This recent Chancery Division decision provides a reminder to litigants that, although the application of s.14A Limitation Act 1980 is fact specific, it may nevertheless provide a route of recovery where a primary cause of action has expired.

The Facts

The Defendant firm of solicitors acted for Mr Shore in relation to a claim against his financial advisors for failure to properly advise in relation to the transfer of various occupational pension schemes to a private scheme. The claim was originally dismissed at first instance and again by the Court of Appeal, as a result of which Mr Shore was unable to pay his liability for adverse costs and was made bankrupt.

The Claimants in this transaction were the Trustees In Bankruptcy of Mr Shore and brought a claim against the Defendant on the grounds that Mr Shore would never have brought the claim against his financial advisors, or alternatively would have accepted a lower offer of settlement or a drop hands offer, if the Defendant had advised that his claim was doomed to fail on limitation grounds.

It was not disputed that the six year primary limitation period in respect of claims brought in contract and tort had already expired by the time the Defendant was instructed. Accordingly, it was necessary to determine whether a claim could be brought by Mr Shore under s.14A Limitation Act 1980 on the basis that he did not acquire the relevant knowledge and facts giving rise to the claim until less than 3 years before it was issued.

In the present case, the Claimants alleged that Mr Shore was not warned that his claims were statue barred and in truth the claim was hopeless from the start. Further, insofar as the claim was not hopeless from the start, it was alleged that the Defendant underplayed the risks and gave overoptimistic advice as to the prospect of success on the limitation issue. It was said that had Mr Shore been given “proper advice” he would either not have issued his claim or would have settled earlier.

The Decision

On the facts, the Court held that Mr Shore’s case was not hopeless. However, the Court also went on to consider what the position would have been had the case been hopeless and what would have happened if the Defendant had failed to advise accordingly. On this point, it was held that it was highly relevant that the Defendant had instructed Counsel to advise on the limitation position throughout. It was held that it was common ground that a solicitor who reasonably relies on Counsel’s advice when giving his own is not negligent if the Counsel instructed is competent and experienced in the field and properly instructed. Although a solicitor is not entitled to abdicate responsibility to Counsel and must exercise his own judgment, bearing in mind his own knowledge and experience in a specialised area, a solicitor can rely on Counsel’s advice unless it is “obviously and glaringly wrong”. In the present case, the Counsel instructed was experienced and competent in their field and although they advised both Mr Shore and the Defendant of the significant limitation risks in the case, they did not advise that the claim was bound to fail.

In respect of s.14A Limitation Act 1980 and the need to determine the extent of relevant knowledge for time to start running, the Court referred to the judgment of Spencer-Ward v Humberts [1995] 1 EGLR. Here it was held that the issues in s.14A “should be approached in a broad common-sense way, bearing in mind the object of the section and the injustice it was intended to mitigate”. HHJ Cooke held that it was apparent from the cases that the Courts are taking value judgments in which the perception of the balance of the injustice to the claimant and defendant plays a part in assessing, on the facts of a particular case, whether the knowledge acquired is sufficient or not.

Commentary

This case is helpful from two viewpoints. First, notwithstanding limitation defences are complex and fact specific, this case reminds litigants that even where a primary cause of action may have expired, there may nevertheless be options that allow a potential claimant to bring a claim. Second, it reminds practitioners that a solicitor cannot be held negligent for relying on the advice of Counsel unless it is obviously and glaringly wrong.

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