4/06/2015 Junior lawyers’ professional indemnity seminar 4 June 2015 Section 14A of the Limitation Act 1980 – There’s No Limit? Niamh O’Reilly Extending the Limitation Period in Professional Negligence Claims • Section 14A of the Limitation Act 1980 – brought in by the Latent Damage Act 1986 • Subject to 15 year longstop – section 14B • Section 32 of the Limitation Act 1980 – time starts to run from when fraud, deliberate concealment or mistake in respect of which relief sought was or could by the exercise of reasonable diligence have been discovered • No longstop for section 32 Hailsham Chambers, 4 Paper Buildings, Temple, London, EC4Y 7EX T: 020 7643 5000 | E: clerks@hailshamchambers.com
4/06/2015 Section 14A Limitation Act 1980 14A (1)This section applies to any action for damages for negligence, other than one to which section 11 of this Act applies, where the starting date for reckoning the period of limitation under subsection (4)(b) below falls after the date on which the cause of action accrued. (2)Section 2 of this Act shall not apply to an action to which this section applies. (3)An action to which this section applies shall not be brought after the expiration of the period applicable in accordance with subsection (4) below. (4)That period is either — (a)six years from the date on which the cause of action accrued; or (b)three years from the starting date as defined by subsection (5) below, if that period expires later than the period mentioned in paragraph (a) above. (5)For the purposes of this section, the starting date for reckoning the period of limitation under subsection (4)(b) above is the earliest date on which the plaintiff or any person in whom the cause of action was vested before him first had both the knowledge required for bringing an action for damages in respect of the relevant damage and a right to bring such an action. Section 14A Limitation Act 1980 (continued) (7)For the purposes of subsection (6)(a) above, the material facts about the damage are such facts about the damage as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment. Hailsham Chambers, 4 Paper Buildings, Temple, London, EC4Y 7EX T: 020 7643 5000 | E: clerks@hailshamchambers.com
4/06/2015 (8)The other facts referred to in subsection (6)(b) above are — (a)that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence; and (b)the identity of the defendant; and (c)if it is alleged that the act or omission was that of a person other than the defendant, the identity of that person and the additional facts supporting the bringing of an action against the defendant. (9)Knowledge that any acts or omissions did or did not, as a matter of law, involve negligence is irrelevant for the purposes of subsection (5) above. Actual Knowledge – What is the Starting Date? The earliest date on which the claimant or any person in whom the cause of action was vested before him first had both a right to bring an action and knowledge: i. of the material facts about the damage in respect of which damages are claimed (being such facts about the damage as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment) i. that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence; ii. of the identity of the defendant; and iii. if it is alleged that the act or omission was that of a person other than the defendant, the identity of that person and the additional facts supporting the bringing of an action against the defendant and a right to bring such an action. Hailsham Chambers, 4 Paper Buildings, Temple, London, EC4Y 7EX T: 020 7643 5000 | E: clerks@hailshamchambers.com
4/06/2015 What is Knowledge? Haward v Fawcetts [2006] UKHL 9: • Knowledge does not mean knowing for certain and beyond possibility of contradiction. • It means knowing with sufficient confidence to justify embarking on the preliminaries to the issue of a writ. Per Lord Nicholls: “ In other words, the claimant must know enough for it to be reasonable to begin to investigate further . ” (at para 9) Actual Knowledge – Material Facts About the Damage • Section 14A(7): [T]he material facts about the damage are such facts about the damage as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment. • Relates entirely to the question of the damage suffered • Need not be able to precisely quantify the damage for time to start running • Haward v Fawcetts [2006] UKHL 9: Knowledge of the “essential thrust” of the damage required. Actual Knowledge – Attributability of Damage Haward v Fawcetts [2006] UKHL 9: • Knowledge in broad terms of the facts on which the claimant's complaint was based and of the defendant's acts or omissions and knowing that there was a real possibility that those acts or omissions had been a cause of the damage. • For time to run “there needs to have been something which would reasonably cause [the claimant] to start asking questions about the advice he was given. ” (per Lord Nicholls, para 21). • C believed that losses were to be explained by a variety of damaging economic factors, rather than the bad advice of his advisers. Nonetheless, the attributability criterion was satisfied. Hailsham Chambers, 4 Paper Buildings, Temple, London, EC4Y 7EX T: 020 7643 5000 | E: clerks@hailshamchambers.com
4/06/2015 • Haward v Fawcetts [2006] UKHL 9 What the claimant must know to set time running is the essence of the act or omission to which his damage is attributable, the substance of what ultimately comes to be pleaded as his case in negligence. That essence or substance here could no doubt be characterised in either of two ways: either as the act of recommending investment in the company (or omitting to caution against it- on the particular parts of this case these are two sides of the same coin), or, with greater particularity, the act of recommending investment without first carrying out the investigations necessary to justify such positive advice. Having at first preferred the latter characterisation, I have come to prefer the former. True, under the former the claimant knows nothing beyond the fact that his advisers led him into what turned out to be a bad investment; he does not know, as under the latter characterisation he would, that he has a justifiable complaint against his advisers. But he surely knows enough (constructive knowledge aside) to realise that there is a real possibility of his damage having been caused by some flaw or inadequacy in his advisers' investment advice, and enough therefore to start an investigation into that possibility, which section 14A then gives him three years to complete. ( Per Lord Brown at 90) Actual Knowledge – Attributability of Damage • C’s awareness of potential claim against D is entirely irrelevant ( Haward v Fawcetts [2006] UKHL 9; see also section 14A(9)) • Chinnock v Veale Wasbrough [2015] EWCA Civ 441 Constructive Knowledge under Section 14A 14A (10)For the purposes of this section a person’s knowledge includes knowledge which he might reasonably have been expected to acquire — (a)from facts observable or ascertainable by him; or (b)from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek; but a person shall not be taken by virtue of this subsection to have knowledge of a fact ascertainable only with the help of expert advice so long as he has taken all reasonable steps to obtain (and, where appropriate, to act on) that advice. Hailsham Chambers, 4 Paper Buildings, Temple, London, EC4Y 7EX T: 020 7643 5000 | E: clerks@hailshamchambers.com
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