Susan Jacobs v Sesame Ltd
Jurisdiction | England & Wales |
Judge | Lord Justice Lewison,Lord Justice Tomlinson |
Judgment Date | 30 October 2014 |
Neutral Citation | [2014] EWCA Civ 1410 |
Docket Number | Case No: B2/2013/3682 |
Court | Court of Appeal (Civil Division) |
Date | 30 October 2014 |
[2014] EWCA Civ 1410
Lord Justice Sullivan
Lord Justice Tomlinson
and
Lord Justice Lewison
Case No: B2/2013/3682
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BATH COUNTY COURT
Deputy District Judge Webber
2YN06020
Royal Courts of Justice
Strand, London, WC2A 2LL
Peter Dodge (instructed by Wixted and Co Solicitors) for the Respondent
Simon Howarth (instructed by Reynolds Porter Chamberlain LLP) for the Appellant
Hearing date: 8 October 2014
This appeal raises the question whether the Respondent/Claimant, Mrs Jacobs, can take advantage of the provisions of s.14A of the Limitation Act 1980 in order to pursue a claim in negligence against the Appellant/Defendant which is otherwise time-barred. After a trial of that preliminary issue Deputy District Judge Webber sitting in the Bath County Court determined that she could. The Defendant appeals.
The Defendant is a "network" of financial advisors. A Mr Derek Pike was a member of the Defendant's network. In September 2005 Mr Pike advised Mrs Jacobs to invest in a Legal and General (L & G) Investment Bond. She invested £65,000 on 20 September 2005. In August 2008 Mrs Jacobs made a single withdrawal of £2,500 (inclusive of early surrender penalties totalling £180.64). Between October 2011 and February 2012 she withdrew £1,560 by way of monthly payments. Mrs Jacobs surrendered the Bond in February 2012. Its value was then £53,152.32. The loss asserted is £7,968.32, although there is also reference in the Particulars of Claim to loss of interest. In April 2012 Mrs Jacobs consulted solicitors, apparently in response to an advertisement in the press indicating that financial advisors could be pursued for compensation on a "no win no fee basis". Proceedings were issued in November 2012. Mrs Jacobs asserts that it was not until February 2012 that she knew either that she had suffered a loss or that she might have received inappropriate advice.
Mrs Jacobs contends that Mr Pike's advice was negligent and that the product was unsuitable for her requirements. The Defendant denies negligence but relevantly for present purposes asserts that Mrs Jacobs had sufficient knowledge to bring a claim in July 2009. By then she had received four annual statements in June 2006, 2007, 2008 and July 2009, the latter two of which showed a catastrophic fall in the value of the Bond. The June 2008 statement showed a fall in value of the Bond of £17,264.99, i.e. 21%, over the previous twelve months. The statement of July 2009 showed a fall in the value of the Bond of £18,052.12, i.e. 30%, over the previous twelve months. The value of the Bond in July 2009 was £43,653.
Although nothing may here turn on it, it is as well to remember that the onus is on Mrs Jacobs to demonstrate that the starting date for reckoning the period of limitation has been postponed. If her contention that she suffered no loss until surrender of the Bond in February 2012 is well-founded, then she would succeed in so demonstrating. So too if she did not until then have sufficient knowledge to bring a claim.
In 2005 Mrs Jacobs was a warden in a block of residential flats. She retired in 2011. She describes herself as an inexperienced investor. She had never before held any form of non-deposit investment. The £65,000 which in September 2005 she decided to invest represented 75% of the life savings of her and her husband. She says in her witness statement that she had an extremely cautious attitude towards risk and that she could not afford to lose any part of the fund.
The judge heard evidence from Mrs Jacobs and Mr Pike.
After meeting Mrs Jacobs and assessing her requirements Mr Pike wrote a "Suitability Report" dated 19 September 2005. The judge found that Mrs Jacobs never received this document notwithstanding that it was Mr Pike's evidence that he either gave it to her or left it for her or posted it to her. That report contains the following two paragraphs:-
"1. The area which requires addressing is investing for capital growth. You preferred only to accept a low risk of capital loss with 100% of your savings, in return for the opportunity to earn more than from a deposit type investment[s]. You recognise that this will limit the potential for real capital growth.
2. I have recommended £65,000 into an Investment Bond because we agreed that you required a medium to long term investment with the potential for real capital."
As typed in the original document there is no full stop at the end of paragraph 2 of the Suitability Report and I suspect that the word "growth" is missing. The judge records in his judgment that the parties before him agreed that these two paragraphs contain "a true description of the sort of investment Mrs Jacobs was seeking".
There is of course something of a tension between this assessment of Mrs Jacobs' attitude to risk and what is said in her Witness Statement and indeed what is pleaded on her behalf in the Particulars of Claim. That document in turn does not speak with one voice. At one stage it is asserted that Mrs Jacobs had a cautious attitude to risk "and could not afford to invest in any product where there was a substantial risk that she could lose some or all of the amount invested". In at least two places it is asserted that the Defendant ought not to have recommended anything other than an interest bearing deposit.
The Suitability Report also effectively records Mr Pike's advice as to fund allocation in these words:-
"It was agreed to invest the monies into a property fund hold [sic] real assets in bricks and mortar."
Mrs Jacobs understood that the money was to be invested in commercial property. The Bond when she received it recorded that the entire amount was invested in Property Fund (A).
The Suitability Report also contained this paragraph:-
"I confirm that these funds (sc. the property fund referred to in the previous paragraph) are consistent with your attitude towards investment risk. I also advise that you invest for a period of at least five years."
The second sentence quoted above reflects the circumstance that surrender, in whole or in part, during the first five years after the policy date attracted a graduated early surrender charge, diminishing from 7% of "cash value" during year one to 2% for surrender after four but before five years. The Bond had no fixed term. It is properly described as a single premium life assurance contract. Benefits were payable on death of the life assured or surrender. The judge found that the understanding between Mrs Jacobs and Mr Pike was that the money would remain in the Bond for at least five years.
Paragraph 3(o) of Mrs Jacobs' Particulars of Claim asserts:-
"The Claimant was concerned about the loss of her savings and Mr Pike reassured her that this would not occur, advising her that "You'll always get £65,000 back". The Claimant believed, therefore, that regardless of the performance of the Bond throughout its term, on its termination she would receive back the full invested amount at least. Mr Pike did nothing to correct this impression when he knew, or should have known, that there was no such protection in place. Had the Claimant known there was no such protection in place, as well as the actual level of risk to which her savings would be exposed, she would have declined the advice of Mr Pike and not have agreed to place her savings into this investment."
The judge heard evidence on this issue which he summarised as follows:-
"5. Mrs Jacobs goes further. In her witness statement she said "Mr Pike said to me, that I always would get the £65,000 back and I accepted that advice." In her evidence she used the word "guarantee" a number of times. For example, she said "I did believe that there was a guarantee that at the end of the five years Legal and General would pay me £65,000 because that is what I was told I would get". She also said: "I invested the money because I wanted to make money. He told me it was going into commercial property and it would be a reasonably safe investment and the £65,000 would always remain safe, no matter what I made on top of that." And "I asked over and over would the £65,000 be safe. There were several conversations. I might have been naïve but I believed someone who knew about investments."
6. In his statement Mr Pike says: "I did not at any stage state to the Claimant that 'she would always get £65,000 back' from her investment. Her capital was not guaranteed. In his evidence he said "there was no guarantee, although there was an expectation of a profit". The money was all to be invested in commercial property and "over the previous 10 years that sector had done extremely well. In 2005 I was confident, otherwise I would not have recommended it". In his evidence Mr Pike said: "I may have said an adjective, such as likely or probably, that 'you will get your money back over five years'. In 2005 I was confident otherwise I would not have recommended it.""
The judge's findings on this aspect were as follows:-
"7. I find that Mr Pike did not give a guarantee as such. To have done so would have been plainly inconsistent with the document, written in plain English, that was given to Mrs Jacobs at the time. However, I do find that Mr Pike said sufficient to Mrs Jacobs that she believed that there was no chance of her receiving less than £65,000 when the investment period elapsed."
The reference to the document given to Mrs Jacobs at the time is to a 16 page document entitled "Key Features of the Legal & General...
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