Professional Negligence – What it is and how it is relevant to the Leasehold Scandal.

Definition of “Professional”

Professional Negligence occurs when a professional fails to perform their responsibilities to the standard required. This can be a claim against any calibre of professional. Simply put, a professional is an individual or body that is considered to have expertise and skill in the service that they are providing. For example, a solicitor owes their client a duty to provide services in a manner which protects the client’s interests.

Requirements for a claim in professional negligence

In order  for your professional negligence claim to be successful, there is a requirement for the following elements to be present:

–         Firstly, there needs to be a demonstration that a duty of care was owed by the professional to the client;

–         Secondly, the professional is required to have breached this duty and

–         Finally, the breach must have amounted to a loss.

A mere error or bad service would not suffice as a breach; the test requires demonstration that the professional has fallen below the standards of a reasonably competent professional in that area. The competency of a professional is not an objective test; elements of character, age or experience are not taken into account. The standard is the same for all professionals of that type, for example all doctors are held to the standard of a reasonably competent doctor, regardless of any external factors.

Financial loss resulting from the breach

In the case that the breach has resulted in financial loss, it is a requirement to prove that the loss was caused as a direct result of the negligent action. For example, where a conveyancer fails to highlight the implications of an escalating ground rent clause in a property’s lease to the client before purchase, any loss of profit, or depreciation in value of the property, suffered by that client thereafter may be deemed to be financial loss resulting from the conveyancer’s breach.  The loss should also be reasonably foreseeable as something that could occur.

Duties owed by the claimant

An additional factor to consider is that the claimant has a duty to mitigate their losses. This requires taking reasonable steps to minimise losses. Employing a conveyancer to carry out the relevant checks and aid with the purchase of a property displays precautionary measures being applied. It is the conveyancer’s duty to point out any terms within a lease that may pose a problem to the investment.

Bringing a claim in negligence

Once it is satisfied that all these elements are present and it appears that a claim in professional negligence would be worth pursuing, a procedure named the ‘Professional Negligence Pre-Action Protocol’ is to be followed. This provides the framework in which the claim should be issued, with the aim of dealing with matters quickly and cost effectively.

The procedure involves issuing a Letter of Claim to the professional setting out the legal and factual basis of the claim, the allegations and the losses. Once the letter has been received, the professional has 21 days to acknowledge receipt and three months to provide a Letter of Response, which may either admit the claim and makes an offer of settlement, or dispute the claim.

In cases of professional negligence, the defence of contributory negligence may be raised. This is where the argument is made that the claimant has caused or contributed to the losses suffered. This manner of defence can also be used where a third party has contributed to the losses. The losses claimed may then be shared rateably, in terms of responsibility across the parties.

Relevance to the Leasehold Scandal

We understand that a house purchase is likely to be the biggest investment that most people make. Unfortunately for some that have purchased leasehold properties, they have also inherited obligations to pay onerous ground rents. Some major mortgage lenders are refusing to lend against these properties, which is rendering them unsellable.

Alternatively, the property remains sellable, yet at a substantially reduced price to remain attractive to a buyer. Conveyancers are now highly aware of this issue and are making sure to inform future potential buyers about these clauses and the implications, making the properties unattractive option for buyers.

In the context of a property transaction, it is the responsibility of the solicitor instructed to point out onerous terms to the client as well as their implications. A failure to do so could amount to a breach of duty as referenced previously in this article. Ultimately, the negligence will have led to a financial loss that can be calculated on the value of the property with this clause within the lease, against the value of the property without it.

A claim in professional negligence for this lack of advice, can lead to a monetary remedy of compensation. With this, the leaseholder could buy the freehold or extend the lease enabling the possibility of re-negotiation of the lease terms.

Let us help you

If you feel that you may have a claim in professional negligence in regards to the advice you received prior to purchasing your leasehold property, do get in touch with FS Legal, we would be happy to discuss this with you.

You can contact us on 01384 889 900 during office hours 9:00am to 5:30pm. You can also find out more about us and our leasehold work at http://www.fsl.legal/or www.leaseclaims.co.uk and on via the Leasehold Facebook page https://www.facebook.com/LeaseClaims or twitter page www.twitter.com/Lease_Claims