The claimants instigated a professional negligence claim against the defendant for failing to advise on the need to equalise the pension age in a pension fund. The negligence was said to arise between 1990 and 2000. In 2000, the claimants obtained a report stating that a non-compliant method of equalisation was possibly being used, so it recommended that legal advice be obtained. Following a Standstill Agreement between the parties, proceedings were issued on 30 September 2010.The defendant argued that it could be inferred that the report was seen by the fund trustees and their legal advisers and therefore primary limitation expired in October 2004. Further, knowledge of the material facts was established prior to October 2007.

The claimants sought to rely on s.14A of the Limitation Act. They submitted that they first acquired requisite knowledge in 2010 when the failure to validly implement equalisation was discovered by virtue of the report. The claimants adduced no evidence from any of the parties who may have reviewed the report in 2000.

Section 14A of the Limitation Act 1980
Section 14A of the Limitation Act provides a special time limit for negligence actions where facts relevant to the cause of action are not known at the date of the accrual of the primary limitation period. Section 14A provides that a claim pursuant to that section shall not be brought after the expiration of three years from “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.”

Knowledge means both knowledge of “(a) of the material facts about the damage; and (b) of the other facts relevant to the current action.” 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.” The other facts relevant to the action 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”.

The Judgment
It was held that the claimants could not rely on section 14A. The evidence demonstrated that they had the requisite knowledge under that section well before proceedings were issued.

The initial review of the claimants’ knowledge was upheld on appeal. In considering whether the claimants had constructive knowledge for the purposes of section 14A, the Court looked at two elements: firstly, whether the report ought reasonably to have been read by an employee of sufficient seniority and secondly, if that threshold is passed, was it fanciful to think that the statutory test as to knowledge would not be met on the facts of this case. It was held that it was fanciful to think the claimants would succeed at trial in showing that the report ought not to have been read by a senior employee or that, if it had been, it would not have sufficiently alerted the reader to a potential issue regarding equalisation justifying further investigation, involving taking legal advice. The Court found on the facts that the report had been reviewed by a senior employee, with a subsequent presentation being given on the information provided therein. In those circumstances the claimants were fixed with constructive knowledge under both s14A (10) (a) and (b).

Further, it was held that the claimants would not be able to avoid the imputation of knowledge by showing that they had taken all reasonable steps to obtain expert advice, because they had not asked for any advice about the report. On that basis the claimants were unable to rely on section 14A of the Limitation Act and accordingly their claim was time barred.

This case demonstrates the importance of being certain of the relevant limitation period and ensuring that proceedings are issued before the limitation deadline expires. The case emphasises that where primary limitation has expired, section 14A of the Limitation Act will not necessarily prevent a matter from being statute barred.

For further information, please contact Georgina Squire or the Partner with whom you usually deal.