Professionals’ duty of care considered further

the statue of justice lady justice or iustitia, justitia the roman goddess of justice.

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In a reaffirmation of the landmark Manchester Building Society case (See Brunel News, August 2021), a recent Court of Appeal ruling has seen a law firm, which responded to queries from a former client, not assuming a duty of care to provide more extensive legal advice. This decision further clarifies the professional’s duty of care to their clients in the performance of their services.

Law firm Withers was appointed by Spire Property Development and Hortensia Property Development in relation to the purchase of two ‘super-prime’ grade II listed properties in London for nearly £42 million; the purchase completed and Withers ended their services.

However, the developers discovered three high voltage electricity cables running under the site. The development company subsequently brought an action against Withers for failing to make sufficient searches to identify there were cables running under the property and secondly for failing to advise them on the legal remedies they might have, after the discovery of the cables – amounting to negligent services which had cause them losses on the development.

Following an initial decision by the Court, Withers appealed the second allegation, arguing they had not been negligent in failing to advise on their client’s legal remedies.

The case focused on email exchanges between the parties after the completion of the transaction which asked three specific questions.  No formal retainer existed between the parties by that time.

Spire argued that it had asked Withers for advice on its legal remedies against the owner of the cables in its email by implication; as Withers then provided no further information on remedies, Spire believed it had none and reduced the scope of its development of the properties.

The Court of Appeal was asked to deliberate on whether Withers’ duty of care to Spire extended to the implied questions.  The Court concluded that Withers’ responsibility was limited to answering the three specific questions asked and that it had not assumed a wider responsibility to advise on Spire’s rights and remedies.  The court noted that the ruling was fact-specific and that the developers were sophisticated, well-resourced clients.

Harry Bush, Senior Risk Executive at Brunel Professions notes:

“This decision would be welcomed by the professional services community as another strengthening of the rules surrounding the set standards of a professionals’ “duty of care.” Whilst it has always been clear as to how well a service should be carried out so as to not be negligent (the standard of reasonable skill and care), it has not been as clear the degree to which a professional’s duty of care will extend and how far they should go in order to ensure that they aren’t negligent.

The ruling in this case (as well as the ruling in Manchester Building Society) provides clarity in this regard, ensuring that there is a hard stop on the services that a consultant or professional is required to carry out as well creating safety and reassurance for professionals carrying out services in tumultuous or litigious markets such as the construction sector.”

Reports about the case have been published by Law Society Gazette, Hailsham Chambers, 4 New Square and RPC.

ProfessionalIndemnity.com is owned by Brunel Professions, which is a leading professional indemnity insurance broker in the UK.  Click here to get a quote or call 0345 450 1074 to speak to a broker.

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