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Deliberating liability

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The unintentional consequences of an architect's actions may extend his/her period of liability past the usual six years

The Limitation Act 1980 performs a delicate balancing act. On the one hand, it enables defendants to draw a line under the risk of a claim being brought against them (generally after six years); on the other, it gives claimants a reasonable time to bring proceedings, particularly when circumstances are such that they may not discover that they have a claim for some years. Generally speaking, the Act has done its job rather well.

By 1986, when latent damage appeared to tilt the balance too much in the defendants' favour, parliament enacted the Latent Damage Act. In appropriate cases this gives claimants three years to bring a claim from the time they could reasonably have discovered the facts underlying it, even if more than six years has elapsed from the original event.

Importantly, though, this is subject to a cut-off point of 15 years from the alleged act giving rise to a claim, after which no claim can be brought unless the defendant was fraudulent. Therefore professionals know that after 15 years there can be no comeback from clients - or so we thought!

The Limitation Act has never provided protection to defendants who deliberately conceal facts from claimants - in such circumstances section 32 provides that the basic sixyear limitation period will not start to run until the claimant either discovers the concealed facts or with reasonable diligence could have discovered them. Until recently, it was always thought that some unconscionable act or impropriety on the part of the defendant was required before the claimant could invoke the benefit of section 32.

However, the Court of Appeal in Brocklesby v Armitage & Guest (1999) held that all that is required to establish deliberate concealment for the purposes of section 32 is a deliberate act that amounts to a breach of duty in circumstances where it might not be discovered for some time.

There is no need for the defendant to know that they have committed a breach of duty or for them to behave in any way improperly.Mere oversight or inadvertence will be sufficient.

Despite the importance of the decision it was not reported formally until earlier this year. It has been applied in two cases and professional liability insurers have now woken up to its possible consequences.

The point was revisited by the Court of Appeal in March this year in Cave v Robinson Jarvis & Rolf. While expressing surprise at the decision in Brocklesby, it was constrained to follow precedent and suggested that the issues needed to be aired before the House of Lords. For technical reasons, Cave may never go to the Lords and so another suitable test case will have to arise, which could take up to two years. In the meantime, Brocklesby remains good law.

Ultimately, it may be that the only way to change a decision which many legal commentators consider to be ill-judged would be for parliament to amend the Limitation Act itself.

There is no doubting that from a professional's point of view, Brocklesby has serious consequences.

In our professional lives we give advice and provide solutions to clients' needs. By definition, advice is given deliberately and solutions are designed deliberately to satisfy clients' needs. If we get it wrong the very nature of what we do will invariably mean that Brocklesby applies.

Clients now have six years to bring a claim from when they discover or reasonably should discover the facts behind any breach of contract or negligence. This renders redundant both the three-year latent damage period and the 15-year period.

Limitation is an issue in claims against professionals which arises regularly, so Brocklesby cannot be ignored. What can be done to mitigate its effect?

Consider what areas of your practice are more likely to throw up possible claims many years later.

Subject to professional constraints, consider limiting liability in contracts/retainers.

What further information/documents can you give to clients during the course of, or at the end of, a retainer, which may enable them to discover any problem sooner?

Where insurance is maintained on a claims-made basis, continuing cover for only six years will not be sufficient. Consider what further period should be insured.

Where you practice in partnership, what provision is made for the effect of claims on retired partners?

Are changes required?

What steps are your insurers/broker taking to deal with the issue?

Review file/document destruction policies. Are you retaining papers for long enough?

Consider the effect on your general risk management strategy: prevention is always better than cure.

Overcautious compliance with all these steps my well seem onerous, but insurers may insist on more stringent risk management procedures by architectural practices to minimise the implications of Brocklesby. In the meantime, the consequences of the case need to be given serious consideration.

Gavin Tyler is partner and head of professional liability at Cripps Harries Hall solicitors. Tel 01892 515121 or visit www. e-cripps. co. uk

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