Andrew Parsons is a barrister practising at Portsmouth Barristers' Chambers.
WHEN does the primary limitation period begin to run for a professional negligence action in the area of housing law? If a house purchaser intends to take action against an allegedly negligent surveyor or valuer who provides a mortgage valuation report for the mortgagee, does the limitation period run from the exchange of contracts or completion?
Surprisingly, this important question had never been clearly answered until a recent Court of Appeal case, Byrne & Byrne v Hall Pain & Foster & ors. It was decided it was upon exchange.
The plaintiffs in the case claimed they had purchased a lease of a flat relying on a mortgage valuation report by the defendant surveyors, and the surveyors negligently failed to report defects in the property. The plaintiff's writ was issued more than six years after exchange of contracts but less than six years after completion. Since defects in the property had been noticed by the plaintiffs almost immediately, they could not rely on the Latent Damage Act. Such facts were not in dispute, so the outcome of the case turned upon this discrete point of law.
The plaintiffs had argued that until completion, their loss was contingent loss only and did not amount to actual damage. They relied upon a passage in the speech of Lord Nicholls in Nykredit Mortgage Bank v Edward Erdman Group , which suggested actual damage was not suffered until completion.
The Court of Appeal rejected this argument, distinguishing the passage referred to and holding that there was no distinction in principle between the loss accruing upon exchange and the loss accruing upon completion. Nykredit in fact assisted the defendants' case in demonstrating that contingent loss could in law amount to actual damage. The defendants' application to summarily strike out the claim was therefore successful. The importance of the decision is:
it provides a welcome, clear statement of the law.
it draws upon and clarifies a number of earlier decisions.
it has implications for other professional negligence actions.
Practitioners acting for defendant valuers, surveyors, or solicitors should review their current cases to see if this decision provides an opportunity to raise a good limitation defence and to make an application to strike out, or for trial of a preliminary issue.