Ireland: The Professional Negligence Law Review First Edition

Last Updated: 17 August 2018
Article by April McClements and Rebecca Ryan

I INTRODUCTION

I Legal framework

General grounds for professional liability and their legal bases

The main grounds for a claim concerning professional liability are breach of contract, negligence and breach of fiduciary duty. As a general rule, where there are claims for tort and breach of contract available, liability should be determined by reference to contract rather than by reference to tort.1

Negligence

The primary line of authority for professional negligence claims stems from the UK decision of Bolam v. Friern Hospital Management Committee2 as approved in Ireland by Ward v. McMaster.3 The standard of care applicable in professional negligence cases is by reference to the 'ordinary skilled man exercising and professing to have that special skill'.

Contract

There is an implied term that a professional will exercise reasonable care and skill in providing services to their client. The scope of the services to be rendered will usually be defined in the contract and disputes frequently arise where there has been an element of 'mission creep'.

Fiduciary duty

Some professions also owe fiduciary duties to their clients, such as a duty of confidentiality. These may arise where the relationship is one of trust and loyalty. A plaintiff can claim equitable remedies in the event of a breach of fiduciary duty.

Limitations on the extent of the professional's liability

Professionals may limit their liability with regard to the contractual obligations owed to their clients. This can be done, for example, by way of exclusion clauses, clauses limiting the scope of the duty, or indemnity clauses.

COMMON DEFENCES TO LIABILITY CLAIM

Defences

A defendant may defend a professional negligence claim by establishing that one of the required elements of negligence was not present. The defendant can argue that the service provided was of a reasonable standard, or that the defendant's actions did not cause the damage complained of. The defendant may also argue that the particular duty of care owed did not extend to cover the damage complained of, as it was outside the terms of the retainer. A professional has a duty to protect the client's interests and carry out instructions in the matter to which the retainer relates; however, this duty does not extend to advising on unrelated matters. While this principle can limit the scope of the obligations arising in contract, it does not prevent a duty from arising in tort. It should be noted that compliance with an accepted practice will not always provide a full defence, and the fact that a practice is universal within a profession will not of itself protect the professional concerned from liability (Roche v. Peilow,4 ACC Bank Plc v. Johnston,5 Kelleher v. O'Connor).6

Partial defences that reduce the level of costs awarded Section 34 of the Civil Liability Act 1961 provides for apportionment in cases of contributory negligence. The court can reduce damages owed to a plaintiff as 'the Court thinks just and equitable, having regard to the degrees of fault of the plaintiff and the defendant'7 Further, claimants must mitigate their losses, which is a question of fact as opposed to one of law. Finally, while not strictly a defence, a professional may also be in a position to seek a contribution or indemnity from another party or a 'concurrent wrongdoer', pursuant to the Civil Liability Act 1961. Two or more persons will be concurrent wrongdoers where they are liable to the same party in respect of the same damage. This commonly arises in cases involving construction professionals.

I ILIMITATION AND PRESCRIPTION

Time limits

The Statute of Limitations 1957 (as amended) prescribes the time limits applicable to professional negligence claims. These time limits run from the date the cause of action accrued except in cases of concealment, fraud or mistake, where the limitation periods may be extended. A plaintiff who has a cause of action in both contract and tort is entitled to pursue whichever claim provides the most advantageous limitation period.8

Contract

Generally, there is a six-year time limit to institute proceedings based in contract, from the date on which the cause of action accrued, unless otherwise provided in the contract. A 12-year limitation period operates for contracts executed as a deed.

Tort

A six-year time limit applies to bring an action in tort, from the date on which the cause of action accrued.

In certain cases of financial loss, where the cause of action is in tort, the Supreme Court has held9 that the cause of action does not accrue when the wrong is committed but when actual damage is suffered.

III DISPUTE FORA AND RESOLUTION

Courts or tribunals in which professional liability claims are in general brought

The jurisdiction in which court proceedings are brought will depend on the monetary value of the claim. The District Court has jurisdiction over claims up to €15,000 and the Circuit Court deals with claims with a value of up to €75,000 (or €60,000 for personal injury claims). Claims with a value in excess of this limit are heard by the High Court, which has an unlimited monetary jurisdiction. Each court has its own set of procedural rules. High-value professional liability claims may also potentially be heard by the Commercial Court, a fast-track division of the High Court established to deal exclusively with disputes of a commercial nature valued in excess of €1 million. Cases in the Commercial Court are case-managed and tend to progress at a much quicker pace than other High Court cases.

Alternative dispute resolution

Professional liability disputes may also be dealt with by way of alternative dispute resolution (ADR) and it is common for contracts to require disputes to be determined by ADR. Mediation and arbitration are the most common forms of ADR used in Ireland; however, conciliation and adjudication are common in construction disputes. Conciliation is similar to mediation, except that the parties can opt for the conciliator to issue a binding recommendation. Other forms of ADR, such as expert determination and early neutral evaluation, are also available but less commonly used.

In addition, following the Mediation Act 2017, any court may adjourn legal proceedings on application by either party or of its own initiative to allow the parties to engage in mediation. Failure by either party to engage in ADR following such a direction can result in that party being penalised in relation to costs. Further, solicitors must now advise their clients of the option of mediation prior to issuing proceedings.

In Ireland, the law on arbitration is codified in the Arbitration Act 2010, which incorporates the UNCITRAL Model Law on International Commercial Arbitration. The arbitrator's decision is binding on the parties and there is no means of appeal. Where parties have entered into a valid arbitration agreement, the courts are obliged to stay proceedings. Ireland is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, allowing Irish arbitral awards to be enforced in any of the 157 countries party to the Convention.

The Construction Contracts Act 2013 provides for adjudication in construction disputes regarding payment. The Act applies to all construction contracts entered into after 25 July 2016. Adjudication has the benefit of providing a decision within 28 days of

 the referral to adjudication (or 42 days if the referring party agrees to this extension). The decision will bind the parties until the dispute is finally settled, such as by arbitral award or a decision of the court.

IV REMEDIES AND LOSS

Types ofremedies

There is a range of remedies available in professional negligence claims, including orders for specific performance, rescission and declarations, as well as interim remedies such as injunctions. Damages, however, are the primary remedy sought.

The method of assessing loss and damage

Calculating loss

Generally, damages for a contractual claim should place the plaintiff in the same situation, in monetary terms, as if the contract had been performed. The courts have developed various means of assessing damage in professional negligence claims. The expectation approach involves assessing the actual financial position of the plaintiff against the position the plaintiff expected to be in as a result of the advice given or the service received. The decision of the House of Lords in Banque Bruxelles SA v. Eagle Star (SAAMCo)10 has been applied in Irish cases, particularly concerning solicitors' negligence. In that case, the House of Lords held that where a person is under a duty to take reasonable care to provide information on which someone else would decide on a course of action, that person is, if negligent, responsible not for all the consequences of the course of action decided on but only for the foreseeable consequences of the information being wrong. Further, the 'no-transaction' approach to damages has been adopted in a number of cases to compare the actual financial state of the plaintiff with the position it would have been in had it not been provided with the allegedly negligent advice or service.11

II SPECIFIC PROFESSIONS

I Lawyers

Barristers and solicitors are regulated by separate professional bodies. However, the Legal Services Regulation Act 2015 establishes a new Legal Services Regulatory Authority (LSRA), which (once the Act is fully commenced) will regulate the provision of legal services by all legal practitioners. The only sections of the Act that are currently commenced relate to the establishment of the LSRA and public consultations, and consequently solicitors and barristers continue to be regulated separately pending commencement of the relevant provisions.

Solicitors

Professional bodies and key regulatory and disciplinary codes and bodies

Solicitors are currently regulated by the Law Society of Ireland pursuant to the Solicitors Acts 1954 to 2015. The Law Society investigates complaints, including allegations of excessive fees, misconduct or inadequate professional services. The Complaints and Client Relations Committee can uphold or reject a complaint, or direct the solicitor to take certain steps, including paying compensation of up to €3,000. The Committee may also refer the solicitor to the Solicitors Disciplinary Tribunal, an independent statutory tribunal that considers complaints of misconduct. A client may also go directly to the Tribunal. The Tribunal may direct restitution of up to €15,000 and may refer its finding to the president of the High Court, who will determine the sanction to be imposed on the solicitor.

Compulsory insurance scheme:

Solicitors must maintain a minimum level of professional indemnity cover of €1,500,000 for every claim, excluding defence costs, as prescribed by the Solicitors Acts 1954 to 2015 (Professional Indemnity Insurance) Regulations 2017. The Regulations also set out additional minimum terms and conditions required in a solicitor's professional indemnity policy. Cover may only be provided by 'participating insurers' with a minimum financial strength rating of BBB.

Barristers

Professional bodies and key regulatory and disciplinary codes and bodies

Barristers are regulated by the Bar Council of Ireland. The Barristers' Professional Conduct Tribunal hears complaints of misconduct but does not consider claims regarding professional negligence, which are dealt with by the courts. The Tribunal can uphold or reject a complaint and can suspend or disbar a barrister, require return of the client's fee and impose a fine or a caution. It cannot award compensation. Decisions can be appealed to the Barristers' Professional Conduct Appeals Board.

Compulsory insurance scheme

The Bar Council Code of Conduct requires barristers to have professional indemnity insurance, currently set at €1,500,000 (any one claim).

III Medical practitioners

Professional bodies and key regulatory and disciplinary codes and bodies

Irish Medical Council

Doctors are regulated by the Irish Medical Council (IMC), which maintains a register of practitioners, sets standards for professional competence and investigates complaints. The Preliminary Proceedings Committee (PPC) considers all complaints. If there is a prima facie case, the PPC must refer the complaint to the Fitness to Practise Committee (FPC) for a Fitness to Practise Inquiry. If the complaint does not warrant further action, the PPC may refer the dispute for mediation or refer the doctor to performance assessment. At the conclusion of an inquiry the FPC may recommend: a written censure, a fine not exceeding €5,000, attaching conditions to registration, suspending or cancelling registration, or prohibiting the doctor from applying to have his or her registration restored for a certain period.

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Footnotes

1 Pat O'Donnell & Co. Ltd v. Truck & Machinery Sales Ltd (1 April 1988).

2 [2000] Lloyd's Rep PN 823.

3 [1989] ILRM 400.

4 [1985] IR 232.

5 [2010] 4 IR 605.

6 [2010] IEHC 313.

7 Carroll v. Clare County Council [1975] IR 221.

8 Finlay v. Murtagh [1979] IR 249.

9 Gallagher v. ACC Bank [2012] IESC 35.

10 [1997] AC 191.

11 For example Kelleher v. O'Connor [2010] 4 IR 380, ACC v. Johnston [2011] IEHC 376.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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