1

PROFESSIONAL LIABILITY LITIGATION -

RECENT DEVELOPMENTS Liability of Professionals Contract and Tort

1. A barrister involved in professional liability litigation, absent being a party to the

proceedings will be retained to advise and represent a Plaintiff, Defendant or

Third Party. The assumption is invariably if unconsciously made that

professional liability litigation is solely concerned with the professional’s liability

in negligence. While this may have been a justified assumption to make in the

past, it is increasingly the case that it is necessary to consider whether the case

in which the barrister has been instructed involves a contractual relationship

between the parties.

2. The existence of a contractual relationship normally not only impacts on the

scope of the professional's retainer but also on the extent of the duty of care

owed, whether an actionable breach of that duty has occurred as well as the

extent of any resulting liability where a breach is established. It is also relevant

to when a cause of action accrues as the date of the breach rather the date of

loss or damage is the date from which time begins to run for Statute of

Limitations purposes.

3. Noting that a wrong committed by a professional may give rise to concurrent

causes of action in negligence and breach of contract, the fact that some or all of

the parties have a contractual nexus, may be and often is an important factor

which is relevant to the merits or a defence of a claim made against a

professional.

4. Equally, while the absence of a contractual relationship precludes the possibility

of a claim for damages for breach of contract, it does not prevent a party from

pursuing a claim for damages for negligence and/or negligent misstatement

causing loss.

2

5. The absence of a contractual nexus with the professional means that liability can

only be imposed on the professional if the party pursuing the claim can establish

that the professional owed a duty of care which was breached and which caused

loss and damage. It is in this quite typical circumstance that a solicitor and/or

barrister will be asked to advise as to whether the factual matrix between the

parties is such in law as to create a duty of care breach of which causing loss

normally entitles the party making the claim to an award of damages.

Significance of the existence of a contactual nexus with the professional

6. In acknowledging the entitlement to pursue a concurrent cause of action in

negligence and breach of contract against a professional, it is interesting to note

a perceptible leaning, if not, tendency of courts to determine professional liability

claims on the basis of contract rather than exclusively on the basis of the tort of

negligence. In effect there is evidence that the courts tend to treat the contract

where it exists as the defining feature of the professional relationship and to all

intents and purposes as subsuming the claim in negligence.

7. In noting this development, it is also important to state that the courts have not in

any sense adopted a uniform and consistent approach.

8. In the leading text Professional Liability (Seventh Edition, 2012) Jackson &

Powell at paragraph 1-004 in promoting this approach have stated:

“A final Plea for the Importance of Contract

For too long the assertion of failure to exercise reasonable care has been

a portmanteau term which has aided the less than rigorous practitioner or

judge to avoid articulation of more precise reasons for his contention or

conclusions. A proper evaluation of risks transferred and retained

requires greater scrutiny of the particular task undertaken for the

particular clients and of the precise contractual obligations undertaken.

The tortious focus in not causing harm linked to the Atkin concept of care

is too blunt. It has dominated too long the analysis of professional liability

3

cases. Also their description as professional negligence cases as

opposed to professional liability cases encourages false parallax and

sometimes blind spots as to other bases of liability. Other than in the

medical context, contract provides the basis for most professional

relationships. Contract principles rather than tort principles should

provide the prime basis for analysis in such cases, supplemented in a

regularity context by regulatory principles and rules. A rigorous

contractual analysis should also lead to better determination of the scope

of the contract and the services agreed to be provided and to the

articulation of more precise, express and implied duties than the too

general duty to exercise reasonable care and skill”.

The courts in this jurisdiction in a number of cases have emphasised that the

issue of liability should be determined by reference to the contract between the

parties rather than by reference to the tort of negligence.

9. In Finlay v Murtagh [1979] IR 249 the Supreme Court in recognising the

existence of concurrent causes of action in contract and in tort against a

professional stated per Henchy J. as follows:

“The coincidence that the [solicitor]’s conduct amounts to a breach of

contract cannot effect either the duty of care or the common law liability

for its breach, for it is the general relationship, and not any particular

manifestation of such as contract, that gives rise to the tortious liability in

such a case.”

10. In the later case of Kennedy v Allied Irish Banks Ltd [1998] 2IR48 at 56,

Hamilton C. J. accepted as a correct statement of Irish Law the passage in

Henderson v Merrett Syndicates Ltd [1995] 2 AC145 at 193 – 194 by Lord

Goff when he stated:

“The common law is not antipathetic to concurrent liability, and that there

is no sound basis for a rule which automatically restricts the Claimant to

either a tortious or contractual remedy. The result may be untidy; but

4

given that the tortious duty is imposed by the general law and the

contractual duty is attributable to the will of the parties, I do not find it

objectionable that the Claimant may be entitled to take advantage of the

remedy which is most advantageous to him, subject only to ascertaining

whether the tortious duty is so in consistent with the applicable contract

that, in accordance with ordinary principle the parties must be taken to

have agreed that the tortious remedy is to be limited or excluded.”

11. Later cases which followed including the decision of the Supreme Court in Pat

O’Donnell & Co. Ltd v Truck & Machinery Sales Ltd (1 April 1988), endorsed

this approach with O’Flaherty J. stating:

“[T]he general duty of care in tort cannot be manipulated so as to override

the contractual allocation of responsibility between the parties. Thus if,

for instance, a contract provides – whether expressly or by necessary

implication – that the Defendant is not liable for a particular risk, then the

law tort should not be allowed to contradict it.”

12. In Gallagher v ACC [2012] IESC 35 in which the Supreme Court again

recognised the existence of concurrent causes of action in negligence and for

breach of contract, O’Donnell J. (who was in the minority on this point) stated as

follows:

“The same facts are repackaged as a claim in contract, negligence and

negligent misstatement. The pleadings do not distinguish between those

claims. Instead the same acts are pleaded as “particulars of wrongdoing”

and no distinction is made between the legal nature of the wrong alleged.

It is also fair to say, I think, that the cause of action in contract is in truth

the central and primary claim here. Indeed, there was a time not so long

ago and certainly at the time the relevant provisions of the Statute of

Limitations Act, 1957 were enacted, when the contractual claim would

have been regarded as the only possible cause of action arising on the

facts here. Even today, it is the contract which creates the relationship

giving rise to the obligation in Hedley Byrne & Co. Ltd v Heller &

5

Partners Ltd [1965] AC465 to take care in the provision of advice, and

the terms of contract could control, limit or negative any such duties.

Once again, if there is a separate duty of care in negligence alone, then it

is the contract which creates the proximity between the parties which give

rise to the duty of care.”

13. In Murphy v Joe O’Toole & Sons Limited and Bank of Scotland (Ireland) Ltd

[2014] IEHC 486 Baker J. in adopting the approach of O’Donnell J. stated as

follows:

“I am persuaded by the statement of O’Donnell J. that I should not

engage upon the artificial exercise of distinguishing between or

decoupling the claims in contract and tort. The central and primary claim

in this case is a claim for breach of the agreement for sale of a machine,

a claim made in contract and under the relevant provision of the Sale of

Goods of Act, 1893 and 1980.”

14. While the above authorities indicate that the courts determination of liability in

any case will be informed by the terms of the contract on foot of which the

professional is retained, the court will not be slow to find a duty of care is owed

by the professional beyond the terms of the contract if the circumstances in

which the professional is retained justifies the imposition of a duty of care which

is not otherwise excluded by the contract. The cases in which a duty of care

extending beyond the terms of the contract on foot of which the professional is

retained are considered below.

15. As professionals are invariably retained on foot of a contract and as the contract

is the means by which risk is allocated between the client and the professional, it

is important to highlight that it is not an option for a solicitor in this jurisdiction to

exclude or limit liability. Section 7 of the Solicitors (Ireland) Act 1870 contains a

statutory prohibition from doing so:

“A provision in any …. agreement that the attorney or solicitor shall not be

liable for negligence, or that he shall be relieved from any responsibility to

6

which he would otherwise be subject as such attorney or solicitor, shall be

wholly void”.

16. The prohibition contained in section 7 of the 1870 Act does not otherwise

preclude a solicitor from contesting liability on the basis that the scope of his/her

retainer by reference to the terms of the contract which will normally define the

extent of the duty owed by a solicitor to a client absolves the solicitor from

liability.

17. It is also of interest to note that excluding or limiting liability in medical

malpractice suits while theoretically possible, there being no statutory prohibition

to their use and their application being subject only to the terms being fair and

reasonable, the patient being in law a consumer of a service (i.e. sections 39

and 40 of the Sale of Goods and Supply of Services Act 1980) do not feature at

all in defences upon which medical professionals seek to contest liability. As

noted by Healy in his text, Medical Malpractice Law (2009) exemption clauses

or clauses limiting liability have not been utilized in the healthcare context as

they are viewed as inimical and incongruent with the plight of a patient who, as a

matter of necessity, has to avail of a healthcare service which automatically

precludes such a clause being fair and reasonable1.

18. The above considerations and the recent cases referred to above serve as a

reminder that assumptions should not be made and that the most careful enquiry

should be undertaken from the moment instructions are received, as the duty of

care and skill resting on professionals requires no less. In this regard, it is

instructive to recall the dicta of Tindal C.J. in Lanphier v Phipos (1839) 8 C.&.P

475, 173 E.R.581 when he stated:

“Every person who enters into a learned profession undertakes to bring to

the exercise of it a reasonable degree of care and skill. He does not

undertake, if he is an Attorney, that at all events you will gain your case,

nor does a surgeon undertake that he will perform a cure; nor does he

undertake to use the highest possible degree of skill.”

1 Medical Malpractice Law (2009) Chapter 2, pp 123-124

7

Who is the Professional’s Neighbour?

19. As noted, where a professional is retained under contract, there is normally no

difficulty in establishing the requirements of “foreseeability” and “proximity” which

are necessary constituents of the “neighbour principle”. However, where no

contractual nexus exists, the court faced with a claim for damages in negligence

is required to determine whether the factual matrix in which the professional

advised and acted, is such as to create a duty of care, breach of which causing

loss entitles the party to recover damages.

20. The original formulation of the “neighbour principle” by Atkin L. J. in Donoghue

v Stevenson [1932] A.C. 562 essentially focused on the requirements of

“foreseeability” and “proximity”.

21. Because the “neighbour principle” gained widespread application as a basis for

imposing legal liability, not only in the areas of the personal injuries and property

damages claims, but in civil actions generally, the courts have sought to

introduce more general considerations beyond the requirements of

“foreseeability” and “proximity” before holding that a breach of a duty of care is

actionable in negligence.

22. The rationale for the revision of the “neighbour principle” in recent times which

commenced with the decision in Glencar Exploration plc v Mayo County

Council (No.2) [2002] I.R. 84 was most recently articulated by the Supreme

Court in Whelan and Others v Allied Irish Banks Plc and Others [2014] IESC

3 by O’Donnell J. at paragraph 64 of his judgment when he stated:

“[64] In later cases however, and put again perhaps to simply, there

emerged a concern that this approach would give rise to a considerable

extension of liability, and consequently costs, and make the tort of

negligence the dominant vehicle for recovery in any civil action, which

would threaten, if not obliterate, the other torts and even recovery in

contract and quasi-contracts. The High Court of Australia in Sutherland

Shire Council v Heyman (1985) 157 C.L.R. 424 pointed out that this

8

approach gave rise to a significant risk of an approach which would result

in a massive extension of a prima facie duty of care restrained only by

some indefinable considerations of policy. This was important because of

a decision that a duty of care arose in any novel situation controlled not

only the instant case, and all similar cases, but also influenced all of those

cases in which such a situation or some plausible analogy could be

advanced, given rise to a risk of liability which might have to be settled.

The parties would have to seek insurance against such potential liability,

and furthermore seek to recover that additional costs from their clients

and customers, or risk claims and additional costs. In Sutherland Shire

Council v Heyman, an alternative approach was mooted which was

subsequently adopted both in the United Kingdom in Caparo Plc v

Dickman [1990] 2 A.C. 605 and in this jurisdiction in the judgments in

Glencar Exploration plc v Mayo County Council (No. 2) [2002] I.R. 84.

That was where injury or damage was reasonably foreseeable, and there

was sufficient proximity between the parties, a duty of care would

nevertheless not arise in any such novel area unless the court considered

that in all the circumstances, it was just and reasonable that the law

should impose a duty of care on the defendant.”

23. In Glencar Exploration plc v Mayo County Council (No.2) [2002] I.R. 84

Keane C.J. having traced the development of the law of negligence in England

and Ireland and having referred to the oft-quoted portion of the judgment of

McCarthy J. in Ward v McMaster which appeared to endorse the approach

taken by the House of Lords in Anns v Merton London Borough [1978] A.C.

728 Keane C. J. stated at page 139 of the report stated as follows:

“There is, in my view, no reason why courts determining whether a duty of

care arises should consider themselves obliged to hold that it does in

every case where injury or damage to property was reasonably

foreseeable and the notoriously difficult and illusive test of “proximity” or

“neighbour” can be said to have been met, unless a very powerful public

policy considerations dictate. It seems to me that no injustice will be done

if they are required to take the further steps of considering whether, in all

the circumstances, it is just and reasonable that the law should impose a

9

duty of a given scope on the defendant for the benefit of the plaintiff, as

held by Costello J. at first instance in Ward v McMaster [1985] I.R.29, by

Brennan J. in Sutherland Shire Council v Heyman (1985) I57

C.L.R.424 and by the House of Lords in Caparo Plc v Dickman [1990] 2

A.C. 605. As Brennan J. pointed out, there is a significant risk that any

other approach will result in what he called a “massive extension” of a

prima facie duty of care restrained only by undefinable

considerations……..”

24. The concerns referred to by O’Donnell J. have largely presented themselves in

the guise of legal liability being imposed in negligence for not only personal

injuries and property damage, but also pure economic loss. A number of cases

in this jurisdiction including Siney v Dublin Corporation [1980] IR400 and

Ward v McMaster [1988] I.R. 337 allowed recovery for pure economic loss in

negligence. The court in these cases had effectively followed the earlier

decisions of the House of Lords in the cases of Anns V Merton London

Borough Council [1978] A.C 728 and Junior Books v Veitchi [1982] 3 W.L.R

477, the latter case imposing liability on a sub-contractor for economic loss in

respect of a negligently constructed factory floor.

25. In Ward v McMaster McCarthy J. in adding to the requirements of “proximity”

and “foreseeability” the requirement that there was no compelling exemption

based upon public policy against the finding of a duty of care, had

notwithstanding the concerns previously expressed in Sutherland Shire

Council v Heyman no difficulty in imposing liability on the Defendant for the

economic loss suffered by the Plaintiff.

26. Because the formulation of the test by Keane C J. retains reference to “public

policy considerations” which was a factor also incorporated in the formulation of

the test by McCarthy in Ward v McMaster, there is some confusion as to

whether the test posited by Keane C. J. in Glencar Exploration Plc v Mayo

County Council is a three step or four step test. Subsequent cases have not

been entirely consistent in their commitment to or interpretation of the terms of

the test formulated by Keane C. J. with some treating it as involving a four-step

10

process, namely, proximity, foreseeability, the absence of countervailing policy

considerations and a finding by the court that it was just and reasonable to

impose a duty of care and other cases applying a three-step test omitting any

reference to the public policy step.

27. By way of example, in the Supreme Court in Beatty v Rent Tribunal [2006] 1

IRLM, per Fennelly J. formulated the underlying principles of negligence as

being applicable where:

“That there is a relationship of such proximity between the parties such as

to call for the exercise of care by one party towards the other; that it is

reasonably foreseeable that breach of the duty of care with occasional

loss to the party to whom the duty owed and that it is just and reasonable

that the duty should be imposed”.

28. In again noting that the reformulation of the “neighbour principle” has been

informed by concerns to exclude the recovery of pure economic loss, the

reformulation has caused confusion, leading in one case, to a surprise finding

that in the context of a solicitor/client relationship, no duty of care existed

because the court held that it would not be just and reasonable to impose such a

duty. In reversing this finding on appeal, the Supreme Court (per O’Donnell J.)

in Whelan v Allied Irish Bank Plc [2014] IESC 3 stated as follows:

“To the casual observer, it might appear that there is little difference

between an approach which imposed liability where there is a prima facie

duty of care unless considerations of policy negative the existence of

such a duty, and one which imposes duty of care only when there is

sufficient proximity and considerations of policy make it just and

reasonable that such a duty should exist. One approach might seem to

be merely the negative imagine to another and to the mathematically

minded, 5 – 2 is exactly the same as 1 + 2. However, there is and had

been in practice a very significant different between the two which might

be illustrated by this case. The formulation in Anns v Merton London

Borough Council and Ward v McMaster of prima facie liability only

negative by considerations policy loads the balance heavily in favour of

11

finding liability. Furthermore, it tends to ensure that the general issue as

to the existence of a duty of care in such circumstances will be addressed

in the particular circumstances of the case and the question becomes,

almost imperceptible, whether a Plaintiff who has now been found to have

been injured by the carelessness of a period whose acts could

foreseeably cause damage to the Plaintiff should nevertheless be

deprived of damages.

Viewed in this way, it is, I think, apparent that the judge’s conclusion of

that the firm L.K. Shields owed no duty of care to Mr Lynch when advising

as to the nature of the facility agreement because to impose a duty of

care in such circumstances would not be just and reason cannot be

maintained. First, this was not a novel area where liability was being

asserted for the first time. The essential component of the Plaintiff’s claim

were well established. It has been beyond controversy for more than half

a century that an advisor may owe a duty of care when making

statements which may be relied upon even if there is no contract or

retainer covering the advice. It is also well established that a solicitor

may owe a duty of care independent of contract, and indeed, owe a duty

of care in respect of areas outside the original retainer. None of this is or

was in controversy. Second, the just and reasonable test in Glencar is

also essentially a policy consideration and it has been determined long

ago that it is just and reasonable that solicitor or, indeed, any other

professional adviser should owe a duty of care in such circumstances. It

is also important that the question must be approached at that level of

abstraction…...

The test does not mandate or permit a consideration of each individual

case and whether the imposition of a duty of care, and therefore liability

meets some undefined concept of fairness in the particular case. If that

were so, then the law would be no more than the application of individual

discretion in different facts or circumstances which might well be decided

differently from court to court. In such circumstances, the law of

12

negligence would be little more than the wilderness of single instances

criticised by Tennyson.”

29. O’Donnell’s J. analysis while elevating the status of the reformulation of the

“neighbour principle” by Keane C. J. in Glencar from its previous considered

status of orbiter dicta2 to that of being the “foundation stone of modern

jurisprudence on the tort of negligence”, it has not entirely displaced the test in

Siney v Dublin Corporation [1980] IR 400 and Ward v McMaster [1985] IR29

which effectively applied the test formulated in Anns v Merton.

30. In McGee v Alcorn [2016] IEHC which involved, inter alia, a claim for

professional negligence against an architectural technician who had certified the

foundations and construction of a house as being compliant with applicable

regulations, when in fact the foundations were defective and resulted in damage

to the house which required extensive remedial works to both the foundations

and the house. Significantly, the Plaintiffs who had no contract with the

architectural technician who was in fact retained by the builder, who was also

named as a defendant in the proceedings, was seeking to recover damages for

economic loss which was principally presented as a claim for repair costs to the

foundations and building and a diminution in the market value of the house.

31. In holding that the Plaintiffs were entitled to recover damages to cover the costs

of the remedial works, the inconvenience caused because of the original defects

and the subsequent remedial works together with the diminution in the value of

the house, O’Malley J. had no difficulty in accommodating the facts of the case

and permitting recovery for the plaintiffs for economic loss within the formulation

of the “neighbour principle” as stated in Ward v McMaster and Glencar

Exploration Plc v Mayo County Council.

32. In this regard, it is useful to highlight the following paragraphs of the judgment of

O’Malley J. who having considered the later judgment of the Supreme Court in

Wildgust v Bank of Ireland [2006] 1 I.R. 570 which described Glencar as the

"most authoritative statement of the law in relation to the general duty of care in

2 See Beatty v Rent Tribunal [2006] IR191, 200; Bates v Minister for Agriculture [2012] 1IR247

13

negligence " and having noted that the Supreme Court in Glencar regarded the

judgment of Henchy J in Ward v McMaster which was based on "well

established principles " as the binding decision of the Court and not the

judgment of McCarhy J, .:

“134. Whether the analysis of Keane C.J. was, on the facts of the case in

Glencar, simply obiter as Geoghan J. said, “most authoritative statement

of the law, as Kearns J. described, it is certainly incumbent on this court

to accord it full respect as a considered expression of the unanimous view

of the Supreme Court. However, I think it is important to note in the

context of this case that it does not appear, in my view, to be authority for

the proposition that the outcome in either Siney or Ward v McMaster

was incorrect.

135. On the facts of the instance case, I have no difficulty of finding the

existence of a duty of care on either the approach of McCarthy J. or

Keane C. J.

136. There was, in the first place, undoubtedly proximity between the

plaintiffs and the second named Defendant. In this respect, I consider

that the absence of a contractual relationship between the parties is

immaterial. It is true to say that the certificates were supplied to the

second named defendant to the builder, but the only conceivable purpose

of them from the builders point of view was for the presentation to have

prospective buyer. The second named defendant must have been aware

of this, and there must have been implicit knowledge and, indeed, an

assumption that such a person would rely on upon the certificate – that is

the purpose of for which they were issued. This is particularly so in the

case of the representation that the foundations were properly constructed.

Having regard to the evidence in this case as to how the problem was

identified – by the digging of large test holes around the house – this is

not a matter that can readily be assessed by a potential buyer. By the

same token, it was eminently foreseeable by a person in the second

14

named defendant’s positon that if the foundations were in fact

inadequate, they was likely occasioned to the buyer.

137. The alternative questions: “is there any reason not to impose a duty

of care in the circumstances?” and “is it fair, just and reasonable to

impose a duty of care in the circumstances?”. Both lead me,] on the facts

of the case, in the same direction. No argument has been made by the

second named defendant that there are any policy considerations that

would make the court hesitate in finding that the duty exist. The class of

persons to whom the duty is owed is easily defined – it is the purchaser to

whom the certificate has been presented since that the personal who ill

rely upon it. It is not necessary to go further in this case, and consider the

possibility of opened ended liability to subsequent buyers years down the

lines.

138. A further considered, that it is fair, just and reasonable to impose a

duty of care towards purchasers on persons such as engineers and

architects to provide certificates of this nature to builders. Most people

buying a modern house, and most of the lenders to whom they will go for

mortgages, will require such certificates and rely upon them. Self-

certification builder does not seem a realistic alternative. It is simply

untenable to suggest that the person who holds himself out was

professionally qualified to asses, and a decision to certify, the quality of

the house, the workmanship of his construction, should not thereby by

required to giving such certifications.”

33. Having considered the jurisprudence, O’Malley J. on the facts of the case also

went onto state particularly with regard to justifying an award in favour of the

Plaintiffs for pure economic loss stated at paragraph 147 of her judgement:

“147 That being so, it appears to me that in the circumstances, the

combination of the Statement of Claim, the Notice for Particulars and the

Replies thereto are adequate for the purpose of making the case of

negligence misstatement. On the facts of the case, there can be little

15

doubt as to whether the criteria for liability for negligent misstatement, as

discussed in the authorities and most recently in Wildgust, have been

met. Damages for economic loss are therefore recoverable.”

34. The decision of the Supreme Court in Whelan v Allied Irish Banks Plc has

been most recently considered by the Court of Appeal in the case of Rosbeg

Partners Ltd v L.K. Shields (Farm) [2016] IECA161. McMenamin J. giving

judgement of the court stated as follows:

“24. An enforceable agreement to sell is not always a necessary proof for

a loss of transaction claim. In such cases, it was a matter for the trial

judge to decide, on the balance of probabilities, whether a sale would

have proceeded, but for the negligence. The presence, or absence, of an

agreement to sell may, or may not, dependent upon the facts, be relevant

to the judge's assessment of this question. It is noteworthy that, in

Fairlee , Mr. Beades did not have any enforceable agreement to sell in

place in January, 2007, nor yet had he even begun to negotiate a sale, in

circumstances where the apartments had not been built.

25. As regards the question of legal causation, remoteness and scope of

duty, the law is well established in Glencar Explorations v. Mayo

County Council [2002] 1 I.R. 84, at page 139. As O'Donnell J., speaking

for a unanimous Supreme Court, pointed out in Whelan v. AIB [2014]

IESC 3:

The Glencar test does not mandate or permit a consideration of each

individual case and whether the imposition of a duty of care, and

therefore liability, meets some undefined concept of fairness in the

particular case. If that were so, then the law would be no more than the

application of individual discretion in different facts or circumstances

which might well be decided differently from court to court. In such

circumstances, the law of negligence would be little more than the

wilderness of single instances criticised by Tennyson.?”

16

35. It will be seen from the above review that there can be little doubt that the

reformulation of the “neighbour principle” in Glencar is now in the ascendancy

and that future cases in considering the reach of the tort of negligence will seek

to limit its application to within the parameters which Geoghegan J. had in mind

when he stated in Wildgust v Bank of Ireland [2006] 1 I.R. 570:

“Pragmatically, some kind of control mechanism was necessary in

relation to liability for negligent misstatement as otherwise an action might

lie at the suit of large numbers of people influenced and reasonably

foreseen to be influenced by the erroneous statement. By contrast, a

negligent act will, for the most part, foreseeably damage only a small

category of people.”

36. Describing by analogy the developments in the jurisprudence considered above,

it is appropriate to state that the neighbour who is likely to benefit from the

“neighbour principle” is to be found in the 'village centre” where the sense of

neighbourhood is obvious rather than in the “urban centre” where the sense of

neighbourhood is not so obvious.

Contract – Not Conclusive as to the extent of a Professional’s Duty of Care

37. Having noted that the existence of a contractual nexus with the professional

retained to advise or act is a significant factor which not only defines the extent

of the professional’s retainer, but informs how the court should approach its task

of determining the question liability, it is not to be taken as conclusive or

exhaustive as to the extent of the professional’s duty of care.

38. In Bolam v Friern Hospital Management Committee [1957] 1 W.L.R. 582,

the court explained the basis of the application of the law of negligence to

professionals:

“Where you get a situation which involves the use of some special skill

and competence, then the test as to whether there has been negligence

or not is not the test of the man on the top of the Clapham Omnibus,

because he has not got this special skill, the test is the standard of the

17

ordinary skilled man exercising and professing to have that special skill; it

is well settled law that it is sufficient if he exercises the ordinary skill of an

ordinary competent man exercising that particular act.”

39. In Midland Bank Trust Co. Ltd v Hett, Subbs & Kemp [1979] CH 384 at 403,

the court stated:

“The test is what the reasonable competent practitioner would do having

regard to the standards normally adopted in his profession.”

40. Mindful that the paramount duty of on the professional is to exercise reasonable

care and skill in his dealings with the particular client, it is important to keep in

mind what was stated by Barron J. in Doran v Delaney [1998] 2 I.R.60 at 78,

Barron J. stated as follows:

“The solicitor is not a conduit pipe. Once he is acting professionally, he

warrants that so far as his own acts are concerned, he is taken the care

and applied the skill and knowledge expected of a member of his

professional. He cannot therefore accept his client’s instructions without

question when it is reasonable to query them……. Of course, as against

his own client, if the solicitor acted on the client’s expressed instructions,

this is generally a good defence to a claim by his own client.”

41. In Carroll v Carroll [1999] 4 I.R. 241 at 266:

“Even if he had been the donor’s solicitor, what he did would not have

saved the transaction. As I said before, a solicitor or other professional

person does not fulfil his obligation to his client or patient by simply doing

what he is asked or instructed to do. He owes such person a duty to

exercise his professional skill and judgement and he does not fulfil that

duty by blithely following instructions without stopping to consider whether

to do so is appropriate. Having done so, he must then give advice as to

whether or not what is required of him is proper. Here, his duty was to

advise the donor to obtain independent advice. In the present case,

18

whatever independence [the donee’s solicitor] may have had has been

destroyed by his acting in the present proceedings as solicitor to the

personal representative of the donee.”

42. In the later case of O’Carroll v Diamond [2005] 4 I.R.41 at 54, Hardiman

stated:

“My decision should not be taken as implying that, in any other

circumstances, a solicitor necessarily discharges his duty merely by

urging a person to take independent advice and gladly accepting a

decision not to do so. Depending on the circumstances, his obligations

may be much greater and may include declining to act until such advice is

taken. “

43. More recently, in the case of ACC v Johnston, Traynor & Mallon [2010] IEHC

236 at paragraph 6.23, Clarke J. in emphasising that professionals are

employed to minimise risk, stated as follows:

“The ordinary duty of care, therefore, extends not merely to ensuring that

the relevant professional person carries out his or her duties in the way in

which other suitably qualified members of the relevant profession do, but

also extends to considering other common practices so obviously

involved in necessary risks which can be eliminated that such practices

should not be engaged in.” 3

Examples of Particular Duties Resting on Professionals

44. Noting that the Courts will not only consider the terms of the contract on foot of

which a professional has been retained but will also assess the professional’s

advice and conduct against the standard of suitably qualified members of his/her

profession exercising reasonable care and skill, it is appropriate to identify

3 See also O’Donovan v Cork County Council [1967] I.R. 173; Roch v Peilow [1986] I.L.R.M. 189;

Dunne (an Infant) v The National Maternity Hospital [1989] I.R. 91; Murphy v Beauchamps & Bowe,

Unreported, High Court, Peart J. Nov. 24 2011; Rosbeg Partners Ltd v LK Shields (A Firm) [2016] IECA

161; Kenny v Howard and the HSE [2016] IECA 243; Vessey v Kent Carty [2016] IECA 302

19

specific duties which the Courts have held rest on professionals who have been

instructed and/or retained to provide professional advice and services:

Duty to clearly and fully advise at all stages of the retainer and litigation

Levicom International Holdings BV and Another v Linklaters (A Firm)

[2010] EWCA Civ 494

Emerald Island Assurance and Investment Ltd and Others v

Coakley Moloney Solicitors [ 2014 ] IECA 370

45. In discharging the duty to clearly and fully advise at all stages of the retainer

and/or litigation, it has been stated that in order to avoid the risk of a

professional negligence claim, professional advisers should ensure the

following:-

Not to overstate a case, particularly at the outset

Be slow to give unqualified advice without first carrying out a thorough

investigation and obtaining all the facts

Make sure advice is based on careful analysis, sound reason and

consideration of all foreseeable possibilities

Be very clear and thorough, especially when explaining complex issues to

clients using language and terminology that clients and reasonably be

expected to understand

Qualify advice given if necessary, particularly if not all the facts are known

Make sure that the client is fully aware of all possibilities and options open to

them and the cost consequences of these.

46. The decisions in Levicom International Holdings BV and Another v

Linklaters (A Firm) and Emerald Island Assurances and Investment Ltd

and Others v Coakley Maloney Solicitors are also important decisions in the

context of causation and, in particular, on whom the burden rests in proving

causation.

20

47. Traditionally, the burden rests on the Plaintiff to prove to all constituents of the

cause of action pleaded, including causation. In Levicom the Court of Appeal

held that it was not for the Plaintiff to prove causation. The court held that there

was a re-buttable presumption that a client follows a solicitor’s advice.

Consequently, it is for the professional to show that even the client had been

given correct advice, the client would not have acted differently. Burnton L. J. in

Levicom in justifying this analysis, stated as follows:

“One has to ask why a commercial company should seek expensive city

solicitor’s advice and do so repeatedly, if they were not to act on it.”

48. The Court of Appeal in this jurisdiction in Emerald Island Assurance and

Investments Ltd did not go so far, but clearly did not accept that a simple

submission by the Defendant that the Plaintiff would have not have acted

differently even it had been given correct advice, was the correct test to apply in

ascertaining whether the loss complained of was caused by the Defendant’s

negligence. The court put the position as follows:

“(44) In my view, the president was in error in his finding on this matter.

The evidence in the case did not demonstrate complete incapacity on the

part of the plaintiffs to take advice. The did so on the occasion of the

2010 settlement. More generally, it cannot be deducted that the plaintiffs

were not going to respond to a clear, explicit warning simply because they

were in dispute with their accountant over quantum.

(45) It seems to me that the proper approach to this case is that Mr.

Duane is to be faulted and held negligent for a failure to advise his clients

appropriately, and by that I mean along the lines indicated above. In the

particular circumstances of this case, he was under an obligation to set

out the positon clearly before them. If he needed to get Senior Counsel’s

advice, that would have been appropriate. Alternatively, it might have

been desirable to have a meeting. What he needed to do above all was

to present them with the situation that they could proceed with their case

as matters stood and with the evidence that they had originally relied on,

21

but that there were risks and dangers in that course. They could urgently

get another accountant to replace Mr Peelo. All this should have taken

place well before the expiration of four years between 2003 and 2007.

(46) My conclusion, therefore, is that the failure in this case is not simply

one of the precise terms of a particular letter. It is of a failure of advice

and a course of conduct that simply failed to address a particular issue or

difficulty that had arisen and that it was not an impossible, intractable

problem, but one that had options and consequences, just like many

other situations that present themselves to competent legal or other

adviser. “

Professional Liability of Barristers

49. The extent to which professional liability may be visited on a barrister has been

the subject of a number of cases. With regard to identifying the substance of the

duty resting on a practicing barrister the Court in Eckersley v Binnie [1988]

C.L.R. 1, stated per Bingham L.J.

“A professional man should command the corpus of knowledge which forms

part of the professional equipment of the ordinary member of his profession.

He should not lie behind other ordinarily assiduous and intelligent members

of his profession in knowledge of new advances, discoveries and

developments in his field. He should have such awareness as an ordinarily

competent practitioner would have of the deficiencies in his knowledge and

the limitation on his skill. He should be alert to the hazards and risks inherent

in any professional task he undertakes to extent that other ordinarily

competent members of the profession would be alert. He must bring to any

professional task he undertakes no less expertise, skill and care than other

ordinarily competent members of his profession would bring, but need bring

no more. The standard is that of a reasonable average. The law does not

require of a professional man that he be a paragon, combining the qualities

of polymath and prophet”.

22

Make sure that all advices are evidenced in writing;

Emerald Island Assurances and Investments Ltd and Others v

Coakley Moloney Solicitors [2014] IECA No. 370 and No. 393]

Duty to minimise risk for client

Murphy v Beauchamps & Bow (unreported, High Court, Peart J.,

Novemer 24 2011)

ACC v Johnston [2010] IEHC 236

Duty to warn a client

Doran v Delaney [1998] 2 IR 61;

Carroll v Carroll [1999] 4 IR 241;

Carroll v Diamond [2012] IEHC 140;

Goldswain v Beltec Ltd [2015] EWHC 556;

Rosbeg Partners Ltd v LK Shields (A Firm) [2016] IECA 161

Duty to advise client on matters beyond the initial instructions

Mortgage Express Ltd v Bowerman & Partners [1996] 2 All E.R. 836.

In the latter case, Bingham L.J. stated:-

“A client cannot expect a solicitor to undertake work he has not

asked him to do, and will not wish to pay for such work. But, if in

the course of doing the work he is instructed to so, the solicitor

comes into possession of information which is not confidential and

which is clearly of potential significance to the client, I think that

23

the client would reasonably expect the solicitor to pass it on and

feel understandably aggrieved if he did not”.

Credit Lyonnais SA v Russell Jones and Walker [2002] EWHC 1310

(Ch)

No duty to keep advice under review

Integral Memory Plc v Haines Watts [2012] EWHC 342 (Ch)

Shepherd Construction Ltd v Pinsent Masons LLP [2012] EWHC 43

(TCC).

No duty to advise a client on whether a transaction is a prudent one or

not

Bowdage v Harold Michelmore & Co. [1962] E.G.D. 379 (QBD)

Clarke Boyce v Mouat [1994] 1 AC 428. In the latter case, the Court

stated:-

“When a client in full command of his faculties and apparently

aware of what he is doing seeks the assistance of a solicitor in the

carrying out of a particular transaction, that solicitor is under no

duty whether before or after accepting instructions to go beyond

those instructions by proffering advice on the wisdom of the

transaction. To hold otherwise could impose intolerable burdens

on solicitors”.

Duty of professional to take into account the inexperience or

youthfulness of a client

Pickerstill & Le Cornu v Reilly [2004] UKPC 14

24

Carradine Properties Ltd v DJ Freeman & Co [1999] Lloyds Rep. P.N.

483 (CA)

Duty to ensure client understands advice given

Siasati v Bottoms & Webb (A Firm) [1997] EGCS 22

County Personnel (Employment Agency) Ltd v Aaron R

Pulver & Co [1987] 1 W.L.R. 916 (CA)

Duty to Third Parties

Ross v Caunters [1970] 3 ALL ER Gorham v British Telecom plc [2000] 1WLR 2129 (CA) Hughes v Richards [2004] EWCA Civ 266 Wall v Hegarty [1980] IRLM 224 – liability to beneficiary under a Will White v Jones [1995] 1All ER691 – liability to the beneficiary under a Will Carroll v Carroll [199] 4IR 241 Dean v Allin & Watts (a firm) [2001] EWCA – Solicitors liability to a Third Party

Duties when giving free advice

Padden v Bevan Ashford Solicitors [2011] EWCA Civ 1616

Other Cases

Brownrigg v Leacy [2013] IEHC 434 – claim for negligence

against a valuer

25

O’Neill v Rawluk [2013] IEHC 461 – claim against a consultant

for medical negligence

Adigun v McEvoy [2013] IEHC 342 – claim for professional

negligence against a solicitor

50. In the latter case, the Court in holding that it is not normally a requirement of

general retainer to keep past advice under review or to renew the advices of a

predecessor firm upon or following acquisition of a firm went on to state:-

“There is a difference to be drawn between a specific retainer or

commission which imposes a continuing duty on a professional to keep

earlier advice under review and some sort of obligation which requires the

professional to review and revise previous advice given or services

provided on commissions or retainers which are complete”.

51. In Melbourne Mortgages Ltd & Cavenham Financial Services Ltd v Turtle

and Others practising as Carson McDowell Solicitors [2004] N.I.Q.B. 82, the

Court stated:-

“A lawyer holding himself out as competent in a particular field has a duty

to keep up to date with judicial decisions in that field… [It] is appropriate

that he or she could keep up to date with the law in the field in which they

practice… [Practitioners] have the option to choose not to practice in

fields with which they are unfamiliar to avoid situations of this kind

arising”.

52. In Whelan v Allied Irish Banks plc [2014] IESC 3, the Supreme Court held at

p234 of its Judgement, paragraph 58 as follows:-

“The obligation of a professional person is to give advice some of which

may be unwelcome. Clients may be slow to appreciate advice, which

they are paying for, but which warns them against the course of action

which they wish to follow. The practice of law and other professions have

26

developed considerably, and in many cases for the better, but there can

be strong pressures on lawyers and other advisers to take a “commercial”

view of matters, and to bring only the good news to a client. It remains

very important that advisers give independent advice which, in an

appropriate case, may counsel caution. The obligation to give

independent and professional advice which is important not just to clients

but to society more generally, is reinforced if solicitors and other advisers

understand that they have a duty to be careful in the content of the advice

which they give to clients”.

53. The above jurisprudence is the standard against which the professional liability of

a barrister will be assessed.

54. There have been a number of cases in which the advice given by a barrister and

the manner in which the barrister has presented the case in Court has been

considered by the Courts.

55. As with solicitors who give legal advice, a barrister is also subject to the same

standard, that is, he/she is required to exercise the degree of reasonable care

and skill which is expected of a competent and reasonably experienced barrister.

– Regent Leisure Time Ltd v Skerret Pearson [2006] EWCA Civ 1184 (CA)

56. It is also generally the case that a solicitor can rely on the advice of the barrister

where the barrister is properly instructed and where the solicitor does not have a

specialist knowledge of the area of law in question – Langsam v Beachcroft

LLP [2011] EWHC 1451 (Ch).

57. The burden of proof resting on a claimant who alleges negligence against a

barrister is an onerous one and has been confirmed in a number of cases. In

Phelps v Hillingdon LBC [2001] 2 A.C. 619 at 672 F, the Court stated:-

“In order to get off the ground the claimant must be able to demonstrate

that the standard of care fell short of that set by the Bolam test: that is

deliberately and properly a high standard in recognition of the difficult

27

nature of some decisions which those to whom the test applies are

required to make and of the rule for genuine differences of view and the

propriety of one course of action as against another”.

58. In Moy v Petman Smith [2005] UKHL, 7; [2005] 1 W.L.R. 581, the Court

stated:-

“In claims against members of other professions, the Court will have

expert evidence on whether their conduct has fallen short of the standard.

In cases against advocates, however, the Court assumes that it can rely

upon its own knowledge and experience of advocacy to make that

judgement. This brings, as Lord Hope has pointed out, an obvious risk

that the Judge will ask himself what he would have done in the particular

circumstances of the case. But that is not the test. The doctor giving

expert evidence in medical negligence claim is not asked what he himself

would have done, what a reasonable doctor might have done”.

59. In the recent decision of the Court of Appeal in Vessey v Kent Carty [2016]

IECA 302, the Court in addressing the issue of a barrister’s professional liability

for the presentation of a case before the Court stated as follows:-

“17. The onus of establishing that the respondent was professionally

negligent in the manner in which the appellant's personal injury claim was

processed and more particularly, how the manner was dealt with in court

by his legal representatives, rests squarely with the appellant. The burden

of proof is on the appellant to establish that the respondent failed to meet

the relevant professional standard in the circumstances. It is unnecessary

for the purposes of this appeal to explore the extent to which (if at all)

advocates enjoy any immunity from suit in respect of their own conduct of

the actual court hearing.

18.In IArthur J.S. Hall & Co. v. Symons [2000] 3 All E.R. 673, Lord

Hobhouse, said (at p. 123):-

28

‘The standard of care to be applied in negligence

actions against an advocate is the same as that

applicable to any other skilled professional who has to

work in an environment where decisions and

exercises of judgment have to be made in often

difficult and time constrained circumstances. It

requires a plaintiff to show that the error was one

which no reasonably competent member of the

relevant profession would have made.’

19. That standard required the respondent to ensure, in as far as

possible, that the appellant's claim (both relating to the extent

of his injuries and his consequential loss of earnings) be

advocated in court, that the appropriate witnesses be called

to give evidence, that witnesses called on behalf of Bus

Éireann be cross-examined and / or challenged in order to

ensure that the appellant's claim is vindicated as far as

possible, and, in general terms, that the appellant's

instructions be complied with.

20. Neither the evidence adduced before O'Malley J. or the submissions

made to this Court support the contention that any breach of the

appropriate professional standard occurred. Furthermore, if, in fact, the

appellant (as he maintains he did) expressly instructed the respondent

and / or his counsel to object to the case being heard by O'Malley J. in the

light of the disclosure of a friendship between her father and Mr. Browne,

and such instruction was ignored, or, (again as the appellant maintains)

an opposite position was indicated in open court, such would amount to,

at a minimum, professional misconduct. However, the fact that there is no

evidence that the appellant sought to object or otherwise attempted to,

halt the hearing of the case by O'Malley J after the appellant's counsel

indicated that he had no objection to her doing so, is, at least, strongly

suggestive of the fact that he did not so instruct his legal team.”

29

60. The decision of the Court of Appeal in Vessey v Kent Carty [2016] IECA 302 is

further confirmation that the Courts in this jurisdiction as had been previously

indicated in the case of Behan v McGinley [2008] IEHC 18 , will assume that

barristers do not enjoy a blanket immunity from suit and can be sued for

negligence in relation to their management of litigation on behalf of their clients

either in respect of their preparatory work or indeed in respect of their

management of the trial itself. 4

Gross Negligence – Relevance of Contract in Professional Liability Claims

61. As professionals are invariably retained to provide their specialist advice and

services on foot of a contract, and as the above judicial authorities underline the

terms of the contract are particularly relevant to whether a professional has a

liability in the particular circumstances.

62. While it has been noted above that it is not possible for a solicitor to exclude

liability to a client for negligence, with any such clause being deemed to be void

and as exemption clauses have not been a feature of medical malpractice

litigation, exemption clauses or clauses limiting liability tend to appear in

contracts involving professionals in other disciplines (architects, engineers,

accountants, valuers, surveyors etc).

63. As a phrase used within the tort of negligence, “gross negligence” has in fact no

legal significance and offers no greater scope for success to a Plaintiff who is

seeking to establish the professional's liability in the tort of negligence. While

“gross negligence” is recognised in other areas of the law (i.e. the law of bailment

– J. P. Morgan Chase Bank v Springwell Navigation Corporation [2008]

EWCH 1793) – it has long been accepted that it is a term of description and not

legal significance. Beal v The South Devon Railway Company (1864) 3 H.&

C. 337 at 612, Fagan v. An Garda Commissioner [2014] IEHC 128. Irvine J.

rejected the proposition that a plaintiff must prove malice or recklessness in order

to succeed in liability in pursuing a claim against a public authority such as the

4 See Law of Torts, McMahon and Binchy (4th Edition) Chapter 14, paragraphs [14.224] to [14.252]

30

Garda Commissioner. Irvine J. also preferred the application of the standard

negligence test as distinct from gross negligence. In Beal the court stated:

“A person who undertakes to do some work for reward to an article must

exercise the care of a skilled workman, and the absence of such care in

him is negligence. Gross, therefore, is a word of description and not a

definition and it would have only been introducing a source of confusion

to use the expression gross negligence instead of the equivalent, a want

of due care and skill in navigating the vessel, which was used again and

again by the Lord Chief Justice in his summing up.”

64. The legal insignificance of the phrase “gross negligence” in the tort of negligence

was previously considered in the case of Wilson v Brett (1843) 11 M. & W. 113

where the court remarked that gross negligence is ordinary negligence:

“with …… a vituperative epithet…..”

65. However, it is clear that the phrase “gross negligence” has legal significance in a

contractual context. It is normally used to exclude liability from negligence with

liability only being imposed in circumstances where it is established that the

defaulting party has been guilty of “gross negligence”. Exemption clauses of this

kind normally include the term “wilful neglect” in conjunction with “gross

negligence”.

66. Because exemption clauses are a contractual device available to professionals to

exclude or limit their liability, it is important that when called upon to advise or

represent a party involved in professional liability litigation, or indeed in general

litigation, that consideration is given to any contractual clauses which may be

relevant to excluding liability in the tort of negligence and confining the

professional’s liability to cases where “gross negligence” or “wilful neglect” has

occurred.

31

67. In “ICDL GCC Foundation FZ-LLC and ICDL Saudi Arabi v The European

Computer Driving Licence Foundation Ltd [2012] 3IR 327 the licence

agreement under consideration in that case contained the following clause:

“1. The Licensee’s exclusive remedy and the total liability of ECDL-F

in respect of any cause of action relating to or arising out of this

contract will, to the extent that it is not caused by a wilful act or

gross negligence by ECDL-F, not exceed ten percent of the total

amounts paid to ECDL-F by the Licensee or €50,000 whichever is

the lesser amount.

2. In no event will either party be liable for incidental, indirect or

consequential damages, including but not limited to loss of profit.

This limitation shall not apply to claims due to damage caused by

the use or copying of the ECDL concept or the transfer of

assignment of the licence in violation of the terms and conditions

of this contract.”

68. While it is instructive to read the separate judgements of Fennelly J. (with whom

Hardiman J. concurred) and O’Donnell J. (dissenting), there was acceptance by

all three judges of the court that clauses limiting a party’s liability to cases where

“gross negligence” or “wilful neglect” is established are enforceable with the

meaning of those terms being a matter of contractual construction which is to be

ascertained from the application of the normal rules of construction as set down

in such cases as Analog Devices B. V. v Zurich Insurance Company [2005]

IESC 12; [2005] 1 I.R. 274.

69. The Supreme Court held that a court should endeavour to give meaning to the

term “gross negligence” in the context where the parties had agreed to use it in

the contract.

70. In deciding whether gross negligence existed, the Supreme Court held that a

Plaintiff must prove negligence and that the negligence amounted to a breach by

a significant degree of that party’s duty to the other party under the contract.

32

71. ICDL is a reminder to barristers that assumptions should not be made when

advising in the area of professional liability litigation and that the term “gross

negligence” unlike in the area of negligence has legal significance and where it is

included in a contract for the purpose of excluding or limiting liability, the court

will strive to give meaning and application to it having regard to the particular

circumstances of the case.

Professional Liability and the Statute of Limitations 1957, as amended

72. It has long since been accepted in this jurisdiction that with, the exception of

personal injuries claims, the discoverability test does not apply when

ascertaining the accrual of a cause of action in non-personal injury causes of

action – Hegarty v O’Loughran [1990] 1 I.R. 148; Irish Equine Foundation v

Robinson [1999] 2 IRM 289; Murphy v McInerney Construction Ltd [2008]

IEHC 323; Gallagher v ACC Bank plc [2012] IESC 35.

73. It is also well established that a cause of action in the tort of negligence is not

complete until damage occurs. Without damage, there can be no actionable

cause of action in negligence with the result that the limitation clock cannot

begin to run. However, where a contract exists, it is the date on which the

breach of occurs which sets the limitation clock in motion.

74. Noting that a Plaintiff will, in most cases, be in a position to pursue concurrent

causes of action for damages for breach of contract and for negligence, it follows

that the date of breach of contract can be and often is different from the date of

damage. The spectre that presents itself is that there may be two distinct and

valid dates from which the applicable limitation period is to run. As the relevant

limitation period in non-personal injuries cases for both breach of contract and

negligence is, in most cases, six years it is often the case that two different

dates can be identified from which the relevant statute of limitation period is to

run.

75. As the courts have demonstrated a clear leaning to giving precedence to the

contractual relationship where it exists over the law of negligence in determining

33

the question of liability between disputing parties, it is difficult to see how if the

courts are to be consistent in this approach, they can avoid treating the date on

which the contract was breached, rather than the date on which the tort of

negligence was completed upon damage occurring as constituting the date on

which the cause of action accrued for statute of limitation purposes.

76. However, as the court’s function is simply to interpret the law and not to legislate

for it, the difficulties and inconsistencies which exist in this area of law can only

be addressed by legislation and a revision of the Statute of Limitations Act 1953,

as amended as suggested by the Law Reform Commission in its 2011 Report.

Pending revision, the position would appear to be as stated by Charleton J. in

ACC v Gallagher with which Fennelly J., delivering the majority judgment of the

Supreme Court, agreed:

“Each case is to be judged on the facts as to when the tort occurred, and

whether damage resulted at that time or whether the wrong initiated a

course of action that later resulted in loss.”

77. The recent decision of the Court of Appeal in Brandley v Deane & Anor [2016]

IECA 54 has caused ripples in that it has been received as introducing the

discoverability test for statute of limitation purposes into non-personal injury

causes of action.

78. The case involved a claim for damages for breach of contract and negligence

against a builder and an engineer arising from defective foundations which were

laid and which caused further structural defects in the building constructed on

the foundations. The structural defects occurred a number years after the

building was constructed and more than six years after the foundations had

been laid and the engineer had certified the construction works as being

compliant with relevant building regulations. The High Court (Kearns P.)

dismissed the Plaintiff’s claim on the basis that it was statute barred. However,

on appeal, the Court of Appeal allowed the appeal, holding that the Plaintiff’s

claim was not statute barred and that the defects in the foundation did not

constitute damage for the purpose of the tort of negligence, with damage only

34

occurring when the cracks appeared in the building some years later and which

was less than six years prior to the date on which the proceedings were

commenced by the Plaintiff. The reasoning of the Court of Appeal is to be found

in the following paragraphs 15, 16, 17 and 18 (of udgment).

“15. It seems to me that the learned President was in error in this case. It

is clear that negligence by itself without the accompaniment of damage or

loss is not actionable. The plaintiffs did not suffer damage at the time

when the defective foundations were installed. When the defective

foundation was put in, the only complaint that the plaintiffs could have had

was that the foundation was defective. They had not suffered any

damage at that point – there was merely a defective foundation – but that

is not damage of a kind that is actionable in tort. Indeed, it seems to me to

be very questionable whether there was an action in breach of contract at

that time, but I do not have to consider that on this appeal.

16. Recent jurisprudence in the neighbouring jurisdiction makes clear that

financial loss in respect of specific defects does not give rise to a cause of

action in negligence unless the defects result in damage to other

property, see Robinson v. P.E. Jones (Contractors) Ltd. [2011] 3 WLR

815.

17. The evidence here is that the foundation of these houses was

defective, but it did not cause damage at that time. It caused damage in

December 2005. The evidence is not that there was hidden damage

which became discoverable at a later point; it is that the damage resulting

from the defective foundations happened in December 2005.

18. It seems to me to be clear that no damage resulted to the plaintiffs in

March 2004 when the foundations were installed. I do not agree that the

plaintiffs had any right of action at that point. They could not prove any

loss. Moreover, it seems to me that it would have been quite open to the

second defendant, Mr. Lohan, or the first defendant, as the consulting

engineer, to have subsequently discovered or decided to investigate the

condition of the foundations. They would have been entitled to put right

35

any defects that they identified and the plaintiffs would have had no right

of action as a result. There could have been some delay in the completion

of the project, but that would have given rise to entirely different

considerations. In respect of the specific acts of negligence, the fact that

the defendants might have identified the defects and remedied them is an

illustration of the absence of loss at that point and the unavailability to the

plaintiffs of any right of action there and then.”

79. The Defendants have appealed to the Supreme Court from the Court of Appeal and

the Supreme Court has given leave to proceed with the appeal and has set the

following questions for determination in the appeal.

Questions

Does time run for the statue of limitations in property damage claims from

the damages manifest?

Does time run for the purpose of the statute of limitation in property

damage claims from when the damage is discovered

Does time run for the purpose of the statute of limitation in property

damage claims from when the damage occurs?

80. It will be interesting to see if the distinction between “defects” and “damage”

identified by the Court of Appeal commendd itself to the Supreme Court.

81. The uncertainty in this area of the law is regrettable and requires amending

legislation in the terms recommended by the Law Reform Commission in its

Report in 2011.