Professional Negligence

Professional negligence is a substantive area of law and is an ever-increasing

area where our clients are seeking advice. The purpose of this article is to
briefly consider the following important issues regularly encountered:

1. Liability in both contract and tort.

2. What if any, are the advantages in suing in tort?

3. General responsibilities and duties.

4. What is the measure of the standard of service to be expected?

5. Damages.

1 Concurrent liability in both tort and contract.

All professionals owe a combination of contractual, tortious, statutory and

fiduciary duties to their clients and tortious duties to third parties.

When people talk about professional negligence it tends to be in the generic

sense, which will pick up all these different types of duties. The purpose of
this article is to consider the tortuous and contractual duties.

Is the professional person liable in both contract and tort?

In relation to whether these responsibilities are concurrent, there were plenty

of cases particularly in the medical field, which found doctors to have
concurrent responsibility to their patients for physical injury. However, in the
case of Henderson v Merrett Syndicates 1995, which was one of many cases
involving the underwriting members of Lloyds Names, suing their managing
agents concurrent liability was also extended to cover financial loss, which
obviously had significant effect on bankers, auditors and accountants etc.

In the vast majority of situations there will be sufficient proximity between the
client and professional to find a coterminous duty of care in tort. It still does
not over come or avoid the circular question as to the determination of the
scope of duty in tort, since it promotes the question ‘what does the concurrent
duty of care in tort require? Which begs the response, ‘a duty of care in doing
what?’ With the response focusing the inquiry on what was agreed to be done
under the contract. Therefore using tort to overcome deficiencies in the
contract will not work.

It is also worth noting that where there is a contract, a claim in tort will not
usually extend the duties of the professional. The authority for this comes
from Kensington and Chelsea AHA v Wettern Composites Limited 1984,

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where the defendant structural engineers contractual duties included checking
the adequacy of the drawings and fixing details but this did not extend to the
actual supervision of the installation of the fixings. Their contractual duties
were clear and a duty of care in tort did not extend these duties to include
supervision.

Tort and economic loss

In circumstances where you have no contract is it worth just suing under the
tort of negligence?

The answer will depend upon the type loss you are pursing. The phrase
economic loss comes into play, which is an expression liable to mislead, as
there is really no precise definition. Predictably it will often be dependant
upon the facts and to add to the confusion the courts have provided differing
views.

A possible definition for economic is loss is along the lines of:

“A loss, which is not actual damage, injury or damage to persons or

property. In other words you could recover the resulting damage
caused to property but not the underlying defect itself.”

This will clearly preclude a lot of construction claims, as the damage is often
inherent within the building.

Whilst it seems generally the courts do not like encouraging claims for
economic loss there are confusing signals which therefore make it difficult to
predict with any certainty whether you can claim or not.

A case, which neatly sums up the position, is Spartan Steel Alloys v Martin Co
Contractors where the electricity supply was stopped because of a damaged
cable. The claimants processing plant was half way through smelting a steel
ingot. Applying the logic of economic loss, they were entitled to recover the
loss of the ingot value in terms of profit and cost as the ingot was damaged.
However, they were not entitled to claim for loss of profits for the disruption
caused to the plant as this was not considered ‘damage’ to property.

This should not be confused with the principle from Headley Byrne v Heller
which dealt with negligent misstatements and a person who relied on them
was entitled to pursue a claim for economic loss. The courts have tended to
apply this narrowly and restricting its application to ‘special relationships’
between the parties. In practice liability is confined to the situation where
information is given to a known recipient for a specific purpose in respect of
which the defendant knows that his statement has been relied on.

The principle for permitting economic loss in tort comes from the case
between Storey v Charles Church Developments, which involved foundation
design. The court held that the principle in Hedley Byrne could apply i.e.
where one of the parties has relied on a statement given by a party outside

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the contract. This decision contradicted the early House of Lords decision of
Murphy v Brentwood District Council where the defendant was not
responsible for economic loss. Although Murphy was distinguished on the
facts since in Murphy there was no direct contract with the defendant council.
This important distinction where a contract exists may make the possibilities
of mounting a claim for economic loss may be more tenable.

A recent case illustrates these sorts of difficulties, in Baxall Securities v

Sheard Walshaw Partnership 2002 where the Appellate court looked at the
architect’s responsibility in design and the claimant’s responsibility in
discovering a patent defect. The contractor had become insolvent leaving
little alternative for the claimant to pursue the architect for negligence. The
claimant had purchased the building which was flooded because of a
deficiency in the guttering system. The court conceded that the duty of care
owed by the architect included subsequent owners to avoid causing physical
damage or injury to other property.

The court also considered that in circumstances where the claimant had
actual acknowledge of the defect or should have discovered the defect, will
usually be sufficient to break the chain of causation. Thus a defect is not
latent if it amounted to a defect in the design or workmanship, which was
discoverable with the benefit of such third party advice, or could have been
expected to take whether taken or not. i.e. by a survey of the building when it
was purchased by the claimant. As the floods had been caused by defective
overflows which should have been detected prior to purchase this broke the
chain of causation notwithstanding the architect’s negligence.

2 Any advantages in suing in tort?

The main advantages for pursing a claim in tort are compared below with
situation in contract:

Contract Tort

Limitation Under the Limitation Act 1980 There are potentially better
– the time limit for limitation periods as the cause
commencing an action is for action does not accrue
within 6 or 12 years of the until the problem became
breach of contract. The latter known about, subject only to a
period if the contract is counterclaim that it should
executed as a deed. have been reasonably
Thereafter any action will be discovered before hand. This
statute barred. provides a further 3 years
from notice to bring a claim –
subject to a longstop date of
15 years.

Remoteness Under contractual damages Whereas in comparison under

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of damage – the test to the heads of loss an action in tort the test for the
remoteness of damage, is
‘is what was within the
reasonable contemplation of ‘what was foreseeable at the
the parties at the time of time of the negligent act?’
contracting?’

The limitation advantages offered by tort are self-explanatory. The potential

advantage in regard to damages will be dependant upon the individual
circumstances, but clearly the damages recoverable under tort will take into
consideration known facts at the date of the negligent act, which could prove
advantageous to the claimant, albeit this is also a double edge sword.

It is also particularly noteworthy that a claim in tort carries significant

disadvantages in that the Professional adviser may benefit and rely on
pleading contributory negligence when sued in contract by clients on the
grounds of their client’s own carelessness.

Although there is authority from the case of Vesta v Butcher where the
Appellate court decided that whilst contributory negligence is only a defence
in tort, the claimant cannot by only suing in contract deprive the defendant of
the opportunity to rely on a defence of contributory negligence. Although this
case has generally come under some criticism and as a consequence it may
not be followed in the future.

3 General responsibilities and duties and liability issues:

The three main areas of professional duties are:

1. Contractual (Express and Implied terms)

2. In the Tort of Negligence
3. Statutory duties

Clearly in the majority of situations the duties to the client will be based upon
and derived from the express (or implied) terms of the appointment.

In bringing a claim (or defending a claim) it is like that it will be essential to

identify from the outset precisely what their role was. For example, if one of
the standard forms of appointment had been adopted they will often refer to a
schedule of one form or another containing work stages outlining the
professional advisers description of work. This should be completed and will
provide the starting point for determining the consultants role and thereby
their responsibilities.

If for example there is a problem with the building then you must have to
identify the particular service, which the professional should have performed
and which has been performed inadequately. It is imperative that you
particularise your claim and not simply to treat, say the Architect as

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guaranteeing the end product – i.e. producing a building completely free from
defects. You cannot simply list out defects or problems experienced with the
building and assert that it must be the Architects fault because of a general
failure to perform his duties by analogy of the doctrine res ipsa loquitur (i.e. as
the designer it was or should have been within their complete control).

The fact remains that it is incumbent on the claimant to fully particularise their
claim properly identifying specific areas the consultant has failed or was
wanton in their care.

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4 What is the measure of the standard of service to be expected?

As stated the contract will often determine the professional adviser’s

responsibilities and liabilities.

Obviously every professional owes a duty of care to his or her clients. In tort
this duty of care has evolved and been developed through the common law
system whereas contract whilst similar, the duty will be primarily governed by
the interpretation of the contract terms.

The ground rules for the basic duty of care have been formulated over years
and were set out in 1957, by McNair as:

‘Where you get a situation which involves the use of some special skill
or competence, then the test as to whether there has been negligence
or not is not the test of the man on top of the Clapham omnibus,
because he has not got this special skill. The test is the standard of
the ordinary skilled man exercising and professing to have that special
skill …..he is not guilty of negligence if he has acted in accordance with
a practice accepted as proper by a responsible body of … men skilled
in that particular art.’

It can be said that this created a role for the expert witness in negligent cases.

This measure of care has been developed and an example of an Architects

standard of care could be taken from the 1963 Australian case of Voli v
Inglewood Shire Council, which approved:

‘An architect undertaking any work in the way of his profession accepts
the ordinary liabilities of any man who follows a skilled calling. He is
bound to exercise due care, skill and diligence. He is not required to
have an extraordinary degree of skill and diligence. But he must bring
to the task that he undertakes the competence and skill that is usual
among architects practising their profession. And he must use due
care. If he fails in these matters and the person who employed him
suffers damage, he is liable to that person. This liability can be said to
arise either from a breach of contract or in tort.’

This introduces a mechanism of determining liability from a failure of a

professional to exercise the appropriate level of skill whether in contract or
tort. What may be required to fulfil the standard will obviously vary according
to the facts and circumstances but the starting point will be to consider the
contract.

A later English case in 1988 of Eckersley v Binnie and Partners ratifies that
the professional advisers needs to keep themselves reasonably up date on
the professions developments and determined the standard as:

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 ‘a professional man should command the corpus of knowledge of the
ordinary member of his profession. He should not lag behind… in
knowledge of new advances, discoveries and developments in his field.
The standard is that of the reasonable average. The law does not
require of a professional man that he be a paragon combing the
qualities of polymath and prophet’

Comparatively recent developments in 2001 found the Court of Appeal

deciding a case of JD Williams v Michael Hyde Associates were they stated
that the ‘Bolam Test’ for professional negligence was not necessarily of
universal application and in some instances the Judge may decide on what
the appropriate standard of care was, rather than defer to the standard of care
set by a responsible body of opinion within the profession.

Summary of the duty of care:

• The original essence was expressed in Bolam, and whilst still good law
today dependant upon the circumstances the courts may have
jurisdiction over what was the duty of care.1

• Under concurrent duty in contract and tort, the duty of care under tort
will not usually extend the contractual duties.2

• What is required to fulfil the standard will vary according to the facts
and circumstances and the starting point will be to consider the
contract. But the test introduces a mechanism of determining liability
from a failure of a professional to exercise the appropriate level of skill
whether in contract or tort.3

• Although evidence will normally be put before a court of general

practice it is not necessarily decisive of what is required to discharge
the standard of reasonable care.

• The standard is reasonable skill and care not perfection not every error
will therefore be negligence.

• Once established that an architect owes a duty either under contract or

tort to provide a service, it is irrelevant what special skills the client may
have in the same area as the architect’s responsibility to exercise
reasonable skill and care is undiminished.4

• The relevant standard is that of a competent practitioner at the time

when the services were performed.5

1
JD Williams v Hyde BLR 2001
2
Kensington and Chelsea AHA v Wettern Composites Limited
3
Voli v Inglewood Shire Council 1963
4
Investors in Industry Commercial Properties v South Bedfordshire D.C.; Ellison and Partners
and Hamilton Associates (1986) 1 All ER
5
Nye Saunders v A E Bristow 1987

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5 Damages

Following the decision in Banque Bruxselles v Eagle Star Insurance it is

necessary to consider the type of loss, which is recoverable before
considering the actual measure of loss.

Irrespective of a claim made in tort of contract the measure of loss is to put

the claimant so far as money can do in the same position he would have
occupied if the construction professional had properly discharged his duty.

Broadly this can happen in one of two possible ways

1. By paying the claimant the monetary equivalent of any benefits of

which he has been deprived; or

2. By indemnifying the claimant against any expenses or liability,

which he has incurred.

In circumstances the claimant has suffered non-pecuniary loss, for example

physical injury or inconvenience, subject to the rule on remoteness the
claimant will be entitled to general damages.

The following are examples of the heads of loss which could fall under item 1

Rectification costs

Usually the main head of loss if a building suffers damage as a result of

negligence. In considering this the court would usually have in mind that the
costs of putting right the damage are proportionate to the benefit as per the
matter of Ruxley Electronics v Forsyth.

Equally full rectification costs may not be recoverable if it can be

demonstrated by the consultant that even with proper and competent
supervision the building contractor would still have failed to properly carried
out the works

Moreover if the ‘proper’ design improves the negligent design and this results
in an increase in the initial costs to the client, he will have to give a credit or
recognise the increased benefit, as was illustrated in the decision in MOD v
Scott Wilson Kirkpatrick. This case involved the fixing of a roof with the
incorrect length of nails. The roof blew off and the redesign involved a much
more expensive system and court held that the MOD were not entitled to
claim for the new more expensive method of fixing as they should have paid
for it any way.

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Where the claimant rebuilds the works or part of the works at a higher
standard than the original design there is always potential for considerable
argument regarding ‘betterment’.

The only circumstances when the claimant can ask the consultant to pay for
the increased costs for benefit was summarised by J. Newey in Richard
Roberts v Douglas Smith Stimson as:

‘If the only practicable method of overcoming the consequences of a

defendants breach of contract is to build to a higher standard then the
contract had required, the plaintiff may recover the costs of building to that
higher standard. If, however, a plaintiff needing to carryout works because
of a defendant’s breach of contract, chooses to build to a higher standard
than strictly necessary, the courts will, unless the new works are so
different as to break the chain of causation award him the cost of the
works less a credit to the defendant in respect of betterment.’

The following could fall under item 2

An example here is where an architect is negligent and exposes the client to a

third party. For example if an architect failed to take or make a proper site
examination and survey which then resulted in the building encroaching a
third party’s land. In these circumstances the architect would be responsible
for indemnifying the client for the cost of his trespass.

Similarly, if a third party is injured because of the architect’s negligence, he

would be required to indemnify the employer accordingly.

Author: Graham Read

Date: April 2004
Email: graham.read@alway-associates.co.uk
Web: www.alway-associates.co.uk