Do you have a Professional Negligence Claim?

When professionals fail to uphold the standard of care expected of them, their clients may suffer significant financial losses.

A proper understanding of professional negligence is essential for those who believe they have been affected.

Who is Considered a Professional?

There is no precise legal definition of a ‘professional’; however, the term typically applies to individuals engaged in skilled work that requires formal training or study. Common professions subject to professional negligence claims include:

• Solicitors
• Barristers
• Conveyancers
• Accountants and auditors
• Financial advisers
• Valuers
• Engineers and architects

What is required to prove professional negligence?

To succeed in a professional negligence claim, a plaintiff must prove the following elements:

1. Existence of a Duty of Care

The plaintiff must demonstrate that the professional owed them a duty of care. In many professions, such duties are well-established (such as the doctor-patient or solicitor-client relationship).

2. Breach of Duty

The plaintiff must prove that the professional failed to meet the expected standard of care. This may involve providing incorrect advice, failing to act within a reasonable timeframe, or neglecting critical details.

Under the Civil Liability Act 2002 (NSW), a professional does not breach their duty of care if it is established that the professional acted in a manner that (at the time the service was provided) was widely accepted in Australia by peer professional opinion as competent professional practice (the “peer professional opinion” defence).

Courts often rely on expert evidence to determine whether the professional breached their duty of care.

3. Loss and causation

The plaintiff must be able to demonstrate not only that they have suffered loss as a result of the professional’s negligence, but that the professional’s negligence was a clear cause of that loss, and was (or ought to have been) reasonably foreseeable to the professional.

Examples of Professional Negligence

Lawyers

• Missed limitation: failing to file proceedings within the relevant limitation period, resulting in the client losing their right to pursue legal action against a third party.
• Incorrect advice: Providing incorrect advice to a client.
• Failure to follow instructions – Ignoring or misinterpreting a client’s clear instructions.
• Failure to warn of legal risks: Neglecting to inform a client about the potential consequences of something discovered during the course of the solicitor acting (even if not central to the work the solicitor was performing).
• Poor drafting of documents – Drafting contracts, wills, or pleadings with errors or omissions.

 Conveyancers

• Failing to identify title defects – Not identifying issues such as easements, encumbrances, or restrictive covenants that could affect the property’s use or value.
• Failing to advise on special conditions in contracts – Overlooking or misunderstanding contract clauses, such as sunset clauses or cooling-off periods, or failing to advise in relation to unusual special conditions.
• Miscalculating Transfer Duty and other fees – Providing incorrect advice on stamp duty obligations or failing to ensure timely payment, leading to penalties and interest.
• Failing to advise in relation to Surcharge Purchaser Duty – leading to penalties and interest, or the inability to avoid the imposition of the duty.
• Missing settlement deadlines – Failing to properly manage the conveyance, resulting in penalties, additional costs, or losses arising from contract termination.
• Failing to advise on council and planning restrictions – Not informing the client about zoning laws or development restrictions that could impact their intended use of the property.

Accountants

• Failure to identify tax deductions or credits – Overlooking legitimate deductions or credits, resulting in the client paying more tax than necessary.
• Poor advice in relation to business structures – Recommending an inappropriate business structure (e.g., sole trader vs. company).
• Failing to lodge tax returns or financial reports on time – Missing tax return deadlines or financial reporting obligations.
• Incorrect financial statements – Producing inaccurate financial statements that misrepresent the financial position of a business.
• Failure to detect fraud or financial irregularities – Failing to identify fraudulent transactions, misappropriation of funds, or accounting errors.
• Providing inaccurate cash flow or budgeting advice – Providing incorrect financial projections that lead to poor investment or operational decisions.

Architects

• Failing to design within a client’s stated budged or design objectives.
• Design errors in specifications and detailing.
• Inadequate administration of contact and supervision of building works.

Surveyors

• Incorrectly defining property boundaries, providing inaccurate land measurements, leading to legal disputes or encroachment issues.