Limitation issues, and an important accountancy negligence claim

One of the most pertinent legal questions related to a claim for professional negligence, whether it is against an accountancy firm or other professional, is the issue of limitation. However, answering the question can involve tortuous analysis of statute and precedent and is rarely clear-cut, even for professional negligence solicitors.

Limitation in contract

In contract law, the six-year limitation period will be set into motion from the date of breach.

Limitation in tort

In tort (negligent action which does not relate exclusively to breach of contract) the six-year limitation periods does not begin until such time as the claimant has suffered damage.The three-year exceptionHowever, it is not always clear to a claimant when the damage was suffered. As such, if the damage occurs before the claimant becomes aware of the relevant facts, an additional three-year period is allowed from the date on which the claimant became aware of the relevant facts.

Confusion

As can be imagined, when making a claim for professional negligence, establishing which date is relevant to the case can be a complex and difficult business, and the advice of an experienced and trusted professional negligence lawyer is likely to be essential before a claimant can proceed with any degree of confidence and clarity.

Application and Haward v Fawcetts

There is a great deal of case history related to issue of limitation, in both contract and tort. Furthermore, the issue of the three-year exception can be both interpretive and contentious.The case of Haward v Fawcetts 2006 provides some illustration of how some of the above principles and precedents might be applied:In October 1994, a partner in Fawcetts, an accountancy firm, provided advice to a Mr Haward in regard to his proposed acquisition of a company, Kings Stag Engineering Ltd. On 9 December 1994, based on the advice of Fawcetts, Mr Haward's company sought a controlling stake in Kings Stag. Furthermore, a Haward family trust acquired the freehold of the Kings Stag hitherto leasehold premises. Fawcetts then became auditors to Kings Stag. Although it had been known that the company required intervention to make it profitable, investment from Haward failed to bring this to pass. Then, in 1998 Mr Haward instructed a corporate rescue specialist to evaluate the company's accumulating losses. The results of this analysis proved the trigger for Haward to consider a claim for professional negligence againt Fawcetts, which was formally mounted on 6 December, 2001, in both contract and tort. As well as denying negligence, Fawcetts countered that all claims, both those made in contract and those made in tort, were barred under the statute of limitations. The case affirmed existing legal principle - the House of Lords held that the relevant date was not when the claimant first had knowledge that he might have grounds for professional negligence compensation, but the earlier date, at which he became aware that he might have received defective or negligent advice.

Leading professional negligence claims

With offices in London and Brighton, the professional negligence partners at Healys can help bring clarity and confidence to your claim for professional negligence, whether it is against an accountant or other professional.Use our call-back form to receive a call from our team or call our partners directly on 020 7822 4106.