Plaintiff not having requisite knowledge of breach of duty currently claimed until date within prescribed period before writ – Plaintiff having earlier knowledge of other matters constituting actionable breach and not suing – Whether same cause of action – Whether limitation defence barring plaintiff’s claim – Limitation Act 1980 section 14A
In 1990 Stapley & Co (the defendants) acted for both the purchaser and the mortgagee (the plaintiff) in the purchase and mortgage of a house in Plaistow. The purchaser defaulted, and the plaintiff sold the house at a loss in 1995. The statement of claim alleged breach of contract, negligence and breach of trust on the part of the defendants. It was conceded by the plaintiff that the contract and breach of trust claims were statute-barred under section 14A of the Limitation Act 1980 and the only remaining claim was one in tort. The plaintiff’s principal claim was the defendants’ failure to inform it of material respects within the defendants’ knowledge, in which the borrower’s involvement with, and purchase of, the property differed, to the substantial detriment of the security, from the information given in the mortgage application.
The defendants served a rejoinder asserting that, in breach of their own admitted duty of care, they had failed to advise the plaintiff of their search of the register of local land charges prior to completion of the mortgage, which disclosed that the property was the subject of a demolition order. The plaintiff had become aware of this in April 1991, more than three years before the issue of the writ. The defendants asserted that the plaintiff’s earlier knowledge of that potential claim, not sued upon, debarred the plaintiff from pursuing the present claim, of which it did not have requisite knowledge until well within the relevant period for commencement of proceedings. The defendants submitted that knowledge was material if it constituted facts relating to the same cause of action as that on which the present claim was founded.
Held The limitation defence failed in relation to the claim in tort.
Knowledge of facts outside those relied upon by the plaintiff were material if they related to the same cause of action on which the current claim was founded. However, the negligence alleged by the defendants in their rejoinder gave rise to a different cause of action from that alleged by the plaintiff in the statement of claim. The two allegations of negligence were significantly distinguishable, notably, in what the defendants ought to have done. In the case of the demolition order, an urgent inquiry into its provenance and current effect was required. In the case of the borrower’s activities, immediate disclosure to the mortgagee was required. The answer to the question as to whether there were separate causes of action must have been the same, whether it arose on a plea of limitation or of res judicata. It followed that, had the defendants been correct, a plaintiff who, on the facts of the present case, had sued promptly for the failure to deal with the demolition order and obtained a judgment or settlement before learning of the matters presently complained of, would have been estopped from pursuing them. The matters relied on in the rejoinder were a separate cause of action, and knowledge of facts relating to them was to be disregarded for the purposes of section 14A: Hamlin v Edwin Evans [1996] 2 EGLR 106 and Horbury v Craig Hall & Rutley [1991] EGCS 81 considered.
Anthony Sendall (instructed by Hammond Suddards) appeared for the plaintiff; Glenn Campbell (instructed by Wansbroughs Willey Hargrave) appeared for the third defendants: the first and second defendants did not appear and were not represented.
Sarah Addenbrooke, barrister
