Property — Mortgage — Negligent advice — Action in damages — Limitation period — Whether action statute-barred — Appeal dismissed
The appellant inherited a property against which she secured bank overdrafts. In early 1988, she decided to pay off the overdraft and to raise working capital by borrowing £50,000 from a building society. On 3 March, the appellant and her husband (G) duly attended the offices of the respondent solicitor, where they signed both a deed of gift transferring the property into their joint names and a mortgage in favour of the building society. The bank mortgage securing the overdraft was then released.
By September 1988, G had accrued further debts and needed to increase his overdraft limit. The bank sought a second charge on the property in order to secure this and, although the appellant was reluctant to provide the security, she agreed to do so when the respondent explained that her husband’s creditors might otherwise obtain charging orders and force a sale.
In 1993, the bank obtained a possession order, which was suspended upon agreed payment terms. In December 1996, the appellant complained to the bank that she had been “conned” into signing the bank charge and guarantees in 1988. She took legal advice from other solicitors in May 1999 and subsequently discovered that the building society would not have insisted upon the deed of gift in 1988. She brought proceedings against the respondent in May 2002, alleging that she had retained the firm from February to December 1988 and that it had provided negligent advice. The county court judge found that her action was statute-barred by virtue of section 14A of the Limitation Act 1980 because the requisite limitation period was three years from the date of the appellant’s constructive knowledge. Thus, she should have taken legal advice by no later than December 1996. The appellant appealed.
Held: The appeal was dismissed.
It had been reasonable to expect that the appellant would take legal advice on her claims against the bank as soon as she had been prevailed upon to execute the second guarantee in November 1988, and acquire knowledge from the facts ascertainable by her with the help of a solicitor investigating those claims.
The test of reasonable expectation was clearly objective. The court should take into account surrounding circumstances, such as the significance of the issues to a reasonable person in the position of the appellant. In general, the court must have regard to the characteristics of a person in the appellant’s position, but not to characteristics peculiar to the claimant and made irrelevant by the objective test imposed by section 14A(10). That conclusion was consistent with the general approach of section 14A, which attached importance to a claimant having actual knowledge: Henderson v Temple Pier Co Ltd [1998] 1 WLR 1540 considered.
In the present case, on the basis that section 14A(10) required the court to have regard to the position of the actual appellant, rather than a wholly hypothetical one, it was appropriate to take account of her belief that she had a claim against the bank. That was not inconsistent with the objective test in section 14A(10), and the court was entitled to assume that the appellant would have been concerned to know the reasons for her mistake as to the consequences of the deed of gift: Adams v Bracknell Forest Borough Council [2004] UKHL 29; [2004] 3 WLR 89 considered.
Richard Edwards (instructed by Churchers, of Fareham) appeared for the appellant; Andrew Nicol (instructed by Bond Pearce, of Southampton) appeared for the respondent.
Eileen O’Grady, barrister
