• In New South Wales professional negligence is defined under the law as the breach of a duty of care or of a contractual obligation in the performance of professional work or in the provision of professional services.
• Claims for professional negligence are primarily made against medical practitioners, legal practitioners and accountants but can be made against any individual engaging in professional services in any industry, including engineers, real estate agents, builders, architects, auditors and property valuers.

• If you have suffered loss as a result of a professional’s negligence then you may be entitled to claim compensation by bringing a private action against the professional in court.

• The person who brings a claim in court is called a plaintiff. This is the person who has suffered the loss or injury.

• The person who the claim is brought against in court is called a defendant. This is the professional who has acted negligently. 

• The plaintiff must prove that the defendant:

1. owed them a duty a care;
2. breached that duty of care; and 
3. the breach caused the damage experienced by the plaintiff.

• The onus of proof rests with the plaintiff who is required to prove a case of professional negligence. They have the onus of proving to the court that the relevant facts exist and that negligence has actually occurred. 

• In professional negligence cases the plaintiff must convince the court that on the balance of probabilities negligence has occurred. This does not mean that the court must be completely convinced of each small detail but as a cumulative whole the evidence must indicate negligence.

• The court will consider all of the evidence and ask what series of events is more probable. If the evidence shows that the incident probably happened a particular way then they will make their decision accordingly. 

• Vicarious liability arises in circumstances where one person is held responsible for the conduct of another person unless that person can show that ‘all reasonable steps’ have been taken to reduce this liability.

• For example:

1. an employer may be vicariously liable for negligent acts or omissions by his or her employee done in ‘the course of employment’. Proof of fault on behalf of the employer is often not required. They will be responsible for their employee’s negligence regardless of any wrongdoing on their own part; and 
2. a contractor may be liable if their subcontractors fail to finish certain work or do the work incorrectly.

• The primary liability will still be of the negligent party who is in this case the employee.

• The vicarious liability is a secondary liability incurred by the employer. 

• Usually both will be liable jointly and severally. This means you recover the entire compensation amount from one of these people or from both in proportion to their responsibility. 

• A duty of care is a legal responsibility imposed on an individual that requires them to observe a reasonable standard of care while doing anything that may cause harm to others. For example a financial adviser owes a duty of care to his or her client to provide sound and appropriate advice to protect their assets and ensure financial growth.

• A standard of care is the degree or level of care expected of an individual who owes a duty of care to another person. Once you have established that someone owes you a duty of care you must establish what standard of care must be provided.

• Causation simply means that the actions of an individual caused injury or loss to another person. For you to prove that a professional has been negligent you must establish that their actions or inactions actually caused your harm or loss. This is just one of the criteria that must be met to prove that negligence caused particular harm.

• In New South Wales the Civil Liability Act 2002 (NSW) does not expressly define what an exceptional case is for those situations where causation can't be established. An exceptional case is simply a situation where negligence cannot be established as a necessary condition of the loss suffered. This means that the common law ‘but for’ test of causation is not met. The common law test asks 'whether the harm would have been suffered but for the acts or omissions of the professional'. 

• If the harm would have been suffered regardless of the acts or omissions of the professional then the court considers whether responsibility for the harm should be imposed on the negligent party and why. 

• The amount that a plaintiff may claim depends on their particular situation and the amount of loss they have suffered as a consequence of the professional’s negligence.

• In Australia professional negligence cases are subject to strict time limits. In most cases the plaintiff has 6 years from when they suffered the loss to commence court proceedings.

• In New South Wales a professional will not be considered liable if he or she acted in a manner that was generally accepted by his or her professional peers to be competent professional practice at the time. 

• Despite this a court will still not be bound by peer professional opinion if it finds that the opinion was irrational or not best practice.

Question

My financial advisor gave me some advice recently that was obviously wrong. I've lost a lot of money. I've discussed the initial advice with other financial advisors since things went wrong and they are all very surprised that he said what he did. What can I do?

Answer

• Generally you will have three options that you can pursue against your financial advisor.
• Getting poor, misleading or negligent financial advice can lead to disastrous consequences. Financial advisers are professionals who are have a legal duty to provide their clients with a certain standard of care when providing professional services.
• You might like to:
• contact your financial adviser and make a formal complaint;
• make a complaint through the Australian Financial Complaints Authority (AFCA); or
• lodge a professional negligence claim in court.
• When you take a matter to court it may still be settled outside of court through preliminary mediation and negotiations. You may also claim for indirect loss such as loss of opportunity. However court processes can be quite expensive and if you lose you may be asked to pay the other party’s costs.
• You should speak with us as soon as possible regarding the legal avenues available to you. Strict time limits apply to financial advice professional negligence cases.

Question

I recently consulted a financial advisor who was advertising on the local TV networks in my area. He was offering cheap consultations and promising big rewards. He treated me badly the whole way through our meeting. I don't think he really listened to what I was saying and he gave me advice that has resulted in me losing a lot of money. Have I just made a bad decision or do I have a claim against this person?

Answer

• Many things can be considered as poor or negligent financial advice and you should speak to a lawyer for advice on your particular case.
• Some examples of things for which you may sue your financial adviser include:

1. suggesting and encouraging risky investment proposals;
2. not adequately assessing your circumstances;
3. not advising you whether an investment is financially viable; 
4. not analysing the market for trends;
5. encouraging investments that have high commission rates;
6. not explaining to you the effect of taking loans and the interest payable on loans; or
7. advising poor investment strategy.

• It sounds like your financial advisor may have at least inadequately assessed your circumstances if you feel that he didn't listen to you at all. He may also have encouraged risky investments. Without more information about your conversations with him it is difficult to say.
• You should discuss the strength of your case with us.

Question

I'm not sure but I don't think my lawyer has been giving me the best advice. She doesn't seem to understand my needs and has made some really strange suggestions. I keep going back to her to clarify the dates and times for my hearing and there is always a delay or something that is holding it up. It shouldn't be this complicated. How can I lodge a complaint and claim compensation for negligence if something goes wrong?

Answer

• Each person’s case is different and it is strongly recommended to get specialist legal advice relevant to your individual matter. You have two main options in the event that things go wrong with your matter. If you live in NSW you can lodge a complaint with the Office of the Legal Services Commissioner (OLSC) or you can commence a private claim for professional negligence in court.
• If you lodge a complaint with the OLSC you may only have a limited chance of getting compensation. It is more relevant if you want disciplinary action taken against the lawyer. 
• A private action in court for a claim in professional negligence may be a costly process as you need to hire another lawyer to fight your case but if you are successful you may be awarded damages as compensation.
• You can lodge a complaint with the OLSC simultaneously with commencing private action for professional negligence.
• Other states and territories have different bodies where you must lodge your complaint.

Question

I'm not happy with the way my lawyer is handling my case. I've heard there are a range of different types of misconduct. What actions or inactions by a lawyer may be considered as unsatisfactory professional conduct, professional misconduct or negligence?

Answer

• Generally the following matters may be considered as forming unsatisfactory professional conduct, professional misconduct or negligence:

1. giving wrong advice;
2. failure to follow instructions;
3. negligent delays;
4. failure to carry out their duties; 
5. inappropriate conduct;
6. breach of the Legal Profession Rules; or
7. not having the knowledge or skills expected of a professional practicing in that area of law.

• In order to claim for professional negligence you must be able to establish that your lawyer’s conduct resulted in you incurring some identifiable loss.
• If you believe that your lawyer is engaging in the conduct described here or other similar conduct you should approach them to discuss the issues. If your lawyer is unwilling to discuss or resolve these problems then you may want to engage a specialist lawyer to help you understand your best options for resolution. 

Question

I am an employed solicitor but an old family friend has just asked me for assistance with applying for probate on his mother’s estate. This is not the first time friends and family have asked me for free or cheap legal advice. I don’t want to bring them to my firm as clients and have to time cost them at solicitor rates because their issues are really minor but at the same time it really worries me that if something goes wrong I am not covered. Is there anything I can do?

Answer

• Professional indemnity insurance is insurance that provides a certain level of financial protection for professional people when they are providing professional services.
• In Australia all professionals are obliged to have professional indemnity insurance.
• If a professional is sued because they have breached their professional duty the insurance company pays for any claims that are:

1. ordered by court; or
2. agreed between the parties at settlement providing the agreement has been approved by the court. 

• This just means that the compensation amount is handled by the insurance company rather than coming out of the individual's own pocket. It helps a professional to avoid a situation of falling short of any compensation amount. 
• As an employee lawyer any legal services you provide through your firm are covered through your firm’s insurance policy.
• However any advice you give to friends and family when you are not acting as an employee is unlikely to be covered.
• In NSW professional indemnity insurance for lawyers is provided by LawCover. You can call LawCover and ask whether they can provide you with what is informally known as “dinner party cover.”
• In order to obtain LawCover insurance you may need to hold an unrestricted practicing certificate and have completed a practice management course authorised by the Law Society.

Question

My real estate agent lost the essential documents that we had sent to him in order to purchase a house. We lost our chance at the dream house, lost money and suffered a lot of stress. Do I have a professional negligence claim? 

Answer

• This will really depend on whether the loss that you have suffered was caused by the real estate agent or not. You should always speak to a specialist lawyer and get advice specific to your individual matter. 
• Allegations of professional negligence against a real estate agent can range from claiming that they acted deceptively right through to providing incorrect information and conducting themselves unprofessionally.
• In New South Wales real estate agents are regulated under the Property and Stock Agents Act 2002 (NSW). There is other similar law in place in other states and territories of Australia.
• If the loss that you suffered is solely as a result of your real estate agent losing your documents then you have two options available to you.
• Firstly section 173 of the Property and Stock Agents Act 2002 (NSW) states that a compensation fund is maintained for the purpose of compensating persons who suffer pecuniary (financial) loss because of an agent’s failure to account. You must make a claim against the Compensation Fund within 12 months from the date you became aware of your agent’s negligence. You must make the claim in writing to the Secretary. Your lawyer should be able to guide you through the process and submit any necessary documents within the time limits.
• Alternatively you may wish to sue the real estate agent in professional negligence in a court. Your real estate agent will have professional indemnity insurance out of which any successful claim for negligence will be paid. Whether or not you have a strong case against your agent depends on a number of things.
• We can consider the specific facts of your situation to evaluate whether your claim is likely to be successful. 

Question

A structural engineer was hired by our owner’s corporation to assess the structural integrity of an underground car park due to emerging fracture marks in ceiling. In his report the engineer stated there was no cause for concern. He said the fracture marks were a result of normal aging of the building. He concluded no further actions were needed and that the car park was safe for use. Two weeks later part of the car park ceiling collapsed damaging common property, 20 cars and personal property of the residents. It was only good luck that no-one was killed or injured. Can the owner’s corporation sue the engineer for professional negligence? 

Answer

• It is likely that your engineer owes you a duty of care and it is possible that he has failed to exercise that duty of care to a sufficient standard. If this is proven then it may follow that his failure to observe that duty of care resulted in the relevant damage and loss. 
• In New South Wales the standard of care required of an engineer is based on the standard that was applicable at the time the service was delivered. It is determined by the court in accordance with the accepted professional practice at the time of the negligent conduct.
• You will need to provide evidence to highlight that the car park ceiling was experiencing the structural defect that led to the collapse at the time it was inspected by the engineer. You will also need to prove that because of the engineer’s negligence in undertaking the inspection he failed to discover or correctly identify the defect that led to the collapse. The negligent act must have caused or contributed to the damage. 
• It is possible that the collapse was due to something unforeseeable by the engineer at the time of inspection despite his best efforts. It will be up to the court to decide that.
• We can review the engineer’s report and evaluate the strength of your claim.