Professional Negligence and Liability
Chapter 3
LIMITATION
I. INTRODUCTORY
3.1 This chapter is intended to provide an overview of the application of the principles of statutory limitation to professional negligence actions.1 It does not attempt to deal with every point or every case on the topic (though it does try to consider all the important cases), but it will try to relate the cases from different professions to each other in an effort to highlight common principles and areas of doubt, difficulty and development. The chapter does not deal with those aspects of limitation law which are primarily relevant to personal injuries actions, i.e. sections 11, 14 and 33 of the Limitation Act 1980. These matters are considered in Chapter 14 on Clinical Practitioners.II. THE BASIS OF PROFESSIONAL NEGLIGENCE ACTIONS—CONTRACT, TORT OR FIDUCIARY DUTY?
3.2 Absent fraud, concealment or mistake, periods of limitation run from the date of the earliest accrual of the cause of action.2 The general rule is that parts of a day are not included when identifying the date from which the limitation period runs.3 In the context of actions founded on an allegation of professional negligence, there are two potential forms of legal relationship between the claimant and the defendant professional: contractual and tortious. The first half of this chapter (to ) therefore considers the accrual of the cause of action where the defendant is alleged to have breached his contractual and/or tortious duties to the claimant. 3.2.1 Running alongside the duties owed by the defendant to the claimant in contract or tort is the possibility of equitable duties. The Limitation Act 1980 does not apply directly to actions for breach of an equitable duty, although two recent decisions of the Court of Appeal have simplified the application of the principles of limitation of actions to equitable claims. The accrual of causes of action in equitable claims is considered at the end of the first half of the chapter, at et seq.1. Contract
3.3 In the first instance it is clear that in many such actions claimants will be in a contractual relationship with the defendant (see , below). This would apply to the client suing a professional adviser retained by him. In other cases, however, there will be no contractual relationship. This may happen in subcontract situations, such as are commonly found in construction cases. Another important range of cases where it will happen is those where the law does not recognise a client relationship, such as actions by patients against the National Health Service. Less commonly, it may happen in those cases where third parties (such as disappointed beneficiaries under a will) are able to sue professional advisers. In all these cases the most obvious possible action will be in tort. Although there are theoretical differences between contract and tort from the point of view of both remoteness of damage and quantum of damages, it appears that in professional negligence cases these differences are rarely, if ever, material. Claimants usually need to sue in tort only where there is no contract or where the contract action is time-barred. More recently, there have been some attempts to base actions on breach of fiduciary duty.4 Although the reasons for doing this may not be connected primarily with limitation questions, the trend has focused attention on the provisions of section 21 of the Limitation Act 1980, which deals with trusts (as to which, see , below).2. Concurrent rights
3.4 The leading modern authority on the question of concurrent rights of action is Henderson v. Merrett Syndicates Ltd,5 where Lord Goff reviewed the authorities in various jurisdictions and the issues at some length. He approved the approach of Oliver J in Midland Bank v. Hett, Stubbs & Kemp (A Firm),6 which was the first relatively modern case to analyse the case law closely and to conclude that concurrent duties ought to be recognised. The conclusion reached by the House of Lords was that an assumption of responsibility by a professional rendering services, coupled with reliance on that assumption by the client, would normally give rise to a tortious duty of care. Where there is also a contract, the tortious duty will remain unless validly excluded by the contract.7III. THE ACCRUAL OF THE CAUSE OF ACTION
1. Contract
3.5 The basic rule in contract is that the right of action8 accrues as soon as there is a breach of contract. The rule dates back to Gibbs v. Guild.9 It is immaterial that at that time only nominal damage may have been suffered by the claimant, or that any damage suffered (whether nominal or not) may not be immediately apparent to the claimant. 3.6 The Latent Damage Act 1986 does not apply to actions founded on contract,10 so there is no general provision for delaying the running of time until the existence of the cause of action becomes reasonably discoverable, though of course the running of time may be postponed in cases of fraud, concealment or mistake under section 32 of the Limitation Act 1980.11 The rule is potentially a considerable inconvenience for claimants, since it commonly happens that the breach of contract itself occasions relatively little immediate or immediately apparent damage: in the same way as in tort the damage may follow some time after the breach of duty, so in contract there may be an interval between the breach and the damage. This is of course especially so in professional negligence cases, since such things as physical defects in a building or the adverse economic consequences of defective legal advice are by their nature prone to remain hidden for lengthy but unpredictable periods of time. Where those periods exceed the appropriate limitation period it will be impossible to recover in full the damage suffered. 3.7 At the present day from the point of view of limitation the principal difficulty which arises in contractual cases is to determine the date of breach. This may be because of uncertainty as to the earliest date at which there has been a breach, or because of difficulties about establishing the latest date at which time could start to run in contract, as in the case of continuing breaches.(a) Earliest date
3.8 The earliest date of accrual marks the earliest date at which an action can properly be brought, and the period of limitation will ordinarily run from that earliest date.12 It is accordingly important to ascertain the time on or by which the parties agreed, or may be taken to have agreed, that the obligation in issue was to be performed. In determining that time, it is equally important to distinguish between non-continuing and continuing obligations.13 Finally, care must be taken to distinguish between this exercise (determination of the earliest date of accrual), which is entirely objective, and the more subjective exercise which is the determination of the date on which the claimant first became aware (or should have become aware) of the defendant’s breach of contract.14(b) Non-continuing obligations
3.9 Where the obligation in question is one which must be performed on a single date or not at all, the position is straightforward. The breach must happen on that date, and time must therefore run from that date. Simple cases of this kind give rise to little difficulty from the limitation point of view, though they are no doubt very numerous. It is thus not surprising that the reported cases have tended to be those where the giving of advice is often extended over a period of time, and where even after the advice has been acted upon, there may still be a period of time during which any errors can be corrected. In some cases there may be successive breaches of the same duty, for example, in relation to the giving of advice, which will give rise to a separate cause of action at the date of each breach and therefore a separate limitation period in respect of each breach.15 This situation is to be contrasted with the case where there is only one breach but the damage is progressive in which case the limitation period will as stated above run from the earliest date of the damage.(c) Latest date—continuing obligations
3.10 Where the defendant omits to do something that he was contractually obliged to do, there may be difficulty in determining when the cause of action arises if it is unclear what was the latest time at which the obligation could properly have been performed. The problem is illustrated by the decision of Oliver J in Midland Bank Trust Co v. Hett, Stubbs & Kemp.16 This was an action against a firm of solicitors in which the breach of duty consisted of the failure to register an option to purchase land as an estate contract. It was argued that the duty must have been to register the option within a reasonable time, and that this reasonable time had elapsed more than six years before the action was brought. Oliver J held that it was a matter of “total indifference” to the client when the contract was performed by registering the option, so long as it was effectively done. The key point was that:“No doubt a normally careful practitioner would fulfill that obligation as soon as is reasonably practicable. In an appropriate case he might give a priority notice. But if he fails to do so and an effective registration can still be and is effected, his client can have no complaint except the purely technical one that he has been a bit careless and might have done it sooner. He has, no doubt, exhibited a failure to show the normal competence and care for his client’s affairs by carelessly allowing a period to elapse during which a third party might have, but has not in fact, acquired an interest. But such a failure cannot, I should have thought, affect, much less discharge, the primary obligation to effect registration timeously, which continues until it is performed or becomes impossible of performance or until the client elects to treat the continued non-performance as a repudiation of the contract.”17