Limitation In Solicitors’ Negligence – Narrowly Avoiding Liability
To successfully bring a claim against a solicitor you have to prove that they owed you a duty of care which was breached causing you foreseeable loss.
What is limitation period?
You also have to bring the claim within the statutory limitation period of 6 years. However, it can be tricky working on at what point this runs from because a professional negligence claim against a solicitor can be brought in tort or contract.
Generally for contract claims limitation runs from the date of breach (s5 of the Limitation Act 1980) and for the tort of negligence it runs from the date of loss (s2 of the Limitation Act 1980), which is usually a later date.
This issue of when limitation runs was reviewed in the recent case of Elliott v Hattens Solicitors (a firm) (2021) which was heard by the Court of Appeal.
Elliott v Hattens Solicitors (a firm) (2021)
Hattens were instructed by Mrs Elliott in 2011 for the grant of a lease from her husband, from which she would be granting an underlease to a Mr Malster. Her husband owned the freehold of the premises in Essex. The underlease would be guaranteed by Mr Malster’s parents.
The lease, underlease and rent deposit deed were duly executed on 24 February 2012. The lease and underlease contained standard terms for Mrs Elliott as the tenant to insure the premises and keep them in good repair.
It was accepted that in breach of their duties they:
- Failed to name Mr Malster’s parents as guarantors
- Failed to advise Mrs Elliott to obtain insurance
On 6 November 2012 there was a fire which destroyed the premises and Mr Malster vacated the property without undertaking any repairs. Although Mr Elliott (but not Mrs Elliott) had insurance, cover was declined.
Mrs Elliott issued proceedings on 10 April 2018 – this was more than 6 years after execution of the deeds but less than 6 years after the fire.
The question before the court was whether the claim was now statute barred under the Limitation Act 1980.
There is a distinction to be drawn between
- No transaction cases – but for the negligence the client would not have entered into the transaction; and
- Flawed transaction cases – but for the negligence the transaction would have been a better one
Mrs Elliott’s case fell into the latter category.
The judge at first instance decided that prior to the fire any loss was ‘purely contingent’ (Law Society v Sephton & Co (2006)) so she was in time.
The Court of Appeal allowed the appeal and agreed that Mrs Elliott had been statute barred from bringing a professional negligence claim, stating:
“Mrs Elliott suffered damage as soon as the lease and underlease were executed. She was immediately in a measurably less advantageous position than she should have been. Hattens’ negligence served to deprive her of certain of the benefits which she should have obtained from the transaction (in particular, the right to a guaranteed rental stream and a property that was insured) and so they were at once vulnerable to a tortious claim. Mrs Elliott’s loss was not purely contingent and the Judge was mistaken in attaching importance to whether she wished to assign.”
The court also concluded that, “If negligence on the part of a solicitor served to reduce the market value of an asset, the claimant cannot, in my view, defer the expiry of the limitation period by pointing out that he was not intending to sell it.”
Limitation is a very tricky area and easy to get wrong. It is unclear why Mrs Elliott left it so late to issue the claim and whether she will now be bringing a claim against her second set of solicitors for getting the time limits wrong.
A cautionary tale that limitation where possible should be calculated from the earliest possible date to avoid pitfalls like these.
Clients should seek advice at the earliest stage if they consider that their solicitors have been negligent. If you’re seeking legal advice and would like to bring a negligence claim against a solicitor please call our highly experienced dispute resolution experts on 0808 271 9413 to talk through your situation with us. Alternatively, you can request a call back.