Limitation of action — Preliminary issue — Whether for the purpose of section 2 of the Limitation Act 1980 the cause of action arose prior to the period of six years before the issue of a writ for negligence — The present proceedings were not concerned with the question of liability, which was not decided, but only with the date when the cause of action, if any, arose — The allegation against the defendants was that they were negligent in carrying out instructions given by the plaintiff to ensure that certain repair works required to property in which the plaintiff had a leasehold interest were properly carried out — The importance of this was that the plaintiff was entitled to extend the term of his lease, which was shortly coming to an end, provided that he had complied with all the covenants — One of these covenants was a repairing covenant to be performed during the last year of the term — Such performance was therefore of critical importance for securing to the plaintiff an extension of 21 years
met with difficulties when he endeavoured to exercise his option — A claim
against the assignees of his original lessors was dismissed because the option
had not been registered as an estate contract — A claim against the original
landlords for damages for breach of covenant failed because it was found that
the repairing covenant, performance of which was a condition precedent to the
extension, had not been complied with — The plaintiff now sued the defendants,
a firm of chartered surveyors, seeking under the head of negligence damages
representing the loss of the extension of the lease — The preliminary issue was
whether the cause of action was statute-barred — It was agreed that the cause
of action accrued when the plaintiff suffered damage caused by the alleged
negligence — Was this on December 25 1974 when the stipulated time for the
plaintiff to comply with the repairing covenant expired or was it May 9 1984
when the judge in the previous proceedings held that the covenant had not been
complied with, the former date being outside and the latter date within the
limitation period?
the latter date the plaintiff submitted that the damage only crystallised at
the date of the judge’s decision — Before that there was no certainty that the
plaintiff would fail in his action against the original lessors — The court
rejected this submission on the ground that it adopted a subjective assessment
of the prospect of success as a criterion for postponing the date of accrual of
damage — The judge’s decision merely confirmed that the right to a new lease or
damages in lieu had been lost on December 25 1974 — Hence the cause of action
was statute-barred
The following
cases are referred to in this report.
Dove v Banhams Patent Locks Ltd [1983] 1 WLR 1436
Moore (D
W) & Co Ltd v Ferrier [1988] 1 WLR 267;
[1988] 1 All ER 400, CA
Pirelli
General Cable Works Ltd v Oscar Faber &
Partners [1983] 2 AC 1; [1983] 2 WLR 6; [1983] 1 All ER 65; [1983] EGD 889;
(1982) 265 EG 979, HL
In this action
the plaintiff, Mr Alan William Kitney, sued the defendants, Jones Lang Wootton,
a firm of chartered surveyors, alleging negligence in failing to ensure that
certain repair work had been carried out to a property at 5 and 6 Granville
Parade, College Road, Harrow, Middlesex, in which the plaintiff held a
leasehold interest. The present proceedings were concerned with a preliminary
issue only, namely the date when a cause of action arose for the purpose of the
Limitation Act 1980.
Ian Romer
(instructed by Dale & Newbery) appeared on behalf of the plaintiff; Mark
Strachan (instructed by D J Freeman & Co) represented the defendants.
Giving
judgment, NOLAN J said: This case comes before me for the determination of a
preliminary issue. The question at issue is whether, for the purposes of
section 2 of the Limitation Act 1980, the cause of action arose prior to the
period of six years before the issue of the writ. Section 2 reads as follows:
An action
founded on tort shall not be brought after the expiration of six years from the
date on which the cause of action accrued.
The writ in
this case was issued on January 14 1985. The plaintiff claims that the
defendants were negligent in failing to ensure that certain repair work was
carried out to property in which the plaintiff held a leasehold interest. The
work was required in order to satisfy the obligations of the plaintiff under a
repairing covenant in the lease. It was of critical importance because of the
facts which are set out in a statement prepared by Mr Romer for the plaintiff
and accepted by Mr Strachan for the defendants.
Mr Romer’s
statement reads as follows:
1 By a lease dated April 20 1933 and made
between Greater London Properties Ltd of the one part and Gee Bee (Outfitters)
Ltd (therein called ‘the lessees’ which expression included successors and
assigns) of the other part, premises known as nos 5 and 6 Granville Parade,
College Road, Harrow, Middlesex were demised to the lessees at a yearly rent of
£700 for a term (‘the original term’) expiring on December 25, 1974.
2 By clause 5(2) of the said Lease Greater
London Properties Ltd covenanted that if the lessees should be desirous of
extending the lease for a further term of 21 years from the expiration of the
original term and of such desire should give six months’ previous written
notice then provided the lessees should have paid the rents thereby reserved
and observed and performed all the covenants and conditions on the lessees’
part therein contained the said lease should be continued for such further term
of 21 years at the same rents and subject to the same provisions except such
covenant for renewal.
3 By clause 3(5) of the said lease the lessees
entered into a covenant (‘the repairing covenant’) that during the last year of
the original term they would (inter alia) in good and workmanlike manner
paint all the parts of the said premises usually painted and that at the
expiration of the said term they would yield up the said premises well and
substantially repaired and painted as therein mentioned.
4 In 1966 the said term became vested in the
plaintiff and remained so vested until its expiration on December 25 1974.
5 In May 1974 the plaintiff duly served notice
of his desire to extend the same lease. By that time the reversion on the lease
had become vested in MEPC.
6 The defendants are and have at all material
times been a firm of chartered surveyors and on April 9 1974 they were
instructed by Dale & Newbery (the plaintiff’s solicitors) to prepare a
schedule of works required to be undertaken at the said premises to comply with
the repairing covenant. In May 1974 the defendants produced a schedule of works
(‘the May schedule’) to be carried out at the said premises.
7 In October 1974 the defendants accepted
instructions from the plaintiff to put in hand and to supervise the carrying
out of the works required as aforesaid.
8 In or about October 1974 the defendants made
certain amendments to the May schedule and the work specified in the said
schedule as so amended was completed in early December 1974.
9 In March 1977 the plaintiff’s claim against
MEPC for a renewal of lease was dismissed by the Court of Appeal* because the
option in the lease had not been registered as an estate contract.
10 On May 9 1984 it was held by Mr Michael
Wheeler QC (sitting as an additional judge of the Chancery Division) in
proceedings in the Chancery Division intituled: re the said lease: Kitney v
Greater London Properties Limited† that ‘the repairing covenant had not been
complied with and that by reason thereof the plaintiff was not entitled to have
the said lease extended and that his claim against Greater London Properties
for damages for breach of its said covenant to extend the said lease should
therefore be dismissed.’
*Editor’s
note: Kitney v MEPC Ltd [1978] 1 All ER 595.
†Editor’s note:
Reported at (1984) 272 EG 786.
In other
words, the plaintiff’s assertion that the repairing covenant had been complied
with could not be raised against MEPC with a view to getting a new lease
because of the lack of registration. It could be raised only against the
original lessor (whom I shall call ‘GLP’) by way of a claim for damages for
breach of the covenant to extend the lease.
The action
against GLP having been dismissed by Mr Wheeler, the present action is proposed
to be brought against the present defendants, again for damages representing
the loss of the extension to the lease but on the basis now that, as decided by
Mr Wheeler, the covenant to repair had been broken by the plaintiff. The
plaintiff says that the defendants were responsible for the breach by reason of
their negligence.
It is common
ground that the action can be brought in tort. It is common ground that the
cause of action accrued for the purposes of section 2 of the Limitation Act
1980 when the plaintiff suffered damage caused by the negligence alleged. When
was that? It was either (1) on December
25 1974, when the stipulated time for the plaintiff to comply with the
repairing covenant expired, or (2) on May 9 1984, when Mr Wheeler held that the
covenant had not been complied with.
In support of
the latter date, which is of course within the six-year period, Mr Romer
submits that the damage crystallised only at the date of this decision. Until
then, he submits, there was no certainty or even probability that the plaintiff
would fail in his action against GLP and therefore it would not be commercially
realistic to say that the plaintiff had suffered the damage which he now seeks
to lay at the door of the defendants.
Mr Romer
referred me to a number of authorities, notably the Pirelli and Dove‡
cases, in which a critical distinction had been drawn between defective advice
or work by the defendant and the onset of actual damage resulting from that
defective advice or work. The cases are helpfully summarised and analysed in D
W Moore & Co Ltd v Ferrier, which was decided by the Court of
Appeal on July 29 1987 but is not yet reported save in The Times
newspaper.§ If an analogy were drawn
with the present case, it would be on the basis that the defendants’ failure to
carry out the necessary repair work before the lease expired was the defect and
the decision of Mr Wheeler represented the accrual of the damage. But to my
mind the analogy is far-fetched and unrealistic and I think in the end both
counsel were minded to agree that the facts of the present case break new
ground.
‡Editor’s
note: Pirelli General Cable Works Ltd v Oscar Faber & Partners
[1983] 2 AC 1 and Dove v Banhams Patent Locks Ltd [1983] 1 WLR
1436.
§Editor’s
note: Now reported at [1988] 1 WLR 267.
The principle
of seeking out the date of accrual of the damage none the less still governs
the matter. Mr Romer invokes a phrase used by the deputy judge in the Moore
case, whose decision was upheld by the Court of Appeal, for the adoption of a
commercial approach to the identification of the date of accrual of the damage.
Following that approach, he submits as I have indicated that, until Mr
Wheeler’s decision was given, its result was not certain or even probable. In
factual support of that proposition, he cites Mr Wheeler’s view that there was
a narrow margin between the two sides and he relies on the facts that MEPC had
been satisfied with the state of repair of the premises in 1974, that GLP had conceded
that the state of repair was not bad, and that the present intended defendants
still maintained that the work was carried out adequately. Thus the plaintiff
might well have succeeded before Mr Wheeler and he could not definitely have
been said to have suffered damage until he failed.
The difficulty
with that approach to my mind is that it adopts a subjective assessment of the
prospect of success as a criterion for postponing the date of accrual of the
damage. I think that the difficulty is compounded by the fact that the
assessment of the possibility or likelihood of success is bound to be coloured
by the fact that, ex hypothesi, it is one which has been proved by
events to have been wrong. That is the foundation of the present action.
With respect,
I think that Mr Romer’s approach could be sustained only on the broader ground
that, irrespective of the prior expectation of the plaintiff, it was the
decision of Mr Wheeler which precipitated the damage. But I prefer Mr
Strachan’s submission that Mr
lieu had been lost on December 25 1974. The judgment established what the
situation had been at the end of that day. It did not create the situation.
Mr Strachan
also submitted by analogy with earlier authorities that the well-established
doctrine that damage may accrue before it is discovered or discoverable is in
point here. So he submits the fact that the plaintiff did not discover that he
had lost the right until the date of Mr Wheeler’s judgment did not prevent it
from having been lost on the earlier date. I think that is a helpful analogy,
but I base my decision on the simple former ground put forward by Mr Strachan.
For these
reasons, the preliminary question for determination must be resolved in favour
of the defendants.
