Professional Negligence News

(As reported by The Lawyer)

 

Pinsent Masons is set to go to the High Court tomorrow in a bid to strike out a £10m professional negligence claim being pursued against it by construction contractor Shepherd Construction.

 

The firm has drafted in 4 New Square’s David Sear QC, instructed by Beale and Company senior partner Antony Smith, to lead its defence of the claim, which relates to the drafting of contract clauses.

 

Shepherd Construction alleges that a contract drawn up by the firm on a joint venture agreement between Modus and CIREF creating Trinity Walk Wakefield left it liable for subcontractor fees.

 

The claimant company was the main contractor on the project. It had attempted to avoid paying the subcontractor fees, but a High Court ruling handed down by Mr Justice Coulson in June 2009 held it liable for the fees.

 

The Court of Appeal later reaffirmed the first instance decision, holding that Shepherd Construction could not withhold payment on the basis it had a ’pay when paid clause’ in its contract with the subcontractor.

 

The company is now pursuing Pinsent Masons over that clause, which it says became invalid when the Enterprise Act was enacted in 2002. The firm counters that the claim has no basis because the clause was valid when the contract was drafted.

 

Pinsent Masons partner Andrew Paton said: “We’re disappointed that proceedings have been commenced against us by Shepherd Construction. We shall be vigorously defending these allegations in the Technology and Construction Court and have applied to strike out the claim.”

 

Pinsent Masons’ lawyer, Smith at Beale and Company, said: “Pinsent Masons denies all liability as the contract was accurate when drafted.

 

“Therefore the allegations in the claim would impose a difficult burden on all solicitors in Pinsent Masons’ position, which the legal profession would want to see defeated.” 

 

 

 

(As reported by Shropshire Live)

 

Paul Horton, Partner in the Litigation Department at Shropshire law firm FBC Manby Bowdler LLP, says that people losing money on residential property is the main reason why they seek to sue their legal and property advisers.

 

“With money tight in these recessionary times and the property market flat, the conduct of professional advisers has come under increased scrutiny,” says Mr Horton, who is based in FBC Manby Bowdler’s Telford office.

 

“Before the recession a rising property market would generally have covered any losses due to poor legal work or valuations, but that is no longer the case and more people are seeking redress for negligent advice.”

 

According to Mr Horton, claims have been boosted by a recent court case which established that a valuation of a standard residential property which varied in value more than plus or minus 5% can be considered negligent.

 

“The court established a useful benchmark which it comes to judging negligence in property valuation,” says Mr Horton.

 

“This case helps as professional negligence claims can be extremely complex. It is not simply a case of proving that a professional has acted negligently, but in addition that a loss has arisen as a result of that negligence.”

 

According to Mr Horton, the number of claims against solicitors is also on the increase.  He says: “Twice as many solicitors firms than property valuers have already been sued this year.

 

“Unfortunately some legal firms which specialised in bulk property conveyancing are now facing claims, as although they did not charge very much for their work, in some cases the low fees did not give them the time to carry out the work correctly and costly mistakes were made.”

 

According to Mr Horton, the prospect of seeking redress in the courts from a solicitor or surveyor can seem daunting, but the process is the same for resolving any other dispute.

 

He says: “Embarking on litigation can be intimidating, but often the legal process is the only way to recover what can be significant losses which people have made on property transactions through no fault of their own.

 

“Fortunately there are still a number of funding options in place to allow access to justice.  These include “no win-no fee” arrangements; purchasing insurance cover after the event and even, if appropriate, prior to the issue of proceedings contingency fee arrangements.

 

“It is vital that claims are properly assessed before litigation commences.  For example, we provide a comprehensive review of clients’ potential claims, firstly to ascertain that there is merit in the potential claim, and secondly, to discuss the funding options available before the client is advised to take things forward.

 

 

 

 

A City law firm has reported a “dramatic jump” in the number of professional negligence claims brought against surveyors and estate agents.

 

According to Reynolds Porter Chamberlain (RPC), there were 25 commercial and residential High Court cases against estate agents or surveyors in 2009, compared with just one case over the previous five years.

 

RPC partner, Alexandra Anderson, comments: “Losses of UK and Irish banks on loans in the UK property market run to the billions of pounds.”

 

She adds: “This has put a lot of pressure on banks and investors to pursue any option open to them to recover their losses, including launching a negligence claim against the surveyor who valued the collateral for the loan.”

 

The research reveals that the kinds of credit-crunch related professional negligence claims faced by surveyors and estate agents include claims that:

 

They negligently overvalued commercial premises such as shopping centres that subsequently collapsed in value because tenants became insolvent in the recession.

 

They negligently overvalued residential property development sites which plunged in value because of falling house prices and the glut of similar new build that was erected in the housing boom, particularly in cities such as Manchester and Leeds.

 

They negligently underestimated the cost of putting a development project on hold. 

 

They negligently valued a property that was subject to a fraud that has been exposed because of falling prices in the recession.

 

 

 

The number of law firms looking for financial assistance to help cover professional indemnity (PI) premiums has risen dramatically, after a staggering rise in negligence claims in the High Court and the loss of a leading insurer. 

 

Independent financial provider Syscap said it has already received requests from 427 law firms seeking financial cover to help pay for negligence claims. The number represents a 90 per cent spike on last year when only 225 sought aid. 

 

Syscap said the rise was linked to a dramatic increase in professional negligence claims taken to the High Court, which have already hit an 11-year high. 

 

The collapse of Quinn Insurance, which specialised in PI insurance, has also contributed to the rise.