Professional negligence can cost individuals and businesses a great deal of time, money and stress. You must make a claim for compensation within six years of the breach of contract or loss resulting from the negligent act occurring, otherwise you claim will be barred by the court for being out of time.
However, the damage resulting from the negligence of a professional architect, financial advisor, surveyor or other expert advisor is often slow to appear. For example, an architect may have made errors when designing your office-block, but the damage does not become apparent for many years. Even if the problems present themselves before the six-year limitation period ends, it may take some time to establish what caused the negligence and link it back to the professional, resulting in the claim being time-barred.
Quantifying loss caused by professional negligence may also prove difficult. Once an asset has been sold on, it can be difficult to measure the loss incurred by the purchaser. He or she may only suffer what is known as a ‘paper loss’, whereby the asset they purchased is worth less in reality than what they paid for it, owing to the negligence of a professional.
The limitation period in professional negligence cases is deemed to start from the time the claimant was believed to have ‘sufficient knowledge’ that loss had occurred as a result of the defendant’s breach of duty.
When it comes to ‘paper losses’ such as future income or a lost opportunity, the date the claimant should have had knowledge of the loss can be hard to pinpoint. Claimants can again find themselves time-barred because it is deemed the loss was suffered at an earlier date than the claimant first thought.
It is down to the court to assess when a claimant ought to have realised there was a problem, and this can often differ from the claimant’s view. A number of Court of Appeal cases over the past few years reflect this growing trend to assign a limitation period starting date as far back as possible. This point can be illustrated in the case of Pegasus Management Holdings v Ernst & Young. The claimant, on selling his business, took advice from Ernst & Young regarding minimising his tax liability by setting up a tax scheme. The claimant believed that the advice did not produce the results he was expecting and subsequently brought a claim for professional negligence.
The court found the claimant time barred because more than six years had passed from the date the tax scheme had been set up. They deemed that this was the date the loss was suffered, because at that point, the claimant’s tax position was ‘irretrievably altered’ despite the fact that there was no financially quantifiable loss at the time a paper loss had in fact occurred.
Do not risk becoming time-barred from making a claim for professional negligence. As soon as you believe the advice you have received has caused you to suffer a loss, get in touch with an expert solicitor who can advise you on whether or not you have a claim.
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