A law firm has seen off a claim that it acted negligently during divorce proceedings after the Court of Appeal ruled that the case was started too late. Under the Limitation Act 1980, clients have six years from the date they suffered a loss to start a claim in negligence against their solicitors.
The claim was brought by Julia Holt, who claimed that her solicitors were negligent in failing to obtain expert evidence about the value of investment properties and jewellery during her divorce proceedings. She said that her jewellery was over-valued and the buy-to-let properties were undervalued which meant that she secured a worse financial settlement than she should from her husband.
The question facing the court was at what point Ms Holt suffered the loss, which would establish the start of the limitation period in tort. The limitation period for a claim in contract, which commences when a breach of contract occurs, had (if relevant) already expired.
Divorce proceedings had been commenced by Ms Holt’s husband in February 2011. The first hearing to settle their disputed financial affairs (First Directions Appointment (FDA)) took place in July 2011, with the Financial Dispute Resolution (FDR) hearing scheduled for October 2011. The final judgement was handed down in draft form on 10 April 2012.
At the FDA the court ordered the valuation of the family home and some adjoining land by a joint expert. Later valuations for the couple’s portfolio of buy-to-let properties and Mrs Holt’s jewellery were provided by Ms Holt’s husband.
Ms Holt alleged that her solicitor had failed to obtain expert evidence about the value of the investment properties and jewellery. This meant she had lost the opportunity to secure a better financial settlement from her ex-husband.
She issued negligence proceedings against the firm on 5 April 2018. Ms Holt claimed that she suffered loss when the final judgement was handed down on 10 April 2012. The defendants argued that the loss had occurred earlier, when the final evidence was presented on 16 March 2012, meaning that the negligence claim was time-barred.
The Court of Appeal concluded that the date of loss occurred when it became impossible for Mrs Holt to dispute the valuations, which occurred at some stage between the FDR and the final hearing on 16 March 2012. As a result her claim was out of time and the solicitors were awarded summary judgement.
“This case was helpful in considering the point at which a loss occurs,” said James Burgoyne, Director – Claims & Technical, Brunel Professions. “Claims in negligence can take an unexpected course when the courts analyse when loss to the claimant occurs, and both claimants and defendants have been caught out by this in the past. It is also worth solicitors engaged in matrimonial work taking a moment to consider the claimant’s original loss of chance claim, and their own potential exposure to similar claims.”
Brunel Professions is a leading provider of PII insurance broking to the legal profession. To find out more call Mark Sommariva on 0203 475 3275.