Haward and Others v Fawcetts (A Firm) and Another

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLORD NICHOLLS OF BIRKENHEAD,LORD SCOTT OF FOSCOTE,LORD WALKER OF GESTINGTHORPE,LORD BROWN OF EATON-UNDER-HEYWOOD,LORD MANCE
Judgment Date01 March 2006
Neutral Citation[2006] UKHL 9
Date01 March 2006

[2006] UKHL 9

HOUSE OF LORDS

Appellate Committee

Lord Nicholls of Birkenhead

Lord Scott of Foscote

Lord Walker of Gestingthorpe

Lord Brown of Eaton-under-Heywood

Lord Mance

Haward

and others

(Respondents)
and
Fawcetts (a firm)
(Appellants)

and others

Appellants:

Howard Palmer QC

Neil Moody

(Instructed by CMS Cameron McKenna LLP)

Respondents:

Michael Pooles QC

Christopher McCourt

(Instructed by Anthony Taylor)

LORD NICHOLLS OF BIRKENHEAD

My Lords,

1

In this case the claimant Mr Haward invested money in a company on the advice of his accountant Mr Austreng. The company failed, and Mr Haward lost his money. The issue before the House concerns a defence of limitation. This was tried as a preliminary issue in the action.

2

Statutes of limitation seek to hold a balance between two competing interests: the interests of claimants in having maximum opportunity to pursue their legal claims, and the interests of defendants in not having to defend stale proceedings. Traditionally the limitation period for most claims is six years. This goes back to the Limitation Act 1623. On its face this period, with extensions in cases of fraud and mistake, is a generous, perhaps over-generous, period within which to be able to start court proceedings in respect of a wrong.

3

However, with certain types of claims this six year period would be far from generous or even reasonable. The starting date for the six year limitation period is when a cause of action accrues. In claims based on negligence a cause of action accrues when real damage, as distinct from minimal damage, is suffered. This principle has been applied in limitation cases even where, at the date of accrual of the cause of action, the claimant did not know he had suffered damage. The injustices to which this harsh approach gave rise are well known. They were high-lighted in decisions of your Lordships' House in appeals such as the pneumoconiosis case of Cartledge v E Jopling & Sons Ltd [1963] AC 758 and the defective chimney case of Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 2 AC 1. There claimants were held to be statute-barred before they knew or could be expected to know they had suffered damage.

4

Considerable difficulty has arisen in finding a satisfactory formula remedying this deficiency in the law. The relevant statutory provisions now current are sections 11 to 14B of the Limitation Act 1980. Section 11 made provision for special time limits in respect of personal injuries. Sections 14A and 14B, inserted into the 1980 Act by the Latent Damage Act 1986, made similar provision for other negligence claims. The present appeal is concerned with these latter provisions.

5

Both sets of statutory provisions sought to remedy the deficiencies in the law by providing for an extended period of limitation to run from a date later than the date when the cause of action accrued. In the case of personal injuries claims the relevant later date, stated shortly, is when the person injured first knew his injury was significant, that the injury was attributable to the act or omission alleged to constitute negligence, and the identity of the defendant: section 14.

6

Parliament subsequently adopted a similar approach to other negligence claims. The extended three-year limitation period starts when the claimant first had both 'the knowledge required for bringing an action for damages in respect of the relevant damage' and a right to bring the action: section 14A(5). Section 14A(6)-(10) then defines what constitutes knowledge for this purpose. Essentially knowledge means knowledge of certain facts, of which two are relevant in the present case. These two facts are, first, 'the material facts about the damage in respect of which damages are claimed' and, second, 'that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence': section 14A(6) and (8)(a). For convenience I shall henceforth confine my references to section 14A, but my observations apply equally to the corresponding provisions in section 14.

7

By these provisions Parliament sought to identify the knowledge a claimant needs to possess before it is fair and reasonable that time should run against him. That is their purpose. This is made explicit in section 14A by its introductory description of the requisite knowledge as 'the knowledge required for bringing an action [etc]'. The claimant is to have a reasonable period, set by Parliament at three years, in which to start proceedings after he has the knowledge he reasonably needs for that purpose.

The degree of knowledge required

8

Two aspects of these 'knowledge' provisions are comparatively straightforward. They concern the degree of certainty required before knowledge can be said to exist, and the degree of detail required before a person can be said to have knowledge of a particular matter. On both these questions courts have had no difficulty in adopting interpretations which give effect to the underlying statutory purpose.

9

Thus, as to the degree of certainty required, Lord Donaldson of Lymington MR gave valuable guidance in Halford v Brookes [1991] 1 WLR 428, 443. He noted that 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, such as submitting a claim to the proposed defendant, taking advice, and collecting evidence: 'suspicion, particularly if it is vague and unsupported, will indeed not be enough, but reasonable belief will normally suffice'. In other words, the claimant must know enough for it to be reasonable to begin to investigate further.

10

Questions about the degree of detail required have mostly arisen in the context of the need for a claimant to know 'the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence': section 14A(8)(a). Consistently with the underlying statutory purpose, Slade LJ observed in Wilkinson v Ancliff [1986] 1 WLR 1352, 1365, that it is not necessary for the claimant to have knowledge sufficient to enable his legal advisers to draft a fully and comprehensively particularised statement of claim. Where the complaint is that an employee was exposed to dangerous working conditions and his employer failed to take reasonable and proper steps to protect him it may well be sufficient to set time running if the claimant has 'broad knowledge' of these matters. In the clinical negligence case of Hendy v Milton Keynes Health Authority [1992] 3 Med LR 114, 117, Blofeld J said a plaintiff may have sufficient knowledge if she appreciates 'in general terms' that her problem was capable of being attributed to the operation, even where particular facts of what specifically went wrong or how or where precise error was made is not known to her. In proceedings arising out of the manufacture and sale of the drug Opren Purchas LJ said that what was required was knowledge of the 'essence' of the act or omission to which the injury was attributable: Nash v Eli Lilly & Co [1993] 1 WLR 782, 799. In Spargo v North Essex District Health Authority [1997] PIQR P235 Brooke LJ referred to 'a broad knowledge of the essence' of the relevant acts or omissions. To the same effect Hoffmann LJ said section 14(1)(b) requires that 'one should look at the way the plaintiff puts his case, distil what he is complaining about and ask whether he had in broad terms knowledge of the facts on which that complaint is based': Broadley v Guy Clapham & Co [1993] 4 Med LR 328, 333.

11

A similar approach is applicable to the expression 'attributable' in section 14A(8)(a). The statutory provisions do not require merely knowledge of the acts or omissions alleged to constitute negligence. They require knowledge that the damage was 'attributable' in whole or in part to those acts or omissions. Consistently with the underlying statutory purpose, 'attributable' has been interpreted by the courts to mean a real possibility, and not a fanciful one, a possible cause of the damage as opposed to a probable one: see Nash v Eli Lilly & Co [1993] 1 WLR 782, 797-798. Thus, paraphrasing, time does not begin to run against a claimant until he knows there is a real possibility his damage was caused by the act or omission in question.

Irrelevance of knowledge that the act or omission involved negligence

12

Difficulties may sometimes arise over the interaction of these 'knowledge' provisions and the statutory provision rendering 'irrelevant' knowledge that, as a matter of law, an act or omission did, or did not, amount to negligence: section 14A(9). By the latter provision Parliament has drawn a distinction between facts said to constitute negligence and the legal consequence of those facts. Knowledge of the former (the facts) is needed before time begins to run, knowledge of the latter (the legal consequence of the facts) is irrelevant. As Sir Thomas Bingham MR said in the clinical negligence case of Dobbie v Medway Health Authority [1994] 1 WLR 1234, 1242, knowledge of fault or negligence is not necessary to set time running. A claimant need not know he has a worthwhile cause of action.

13

A linguistic point, which can give rise to confusion, should be noted here. Sometimes the essence of a claimant's case may lie in an alleged act or omission by the defendant which cannot easily be described, at least in general terms, without recourse to language suggestive of fault: for instance, that 'something had gone wrong' in the conduct of the claimant's medical operation, or that the accountant's advice was 'flawed'. Use of such language does not mean the facts thus compendiously described have necessarily stepped outside the scope of section 14A(8)(a). In...

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