as soon as the lease and underlease were executed (and was thus outside the six-year limitation period), whereas Mrs Elliott claimed that she did not suffer any damage as a result of (a) and (b) above until after Mr Malster defaulted and after the fire respectively.

The Court of Appeal held that the claim was time-barred in its entirety. Hattens’ failure to ensure Mr Malster’s parents were guarantors caused damage to Mrs Elliott as soon as the lease and underlease were entered into. The Court saw no reason to adopt a different approach in respect of Hattens’ failure to advise Mrs Elliott on her insurance obligations.

Must a claimant be aware loss has arisen for the cause of action to accrue?

The Court of Appeal found that loss had arisen even though the claimant was not aware of it.

It noted the distinction between “no transaction” cases (where the defendant would not have proceeded with the transaction but for the negligence) and “flawed transaction” cases (where the claimant would have proceeded with the transaction but for the negligence, but the transaction would have been a better one).

The court concluded that Elliott was a “flawed transaction” case – i.e. Mrs Elliott would still have entered into the lease and underlease had Hattens not been negligent. As such, the question was whether the value of the flawed transaction was measurably less than the value of a flawless transaction (whereas in a no transaction case, the question would be whether/when the transaction caused the claimant's financial position to be measurably worse than if s/he had not entered the transaction). The lease was objectively less valuable from the outset because there was no guarantor in respect of the underlease granted to Mr Malster. The court observed an expert “could doubtless have put a figure on the difference” and the fact that Mrs Elliot did not, in fact, wish to assign the lease, meaning it was not (viewed subjectively) less valuable, was not determinative.  As to Hattens’ failure to advise Mrs Elliott regarding her insurance obligations, the court applied the same test.  It found that her lease would be less valuable at the date of grant if valued on the basis that she would not comply with her insurance obligations. Accordingly, the fact that the flawed transaction did not create a problem for Mrs Elliott until the fire happened several months later was irrelevant.

The court did observe that it might have been possible to argue that the insurance issue should have been decided differently from the guarantee issue. However, given that no distinction was drawn between the two issues by Mrs Elliot’s counsel (and no evidence adduced on the point), it concluded no differing treatment should apply.

Limitation as a defence

The purpose of limitation periods is to set time limits for bringing claims – and there is clearly a public interest in preserving a clear cut-off point. These cases show, however, that despite the courts’ efforts, the point at which limitation expires is not always clear. In addition to the complexities involved in determining when a cause of action accrues, it is also important to bear in mind that s.32(1) of the Limitation Act postpones the limitation period where the claimant cannot reasonably be expected to know they have a cause of action because of fraud, deliberate concealment or mistake. In a number of recent decisions, the courts have clarified the application of this exception. See here for further analysis on this topic.

 


1 [2021] EWCA Civ 786

2 [2021] EWCA Civ 720

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