The Gazette 1971

Most other correspondents report that their professional

bodies will not become involved in a claim by a client

that a member has acted negligently unless the negli-

gence also amounts to professional misconduct. Many

of the complaints made to these bodies show that the

lawyer may have been negligent but that otherwise he

has acted with perfect professional propriety. The com-

plainant in such cases is left to his remedy in the Courts.

As to what might constitute negligence, it is generally

agreed that a substantial body of evidence by lawyers,

that in the conduct complained of the defendant lawyer

was following a well recognised practice, would norm-

ally be sufficient to entitle him to a verdict. However, in

some places where civil actions are tried by jury, a law-

yer sued for negligence would require almost over-

whelming evidence of that nature to secure a verdict.

This is probably a factor contributing to the high cost

of professional indemnity insurance.

Division 3: Limitation

The relevance of limitation provisions to the topic, is

perhaps, incidental. It does not lie in the very wide

range of limitation periods—from the Netherlands "No

specific time limit,

ergo

thirty years", and Scotland,

where the period is twenty years from the facts coming

to the pursuer's knowledge, to South Africa where the

period is one year from the act giving rise to the claim.

The question whether the cause of action is in contract

or in tort is of real importance in relation to periods of

limitation. In some countries different periods of limi-

tation apply to contract and tort. Switzerland, for

example has a ten years period in contract (ten years,

that is, from the breach) and in tort one year from

knowledge of the damage and of the person liable; but,

in any case within ten years of the negligent act.

Where the cause of action is in contract the period of

limitation, whatever it may be, generally runs from the

breach, with a special exception in the case of fraudu-

lent concealment by the lawyer of his negligence.

The interest which the question has for lawyers is

exemplified by a letter written to the N.S.W. Law

Society

Journal

by a Sydney solicitor asking "How long

should solicitors keep their files?" and pointing out that

in some cases an action against a solicitor in respect of

his negligence might be brought many years after the

act giving rise to the claim because the period of limita-

tion would begin to run from the damage. (A claim by

a client, being based on contract, would be limited in

New South Wales to a period of six years from the act

causing damage : the only possible exception, apart from

actions in tort such as might be brought against any

person, would be a claim based on the

Hedley Byrne

principle.)

An unusual limitation applies in the United Arab

Republic, whose Mr. K. Halim reports that "the law on

the legal profession stipulates that after five years a

client cannot claim any document or right from his law-

yer and the period of limitation runs only from the

termination of the relationship between the lawyer and

his client."

It is generally thought by correspondents that suffi-

cient protection is given to a client by the stipulation

(where it exists) that time does not run in the case of

fraudulent concealment by a lawyer of his negligence.

Presumably, "fraudulent concealment" would not be

confined to its literal meaning, with the ingredients of

deceit and dishonesty. Non-disclosure of a payment

made bv a third party for the plaintiff's benefit, within

the limitation period, was held in

Kitchen v Royal Air

Forces Association

to be such an extension of the

word "fraud" in Section 26b of the Limitation Act, 1939

However, I have found no authority to support

an extension of 'concealment by fraud" to non-dis-

closure by a lawyer of his knowledge, acquired within

the limitation period, that his client has a cause of

action against him for negligence. As distinct from the

'passive concealment" by non-disclosure, any "active

concealment", e.g. by persuading the client not to take

out of the lawyer's custody his documents which might

reveal the negligence, would probably be held to be

fraudulent. Some correspondents suggested special pro-

tection "where a fiduciary relationship exists i.e. if the

client is an infant, very elderly or illiterate" (infancy is

generally excluded from the period of limitation). In

Germany "the lawyer has to inform his client about the

negligent act or omission, otherwise the time for limi-

tation might not start to run."

The effect of fraud on limitation

It being one of the prime ethical requirements of the

lawyer's profession that he deal fairly with his client,

one might well ask whether the rule in Germany is not

closer to the professional ideal than the exception of

concealed fraud. The lawyer is sometimes in a position

of advantage vis-a-vis his client in the matter of his

negligence. With knowledge of the negligence having

occurred, he might also be aware of circumstances likely

to delay the client's discovery of the negligence—for

example if he were holding the client's documents and

without fraud, but by not informing his client of his

negligence, he could gain the benefit of the defence of

limitation. The answer to the suggestion that his client

ought to be informed by the lawyer of the negligence

and advised that he has a right of action against the

lawyer, can only be given simply where the lawyer is

insured. He is then bound by the terms of his policy to

inform his insurer as soon as he becomes aware of the

negligence and to make no disclosure of it to his client.

As to the uninsured lawyer, mere non-disclosure should

not bar the limitation defence, as it would be unreal to

postulate different standards of conduct for insured and

uninsured lawyers.

One feature of limitation particularly concerns the

lawyer holding a professional indemnity insurance policy

who retires from practice. If he neglects to continue an

adequate insurance during the period of limitation

following his retirement he risks the consequences of his

negligence within the period.

Since the law on limitation of action is a matter of

domestic policy for each country to determine, one can

merely express the view that unduly long periods of

limitation are undesirable and unreasonable and would

appear to be a proper subject for the law reformer's

attention. The general conclusions I have formed in

regard to limitation of action against a lawyer for his

professional negligence are :

(1) that the normal period of limitation should apply

to such actions;

(2) that time should run from the commission of the

act or from the omission which constitutes the negli-

gence ;

(3) that in the case of fraudulent concealment by a

lawyer from his client of the lawyer's negligence, time

should run from the date of the client's discovery of the

negligence;

(4) that, apart from the exception in (3), no special

protection in the matter of limitation ought to be given

to a client to compensate for the lawyer's position of

advantage.