The Court of Appeal confirms that Regulators do not owe a general duty of care to individual private litigants

The Court of Appeal (Smith v McCarthy [2017] IECA 168) has recently confirmed that regulators do not owe a duty of care to individual private litigants in relation to the acts of professionals governed by that regulator. Background In the course of proceedings brought against a number of parties, including a financial institution, the plaintiff’s former solicitor and the Law Society of Ireland, a claim was made for damages for alleged negligence and breach of duty agains... The Court of Appeal (Smith v McCarthy [2017] IECA 168) has recently confirmed that regulators do not owe a duty of care to individual private litigants in relation to the acts of professionals governed by that regulator.

Background

In the course of proceedings brought against a number of parties, including a financial institution, the plaintiff’s former solicitor and the Law Society of Ireland, a claim was made for damages for alleged negligence and breach of duty against the Society on the basis of the Society’s alleged failure to police, control or inspect certain correspondence written by the plaintiff’s solicitor and the financial institution. On the application of the Society, the High Court struck out the claim on the basis that the proceedings against the Society were frivolous, vexatious or bound to fail. The plaintiff appealed this decision to the Court of Appeal.

The Court of Appeal decision

The Court of Appeal, in dismissing the appeal and striking out the claim against the Society, stated that there was no case law to support the general proposition that a regulator should owe a duty of care to a particular member of the public in relation to specific acts of a regulated professional. The Court noted the Society’s role as the regulator of the profession of solicitors and its duty to protect the public and stated that there was recent case law in both England and Wales and Canada that stressed that regulatory powers exist for the benefit of the general public and do not give rise to a general common law duty of care to a specific private litigant. This case will be of interest to regulators as it confirms that regulators do not owe a general duty of care to private litigants in respect of the actions of a regulated professional.