In December 2023 the Constitutional Court held that where a client sues their legal practitioner for losses suffered as a result of professional negligence, the knowledge of the facts which give rise to the commencement of running of the three year prescription period may include knowledge of the legal conclusion that the advice was incorrect.
Section 12(3) of the Prescription Act 1969 provides that prescription commences to run as soon as the debt is due. The debt is not deemed to be due until the creditor has “knowledge of the identity of the debtor and the facts from which the debt arises”. Usually the question of what are “facts” is narrowly looked at and does not include knowledge of a legal consequence or conclusion. However a client who seeks legal advice or requires the provision of legal professional services relies on the advice and services to navigate their way around legal issues. Mostly, clients do not have an independent basis to test the correctness of the advice received. There may therefore be no distinction between the facts and the legal conclusion that results in losses to the client. At the time the incorrect advice is given, or the mandate is purportedly discharged, the client would generally not know that the advice was incorrect or the mandate was not properly discharged, as a fact. It is inconsistent with the knowledge requirement in section 12(3) to suggest that prescription must begin to run even in the absence of knowledge that something wrong has occurred. Therefore knowledge that advice received was incorrect, or the mandate was not properly discharged, where it depends on legal conclusions, must be regarded as “facts” for the purposes of section 12(3). There will be exceptions where the facts themselves suggest some wrongdoing and would activate the need to make further enquiry. That enquiry must be made within a reasonable time or prescription will commence running.
In this case the claimants instructed their attorney to exercise an option on their behalf to purchase a farm property. In non-compliance with the Alienation of Land Act, the attorney failed to get a written mandate from them to exercise the option on their behalf and the option fell away. The claimants only found out about the consequences of this failure in the course of cross-examination in proceedings to enforce the option. At that stage even their attorney was not aware of the difficulty. It was only when this legal consequence became known to the claimants that the prescription began to run. Generally, as in this case, clients rely on the correctness of the legal advice from their legal practitioners and are unaware of the lost rights till they are told about the adverse consequences.
When a client sues the attorney for wrong advice, the client must allege what advice was received and what advice they should have received. Until they know as a fact what advice they should have received, they do not know that they have a claim.
This is going to lead to many debates as to the difference between a fact and a legal conclusion. The court itself said that the new rule will be “at the expense of blurring the distinction”. That blurring and uncertainty is going to cause substantial expense for many litigants disputing over the difference.