How to establish accountant negligence
A professional negligence claim against an accountant can be pursued as a contractual claim, a tortious claim,or a statutory claim.
Most commonly, a professional negligence claim results out of a breach of a professional’s contractual and/or tortious duties.
Contractual claim:
In order to be successful in proving an accountant has breached their contractual duties to you, you would need to be able to show that you had entered into a contractual arrangement with that accountant and that they have breached the terms of the contract.
Regardless of whether the accountant has contractual duties to you, they may well have also had tortious duties. By that we mean that the accountant may have had a duty of care to you and may have breached that duty.
To succeed in an action for negligence against an accountant, you need to establish that:
- The accountant owed a duty to you (contractual and/or tortious).
- The accountant breached the duty owed to you.
- The accountant’s breach of duty caused you to suffer loss.
What are the time limits on making an accountant negligence claim
Typically, you can bring a negligence claim against an accountant within:
- six years from the time of breach of the contract; or
- six years from the time you suffer damage as a result of the accountant’s negligence
In tortious claims, it is also possible to pursue a claim within three years from your date of knowledge, i.e. the date when you started to suspect that the accountant might have done something wrong.
There are some exceptions to the general rule.
What are some examples of accountant negligence
University of Keele v Price Waterhouse
The Defendant (an accountancy firm) had negligently advised the University in relation to a profit-related pay scheme resulting in loss of savings which the University would have made otherwise, had the advice been correct.
The Defendant accepted that its interpretation of law was incorrect and, despite the Defendant disputing their liability on the basis of the wording of the exemption clause in the terms of engagement, the court ruled in the University’s favour and awarded compensation in respect of the lost savings.
