PROFESSIONAL LIABILITY LITIGATION - RECENT DEVELOPMENTS ... · 1 PROFESSIONAL LIABILITY LITIGATION...
Transcript of PROFESSIONAL LIABILITY LITIGATION - RECENT DEVELOPMENTS ... · 1 PROFESSIONAL LIABILITY LITIGATION...
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PROFESSIONAL LIABILITY LITIGATION -
RECENT DEVELOPMENTS Liability of Professionals Contract and Tort
1. A barrister involved in professional liability litigation, absent being a party to the
proceedings will be retained to advise and represent a Plaintiff, Defendant or
Third Party. The assumption is invariably if unconsciously made that
professional liability litigation is solely concerned with the professional’s liability
in negligence. While this may have been a justified assumption to make in the
past, it is increasingly the case that it is necessary to consider whether the case
in which the barrister has been instructed involves a contractual relationship
between the parties.
2. The existence of a contractual relationship normally not only impacts on the
scope of the professional's retainer but also on the extent of the duty of care
owed, whether an actionable breach of that duty has occurred as well as the
extent of any resulting liability where a breach is established. It is also relevant
to when a cause of action accrues as the date of the breach rather the date of
loss or damage is the date from which time begins to run for Statute of
Limitations purposes.
3. Noting that a wrong committed by a professional may give rise to concurrent
causes of action in negligence and breach of contract, the fact that some or all of
the parties have a contractual nexus, may be and often is an important factor
which is relevant to the merits or a defence of a claim made against a
professional.
4. Equally, while the absence of a contractual relationship precludes the possibility
of a claim for damages for breach of contract, it does not prevent a party from
pursuing a claim for damages for negligence and/or negligent misstatement
causing loss.
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5. The absence of a contractual nexus with the professional means that liability can
only be imposed on the professional if the party pursuing the claim can establish
that the professional owed a duty of care which was breached and which caused
loss and damage. It is in this quite typical circumstance that a solicitor and/or
barrister will be asked to advise as to whether the factual matrix between the
parties is such in law as to create a duty of care breach of which causing loss
normally entitles the party making the claim to an award of damages.
Significance of the existence of a contactual nexus with the professional
6. In acknowledging the entitlement to pursue a concurrent cause of action in
negligence and breach of contract against a professional, it is interesting to note
a perceptible leaning, if not, tendency of courts to determine professional liability
claims on the basis of contract rather than exclusively on the basis of the tort of
negligence. In effect there is evidence that the courts tend to treat the contract
where it exists as the defining feature of the professional relationship and to all
intents and purposes as subsuming the claim in negligence.
7. In noting this development, it is also important to state that the courts have not in
any sense adopted a uniform and consistent approach.
8. In the leading text Professional Liability (Seventh Edition, 2012) Jackson &
Powell at paragraph 1-004 in promoting this approach have stated:
“A final Plea for the Importance of Contract
For too long the assertion of failure to exercise reasonable care has been
a portmanteau term which has aided the less than rigorous practitioner or
judge to avoid articulation of more precise reasons for his contention or
conclusions. A proper evaluation of risks transferred and retained
requires greater scrutiny of the particular task undertaken for the
particular clients and of the precise contractual obligations undertaken.
The tortious focus in not causing harm linked to the Atkin concept of care
is too blunt. It has dominated too long the analysis of professional liability
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cases. Also their description as professional negligence cases as
opposed to professional liability cases encourages false parallax and
sometimes blind spots as to other bases of liability. Other than in the
medical context, contract provides the basis for most professional
relationships. Contract principles rather than tort principles should
provide the prime basis for analysis in such cases, supplemented in a
regularity context by regulatory principles and rules. A rigorous
contractual analysis should also lead to better determination of the scope
of the contract and the services agreed to be provided and to the
articulation of more precise, express and implied duties than the too
general duty to exercise reasonable care and skill”.
The courts in this jurisdiction in a number of cases have emphasised that the
issue of liability should be determined by reference to the contract between the
parties rather than by reference to the tort of negligence.
9. In Finlay v Murtagh [1979] IR 249 the Supreme Court in recognising the
existence of concurrent causes of action in contract and in tort against a
professional stated per Henchy J. as follows:
“The coincidence that the [solicitor]’s conduct amounts to a breach of
contract cannot effect either the duty of care or the common law liability
for its breach, for it is the general relationship, and not any particular
manifestation of such as contract, that gives rise to the tortious liability in
such a case.”
10. In the later case of Kennedy v Allied Irish Banks Ltd [1998] 2IR48 at 56,
Hamilton C. J. accepted as a correct statement of Irish Law the passage in
Henderson v Merrett Syndicates Ltd [1995] 2 AC145 at 193 – 194 by Lord
Goff when he stated:
“The common law is not antipathetic to concurrent liability, and that there
is no sound basis for a rule which automatically restricts the Claimant to
either a tortious or contractual remedy. The result may be untidy; but
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given that the tortious duty is imposed by the general law and the
contractual duty is attributable to the will of the parties, I do not find it
objectionable that the Claimant may be entitled to take advantage of the
remedy which is most advantageous to him, subject only to ascertaining
whether the tortious duty is so in consistent with the applicable contract
that, in accordance with ordinary principle the parties must be taken to
have agreed that the tortious remedy is to be limited or excluded.”
11. Later cases which followed including the decision of the Supreme Court in Pat
O’Donnell & Co. Ltd v Truck & Machinery Sales Ltd (1 April 1988), endorsed
this approach with O’Flaherty J. stating:
“[T]he general duty of care in tort cannot be manipulated so as to override
the contractual allocation of responsibility between the parties. Thus if,
for instance, a contract provides – whether expressly or by necessary
implication – that the Defendant is not liable for a particular risk, then the
law tort should not be allowed to contradict it.”
12. In Gallagher v ACC [2012] IESC 35 in which the Supreme Court again
recognised the existence of concurrent causes of action in negligence and for
breach of contract, O’Donnell J. (who was in the minority on this point) stated as
follows:
“The same facts are repackaged as a claim in contract, negligence and
negligent misstatement. The pleadings do not distinguish between those
claims. Instead the same acts are pleaded as “particulars of wrongdoing”
and no distinction is made between the legal nature of the wrong alleged.
It is also fair to say, I think, that the cause of action in contract is in truth
the central and primary claim here. Indeed, there was a time not so long
ago and certainly at the time the relevant provisions of the Statute of
Limitations Act, 1957 were enacted, when the contractual claim would
have been regarded as the only possible cause of action arising on the
facts here. Even today, it is the contract which creates the relationship
giving rise to the obligation in Hedley Byrne & Co. Ltd v Heller &
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Partners Ltd [1965] AC465 to take care in the provision of advice, and
the terms of contract could control, limit or negative any such duties.
Once again, if there is a separate duty of care in negligence alone, then it
is the contract which creates the proximity between the parties which give
rise to the duty of care.”
13. In Murphy v Joe O’Toole & Sons Limited and Bank of Scotland (Ireland) Ltd
[2014] IEHC 486 Baker J. in adopting the approach of O’Donnell J. stated as
follows:
“I am persuaded by the statement of O’Donnell J. that I should not
engage upon the artificial exercise of distinguishing between or
decoupling the claims in contract and tort. The central and primary claim
in this case is a claim for breach of the agreement for sale of a machine,
a claim made in contract and under the relevant provision of the Sale of
Goods of Act, 1893 and 1980.”
14. While the above authorities indicate that the courts determination of liability in
any case will be informed by the terms of the contract on foot of which the
professional is retained, the court will not be slow to find a duty of care is owed
by the professional beyond the terms of the contract if the circumstances in
which the professional is retained justifies the imposition of a duty of care which
is not otherwise excluded by the contract. The cases in which a duty of care
extending beyond the terms of the contract on foot of which the professional is
retained are considered below.
15. As professionals are invariably retained on foot of a contract and as the contract
is the means by which risk is allocated between the client and the professional, it
is important to highlight that it is not an option for a solicitor in this jurisdiction to
exclude or limit liability. Section 7 of the Solicitors (Ireland) Act 1870 contains a
statutory prohibition from doing so:
“A provision in any …. agreement that the attorney or solicitor shall not be
liable for negligence, or that he shall be relieved from any responsibility to
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which he would otherwise be subject as such attorney or solicitor, shall be
wholly void”.
16. The prohibition contained in section 7 of the 1870 Act does not otherwise
preclude a solicitor from contesting liability on the basis that the scope of his/her
retainer by reference to the terms of the contract which will normally define the
extent of the duty owed by a solicitor to a client absolves the solicitor from
liability.
17. It is also of interest to note that excluding or limiting liability in medical
malpractice suits while theoretically possible, there being no statutory prohibition
to their use and their application being subject only to the terms being fair and
reasonable, the patient being in law a consumer of a service (i.e. sections 39
and 40 of the Sale of Goods and Supply of Services Act 1980) do not feature at
all in defences upon which medical professionals seek to contest liability. As
noted by Healy in his text, Medical Malpractice Law (2009) exemption clauses
or clauses limiting liability have not been utilized in the healthcare context as
they are viewed as inimical and incongruent with the plight of a patient who, as a
matter of necessity, has to avail of a healthcare service which automatically
precludes such a clause being fair and reasonable1.
18. The above considerations and the recent cases referred to above serve as a
reminder that assumptions should not be made and that the most careful enquiry
should be undertaken from the moment instructions are received, as the duty of
care and skill resting on professionals requires no less. In this regard, it is
instructive to recall the dicta of Tindal C.J. in Lanphier v Phipos (1839) 8 C.&.P
475, 173 E.R.581 when he stated:
“Every person who enters into a learned profession undertakes to bring to
the exercise of it a reasonable degree of care and skill. He does not
undertake, if he is an Attorney, that at all events you will gain your case,
nor does a surgeon undertake that he will perform a cure; nor does he
undertake to use the highest possible degree of skill.”
1 Medical Malpractice Law (2009) Chapter 2, pp 123-124
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Who is the Professional’s Neighbour?
19. As noted, where a professional is retained under contract, there is normally no
difficulty in establishing the requirements of “foreseeability” and “proximity” which
are necessary constituents of the “neighbour principle”. However, where no
contractual nexus exists, the court faced with a claim for damages in negligence
is required to determine whether the factual matrix in which the professional
advised and acted, is such as to create a duty of care, breach of which causing
loss entitles the party to recover damages.
20. The original formulation of the “neighbour principle” by Atkin L. J. in Donoghue
v Stevenson [1932] A.C. 562 essentially focused on the requirements of
“foreseeability” and “proximity”.
21. Because the “neighbour principle” gained widespread application as a basis for
imposing legal liability, not only in the areas of the personal injuries and property
damages claims, but in civil actions generally, the courts have sought to
introduce more general considerations beyond the requirements of
“foreseeability” and “proximity” before holding that a breach of a duty of care is
actionable in negligence.
22. The rationale for the revision of the “neighbour principle” in recent times which
commenced with the decision in Glencar Exploration plc v Mayo County
Council (No.2) [2002] I.R. 84 was most recently articulated by the Supreme
Court in Whelan and Others v Allied Irish Banks Plc and Others [2014] IESC
3 by O’Donnell J. at paragraph 64 of his judgment when he stated:
“[64] In later cases however, and put again perhaps to simply, there
emerged a concern that this approach would give rise to a considerable
extension of liability, and consequently costs, and make the tort of
negligence the dominant vehicle for recovery in any civil action, which
would threaten, if not obliterate, the other torts and even recovery in
contract and quasi-contracts. The High Court of Australia in Sutherland
Shire Council v Heyman (1985) 157 C.L.R. 424 pointed out that this
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approach gave rise to a significant risk of an approach which would result
in a massive extension of a prima facie duty of care restrained only by
some indefinable considerations of policy. This was important because of
a decision that a duty of care arose in any novel situation controlled not
only the instant case, and all similar cases, but also influenced all of those
cases in which such a situation or some plausible analogy could be
advanced, given rise to a risk of liability which might have to be settled.
The parties would have to seek insurance against such potential liability,
and furthermore seek to recover that additional costs from their clients
and customers, or risk claims and additional costs. In Sutherland Shire
Council v Heyman, an alternative approach was mooted which was
subsequently adopted both in the United Kingdom in Caparo Plc v
Dickman [1990] 2 A.C. 605 and in this jurisdiction in the judgments in
Glencar Exploration plc v Mayo County Council (No. 2) [2002] I.R. 84.
That was where injury or damage was reasonably foreseeable, and there
was sufficient proximity between the parties, a duty of care would
nevertheless not arise in any such novel area unless the court considered
that in all the circumstances, it was just and reasonable that the law
should impose a duty of care on the defendant.”
23. In Glencar Exploration plc v Mayo County Council (No.2) [2002] I.R. 84
Keane C.J. having traced the development of the law of negligence in England
and Ireland and having referred to the oft-quoted portion of the judgment of
McCarthy J. in Ward v McMaster which appeared to endorse the approach
taken by the House of Lords in Anns v Merton London Borough [1978] A.C.
728 Keane C. J. stated at page 139 of the report stated as follows:
“There is, in my view, no reason why courts determining whether a duty of
care arises should consider themselves obliged to hold that it does in
every case where injury or damage to property was reasonably
foreseeable and the notoriously difficult and illusive test of “proximity” or
“neighbour” can be said to have been met, unless a very powerful public
policy considerations dictate. It seems to me that no injustice will be done
if they are required to take the further steps of considering whether, in all
the circumstances, it is just and reasonable that the law should impose a
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duty of a given scope on the defendant for the benefit of the plaintiff, as
held by Costello J. at first instance in Ward v McMaster [1985] I.R.29, by
Brennan J. in Sutherland Shire Council v Heyman (1985) I57
C.L.R.424 and by the House of Lords in Caparo Plc v Dickman [1990] 2
A.C. 605. As Brennan J. pointed out, there is a significant risk that any
other approach will result in what he called a “massive extension” of a
prima facie duty of care restrained only by undefinable
considerations……..”
24. The concerns referred to by O’Donnell J. have largely presented themselves in
the guise of legal liability being imposed in negligence for not only personal
injuries and property damage, but also pure economic loss. A number of cases
in this jurisdiction including Siney v Dublin Corporation [1980] IR400 and
Ward v McMaster [1988] I.R. 337 allowed recovery for pure economic loss in
negligence. The court in these cases had effectively followed the earlier
decisions of the House of Lords in the cases of Anns V Merton London
Borough Council [1978] A.C 728 and Junior Books v Veitchi [1982] 3 W.L.R
477, the latter case imposing liability on a sub-contractor for economic loss in
respect of a negligently constructed factory floor.
25. In Ward v McMaster McCarthy J. in adding to the requirements of “proximity”
and “foreseeability” the requirement that there was no compelling exemption
based upon public policy against the finding of a duty of care, had
notwithstanding the concerns previously expressed in Sutherland Shire
Council v Heyman no difficulty in imposing liability on the Defendant for the
economic loss suffered by the Plaintiff.
26. Because the formulation of the test by Keane C J. retains reference to “public
policy considerations” which was a factor also incorporated in the formulation of
the test by McCarthy in Ward v McMaster, there is some confusion as to
whether the test posited by Keane C. J. in Glencar Exploration Plc v Mayo
County Council is a three step or four step test. Subsequent cases have not
been entirely consistent in their commitment to or interpretation of the terms of
the test formulated by Keane C. J. with some treating it as involving a four-step
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process, namely, proximity, foreseeability, the absence of countervailing policy
considerations and a finding by the court that it was just and reasonable to
impose a duty of care and other cases applying a three-step test omitting any
reference to the public policy step.
27. By way of example, in the Supreme Court in Beatty v Rent Tribunal [2006] 1
IRLM, per Fennelly J. formulated the underlying principles of negligence as
being applicable where:
“That there is a relationship of such proximity between the parties such as
to call for the exercise of care by one party towards the other; that it is
reasonably foreseeable that breach of the duty of care with occasional
loss to the party to whom the duty owed and that it is just and reasonable
that the duty should be imposed”.
28. In again noting that the reformulation of the “neighbour principle” has been
informed by concerns to exclude the recovery of pure economic loss, the
reformulation has caused confusion, leading in one case, to a surprise finding
that in the context of a solicitor/client relationship, no duty of care existed
because the court held that it would not be just and reasonable to impose such a
duty. In reversing this finding on appeal, the Supreme Court (per O’Donnell J.)
in Whelan v Allied Irish Bank Plc [2014] IESC 3 stated as follows:
“To the casual observer, it might appear that there is little difference
between an approach which imposed liability where there is a prima facie
duty of care unless considerations of policy negative the existence of
such a duty, and one which imposes duty of care only when there is
sufficient proximity and considerations of policy make it just and
reasonable that such a duty should exist. One approach might seem to
be merely the negative imagine to another and to the mathematically
minded, 5 – 2 is exactly the same as 1 + 2. However, there is and had
been in practice a very significant different between the two which might
be illustrated by this case. The formulation in Anns v Merton London
Borough Council and Ward v McMaster of prima facie liability only
negative by considerations policy loads the balance heavily in favour of
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finding liability. Furthermore, it tends to ensure that the general issue as
to the existence of a duty of care in such circumstances will be addressed
in the particular circumstances of the case and the question becomes,
almost imperceptible, whether a Plaintiff who has now been found to have
been injured by the carelessness of a period whose acts could
foreseeably cause damage to the Plaintiff should nevertheless be
deprived of damages.
Viewed in this way, it is, I think, apparent that the judge’s conclusion of
that the firm L.K. Shields owed no duty of care to Mr Lynch when advising
as to the nature of the facility agreement because to impose a duty of
care in such circumstances would not be just and reason cannot be
maintained. First, this was not a novel area where liability was being
asserted for the first time. The essential component of the Plaintiff’s claim
were well established. It has been beyond controversy for more than half
a century that an advisor may owe a duty of care when making
statements which may be relied upon even if there is no contract or
retainer covering the advice. It is also well established that a solicitor
may owe a duty of care independent of contract, and indeed, owe a duty
of care in respect of areas outside the original retainer. None of this is or
was in controversy. Second, the just and reasonable test in Glencar is
also essentially a policy consideration and it has been determined long
ago that it is just and reasonable that solicitor or, indeed, any other
professional adviser should owe a duty of care in such circumstances. It
is also important that the question must be approached at that level of
abstraction…...
The test does not mandate or permit a consideration of each individual
case and whether the imposition of a duty of care, and therefore liability
meets some undefined concept of fairness in the particular case. If that
were so, then the law would be no more than the application of individual
discretion in different facts or circumstances which might well be decided
differently from court to court. In such circumstances, the law of
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negligence would be little more than the wilderness of single instances
criticised by Tennyson.”
29. O’Donnell’s J. analysis while elevating the status of the reformulation of the
“neighbour principle” by Keane C. J. in Glencar from its previous considered
status of orbiter dicta2 to that of being the “foundation stone of modern
jurisprudence on the tort of negligence”, it has not entirely displaced the test in
Siney v Dublin Corporation [1980] IR 400 and Ward v McMaster [1985] IR29
which effectively applied the test formulated in Anns v Merton.
30. In McGee v Alcorn [2016] IEHC which involved, inter alia, a claim for
professional negligence against an architectural technician who had certified the
foundations and construction of a house as being compliant with applicable
regulations, when in fact the foundations were defective and resulted in damage
to the house which required extensive remedial works to both the foundations
and the house. Significantly, the Plaintiffs who had no contract with the
architectural technician who was in fact retained by the builder, who was also
named as a defendant in the proceedings, was seeking to recover damages for
economic loss which was principally presented as a claim for repair costs to the
foundations and building and a diminution in the market value of the house.
31. In holding that the Plaintiffs were entitled to recover damages to cover the costs
of the remedial works, the inconvenience caused because of the original defects
and the subsequent remedial works together with the diminution in the value of
the house, O’Malley J. had no difficulty in accommodating the facts of the case
and permitting recovery for the plaintiffs for economic loss within the formulation
of the “neighbour principle” as stated in Ward v McMaster and Glencar
Exploration Plc v Mayo County Council.
32. In this regard, it is useful to highlight the following paragraphs of the judgment of
O’Malley J. who having considered the later judgment of the Supreme Court in
Wildgust v Bank of Ireland [2006] 1 I.R. 570 which described Glencar as the
"most authoritative statement of the law in relation to the general duty of care in
2 See Beatty v Rent Tribunal [2006] IR191, 200; Bates v Minister for Agriculture [2012] 1IR247
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negligence " and having noted that the Supreme Court in Glencar regarded the
judgment of Henchy J in Ward v McMaster which was based on "well
established principles " as the binding decision of the Court and not the
judgment of McCarhy J, .:
“134. Whether the analysis of Keane C.J. was, on the facts of the case in
Glencar, simply obiter as Geoghan J. said, “most authoritative statement
of the law, as Kearns J. described, it is certainly incumbent on this court
to accord it full respect as a considered expression of the unanimous view
of the Supreme Court. However, I think it is important to note in the
context of this case that it does not appear, in my view, to be authority for
the proposition that the outcome in either Siney or Ward v McMaster
was incorrect.
135. On the facts of the instance case, I have no difficulty of finding the
existence of a duty of care on either the approach of McCarthy J. or
Keane C. J.
136. There was, in the first place, undoubtedly proximity between the
plaintiffs and the second named Defendant. In this respect, I consider
that the absence of a contractual relationship between the parties is
immaterial. It is true to say that the certificates were supplied to the
second named defendant to the builder, but the only conceivable purpose
of them from the builders point of view was for the presentation to have
prospective buyer. The second named defendant must have been aware
of this, and there must have been implicit knowledge and, indeed, an
assumption that such a person would rely on upon the certificate – that is
the purpose of for which they were issued. This is particularly so in the
case of the representation that the foundations were properly constructed.
Having regard to the evidence in this case as to how the problem was
identified – by the digging of large test holes around the house – this is
not a matter that can readily be assessed by a potential buyer. By the
same token, it was eminently foreseeable by a person in the second
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named defendant’s positon that if the foundations were in fact
inadequate, they was likely occasioned to the buyer.
137. The alternative questions: “is there any reason not to impose a duty
of care in the circumstances?” and “is it fair, just and reasonable to
impose a duty of care in the circumstances?”. Both lead me,] on the facts
of the case, in the same direction. No argument has been made by the
second named defendant that there are any policy considerations that
would make the court hesitate in finding that the duty exist. The class of
persons to whom the duty is owed is easily defined – it is the purchaser to
whom the certificate has been presented since that the personal who ill
rely upon it. It is not necessary to go further in this case, and consider the
possibility of opened ended liability to subsequent buyers years down the
lines.
138. A further considered, that it is fair, just and reasonable to impose a
duty of care towards purchasers on persons such as engineers and
architects to provide certificates of this nature to builders. Most people
buying a modern house, and most of the lenders to whom they will go for
mortgages, will require such certificates and rely upon them. Self-
certification builder does not seem a realistic alternative. It is simply
untenable to suggest that the person who holds himself out was
professionally qualified to asses, and a decision to certify, the quality of
the house, the workmanship of his construction, should not thereby by
required to giving such certifications.”
33. Having considered the jurisprudence, O’Malley J. on the facts of the case also
went onto state particularly with regard to justifying an award in favour of the
Plaintiffs for pure economic loss stated at paragraph 147 of her judgement:
“147 That being so, it appears to me that in the circumstances, the
combination of the Statement of Claim, the Notice for Particulars and the
Replies thereto are adequate for the purpose of making the case of
negligence misstatement. On the facts of the case, there can be little
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doubt as to whether the criteria for liability for negligent misstatement, as
discussed in the authorities and most recently in Wildgust, have been
met. Damages for economic loss are therefore recoverable.”
34. The decision of the Supreme Court in Whelan v Allied Irish Banks Plc has
been most recently considered by the Court of Appeal in the case of Rosbeg
Partners Ltd v L.K. Shields (Farm) [2016] IECA161. McMenamin J. giving
judgement of the court stated as follows:
“24. An enforceable agreement to sell is not always a necessary proof for
a loss of transaction claim. In such cases, it was a matter for the trial
judge to decide, on the balance of probabilities, whether a sale would
have proceeded, but for the negligence. The presence, or absence, of an
agreement to sell may, or may not, dependent upon the facts, be relevant
to the judge's assessment of this question. It is noteworthy that, in
Fairlee , Mr. Beades did not have any enforceable agreement to sell in
place in January, 2007, nor yet had he even begun to negotiate a sale, in
circumstances where the apartments had not been built.
25. As regards the question of legal causation, remoteness and scope of
duty, the law is well established in Glencar Explorations v. Mayo
County Council [2002] 1 I.R. 84, at page 139. As O'Donnell J., speaking
for a unanimous Supreme Court, pointed out in Whelan v. AIB [2014]
IESC 3:
The Glencar test does not mandate or permit a consideration of each
individual case and whether the imposition of a duty of care, and
therefore liability, meets some undefined concept of fairness in the
particular case. If that were so, then the law would be no more than the
application of individual discretion in different facts or circumstances
which might well be decided differently from court to court. In such
circumstances, the law of negligence would be little more than the
wilderness of single instances criticised by Tennyson.?”
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35. It will be seen from the above review that there can be little doubt that the
reformulation of the “neighbour principle” in Glencar is now in the ascendancy
and that future cases in considering the reach of the tort of negligence will seek
to limit its application to within the parameters which Geoghegan J. had in mind
when he stated in Wildgust v Bank of Ireland [2006] 1 I.R. 570:
“Pragmatically, some kind of control mechanism was necessary in
relation to liability for negligent misstatement as otherwise an action might
lie at the suit of large numbers of people influenced and reasonably
foreseen to be influenced by the erroneous statement. By contrast, a
negligent act will, for the most part, foreseeably damage only a small
category of people.”
36. Describing by analogy the developments in the jurisprudence considered above,
it is appropriate to state that the neighbour who is likely to benefit from the
“neighbour principle” is to be found in the 'village centre” where the sense of
neighbourhood is obvious rather than in the “urban centre” where the sense of
neighbourhood is not so obvious.
Contract – Not Conclusive as to the extent of a Professional’s Duty of Care
37. Having noted that the existence of a contractual nexus with the professional
retained to advise or act is a significant factor which not only defines the extent
of the professional’s retainer, but informs how the court should approach its task
of determining the question liability, it is not to be taken as conclusive or
exhaustive as to the extent of the professional’s duty of care.
38. In Bolam v Friern Hospital Management Committee [1957] 1 W.L.R. 582,
the court explained the basis of the application of the law of negligence to
professionals:
“Where you get a situation which involves the use of some special skill
and competence, then the test as to whether there has been negligence
or not is not the test of the man on the top of the Clapham Omnibus,
because he has not got this special skill, the test is the standard of the
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ordinary skilled man exercising and professing to have that special skill; it
is well settled law that it is sufficient if he exercises the ordinary skill of an
ordinary competent man exercising that particular act.”
39. In Midland Bank Trust Co. Ltd v Hett, Subbs & Kemp [1979] CH 384 at 403,
the court stated:
“The test is what the reasonable competent practitioner would do having
regard to the standards normally adopted in his profession.”
40. Mindful that the paramount duty of on the professional is to exercise reasonable
care and skill in his dealings with the particular client, it is important to keep in
mind what was stated by Barron J. in Doran v Delaney [1998] 2 I.R.60 at 78,
Barron J. stated as follows:
“The solicitor is not a conduit pipe. Once he is acting professionally, he
warrants that so far as his own acts are concerned, he is taken the care
and applied the skill and knowledge expected of a member of his
professional. He cannot therefore accept his client’s instructions without
question when it is reasonable to query them……. Of course, as against
his own client, if the solicitor acted on the client’s expressed instructions,
this is generally a good defence to a claim by his own client.”
41. In Carroll v Carroll [1999] 4 I.R. 241 at 266:
“Even if he had been the donor’s solicitor, what he did would not have
saved the transaction. As I said before, a solicitor or other professional
person does not fulfil his obligation to his client or patient by simply doing
what he is asked or instructed to do. He owes such person a duty to
exercise his professional skill and judgement and he does not fulfil that
duty by blithely following instructions without stopping to consider whether
to do so is appropriate. Having done so, he must then give advice as to
whether or not what is required of him is proper. Here, his duty was to
advise the donor to obtain independent advice. In the present case,
18
whatever independence [the donee’s solicitor] may have had has been
destroyed by his acting in the present proceedings as solicitor to the
personal representative of the donee.”
42. In the later case of O’Carroll v Diamond [2005] 4 I.R.41 at 54, Hardiman
stated:
“My decision should not be taken as implying that, in any other
circumstances, a solicitor necessarily discharges his duty merely by
urging a person to take independent advice and gladly accepting a
decision not to do so. Depending on the circumstances, his obligations
may be much greater and may include declining to act until such advice is
taken. “
43. More recently, in the case of ACC v Johnston, Traynor & Mallon [2010] IEHC
236 at paragraph 6.23, Clarke J. in emphasising that professionals are
employed to minimise risk, stated as follows:
“The ordinary duty of care, therefore, extends not merely to ensuring that
the relevant professional person carries out his or her duties in the way in
which other suitably qualified members of the relevant profession do, but
also extends to considering other common practices so obviously
involved in necessary risks which can be eliminated that such practices
should not be engaged in.” 3
Examples of Particular Duties Resting on Professionals
44. Noting that the Courts will not only consider the terms of the contract on foot of
which a professional has been retained but will also assess the professional’s
advice and conduct against the standard of suitably qualified members of his/her
profession exercising reasonable care and skill, it is appropriate to identify
3 See also O’Donovan v Cork County Council [1967] I.R. 173; Roch v Peilow [1986] I.L.R.M. 189;
Dunne (an Infant) v The National Maternity Hospital [1989] I.R. 91; Murphy v Beauchamps & Bowe,
Unreported, High Court, Peart J. Nov. 24 2011; Rosbeg Partners Ltd v LK Shields (A Firm) [2016] IECA
161; Kenny v Howard and the HSE [2016] IECA 243; Vessey v Kent Carty [2016] IECA 302
19
specific duties which the Courts have held rest on professionals who have been
instructed and/or retained to provide professional advice and services:
Duty to clearly and fully advise at all stages of the retainer and litigation
Levicom International Holdings BV and Another v Linklaters (A Firm)
[2010] EWCA Civ 494
Emerald Island Assurance and Investment Ltd and Others v
Coakley Moloney Solicitors [ 2014 ] IECA 370
45. In discharging the duty to clearly and fully advise at all stages of the retainer
and/or litigation, it has been stated that in order to avoid the risk of a
professional negligence claim, professional advisers should ensure the
following:-
Not to overstate a case, particularly at the outset
Be slow to give unqualified advice without first carrying out a thorough
investigation and obtaining all the facts
Make sure advice is based on careful analysis, sound reason and
consideration of all foreseeable possibilities
Be very clear and thorough, especially when explaining complex issues to
clients using language and terminology that clients and reasonably be
expected to understand
Qualify advice given if necessary, particularly if not all the facts are known
Make sure that the client is fully aware of all possibilities and options open to
them and the cost consequences of these.
46. The decisions in Levicom International Holdings BV and Another v
Linklaters (A Firm) and Emerald Island Assurances and Investment Ltd
and Others v Coakley Maloney Solicitors are also important decisions in the
context of causation and, in particular, on whom the burden rests in proving
causation.
20
47. Traditionally, the burden rests on the Plaintiff to prove to all constituents of the
cause of action pleaded, including causation. In Levicom the Court of Appeal
held that it was not for the Plaintiff to prove causation. The court held that there
was a re-buttable presumption that a client follows a solicitor’s advice.
Consequently, it is for the professional to show that even the client had been
given correct advice, the client would not have acted differently. Burnton L. J. in
Levicom in justifying this analysis, stated as follows:
“One has to ask why a commercial company should seek expensive city
solicitor’s advice and do so repeatedly, if they were not to act on it.”
48. The Court of Appeal in this jurisdiction in Emerald Island Assurance and
Investments Ltd did not go so far, but clearly did not accept that a simple
submission by the Defendant that the Plaintiff would have not have acted
differently even it had been given correct advice, was the correct test to apply in
ascertaining whether the loss complained of was caused by the Defendant’s
negligence. The court put the position as follows:
“(44) In my view, the president was in error in his finding on this matter.
The evidence in the case did not demonstrate complete incapacity on the
part of the plaintiffs to take advice. The did so on the occasion of the
2010 settlement. More generally, it cannot be deducted that the plaintiffs
were not going to respond to a clear, explicit warning simply because they
were in dispute with their accountant over quantum.
(45) It seems to me that the proper approach to this case is that Mr.
Duane is to be faulted and held negligent for a failure to advise his clients
appropriately, and by that I mean along the lines indicated above. In the
particular circumstances of this case, he was under an obligation to set
out the positon clearly before them. If he needed to get Senior Counsel’s
advice, that would have been appropriate. Alternatively, it might have
been desirable to have a meeting. What he needed to do above all was
to present them with the situation that they could proceed with their case
as matters stood and with the evidence that they had originally relied on,
21
but that there were risks and dangers in that course. They could urgently
get another accountant to replace Mr Peelo. All this should have taken
place well before the expiration of four years between 2003 and 2007.
(46) My conclusion, therefore, is that the failure in this case is not simply
one of the precise terms of a particular letter. It is of a failure of advice
and a course of conduct that simply failed to address a particular issue or
difficulty that had arisen and that it was not an impossible, intractable
problem, but one that had options and consequences, just like many
other situations that present themselves to competent legal or other
adviser. “
Professional Liability of Barristers
49. The extent to which professional liability may be visited on a barrister has been
the subject of a number of cases. With regard to identifying the substance of the
duty resting on a practicing barrister the Court in Eckersley v Binnie [1988]
C.L.R. 1, stated per Bingham L.J.
“A professional man should command the corpus of knowledge which forms
part of the professional equipment of the ordinary member of his profession.
He should not lie behind other ordinarily assiduous and intelligent members
of his profession in knowledge of new advances, discoveries and
developments in his field. He should have such awareness as an ordinarily
competent practitioner would have of the deficiencies in his knowledge and
the limitation on his skill. He should be alert to the hazards and risks inherent
in any professional task he undertakes to extent that other ordinarily
competent members of the profession would be alert. He must bring to any
professional task he undertakes no less expertise, skill and care than other
ordinarily competent members of his profession would bring, but need bring
no more. The standard is that of a reasonable average. The law does not
require of a professional man that he be a paragon, combining the qualities
of polymath and prophet”.
22
Make sure that all advices are evidenced in writing;
Emerald Island Assurances and Investments Ltd and Others v
Coakley Moloney Solicitors [2014] IECA No. 370 and No. 393]
Duty to minimise risk for client
Murphy v Beauchamps & Bow (unreported, High Court, Peart J.,
Novemer 24 2011)
ACC v Johnston [2010] IEHC 236
Duty to warn a client
Doran v Delaney [1998] 2 IR 61;
Carroll v Carroll [1999] 4 IR 241;
Carroll v Diamond [2012] IEHC 140;
Goldswain v Beltec Ltd [2015] EWHC 556;
Rosbeg Partners Ltd v LK Shields (A Firm) [2016] IECA 161
Duty to advise client on matters beyond the initial instructions
Mortgage Express Ltd v Bowerman & Partners [1996] 2 All E.R. 836.
In the latter case, Bingham L.J. stated:-
“A client cannot expect a solicitor to undertake work he has not
asked him to do, and will not wish to pay for such work. But, if in
the course of doing the work he is instructed to so, the solicitor
comes into possession of information which is not confidential and
which is clearly of potential significance to the client, I think that
23
the client would reasonably expect the solicitor to pass it on and
feel understandably aggrieved if he did not”.
Credit Lyonnais SA v Russell Jones and Walker [2002] EWHC 1310
(Ch)
No duty to keep advice under review
Integral Memory Plc v Haines Watts [2012] EWHC 342 (Ch)
Shepherd Construction Ltd v Pinsent Masons LLP [2012] EWHC 43
(TCC).
No duty to advise a client on whether a transaction is a prudent one or
not
Bowdage v Harold Michelmore & Co. [1962] E.G.D. 379 (QBD)
Clarke Boyce v Mouat [1994] 1 AC 428. In the latter case, the Court
stated:-
“When a client in full command of his faculties and apparently
aware of what he is doing seeks the assistance of a solicitor in the
carrying out of a particular transaction, that solicitor is under no
duty whether before or after accepting instructions to go beyond
those instructions by proffering advice on the wisdom of the
transaction. To hold otherwise could impose intolerable burdens
on solicitors”.
Duty of professional to take into account the inexperience or
youthfulness of a client
Pickerstill & Le Cornu v Reilly [2004] UKPC 14
24
Carradine Properties Ltd v DJ Freeman & Co [1999] Lloyds Rep. P.N.
483 (CA)
Duty to ensure client understands advice given
Siasati v Bottoms & Webb (A Firm) [1997] EGCS 22
County Personnel (Employment Agency) Ltd v Aaron R
Pulver & Co [1987] 1 W.L.R. 916 (CA)
Duty to Third Parties
Ross v Caunters [1970] 3 ALL ER Gorham v British Telecom plc [2000] 1WLR 2129 (CA) Hughes v Richards [2004] EWCA Civ 266 Wall v Hegarty [1980] IRLM 224 – liability to beneficiary under a Will White v Jones [1995] 1All ER691 – liability to the beneficiary under a Will Carroll v Carroll [199] 4IR 241 Dean v Allin & Watts (a firm) [2001] EWCA – Solicitors liability to a Third Party
Duties when giving free advice
Padden v Bevan Ashford Solicitors [2011] EWCA Civ 1616
Other Cases
Brownrigg v Leacy [2013] IEHC 434 – claim for negligence
against a valuer
25
O’Neill v Rawluk [2013] IEHC 461 – claim against a consultant
for medical negligence
Adigun v McEvoy [2013] IEHC 342 – claim for professional
negligence against a solicitor
50. In the latter case, the Court in holding that it is not normally a requirement of
general retainer to keep past advice under review or to renew the advices of a
predecessor firm upon or following acquisition of a firm went on to state:-
“There is a difference to be drawn between a specific retainer or
commission which imposes a continuing duty on a professional to keep
earlier advice under review and some sort of obligation which requires the
professional to review and revise previous advice given or services
provided on commissions or retainers which are complete”.
51. In Melbourne Mortgages Ltd & Cavenham Financial Services Ltd v Turtle
and Others practising as Carson McDowell Solicitors [2004] N.I.Q.B. 82, the
Court stated:-
“A lawyer holding himself out as competent in a particular field has a duty
to keep up to date with judicial decisions in that field… [It] is appropriate
that he or she could keep up to date with the law in the field in which they
practice… [Practitioners] have the option to choose not to practice in
fields with which they are unfamiliar to avoid situations of this kind
arising”.
52. In Whelan v Allied Irish Banks plc [2014] IESC 3, the Supreme Court held at
p234 of its Judgement, paragraph 58 as follows:-
“The obligation of a professional person is to give advice some of which
may be unwelcome. Clients may be slow to appreciate advice, which
they are paying for, but which warns them against the course of action
which they wish to follow. The practice of law and other professions have
26
developed considerably, and in many cases for the better, but there can
be strong pressures on lawyers and other advisers to take a “commercial”
view of matters, and to bring only the good news to a client. It remains
very important that advisers give independent advice which, in an
appropriate case, may counsel caution. The obligation to give
independent and professional advice which is important not just to clients
but to society more generally, is reinforced if solicitors and other advisers
understand that they have a duty to be careful in the content of the advice
which they give to clients”.
53. The above jurisprudence is the standard against which the professional liability of
a barrister will be assessed.
54. There have been a number of cases in which the advice given by a barrister and
the manner in which the barrister has presented the case in Court has been
considered by the Courts.
55. As with solicitors who give legal advice, a barrister is also subject to the same
standard, that is, he/she is required to exercise the degree of reasonable care
and skill which is expected of a competent and reasonably experienced barrister.
– Regent Leisure Time Ltd v Skerret Pearson [2006] EWCA Civ 1184 (CA)
56. It is also generally the case that a solicitor can rely on the advice of the barrister
where the barrister is properly instructed and where the solicitor does not have a
specialist knowledge of the area of law in question – Langsam v Beachcroft
LLP [2011] EWHC 1451 (Ch).
57. The burden of proof resting on a claimant who alleges negligence against a
barrister is an onerous one and has been confirmed in a number of cases. In
Phelps v Hillingdon LBC [2001] 2 A.C. 619 at 672 F, the Court stated:-
“In order to get off the ground the claimant must be able to demonstrate
that the standard of care fell short of that set by the Bolam test: that is
deliberately and properly a high standard in recognition of the difficult
27
nature of some decisions which those to whom the test applies are
required to make and of the rule for genuine differences of view and the
propriety of one course of action as against another”.
58. In Moy v Petman Smith [2005] UKHL, 7; [2005] 1 W.L.R. 581, the Court
stated:-
“In claims against members of other professions, the Court will have
expert evidence on whether their conduct has fallen short of the standard.
In cases against advocates, however, the Court assumes that it can rely
upon its own knowledge and experience of advocacy to make that
judgement. This brings, as Lord Hope has pointed out, an obvious risk
that the Judge will ask himself what he would have done in the particular
circumstances of the case. But that is not the test. The doctor giving
expert evidence in medical negligence claim is not asked what he himself
would have done, what a reasonable doctor might have done”.
59. In the recent decision of the Court of Appeal in Vessey v Kent Carty [2016]
IECA 302, the Court in addressing the issue of a barrister’s professional liability
for the presentation of a case before the Court stated as follows:-
“17. The onus of establishing that the respondent was professionally
negligent in the manner in which the appellant's personal injury claim was
processed and more particularly, how the manner was dealt with in court
by his legal representatives, rests squarely with the appellant. The burden
of proof is on the appellant to establish that the respondent failed to meet
the relevant professional standard in the circumstances. It is unnecessary
for the purposes of this appeal to explore the extent to which (if at all)
advocates enjoy any immunity from suit in respect of their own conduct of
the actual court hearing.
18.In IArthur J.S. Hall & Co. v. Symons [2000] 3 All E.R. 673, Lord
Hobhouse, said (at p. 123):-
28
‘The standard of care to be applied in negligence
actions against an advocate is the same as that
applicable to any other skilled professional who has to
work in an environment where decisions and
exercises of judgment have to be made in often
difficult and time constrained circumstances. It
requires a plaintiff to show that the error was one
which no reasonably competent member of the
relevant profession would have made.’
19. That standard required the respondent to ensure, in as far as
possible, that the appellant's claim (both relating to the extent
of his injuries and his consequential loss of earnings) be
advocated in court, that the appropriate witnesses be called
to give evidence, that witnesses called on behalf of Bus
Éireann be cross-examined and / or challenged in order to
ensure that the appellant's claim is vindicated as far as
possible, and, in general terms, that the appellant's
instructions be complied with.
20. Neither the evidence adduced before O'Malley J. or the submissions
made to this Court support the contention that any breach of the
appropriate professional standard occurred. Furthermore, if, in fact, the
appellant (as he maintains he did) expressly instructed the respondent
and / or his counsel to object to the case being heard by O'Malley J. in the
light of the disclosure of a friendship between her father and Mr. Browne,
and such instruction was ignored, or, (again as the appellant maintains)
an opposite position was indicated in open court, such would amount to,
at a minimum, professional misconduct. However, the fact that there is no
evidence that the appellant sought to object or otherwise attempted to,
halt the hearing of the case by O'Malley J after the appellant's counsel
indicated that he had no objection to her doing so, is, at least, strongly
suggestive of the fact that he did not so instruct his legal team.”
29
60. The decision of the Court of Appeal in Vessey v Kent Carty [2016] IECA 302 is
further confirmation that the Courts in this jurisdiction as had been previously
indicated in the case of Behan v McGinley [2008] IEHC 18 , will assume that
barristers do not enjoy a blanket immunity from suit and can be sued for
negligence in relation to their management of litigation on behalf of their clients
either in respect of their preparatory work or indeed in respect of their
management of the trial itself. 4
Gross Negligence – Relevance of Contract in Professional Liability Claims
61. As professionals are invariably retained to provide their specialist advice and
services on foot of a contract, and as the above judicial authorities underline the
terms of the contract are particularly relevant to whether a professional has a
liability in the particular circumstances.
62. While it has been noted above that it is not possible for a solicitor to exclude
liability to a client for negligence, with any such clause being deemed to be void
and as exemption clauses have not been a feature of medical malpractice
litigation, exemption clauses or clauses limiting liability tend to appear in
contracts involving professionals in other disciplines (architects, engineers,
accountants, valuers, surveyors etc).
63. As a phrase used within the tort of negligence, “gross negligence” has in fact no
legal significance and offers no greater scope for success to a Plaintiff who is
seeking to establish the professional's liability in the tort of negligence. While
“gross negligence” is recognised in other areas of the law (i.e. the law of bailment
– J. P. Morgan Chase Bank v Springwell Navigation Corporation [2008]
EWCH 1793) – it has long been accepted that it is a term of description and not
legal significance. Beal v The South Devon Railway Company (1864) 3 H.&
C. 337 at 612, Fagan v. An Garda Commissioner [2014] IEHC 128. Irvine J.
rejected the proposition that a plaintiff must prove malice or recklessness in order
to succeed in liability in pursuing a claim against a public authority such as the
4 See Law of Torts, McMahon and Binchy (4th Edition) Chapter 14, paragraphs [14.224] to [14.252]
30
Garda Commissioner. Irvine J. also preferred the application of the standard
negligence test as distinct from gross negligence. In Beal the court stated:
“A person who undertakes to do some work for reward to an article must
exercise the care of a skilled workman, and the absence of such care in
him is negligence. Gross, therefore, is a word of description and not a
definition and it would have only been introducing a source of confusion
to use the expression gross negligence instead of the equivalent, a want
of due care and skill in navigating the vessel, which was used again and
again by the Lord Chief Justice in his summing up.”
64. The legal insignificance of the phrase “gross negligence” in the tort of negligence
was previously considered in the case of Wilson v Brett (1843) 11 M. & W. 113
where the court remarked that gross negligence is ordinary negligence:
“with …… a vituperative epithet…..”
65. However, it is clear that the phrase “gross negligence” has legal significance in a
contractual context. It is normally used to exclude liability from negligence with
liability only being imposed in circumstances where it is established that the
defaulting party has been guilty of “gross negligence”. Exemption clauses of this
kind normally include the term “wilful neglect” in conjunction with “gross
negligence”.
66. Because exemption clauses are a contractual device available to professionals to
exclude or limit their liability, it is important that when called upon to advise or
represent a party involved in professional liability litigation, or indeed in general
litigation, that consideration is given to any contractual clauses which may be
relevant to excluding liability in the tort of negligence and confining the
professional’s liability to cases where “gross negligence” or “wilful neglect” has
occurred.
31
67. In “ICDL GCC Foundation FZ-LLC and ICDL Saudi Arabi v The European
Computer Driving Licence Foundation Ltd [2012] 3IR 327 the licence
agreement under consideration in that case contained the following clause:
“1. The Licensee’s exclusive remedy and the total liability of ECDL-F
in respect of any cause of action relating to or arising out of this
contract will, to the extent that it is not caused by a wilful act or
gross negligence by ECDL-F, not exceed ten percent of the total
amounts paid to ECDL-F by the Licensee or €50,000 whichever is
the lesser amount.
2. In no event will either party be liable for incidental, indirect or
consequential damages, including but not limited to loss of profit.
This limitation shall not apply to claims due to damage caused by
the use or copying of the ECDL concept or the transfer of
assignment of the licence in violation of the terms and conditions
of this contract.”
68. While it is instructive to read the separate judgements of Fennelly J. (with whom
Hardiman J. concurred) and O’Donnell J. (dissenting), there was acceptance by
all three judges of the court that clauses limiting a party’s liability to cases where
“gross negligence” or “wilful neglect” is established are enforceable with the
meaning of those terms being a matter of contractual construction which is to be
ascertained from the application of the normal rules of construction as set down
in such cases as Analog Devices B. V. v Zurich Insurance Company [2005]
IESC 12; [2005] 1 I.R. 274.
69. The Supreme Court held that a court should endeavour to give meaning to the
term “gross negligence” in the context where the parties had agreed to use it in
the contract.
70. In deciding whether gross negligence existed, the Supreme Court held that a
Plaintiff must prove negligence and that the negligence amounted to a breach by
a significant degree of that party’s duty to the other party under the contract.
32
71. ICDL is a reminder to barristers that assumptions should not be made when
advising in the area of professional liability litigation and that the term “gross
negligence” unlike in the area of negligence has legal significance and where it is
included in a contract for the purpose of excluding or limiting liability, the court
will strive to give meaning and application to it having regard to the particular
circumstances of the case.
Professional Liability and the Statute of Limitations 1957, as amended
72. It has long since been accepted in this jurisdiction that with, the exception of
personal injuries claims, the discoverability test does not apply when
ascertaining the accrual of a cause of action in non-personal injury causes of
action – Hegarty v O’Loughran [1990] 1 I.R. 148; Irish Equine Foundation v
Robinson [1999] 2 IRM 289; Murphy v McInerney Construction Ltd [2008]
IEHC 323; Gallagher v ACC Bank plc [2012] IESC 35.
73. It is also well established that a cause of action in the tort of negligence is not
complete until damage occurs. Without damage, there can be no actionable
cause of action in negligence with the result that the limitation clock cannot
begin to run. However, where a contract exists, it is the date on which the
breach of occurs which sets the limitation clock in motion.
74. Noting that a Plaintiff will, in most cases, be in a position to pursue concurrent
causes of action for damages for breach of contract and for negligence, it follows
that the date of breach of contract can be and often is different from the date of
damage. The spectre that presents itself is that there may be two distinct and
valid dates from which the applicable limitation period is to run. As the relevant
limitation period in non-personal injuries cases for both breach of contract and
negligence is, in most cases, six years it is often the case that two different
dates can be identified from which the relevant statute of limitation period is to
run.
75. As the courts have demonstrated a clear leaning to giving precedence to the
contractual relationship where it exists over the law of negligence in determining
33
the question of liability between disputing parties, it is difficult to see how if the
courts are to be consistent in this approach, they can avoid treating the date on
which the contract was breached, rather than the date on which the tort of
negligence was completed upon damage occurring as constituting the date on
which the cause of action accrued for statute of limitation purposes.
76. However, as the court’s function is simply to interpret the law and not to legislate
for it, the difficulties and inconsistencies which exist in this area of law can only
be addressed by legislation and a revision of the Statute of Limitations Act 1953,
as amended as suggested by the Law Reform Commission in its 2011 Report.
Pending revision, the position would appear to be as stated by Charleton J. in
ACC v Gallagher with which Fennelly J., delivering the majority judgment of the
Supreme Court, agreed:
“Each case is to be judged on the facts as to when the tort occurred, and
whether damage resulted at that time or whether the wrong initiated a
course of action that later resulted in loss.”
77. The recent decision of the Court of Appeal in Brandley v Deane & Anor [2016]
IECA 54 has caused ripples in that it has been received as introducing the
discoverability test for statute of limitation purposes into non-personal injury
causes of action.
78. The case involved a claim for damages for breach of contract and negligence
against a builder and an engineer arising from defective foundations which were
laid and which caused further structural defects in the building constructed on
the foundations. The structural defects occurred a number years after the
building was constructed and more than six years after the foundations had
been laid and the engineer had certified the construction works as being
compliant with relevant building regulations. The High Court (Kearns P.)
dismissed the Plaintiff’s claim on the basis that it was statute barred. However,
on appeal, the Court of Appeal allowed the appeal, holding that the Plaintiff’s
claim was not statute barred and that the defects in the foundation did not
constitute damage for the purpose of the tort of negligence, with damage only
34
occurring when the cracks appeared in the building some years later and which
was less than six years prior to the date on which the proceedings were
commenced by the Plaintiff. The reasoning of the Court of Appeal is to be found
in the following paragraphs 15, 16, 17 and 18 (of udgment).
“15. It seems to me that the learned President was in error in this case. It
is clear that negligence by itself without the accompaniment of damage or
loss is not actionable. The plaintiffs did not suffer damage at the time
when the defective foundations were installed. When the defective
foundation was put in, the only complaint that the plaintiffs could have had
was that the foundation was defective. They had not suffered any
damage at that point – there was merely a defective foundation – but that
is not damage of a kind that is actionable in tort. Indeed, it seems to me to
be very questionable whether there was an action in breach of contract at
that time, but I do not have to consider that on this appeal.
16. Recent jurisprudence in the neighbouring jurisdiction makes clear that
financial loss in respect of specific defects does not give rise to a cause of
action in negligence unless the defects result in damage to other
property, see Robinson v. P.E. Jones (Contractors) Ltd. [2011] 3 WLR
815.
17. The evidence here is that the foundation of these houses was
defective, but it did not cause damage at that time. It caused damage in
December 2005. The evidence is not that there was hidden damage
which became discoverable at a later point; it is that the damage resulting
from the defective foundations happened in December 2005.
18. It seems to me to be clear that no damage resulted to the plaintiffs in
March 2004 when the foundations were installed. I do not agree that the
plaintiffs had any right of action at that point. They could not prove any
loss. Moreover, it seems to me that it would have been quite open to the
second defendant, Mr. Lohan, or the first defendant, as the consulting
engineer, to have subsequently discovered or decided to investigate the
condition of the foundations. They would have been entitled to put right
35
any defects that they identified and the plaintiffs would have had no right
of action as a result. There could have been some delay in the completion
of the project, but that would have given rise to entirely different
considerations. In respect of the specific acts of negligence, the fact that
the defendants might have identified the defects and remedied them is an
illustration of the absence of loss at that point and the unavailability to the
plaintiffs of any right of action there and then.”
79. The Defendants have appealed to the Supreme Court from the Court of Appeal and
the Supreme Court has given leave to proceed with the appeal and has set the
following questions for determination in the appeal.
Questions
Does time run for the statue of limitations in property damage claims from
the damages manifest?
Does time run for the purpose of the statute of limitation in property
damage claims from when the damage is discovered
Does time run for the purpose of the statute of limitation in property
damage claims from when the damage occurs?
80. It will be interesting to see if the distinction between “defects” and “damage”
identified by the Court of Appeal commendd itself to the Supreme Court.
81. The uncertainty in this area of the law is regrettable and requires amending
legislation in the terms recommended by the Law Reform Commission in its
Report in 2011.