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Professional negligence claims: a change of direction?

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Summary: James Clarke discusses the judgment in O'Hare and another v Coutts & Co [2016] EWHC 2224 (QB) where the High Court moved away from the “Bolam” test for professional negligence claims (by reference to what a responsible body of professionals would do), at least in respect of financial advisers alerting their clients to investment risks.

In O’Hare and another v Coutts & Co, the High Court moved away from the “Bolam” test for professional negligence claims (by reference to what a responsible body of professionals would do), at least in respect of financial advisers alerting their clients to investment risks. Does this suggest a change is coming in assessing negligence claims against construction professionals? I don’t think so, but I wonder if recent TCC decisions should cause us to reflect more on the use and quality of expert evidence.

The decision

Coutts recommended products and investments to Mr and Mrs O’Hare. After those investments performed badly, the O’Hares claimed £3.3 million from the bank as losses arising from an alleged breach of the bank’s duty to recommend suitable products.

Mr Justice Kerr decided that the bank was not in breach of its duties to the O’Hares. The expert evidence indicated that there was no clear consensus in the industry at the relevant time as to how a client’s appetite to risk should be managed by an advisor, and so help to identify what was “suitable”. The judge decided that the products sold to the O’Hares were objectively suitable.

The judge also decided that the bank provided Mr and Mrs O’Hare with sufficiently full and detailed information as to the risks of the investments, such that it could not be said that they were mis-sold. It is in respect of this finding that the judge’s observations on the applicable test for negligence is of interest.

The “Bolam” test

Since the 1957 case of Bolam v Friern Barnet Hospital Management Committee, the test of whether the conduct of a professional defendant is negligent is:

“whether the defendants, in acting in the way they did, were acting in accordance with a practice of competent respected professional opinion…  in accordance with a practice accepted as proper by a responsible body of…  men skilled in that particular art.”

In other words, if the professional can show that a sufficiently responsible body of his or her peers would have acted in a similar way, the conduct in question is unlikely to have been negligent. This test has largely driven those involved in pursuing or defending professional negligence claims routinely to seek independent expert evidence on what is “good practice” in the relevant field of expertise and whether the conduct in question reached that bar.

Here, however, Mr Justice Kerr decided that:

“the required extent of communication between financial adviser and client to ensure the client understands the advice and the risks attendant on a recommended investment, is [not] governed by the Bolam test.”

Instead, the judge preferred the approach adopted by the Supreme Court in Montgomery v Lanarkshire Health Board, which considered the duty of explaining risks in the context of medical advice. That duty is:

“to take reasonable care to ensure that the patient is aware of any material risks involved in any recommended treatment, and of any reasonable alternative or variant treatments.”

The test of materiality is:

“whether, in the circumstances of the particular case, a reasonable person in the patient’s position would be likely to attach significance to the risk, or the doctor is or should be aware that the particular patient would be likely to attach significance to it.”

The judge decided that the bank had provided sufficient advice and identification of risks to the O’Hares, who were then sufficiently informed to decide whether or not to proceed, and so the bank had complied with its duty of care.

Does this suggest a move away from the “traditional” approach to assessing negligence claims in the Technology and Construction Court?

I suspect not. Recent TCC cases have confirmed the application of the Bolam test.
In Scott v EAR Sheppard Consulting Civil and Structural Engineers Ltd, the court had to consider whether a structural engineer was negligent in surveying a property before purchase that subsequently had to be demolished. Mr Justice Fraser confirmed that the Bolam test applied. This echoed Mr Nissen QC (sitting as a deputy High Court judge) in Wattret and another v Thomas Sands Consulting Ltd  who, in turn, quoted from the Court of Appeal in Sansom v Metcalfe Hambleton [1998] PNLR 542, which confirmed that:

“a court should be slow to find a professionally qualified man guilty of breach of his duty of skill and care towards a client (or third party) without evidence from those within the same profession as to the standard expected…”

Rather, my feeling is that the courts’ practical application of Bolam is likely to be guided more by the:

  • Context and nature of the expertise under scrutiny.
  • Relevance and quality of the evidence provided by experts.

As for the first point, one shouldn’t forget that in both O’Hare and Montgomery, it was in respect of the extent of communication of advice and risk in the context of medical and financial advice that the Bolam test was not applied. This is (I suggest) as opposed to the substantive quality and reasonableness of the advice itself, for example, where the court is asked to determine whether engineering decisions or calculations undertaken in designing a structure that subsequently collapses, were negligent.

That said, one might wonder whether it would always be possible to shop around for an “expert representative” of a body of professional opinion to support your position in a negligence claim. I would hope, however, that this would lead the court’s analysis to my second point.

Relevance and quality of expert evidence

The TCC is very familiar with dealing with expert evidence, whether in the field of, for example, engineering, project management, delay analysis or quantum. However, recent cases should perhaps prompt a degree of navel-gazing amongst some experts… and those that instruct them.

I find Scott v Sheppard more notable for the judge’s comments as to the quality of the expert evidence. In preferring the evidence of the claimant’s expert and finding that the defendant’s approach was “outside the range permissible of structural engineer exercising reasonable care and skill”, Mr Justice Fraser criticised the methodology, approach and conduct of the defendant’s engineering expert.

Similarly, albeit on matters of quantum assessment of a delay and disruption claim rather than negligence, in Van Oord UK Ltd and another v Allseas UK Ltd, Mr Justice Coulson cast damning criticism on the claimant’s quantum expert, dismissing it as “entirely worthless” which Matt Malloy has previously blogged about.

However, judicial criticism isn’t reserved for the experts alone. In the same judgment, Mr Justice Coulson noted:

“There was no programming evidence on either side. In my view this was a welcome and entirely sensible decision. All too often in cases like this each side relies on a programming expert, but the reports that these experts produce are simply vehicles by which the parties re-argue the facts, rather than reports focused on programming differences.”

I do not suggest that engineering, programming and quantum experts are not well (if not best) placed to assist parties in compiling, processing, evaluating, testing and presenting claims that might ultimately come before a court. However, I believe that recent TCC decisions point to an increasing frustration with the (unnecessary) presentation of the product of those efforts in the form of “expert evidence”, together with the additional time and expense created by it.

So, it seems to me that Bolam is very much alive and well in testing negligence claims concerning construction professionals and so expert evidence remains important. However, the message I take from these TCC decisions is that we should use expert evidence judiciously, proportionately and in a way that assists the court and should reflect carefully on the selection of those experts.

This article was first published by Practical Law on 5 October 2016.

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