Posted: Monday, 1 March 2010 @ 14:42
In business and indeed in our personal lives too, we often have to instruct a professional to advise and assist us. A professional can be anyone who holds themselves out as having specialist knowledge that we don’t possess. They might be accountants, auditors, solicitors, surveyors, engineers, architects, barristers, IT professionals, doctors or, indeed, many other professions.
Professionals, like everyone else, are only human and occasionally make mistakes (some unfortunately more than others). Often their mistakes can cause significant loss and damage to you or your business. So when would you be able to make a claim against him or her? A Professional Standard of Care
A professional is under a legal duty to exercise “reasonable skill and care” when dealing with you. This is not a high standard: they simply have to act as good as a reasonable professional in their area of expertise. In other words, an accountant does not legally have to be a ‘good’ accountant; he simply has to be a reasonable accountant. A good way of looking at this, if you think you have a claim, is to consider whether the professional acted in a way that no reasonable professional of his type would have acted. In other words, if your accountant slipped up on something basic, like failing to file your accounts by a given date, to the extent that no reasonable accountant would have acted in that way, then he has breached his duty of care.
Some professionals hold themselves out as having a particularly expertise in an area. They might, again using accountants as an example, be a specialist in a particular type of tax scheme and will probably charge more for such extra expertise. If this is the case, their duty of care will be measured against a reasonable specialist accountant in this area of tax rather than a standard accountant.
To have a valid claim, you must be able to prove that the professional’s lack of skill and care caused your losses. Often a professional will argue that you would have suffered your losses even if he had given good advice or that you never followed his advice or would have gone ahead and acted in the same way whatever the advice had been given.
A common example is someone who has instructed a surveyor to survey a property before he purchased it. The surveyor missed something serious, such that works needed to be done at significant expense that the buyer did not discover until after he took occupation. In such circumstances, it is up to the buyer to prove that he would not have gone ahead to purchase the property at the price he did had he known of the works needed. In many cases, the surveyor will argue that the buyer would have gone ahead anyway. If he succeeds in this argument, then the buyer’s claim will fail, even if the surveyor did miss something serious.
The above example was a simple one but arguments over whether the negligence caused the losses are often the most significant in professional negligence cases, especially in a business context. Losses Incurred
You must prove what losses you have suffered. In many cases, this can become very difficult. As an example, what if your accountant advised you that your tax liability was far less than it actually was? To pay the extra tax, you have had to use funds budgeted for other purposes and have incurred interest and penalties to the Inland Revenue. If you had been able to use the funds for their original purpose, they would have generated an extra profit for you or would have prevented knock-on losses. Can you claim for these?
The law says you can claim for all losses that are not “too remote” and this generally means that you can only claim for all losses that flow directly from the negligence as long as the professional knew or should reasonable have known they could be a consequence of his negligence. This is again an area where there are often major arguments in a professional negligence case.
It is often easy to realise when a professional has made a mistake and done something wrong. Determining however whether you have a good claim against them is another matter and is often based on difficult areas of law. For this reason, that it is important to seek legal advice on the strength of any legal claim as soon as possible.
Gary Cousins, litigation and dispute resolution solicitor would be happy to discuss any professional negligence issues. Call Gary on 0121 778 3212 or email Gary here
Contact Cousins Business Law for advice on this topic.
Blog by Gary Cousins
Gary has been providing legal advice to shareholders, directors and business owners for over 25 years. Specialising in dispute resolution Gary is based in Birmingham with clients throughout the UK and overseas. View profile
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