Businesses and individuals are entitled to rely on the advice they receive from their advisors. Professionals – lawyers, accountants, valuers, engineers, investment managers and others – are paid for their specialist understanding of a specific sphere. When advice falls short, and the client suffers loss or damage, it may be possible to sue the professional for professional negligence. The award-winning commercial lawyers at Bahamas law firm ParrisWhittaker regularly represent businesses who want to make a claim for professional negligence. We also advise professionals who are defending this kind of claim.
There are obstacles to bringing a negligence claim, including strict time limits within which you need to begin your case. When mounting a negligence case it’s also essential to establish that the professional did actually owe a duty of care to the individual or business. Here we look at the nature of a professional’s duty of care. We also highlight one of the main limitations to this duty, dealt with by the Privy Council in October 2021 in a case involving a Trinidadian bank.
Establishing A Claim For Professional Negligence
Before looking at the legal elements to establish a professional negligence claim it’s worth pointing out that you may also have a related claim for breach of contract. Each type of claim will be governed by different legal principles and the outcome in terms of the legal remedies available may differ. In this article we concentrate on claims for the tort of negligence. (A tort is the legal term to describe a civil (as opposed to a criminal) wrong).
So, to establish professional negligence:
A claimant must show that the professional owed a duty of care not to cause the harm or loss that has been suffered The courts will look at the relationship that existed between the professional and the claimant (client) and the circumstances in which the advice was given: and
The claimant needs to establish that the duty of care was breached – the claimant must prove that the professional failed to conform to the standard accepted by responsible members of his or her profession; and
This breach (failure to reach the required standard of care) must have caused the loss or damage suffered. It’s perfectly possible for a professional to be negligent but not cause the loss the claimant suffered.
To succeed in an action for professional negligence you must be able to establish all three of the above elements. If one requirement is missing it’s unlikely that the claim will succeed in court.
Limiting Duty Of Care: The Purpose Of The Professional Advice
The case involved an allegedly negligent valuation of land in Trinidad and Tobago and examined to what extent a valuer owed a duty of care to the guarantor of a USD3million loan for which the land in question was security. The case is not dissimilar on the facts to the case we have discussed previously of Freemont (Denbigh) Ltd v Knight Frank LLP
Before approving the loan the bank providing the funds (Intercommercial Bank Trinidad and Tobago) asked the guarantor to carry out an up to date valuation of the land. The valuation was carried out by local Trinidadian valuer, Charles B Lawrence and Associates. For the purposes of its report the valuer assumed:
The guarantor had good title to the land
Planning permission would be granted enabling the land to be used for commercial rather than residential use
The land was available with vacant possession.
The valuer valued the land at USD15 million. The bank, relying on this valuation, furnished the loan.
Subsequently the borrower and the guarantor defaulted on the loan and made no payments under it. The bank then called in the loan and attempted to sell the land over which it held security. When it did so the highest offer it received was USD2million – substantially less than what the land had been valued at. The reason for the low offer was that it had emerged
The land could not be used commercially
The land was occupied so a purchaser wouldn’t get vacant possession
The guarantor did not in fact have a good legal title to the land – rendering worthless the security it had provided
The bank then issued professional negligence proceedings against the valuer. In these proceedings it failed. The Privy Council made clear that the purpose of the valuer’s report was to value the property on the assumption that there was good legal title to the land.
It was not the role of the valuer to advise on the title to the land. In this regard it was clear that the bank was not going use the valuer’s report as evidence of legal title. That was for the bank’s attorneys to deal with. (Incidentally the bank did sue its conveyancing attorneys for failing to investigate the title properly, and this action settled for USD2.4 million.)
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It’s clear then that taking a claim for professional negligence is not straightforward. Always consider the purpose for which professional advice has been sought or given. If you have been let down by a professional however, and you have suffered a degree of loss you should consider seeking legal advice at an early stage to establish how strong your case is. We advise businesses in all aspects of professional negligence. If you need advice please schedule a meeting with a lawyer at ParrisWhittaker today.
