There has been a recent surge in the number of professional negligence claims issued against valuers, solicitors and other professional advisers. These claims are a knock-on effect of the recession and, while we have been suffering the effects of the property crash for several years, it may be that the number of claims has only recently started to rise because they are often viewed (by lenders in particular) as a last resort for recovering significant losses. Due to the slow pace at which decisions to pursue professional advisers are made, limitation issues typically arise in negligence cases. The primary limitation period is six years from the date on which non-negligible loss was suffered, but there is an alternative period available under section 14A of the Limitation Act 1980 (
Below is the detail of recent cases where claimants have sought to rely on section 14A Ð an area in which difficulties can often arise.
Section 14A
Section 14A of the 1980 Act sets down an alternative limitation period for negligence claims of three years from the date that the claimant acquired the “requisite knowledge” to bring a claim in negligence. This is subject to an overriding maximum limitation period of 15 years from the date of the breach of duty (see section 14B).
Pursuant to section 14A(8)(a), the three-year limitation period will begin when the claimant knows that the damage it has suffered is “attributable in whole or in part to the act or omission which is alleged to have caused the negligence.”
It is well settled that there is no need for the claimant to have detailed knowledge of how and why the defendant failed in its duty of care. There simply needs to be something that would reasonably cause the claimant to start asking questions about the advice it was given (see Haward v Fawcetts [2006] UKHL 9).
What the case law says
In St Anselm Development Co Ltd v Slaughter and May (a firm) [2013] EWHC 125 (Ch), the defendant solicitor was found to be negligent in failing to include an indemnity provision in new leases granted pursuant to Part 1 of Chapter 11 of the Leasehold Reform, Housing and Urban Development Act 1993 that entitled the landlord to recover from its tenants a proportion of ground rent payable under a headlease. The court found that the claimant’s realisation that he could not recover the relevant proportion of the ground rent in 1999 was at least sufficient to give the claimant reasonable cause to start asking questions and appreciate at least the possibility that the losses had been caused by the act or omission of the defendant solicitor. The claimant’s claim was therefore time barred.
In Roger Ward Associates Ltd v Britannia Assets (UK) Ltd [2013] EWHC 1653 (QB), the court had to consider whether Britannia Assets (UK) could rely on section 14A in relation to negligent planning advice it had received in 2003, namely that planning consent was not required to demolish fuel storage tanks at an oil distribution centre in Rochester and that it could be let out for storage and distribution.
In 2005/2006, it became apparent that the local council considered the change of use to be a planning breach and required a retrospective planning application to be made. On 30 March 2007, the council served on the claimant a planning contravention notice, followed by an enforcement notice on 13 July 2007.
The claimant lodged various appeals against the enforcement action by the council and the appeal process finally concluded on 13 July 2012. Coulson J said: “loud alarm bells must have started ringing” in 2006, when the council had said that a retrospective planning application was required, and “would inevitably have caused the claimant to start asking questions about the advice it had been given”. He went on to say that the claimant could not delay until the planning appeal process had been exhausted and therefore any claim was out of time.
A final salutary reminder
In Rehman and another v Jones Lang LaSalle Ltd [2013] EWHC 1339 (QB), a case concerned with a negligent valuation, the claimants sought to argue that they had not been put on notice of the potential claim until the lending bank had obtained a valuation following the insolvency of the anchor tenant at the property.
Jones Lang LaSalle Ltd (JLL) had provided a valuation in relation to the claimant’s acquisition of a warehouse and industrial site in Grimsby. The property had been valued by JLL during 2004 at £7m on the assumption that it was let to Alpine Cold Stores Ltd (Alpine) at an initial rent of £600,000pa with upward-only rent reviews. A valuation of £4m had also been given on the special assumption that the property was vacant, having regard to the existing occupational arrangements of the current tenants.
Alpine went into liquidation in 2007 and over two years later the lending bank obtained a valuation from GVA Grimley for the property of between £1.5m and £2m. The claimant’s alleged that the valuation from GVA Grimley put them on notice for the first time that the valuations by JLL may have been carried out negligently.
The judge disagreed and said:
“whatever the Claimants’ prior experience, if any, in commercial property transactions – it does not require a sophisticated level of knowledge to appreciate the potential financial implications of losing Alpine and … the liquidation of Alpine would have led a reasonable person in [their] position to take expert advice to enable them to assess the impact on their investment.”
As a result of the inactivity of the claimants in obtaining their own valuation advice once they knew that Alpine was insolvent, the judge went on to find that the claimants’ claim was statute barred.
It is clear from these cases that successful reliance on section 14A is not by any means easy and potential claimants should not be blurred by the injustice of the losses they may have suffered as a result of negligence. If they knew enough to bring or enquire about a claim more than three years ago, then time is most certainly up.
Charlotte Bijlani is a partner and head of real estate litigation at Norton Rose Fulbright
