Negligence – Part 2 – Reducing the risk of negligence claims

There are a number of areas of civil law or tort which may be considered by an ‘injured’ party such as Nuisance, Trespass and numerous others however in many cases built environment/construction professionals find themselves defending a claim in negligence.

Source: http://davidlaw.com/

In Part 1 (Link) of this article I explained how the tort of negligence is particularly relevant to the role of the built environment/construction professional and why it so important to act with professionalism, vigilance and attention to detail at all times.  The consequences of not doing this could result in a mistake/omission/error, albeit unintentionally and may lead to a loss, damage or injury occurring.  If this does happen then an action may be sought in negligence to recover the loss. There are a number of areas of civil law or tort which may be considered by an ‘injured’ party such as Nuisance, Trespass and numerous others however in many cases built environment/construction professionals find themselves defending a claim in negligence.

As also identified in Part 1 of this article; In order to assess whether a person has acted negligently the courts will consider a person’s conduct and actions against how a reasonable person would act in the same circumstances. Although important this is just one consideration in establishing negligence. Over many years through the doctrine of Judicial Precedent, case law has developed a method of establishing negligence based upon decisions made in previous cases. The landmark case of Donaghue v Stevenson (1932) established the modern version of negligence and set a precedent for the main principles of establishing negligence and ‘the neighbour test’.  It is not the purpose of this article to discuss the circumstances or detail of the case, as this is information is widely published however it is worth exploring the principles that arose from the case and how negligence is measured and proved.

Source: http://legemetevangelium.wordpress.com/

In order to establish negligence there are four main ingredients for which all need to be proved. If just one of these are missing or cannot be proved then any action in negligence will fail.  Firstly, a duty of care must be owed to the plaintiff (the ‘injured’ party) by the defendant (accused of the negligence).  Next, if a duty of care is established then it must be shown that the defendant breached this duty.  Thirdly, if the first two elements are in place then proximate cause must be established. In other words, but for the breach of duty, the injury or loss would not have happened. Finally, if all three previously discussed elements are established the plaintiff must demonstrate that the loss/injury was a reasonably foreseeable consequence of the defendant's action or inaction.

Source: https://sielearning.tafensw.edu.au

The first two elements of negligence require the establishment of a duty of care and if shown that this has been breached, but what is a duty of care? A common definition of a duty of care is: ‘A requirement that a person act toward others and the public with watchfulness, attention, caution and prudence that a reasonable person in the circumstances would. The Oxford Dictionary’s definition is a little more concise; ‘A moral or legal obligation to ensure the safety or well-being of others’. As built environment/construction professionals the understanding of duty of care and how it applies is fundamental.  If there is a contractual relationship with a Client, then any loss/damage that may occur is usually dealt with through the contract and any dispute through contract law.  If you read the details of Donaghue v Stevenson you will note that a claim for negligence can be brought in the absence of a contract, so if a Client’s claim were to be unsuccessful in contract law, they may pursue a claim in negligence instead.

As a construction professional it is always worth thinking about your activities and asking yourself if you are meeting your duty of care and acting reasonably.  The measure of reasonableness of a built environment/construction professional will be established in a number of ways. Firstly, by the standards set within an individual’s particular profession. Then, if a mistake has been made and if an appropriately qualified and experienced person taking reasonable care would not have made the mistake, then the professional person may be liable in negligence.  To establish what are reasonable standards in a profession, either the plaintiff or defendant can call an eminent practitioner to give evidence in Court as an expert witness, which is another measure of reasonableness. 

How can we reduce the risk of negligence claims? - The tort of negligence can be a legal minefield for all professionals and something that should not be underestimated.  Before undertaking any professional services it is worth establishing precisely what is expected for your fee, a robust scope of services and knowing exactly who the services are being provided for and who will be relying on your advice.  This may sound simple and obvious to many however it is these simple things that can help to avoid confusion and reduce the possibility of cutting corners and of possible negligence claims in the future. 

Underestimating a fee or confusion over the scope of services does not diminish a professional’s responsibilities in respect of duty of care, and this would certainly be a very weak defence if a claim for negligence was brought by a Client. Acting with watchfulness, attention, caution and prudence will help to avoid these types of scenario, however in the fast paced World of commerce where everything seems to be done at 100mph, sometimes working to impossible deadlines, it is easy to see how we can sometimes ‘drop the ball’. Good robust quality assurance procedures will help to identify issues/mistakes before they leave the office, however it is also worth reviewing and training staff on an ongoing basis to improve knowledge and competence, all of which will help to minimize the risk of negligence (and other) claims in the future.  How much of this are you or your organization currently doing?  Something to think about maybe?

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Information/opinions posted on this site are the personal views of the author and should not be relied upon by any person or any third party without first seeking further professional advice. Also, please scroll down and read the copyright notice at the end of the blog.

UK Housing Market - What's in Store for 2015?

The UK government acknowledge the importance of the housing market to the UK economy and over the last few years have tried to ‘push it along’, with the introduction of a number of initiatives and policies, such as the help to buy scheme, changes to planning policy and recent changes to stamp duty thresholds

Source: http://www.theguardian.com/

Trying to predict what will happen in the housing market over the next twelve months and beyond is always a topical subject, which generates a wide range of debate particularly as we enter a new year.  Any decision on whether to enter the market or to buy or sell will be dependant upon many different factors and particularly by an individual’s current position on the housing ladder.  There will be those who are looking to get onto the first rung of the ladder and those who want to move further up the ladder who may be looking to ‘upsize’ or even ‘downsize’ depending upon their circumstances.  There will also be those who may be stuck in negative equity as a result of decline in the market over recent years and are looking for the first opportunity to escape. In any event the housing market affects a lot of people who will be watching closely to see what happens before making any decisions.

The UK government have acknowledged the importance of the housing market to the UK economy and over the last few years have tried to ‘push it along’, with the introduction of a number of initiatives and policies, such as the help to buy scheme, changes to planning policy and recent changes to stamp duty thresholds. Over the course of 2014 there has clearly been some positive momentum in the UK Housing market undoubtedly influenced by continued low interest rates and no doubt the impact of initiatives such as the help to buy scheme. However, as ever, opinion seems to be split (depending on what you read) on the effectiveness and impact of these initiatives and policies and only time will tell whether they prove to be a benefit or otherwise.  This really is the crux of the matter; will these types of initiatives and polices create sustainable growth in the housing market progressively or will the benefits be only short lived? Well, as identified at the beginning of this article, the answer is undoubtably one of perspective and will depend on individual circumstances and where a person is on the housing ladder.  An advantage for one person may be a disadvantage for another. Rising house prices is a prime example.

Source: http://www.thisismoney.co.uk/

Telegraph Online (Link)recently reported; ‘The average British homeowner saw their property wealth grow by £15,000 this year (2014) – or an astonishing £81,000 for those owning homes in London. The data, from property website Zoopla, is the first to put a figure on house price growth for the year 2014. A tranche of similar numbers from other property price analysts are due in the next few weeks. They are expected to confirm Zoopla's figures and highlight what has been an "extraordinary" year in the British housing market, characterised by a booming first half and then a rapid cooling off. Zoopla said prices across the country rose 6pc bringing the average value to £268,895.’

House Prices - Those who are eager to enter the housing market for the first time may have been biding their time while they save a deposit and no doubt become increasingly frustrated as house price steadily increase. As house price start to increase so does the deposit proportionally, possibly delaying the point at which they can enter the market.  Increasing house prices become less of a problem for those who are already on the housing ladder, because although the purchase price of the next property may increase, so will the price of their existing property, although not always at the same rate.  This is particularly an issue for those who plan to relocate to a different part of the country due to regional price differences, which can be significant.

FT Advisor Online (Link)predict that; ‘House prices will continue to rise in 2015 as gross mortgage lending hits a five-year high next year, Ray Boulger, senior technical manager at mortgage broker John Charcol has predicted. Mr Boulger also said he expects house prices to rise by 4-5 per cent in 2015. He believes that the rate of house price increases will continue slowing, but on-going low interest rates mean that for most people affordability will continue to be more around the deposit than the monthly payments’

Interest Rates – Telegraph Online (Link) recently reported; ‘Rates have remained at a record low (0.5%) since March 2009. The Bank now expects inflation, as measured by the consumer prices index, to fall below 1 per cent next year, from October’s rate of 1.3 per cent. Most economists believe interest rates will start to rise in the second half of next year (2015). Bank of England policymakers are increasingly divided over the best time to start raising interest rates without putting the recovery at risk’

In a previous article I discussed the implications of interest rate rises (Link) and explained that even a small increase in interest rates will pose difficulties for many with variable rate mortgages, particularly those who have borrowed to their absolute maximum.  As an example the table below provides an indication of the financial impact of an interest rate increase on a variable rate 25 year repayment mortgage loan of £150,000, assuming and existing current interest rate of 3%:

Mortgage amount	£150,000	£150,000	£150,000	£150,000
Current Interest Rate	3%	3%	3%	3%
Interest Rate Increase	0.25%	0.5%	0.75%	1.00%
Existing Monthly Payment	£717.85	£717.85	£717.85	£717.85
New Monthly Payment	£737.99	£758.43	£779.15	£800.15
Increase per Month	£20.14	£40.58	£61.30	£82.30
Increase per Year	£241.72	£486.92	£735.57	£987.61

With house prices predicted to continue to rise in 2015, although much more sedately than in 2014, and interest rates predicated to increase for the first time since 2009 in the second half of 2015 this is likely be another challenging year for the UK housing market.  Although the housing market is showing signs of life we need to ensure that the pace of recovery is sustainable.  This will not be achieved by positive publicity (or spin) alone, but must be underpinned by realistic and tangible means.  Building more homes seems logical, however this is impacted by planning policy, skills shortages, funding and numerous other issues that the government need to sort out to enable us to address our massive housing shortage.

Whichever way you look at it the issues inherent in the UK housing market are not new and have existed for many years, so what are we going to do differently in 2015?  Well, it is likely that we will see very little will change in the space of one year, however if we can continue to make steady measured progress in the housing market in 2015, (rather than short term gains) then we may be on the road to a sustainable recovery which in the mid to long term future will be to the benefit to everyone.

Please feel free to share this article and other articles on this site with friends, family and colleagues who you think would be interested

Information/opinions posted on this site are the personal views of the author and should not be relied upon by any person or any third party without first seeking further professional advice. Also, please scroll down and read the copyright notice at the end of the blog.