Section 14A(4)(b) of Limitation Act 1980 – Claimant’s flat charged to secure indebtedness of N – N applying to bank in 1987 for additional £300,000 loan – Claimant taking advice from defendant solicitor – Solicitor failing to mention certain points of banking practice and possibility of undue influence by N – Claimant alerted by different solicitor in 1994 to possible inadequacy of defendant’s advice – Claimant commencing action in December 1996 – Whether advice adequate in circumstances – Whether claim statute-barred – Whether claimant possessed relevant knowledge before 1994 consultation
In 1982 the claimant charged her flat in favour of a bank in order to secure the indebtedness of N, her unmarried partner. In 1987, at a time when the indebtedness had been reduced to about £5,000, N applied for a £300,000 loan in order to fund a project in Portugal. The bank insisted on the claimant taking independent advice, which was given by C, a member of WL & Co (the third defendant). At an interview in September 1987, summarised in a letter of the same date, C explained the effect of the charge and the consequences in the event of default. C also obtained the claimant’s confirmation that she was aware of N’s involvement in an earlier business failure, and that she wished for no legal security for herself.
At some time during 1994 the claimant was advised by another firm of solicitors that the advice given by C was inadequate in certain respects. In 1995 the bank took possession of the flat, and sold it in the following year for about £353,000.
In December 1996 the claimant commenced proceedings against a number of solicitors, each of whom had, at one time or another, been consulted by her in relation to the charge. Her allegation against the third defendant* was that she would not have allowed the charge to be extended to the 1987 loan if the advice given by C had complied with the requirements laid down by the Court of Appeal in Royal Bank of Scotland plc v Etridge (No 2) [1998] 4 All ER 705. This was disputed by WL & Co, which further contended that the claim was in any event statute-barred. At the trial, it was found as a fact (the basic finding) that the claimant was very much “her own woman” and that her relationship with N was not such as to raise a presumption of undue influence.
Held: The claim was not statute-barred, but it failed for reasons of causation.
1. C’s advice fell below Etridge standards in so far as it had failed to explore: (a) the possible existence of undue influence or misrepresentation; and (b) the chances of persuading the bank to place a cap on the otherwise unlimited liability. However, in the light of the basic finding and the history of the charge, it was plain that the fullest advice would not have changed the course of events.
2. If the above matters had been decided in the claimant’s favour, her claim would not have been statute-barred. As the advice had been given more than six years before the issue of the writ, the relevant period was the three years allowed by subsection 4(b) of section 14A of the Limitation Act 1980, commencing from the date that the claimant first had, or reasonably ought to have acquired, knowledge of certain facts, including the fact that the damage was attributable to the alleged failures on the part of C: see subsection 8(a). Although the claimant was at all times aware of the contents of the advice, she did not know, before the 1994 consultation, that banks did not invariably insist upon an unlimited “all moneys charge”; nor did she know that solicitors regularly gave advice about the possibility of capping. Since these were factual matters, the defendant could not contend that the delayed knowledge was limited to the negligence implications (such knowledge being declared irrelevant by section 14A(9)).
3. Despite the difficulty that arose in solicitor’s negligence cases of distinguishing facts from propositions of law, the above approach accorded with that taken in comparable cases of medical negligence: see, for example, Smith v West Lancashire Health Authority [1995] PIQR P514 and Spargo v North Essex District Health Authority [1997] 8 Med LR 125. What mattered was whether there was knowledge of the act or omission that was causally relevant to the negligence claim: see Hallam-Eames v Merrett Syndicates Ltd [1995] 7 Med LR 122.
* Editor’s Note: The claims against the other defendants (which also failed) turned on matters largely related to the “basic finding” summarised above.
Richard Jones QC and Joseph 0’Neill (instructed by O’Callaghan & Co) appeared for the claimant; David Unwin QC and Lindsey Stewart (instructed by Reynolds Porter Chamberlain) appeared for the first, second and fourth defendants; Philip Jones (instructed by Mills & Reeve, of Norwich) appeared for the third defendant.
Alan Cooklin, barrister
