Profesional negligence: is there a duty to correct previous advice?
On 22 February 2012 Richard Sheldon QC held in Integral Memory Plc v Haines Watts  EWHC 342 (Ch) that there was no duty on accountants to correct previous advice in light of a change in the law. He also found that these proceedings had been brought well outside of 3 years from when the Claimant acquired knowledge under s.14A Limitation Act and were therefore statute barred. The liability which arose was not contingent and therefore did not relate to the time when the Claimant had resolved a dispute with HMRC.
Limitation: reminder re lender claims and s.14A of the Limitation Act 1980
On 14 March 2012 the Supreme Court handed down its judgment in the case of AB v. Ministry of Defence  UKSC 9. This case was brought by a group of former servicemen who alleged they had been injured by thermonuclear tests carried out by the MoD in the South Pacific in the 1950's. Given the time that had elapsed since the alleged exposure to radiation, a key issue in the case was the application of the limitation provisions. In particular, the Court looked at section 14A of the Limitation Act 1980 which extends the limitation in cases of "latent" damage. Under s.14A, a claimant who suffers an injury is allowed three years to bring his claim from the date on which he realises that he has suffered a significant injury and that this is attributable to the negligence of the defendant. In the case of the servicemen, they argued that they only became aware of the radiation based injury some 50 years after the event, when they received expert evidence.
The Supreme Court analysed the meaning of "knowledge" for the purposes of s.14A. This is potentially important for mortgage lenders because a similar provision exists under s.14A for claims brought for negligence in a non-personal injury context. Frequently mortgage lenders bring professional negligence claims outside the primary limitation period and rely on s.14A, stating that they did not have the requisite knowledge for bringing their claim until either a repossession valuation was obtained of the security property, or the property was sold at a significant loss. The Supreme Court held that the date a person (or lender) first consulted an expert was not, of itself, determinative of whether the requisite knowledge existed. Rather, the Court would have regard to the confidence with which the person held the belief that he had a claim, the substance this belief carried prior to the person consulting an expert and the effect of the expert report.
In the context of lender claims this is a further reminder that the Court will be forensic in analysing the circumstanced surrounding a limitation defence. If a lender wishes to rely on s.14A, then that lender should expect the Court to look in detail at the lender's conduct and state of knowledge leading up to the possession valuation and the sale of the security. In this context a Court may well also be influenced by the fact that a lender will have an enhanced knowledge of the state of the property market and will judge the lender with this in mind. It is possible therefore to envisage circumstances where the lender may be held to have the requisite knowledge prior to the repossession valuation, for example through more informal checks or an internal valuation opinion over the security property.
Title rectification and professional negligence: whether a certificate of title was dishonest
On 14 March 2012 the Court of Appeal handed down its judgment in R. V Cornelius  EWCA Crim 500 as to whether a solicitor had been dishonest when submitting a Certificate of Title to Mortgage Express. Whilst a criminal case it is also of genuine interest to civil claims.
Mr Cornelius was a solicitor who not only worked in that capacity but also had various property interests. In 2008 he acted as solicitor in a number of transactions where he was also providing bridging finance to a purchaser, who also applied for a "remortgage" from Mortgage Express which would then be used to repay the bridging finance. The purchaser would buy the properties at a discount and then hold the properties on trust for Mr Cornelius and/or Mr Cornelius and the purchaser. These interests were not disclosed to Mortgage Express, who it was accepted would never have lent had they known.
Was the certificate of title itself dishonest? This was the subject of the prosecution.
At first instance a Jury convicted Mr Cornelius on all counts. They found that the representation that the title was unencumbered was false and that there had been dishonesty.
That decision was appealed and the Court Of Appeal concluded that a certificate of title and the representations made have a technical meaning. The existence of the Deeds of Trust (which were not referred to on the title register) were not overriding interests and they did not rank in priority to the mortgages in favour of Mortgage Express. Therefore the interest created by the trust deeds were not an "onerous encumbrance" and the certificate of title was not dishonest and more than that, in that regard the certificate was correct.
The factual scenario behind this case is by no means uncommon. Compliance with the wider obligations of the solicitor including the CML Lender's Handbook would have meant no advances would have been made. However, the case is a useful reminder that no matter the extent of the failings of the solicitor (and resultant liabilities) that does not necessarily mean that it can be shown that the representations in a certificate of title were incorrect.
Professional negligence: can professional negligence be pleaded before expert evidence is obtained
Is expert evidence a requirement in professional negligence cases? Relying on the decision in Pantelli Associates v Corporate City Developments  EWHC 3189 (TCC), the claimant in ACD (Landscape Architects) Ltd v Overall & anor  EWHC 100 (TCC) sought to strike out the defendant's counterclaim of negligence because it was not supported by expert evidence. The defendant then served expert evidence so that application was withdrawn. In deciding how to deal with the costs of that application, the court held that Pantelli did not mean professional negligence cannot be pleaded unless and until expert evidence had been obtained. It may be disproportionate in terms of cost for expert evidence to be obtained at an early stage of proceedings particularly if there is a good prospect of settlement. However, if a party has failed to prepare expert evidence (or has no intention of obtaining expert evidence) the other side should bring this to the attention of the court at the first case management conference.
Rate setting process for LIBOR
The BBA is to review the rate setting process for LIBOR. The BBA has met with HM Treasury, the Bank of England and the FSA to consider the impact of future market and regulatory developments on LIBOR. Discussions with users of the rate are expected to begin shortly.