It is rare indeed for there to be two important decisions on limitation, one from the Court of Appeal and one from the House of Lords, within days of each other.
The House of Lords case dealt with the definition of knowledge in Section 14 and 14A of the Limitation Act 1980. The defendants were accountants who advised the claimant in the purchase of interest in a trading company. The investments proved disastrous and in due course they were lost. The investments were made in 1994 and 1995.
A claim was commenced in December 2001, and the defendants contended that the courses of action based on investments made before December 1995 were statute barred because they arose more than six years before the issue of proceedings. The question arose whether the claimant could rely upon Section 14A of the Act to establish that he did not have the requisite knowledge until after December 1998 (three years before the issue of proceedings).
Judge Playford held that the various tests of knowledge under Section 14A were satisfied as soon as the causative action arose. He said the claimant had knowledge that he had made the investments at the moment he made them; he knew that he had made the investments in reliance upon advice of the defendants and that therefore the damage was attributable to that advice; the advice was the essence of the act or omission upon which the claim now relied. The only thing the claimant did not know was that the advice had been negligently given , but that was the very thing which was declared irrelevant by Section 14A (9).
The conclusions of the Court of Appeal concentrated on whether the claimant acknowledged that the “damage was attributable to the act or omission which is alleged to constitute negligence”. In reversing the decision of the Judge, the court considered that knowledge of attributability could not be established while there were competing causes for the demise of the company.
The defendants appealed to the House of Lords who unanimously allowed the appeal and restored the decision of Judge Playford. There is therefore a heavy burden on a claimant to identify what knowledge is required, as a matter of law, before the limitation period is triggered; and then to prove that such knowledge was acquired by him at a time within the three years proceeding the issue of the claim form. It is going to make it difficult to extend the limitation period in many disease cases.
Hayward and Others -v- Fawcetts. House of Lords, 1 March 2006.
The Court of Appeal case was much more helpful. The claimant issued proceedings a week after the three-year limitation period had expired. The defendant at that time took no limitation point. The insurers had already written informing that liability was not disputed. No Particulars of Claim was served and in August 2003 the claim was struck out.
The claimant issued second proceedings which then gave rise to the issue of whether the court had discretion to disapply the limitation period under Section 33 or whether it was precluded from doing so by the decision of the House of Lords in Walkley in 1979. Walkley, although an anomalous decision, is still law, so the Court of Appeal had to skirt round it.
The court decided that, because the first claim had been brought outside the time limit, the court did have a discretion under Section 33 to decide whether or not the limitation period should be disapplied, as Walkley only applied where the first claim had been issued properly in time. The court then went on to exercise discretion in favour of the claimant. The Judgment makes some very helpful comments in relation to how that discretion should be exercised which can be put to good use in cases where we have to apply for the court’s discretion.
This leaves us however with the bizarre position that, if a solicitor issues a claim in time but fails to serve it, he cannot bring a fresh action. But if he fails to issue it in time and fails to serve it, he can. Confused? Then join the Alice in Wonderland world of limitation.
Adam -v- Ali. Court of Appeal, 21 February 2006, Times Law Reports.