Update: professional negligence

Dishonesty in civil proceedings

Dishonesty has been a regular theme in these updates recently. In December 2006 I noted that the Court of Appeal had hopefully put an end to the debate as to whether the test of dishonesty in civil law requires subjective dishonesty, that is knowledge or appreciation on the part of the alleged wrongdoer of the alleged dishonesty, Abou-Ramah v Abacha [2006] EWCA Civ 1492 having held that it did not.

Despite that, the question of what constitutes dishonesty has since arisen in two cases in particular: Zambia v Meer Care & Desai [2007] EWHC 952 (Ch) and Bryant v The Law Society [2007] EWHC 3043 (Admin). Unfortunately, these cases reach different conclusions, albeit that the reason for that is probably their different contexts.

In Meer Care & Desai the judge, having undertaken a detailed review of authorities and articles on the issue, concluded (at para.357) that: 'The test is an objective one, but an objective one which takes account of the individuals in questions characteristics [and] is a test which requires a court to assess an individual's conduct according to an objective standard of dishonesty. In doing so, the court has to take account as to what the individual knew; his experience, intelligence

and reasons for acting as he did. Whether the individual was aware that his conduct fell below the objective standard is not part of the test. In Bryant, by contrast, the court held (at para.153) that: 'the test to be applied in the context of solicitors' disciplinary proceedings is '¦ a test which includes the separate subjective element.'

How, then, are these conflicting cases to be resolved? In practice, the answer may be that the test for dishonesty is different in civil and disciplinary proceedings, that is that in civil proceedings the test is objective, but in disciplinary proceedings it has a subjective element. Just as the standard of proof in disciplinary proceedings is higher (see for example, In re D [2008] UKHL 33 at [23]), so, suggests Bryant, what has to be proved when alleging dishonesty in disciplinary proceedings is also different.

If so, that seems surprising. Unless the comments in In re D and In re B (Children) [2008] UKHL 35 are taken to change the position, there must be very few cases where the different standards of proof would lead to different results (because, even where the civil standard of proof applies, proof of dishonesty is not easy) and even where they do, there is nothing inconsistent about saying that something, in this case dishonesty, is probable but not beyond reasonable doubt. Saying that a professional is sufficiently dishonest that his insurers need not indemnify him, but not so dishonest that he may be disciplined, on the other hand, does seem inconsistent.

It remains to be seen, therefore, whether both Meer Care & Desai and Bryant will be upheld. Meer Care & Desai is, however, based on extra-judicial writings of the present Master of the Rolls and is consistent with the most recent pronouncements of the Law Lords (albeit as the Privy Council, in Barlow Clowes) and the Court of Appeal (in Abou-Ramah) and in the meantime it is accordingly suggested that it should be considered to state the test of dishonesty in civil proceedings.

Loss of a chance

It is well known that in loss of a chance cases arising out of lost litigation (for example, following a missed limitation period or procedural failing) it is often very difficult to persuade a court that the lost chance had no value. Typically, the defendant will not contemporaneously have advised that the litigation was valueless and so faces an uphill struggle in seeking to say exactly that in response to a claim against it. See, for example, Mount v Barker Austin [1998] PNLR 493.

In the recent case of Perkin v Lupton Fawcett [2008] EWCA Civ 418 a similar thing happened in the context of a share sale agreement. The solicitors for both the seller and the purchaser had thought when negotiating the agreement that it had a particular meaning and that fact ultimately led the Court of Appeal to conclude (at para.39) that, although that belief had been wrong, the claimants had had a real chance of varying the agreement in their favour.

Essentially, this is a case on its own facts. Certainly, it contains no new statement of principle. Nonetheless, it is interesting to note that the Court of Appeal reached its conclusion in the face of evidence from the purchaser's solicitor, which the trial judge had accepted, that no variation would have been agreed and, in practical terms at least, the case therefore suggests that it will often be very difficult to persuade a court that a lost chance had no real value.

Limitation

In Law Society v Sephton [2006] 2 AC 543, discussed in detail in the December 2006 update, the House of Lords held, in (very brief) summary, that a contingent loss standing alone was not sufficient to start a limitation period running. Almost a decade earlier, in Nykredit v Edward Erdman (No.2) [1997] AC 1627, it held that (as explained in Sephton at para.20, emphasis added): 'in a transaction in which there are benefits. . . as well as burdens . . . and the measure of damages is the extent to which the [claimant] is worse off than he would have been if he had not entered into the transaction, the [claimant] suffers loss and damage only when it is possible to say that he is on balance worse off.'

Watkins v Jones Maidment Wilson [2008] EWCA Civ 134 considers both of these principles, indeed is the Court of Appeal's first consideration of Sephton.

The case was described by Longmore LJ (at para.41) as having been 'more difficult than it ought to have been' because of 'the complexity of the preliminary issues put before the judge' (and therefore contains a further reminder of the fact that preliminary issues are far from always appropriate), but its main points can be summarised fairly shortly.

First, where a claimant alleges that he has, as a result of negligence, been deprived of the chance of negotiating a better deal, his cause of action is likely to accrue, and the limitation period is therefore likely to begin to run, on the date on which he entered into the contract he says should have been improved, even if the benefits obtained under the contract exceeded the burdens imposed by it.

This is because the loss of the chance is an actual tangible loss, sustained at the time the opportunity for improvement was lost. It appears to follow, however, that where a claimant says that he would not have entered into a deal at all and that deal entails benefits and burdens, his cause of action will not accrue until the burdens outweigh the benefits.

Second, where a claimant claims that he has lost a right which he had or should have had, then his cause of action is likely to accrue when he loses that right, even if that right related to future events and could only be used if a third party acted in a particular way. Thus, in Watkin the right assumed to have been lost was a right arising if building works were not completed in the future, but neither the fact that the right could only be used in the future nor the fact that the works might have been completed in time meant that there was no loss when the right was lost; it had a value at that time and, therefore, the cause of action accrued on the loss of the right, not on the failure to complete the works in time (the date for which the claimants had contended).

Claims against barristers

Although still relatively rare, the number of recent decisions in claims against barristers merits a quick round up. Thus:

• Whitehead v Hibbert Pownall & Newton [2007] EWHC 1060 (QB); [2008] EWCA Civ 285 (appeal by solicitors only, the claim against counsel having been settled before the appeal hearing) dealt with an allegation of under settlement;
• Pritchard Joyce & Hinds v Batcup [2008] EWHC 20 (QB) considers whether a barrister should advise as to the time limit applicable to a potential claim even though not specifically asked to advise about it (although this case is believed to be under appeal);
• Awoyomi v Radford [2007] EWHC 1671 (QB) holds that the abolition of immunity in Hall v Simons was retrospective;
• Kamar v Nightingale [2007] EWHC 2982 (QB) considers issues of causation and limitation in a claim following the setting aside of convictions; and
• claims against barristers were summarily dismissed in Leonard v Byrt [2008] EWCA Civ 20 and Robinson v Buss Murton LLP (unreported, 24 November 2006, Bean J).