When does the clock start running for professional negligence claims and what is the limitation period in relation to any potential claim?
Bringing A Professional Negligence Claim
In England, Wales and Northern Ireland a claimant in a negligence claim has six years from the date the loss was suffered to bring their claim. This is known as the limitation period. In some circumstances the limitation period can be extended but that’s a subject for another article.
If a claimant brings a claim outside of the limitation period, then the defendant can raise a limitation defence. This will be a complete defence and an end to the claim. It’s therefore absolutely crucial to properly establish what the correct limitation period is in relation to any potential professional negligence claim.
Elliot v Hattens Solicitors
This very issue was recently clarified in the Court of Appeal case of Elliot v Hattens Solicitors. This was a case whereby Mrs Elliot had instructed her solicitors to advise her in relation to her husband granting her a lease of a workshop which she would then in turn let via an underlease to a Mr Malster for his mechanics business. Mr Malster’s parents had agreed to act as guarantors for their son but unfortunately Mrs Elliot’s solicitors failed to obtain their signatures on the relevant documents. They also neglected to advise Mrs Elliot that she was obliged to insure the workshop under the terms of the lease. This was particularly unfortunate because the workshop subsequently caught fire and burned down later that year. Mr Malster then vacated the property without carrying out any repairs and Mrs Elliot lost her rental income.
Mrs Elliott then brought proceedings in professional negligence against Hattens. She brought her claim more than six years after the underlease was signed (“executed”) but less than six years after the fire that destroyed the property. The Court of Appeal had to consider when the negligence first caused actual loss because this would be the date that the clock would start running for limitation purposes. Unsurprisingly, Hattens argued that Mrs Elliott’s claim was outside of limitation and time barred. Mrs Elliott argued that limitation only started running after the fire and Mr Malster’s subsequent default.
The court held that this was a “flawed transaction” case. In other words, had it not been for the negligence, Mrs Elliot would have ended up with a more valuable underlease with Mr Malster’s parents guaranteeing his obligations to pay. It didn’t matter that Mrs Elliot did not intend to assign the underlease; it was significantly less valuable without the guarantees and that in itself constituted a loss. As a result of Hattens’ negligence Mrs Elliot had entered into a flawed (and less valuable) transaction and accordingly, the clock had started running from the date the underlease was executed. Unfortunately for Mrs Elliot that meant she was indeed out of time to bring her claim.
The rules on limitation highlight the importance of seeking legal advice as soon it becomes apparent that there may be grounds for a negligence claim.