Professional employees' exposure to risk of negligence claims from the client

Abstract

Construction professionals owe duties of care and skill to clients in both contract and tort. Usually the principal or the corporate employer takes responsibility for employees' negligence under the principle of vicarious liability. But analysis of court judgments from England, New Zealand, Hong Kong and Florida (USA) reveals circumstances in which professional employees might attract personal liability to the firm's client, despite an apparent lack of contractual or tortious relationship with that client. Professional employees of unincorporated businesses might be more exposed to this risk than employees of incorporated businesses. Factors causing professional employees to be uninsured include lack of contractual privity between client and employee and absence of compelling rules or statutes. Professional employees seem unaware of these risks. Increased awareness of these risks could encourage employees to take out insurance but clients will resist paying twice to insure the negligence of both principal and employee.

Keywords:

• Construction law
• contract law
• negligence
• liability
• professional

Notes

1. [1932] AC 562; 1932 SC (HL) 31; 1932 SLT 317 (England and Scotland).

2. [1964] AC 465; [1963] 3 WLR 101; [1963] 2 All ER 575 (England).

3. [1990] 1 AC 831; [1989] 2 WLR 790; [1989] 2 All ER 514 (joined case Harris v. Wyre Forest District Council) (England).

4. [1991] 1 AC 398; [1990] 3 WLR 414; [1990] 2 All ER 908 (England).

5. [1990] 1 QB 993; [1989] 3 WLR 1150; 16 Con LR 90 (Ralph Gibson LJ) (England).

6. [1995] 2 AC 145; [1994] 3 WLR 761; [1994] 3 All ER 506 (England).

7. [2002] EWCA Civ 9; [2002] BLR 100; [2002] TCLR 184 (Court of Appeal, Brooke and Hale LJJ and Steel J) (England).

8. [2001] EWCA Civ 214; [2001] QB 1174; [2001] 3 WLR 1; [2001] BLR 483; 80 Con LR 43; [2001] 1 EGLR 145 (England).

9. [1982] QB 438; [1981] 3 WLR 843; [1981] 3 All ER 592 (England).

10. See note 3.

11. See note 6.

12. See note 2.

13. See note 6.

14. [1998] 1 WLR 830; [1998] 2 All ER 577; [1998] BCC 428 (England).

15. See note 3.

16. See note 9.

17. [2005] PNLR 31 (Judge Muttrie).

18. [1970] 2 QB 223; [1970] 2 WLR 802; [1970] 1 All ER 1009.

19. (Unreported) New Zealand High Court, Wellington Registry, CP 123/97, 2 December 1998 (Gendall J).

20. [1975] QB 180; [1974] 2 WLR 824; [1974] 2 All ER 967 (England).

21. 30 Con LR 103 (Mr Recorder Thayne Forbes) (England).

22. See note 5.

23. [1976] QB 801 at 820; [1976] 2 All ER 5 at 16 (England).

24. Fairline Shipping see note 20; Thomas Saunders Partnership see note 21; Trevor Ivory v. Anderson [1992] 2 NZLR 517; Williams see note 14; Bradford & Bingley plc v. Martin Hayes and Dunphy Hayes Ltd (Unreported) case no HQ99 03566, 25 July 2001 (England); Partco Group Ltd v. Wragg [2002] EWCA Civ 594; [2002] 2 Lloyd’s Rep 343; [2002] 2 BCLC 323 (Court of Appeal, England); Alfred McAlpine [2002] EWCA Civ 1152; (2002) CILL 1880; [2002] BLR 378 (HHJ Humphrey Lloyd QC) (England).

25. See note 14.

26. (Unreported) case no HQ99 03566, 25 July 2001.

27. [2002] EWCA Civ 594; [2002] 2 Lloyd's Rep 343; [2002] 2 BCLC 323, CA.

28. [2002] EWCA Civ 1152; (2002) CILL 1880; [2002] BLR 378 affirming [2002] 1 Lloyd's Rep 320, QBD.

29. [1897] AC 22.

30. [1992] 2 NZLR 517.

31. 774 So 2d 973 (Fla. 1999).

32. 133 So 2d 554 (Fla. 1961).