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The fundamental premise of professional negligence actions is that a business or individual can rely on the advice a professional adviser gives them.
However, in order to have a valid negligence claim against the professional, there are certain criteria which must be proved.
The first of these is to establish that the professional you are claiming against owed you a duty of care.
Once you have established the professional owed you a duty of care, you must then be able to demonstrate that the professional breached that duty and that the breach has caused you loss.
Recent professional negligence case
A recent case brought by a bank in Trinidad & Tobago against a valuer of land looked carefully at the issue of breach of duty.
It confirmed that there are limits to the scope of a professional’s duty of care. It is not the case that the professional must protect you against all potential losses.
The case related to the valuation of land in Trinidad & Tobago, which was to be security for a $3 million loan.
The valuation of the land was being carried out for the guarantor of that loan, which was required by the bank providing the funds.
Key details of the case
A local firm was instructed to carry out the valuation. In preparing their report, the valuer assumed that the land was available with vacant possession and that the guarantor had a good title to the land.
They also assumed that planning permission would be granted for commercial use of the land.
The land was valued by the valuer at $15 million, and therefore, the bank provided the loan in reliance on this valuation.
Both the borrower and the guarantor defaulted on the loan and made no repayments.
The bank therefore called in the loan.
When the bank attempted to sell the land, the highest offer received was $2 million, significantly less than the valuation and less than the loan amount itself.
The offer was so low because it transpired that the guarantor did not have a good title to the land, the land could not be used for commercial use, and it was occupied, so it could not be sold with vacant possession.
Therefore, the security the bank held over the land was worthless.
Outcome of the case
The bank brought a negligence claim against the valuer, but the claim against the valuer failed.
This was because the court found that the valuation was based on the assumption that there was good title to the land, and the scope of the valuer’s duty of care when preparing their report did not extend to advising on title to the land.
Suppose you believe you may have a negligence claim against a professional.
In that case, it will be necessary to determine that the professional owed you a duty of care and that the professional’s duty of care extended to the advice given.
In determining the scope of the duty of care owed by the professional to you, the purpose for which the advice was being sought or given will need to be considered, together with the risk that the professional was supposed to guard against.
If the professional’s duty of care did not extend to the negligent advice or omission which has caused you to suffer loss, your negligence claim against the professional is likely to fail.