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PFL04

Professional Liability

NZ $50.00
incl GST
Phil Cook Murray Gilbert
Phil Cook
Barrister
Wellington
Murray Gilbert
Gilbert Walker
Auckland
 

Published: 8 June, 2004
Pages: 151

Introduction

As Tipping J observed in Brownie Wills v Shrimpton:

If there is a solicitor involved in a transaction, it is not uncommon for the participants to blame the solicitor if something goes wrong.

This is all too true. The same can be said in relation to other professionals. This is usually because, in practical terms, they are often the only solvent or insured parties worth suing by the time a business has collapsed or some other failure has occurred. For this reason professionals need to take their professional obligations very seriously.

The last time the New Zealand Law Society conducted a professional negligence seminar was in 1984. Many professionals have been successfully sued and many important developments in the law have occurred in the meantime. These include:

  • the rule in McLaren Maycroft preventing concurrent liability in contract and tort has gone;
  • negligent misstatement under the Hedley Byrne principle has been extended to cover negligent acts as well as negligent words;
  • the Anns two stage approach to negligence cases has been overruled in England in favour of the incremental approach set out in Murphy v Brentwood;
  • New Zealand has parted company with England in a number of ways including by continuing to follow the broad two stage approach of Anns, following the New Zealand Court of Appeal’s landmark decision in South Pacific Manufacturing;
  • the very strict rules entitling recovery in cases of breach of fiduciary duty as previously set out in Brickenden have been retreated from;
  • the concept of reasonable discoverability of damage has been applied in latent defect building cases and sexual abuse cases and may have broader application for Limitation Act purposes beyond those types of cases; and
  • the Fair Trading Act has been enacted with significant implications for professionals including real estate agents in particular.

It is therefore timely for a further NZLS seminar to be held on this topic. The territory is huge and it is obviously not possible to cover it in any comprehensive fashion. Instead, we draw attention to some of the more important developments and discuss these with reference to recent cases.

A professional’s obligations most commonly arise by contract or are imposed by tort or stem from the professional’s status as a fiduciary. Important obligations are also imposed by the Fair Trading Act. We cover these sources of obligation separately and provide case examples to illustrate how professionals have fallen short of meeting these obligations in practice. We hope that in doing so, practitioners will find the seminar valuable at a practical level in assisting them to avoid some of the more obvious pitfalls for themselves and for the professional clients they advise.

Professionals will also have obligations and therefore potential liability arising out of statutory duties. It is beyond the scope of this seminar to cover those.

Authors

Author(s): Phil Cook, Murray Gilbert

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