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S.14A Limitation Act 1980 – a three year “fall back”

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Posted by Matthew Goodwin on 01 June 2015

Matthew Goodwin - Tax Disputes Lawyer
Matthew Goodwin Associate-Solicitor-Advocate

In litigation, a claim must be brought within a specified period of time since the cause of action arose in order to have any chance of succeeding. This period of time is known as the “limitation period”. 

Very briefly, the standard limitation period is 6 years. For a breach of contract claim, this is 6 years from the breach, and for tortious claims, this is 6 years from the accrual of the cause of action (usually the breach of duty). If a claim is brought outside of this time, then it will be statute barred and will not be successful.

There is one, very complex and unusually unclear, fall back to standard limitation; the “date of knowledge” limitation.

Date of knowledge

Set out at s.14A of the Limitation Act 1980, the date of knowledge argument is that, if the claimant only had knowledge (whether actual or constructive) of a claim within the last 3 years, but outside the 6 year standard limitation period, then it will still be able to bring its claim.

Remarkably straightforward, you might think. But you’d be wrong. The issue with this point of law is the meaning of knowledge.

The test is a subjective one, and, put very simply, is as follows:

  1. A claim can be brought within 3 years from the date the claimant had the knowledge of the claim;
  2. Knowledge means knowledge of the material facts, that the damage was attributable to the alleged negligent act(s) and the identity of the defendant / other negligent party.
  3. Knowledge that the acts involved were negligent is not relevant.
  4. Knowledge includes that which a claimant could have been reasonably expected to acquire from facts observable to the claimant or from facts ascertainable by the claimant on further investigations with the assistance of an appropriate expert, which it might have been reasonable for the claimant to undertake.

The sheer volume of interpretable and subjective elements of the above simplified test give credence to just how complicated the application of this test can be.

Interpretation

There are several key judgments setting out some guidance on how this area of law should be interpreted. What these judgments all have in common, is that the question of s.14A limitation is one that can only be determined based on the facts of each individual case, and one which is heavily dependent on whether the claimant knew, or should have known, that they had a claim.

Recent Developments – Chinnock v Veale Wasbrough and Karen Rea [2015] EWCA Civ 441

Facts

The claimant and her husband sought advice from the defendant in 1999 as to whether the advice given to them by the NHS with regard to the birth of their daughter was negligent. The main basis of the claim was whether or not the NHS should have realised, and made the claimant and her husband aware, that the daughter was likely to be born with sever growth abnormalities. In 2001, only months before standard limitation expired, the claimant and her husband were advised by the defendants that they had no claim against the NHS and not to pursue it. The claimant and her husband were surprised by this advice, but chose not to pursue the claim against NHS.

Eight years later, the couple divorced. The husband’s solicitors advised the couple that they had a claim against the defendants for negligent advice, as the claim against the NHS should have been pursued.

The claim failed at first instance on the basis that the defendants were not negligent, but even if they were, then the claimants could not rely on s.14A for limitation as they had had actual knowledge of the negligent advice. The claimant appealed, the husband did not.

Limitation question

In order to address the question of s.14A, Lord-Justice Jackson made two presumptions:

  1. That the advice given by the defendants was wrong; and
  2. That error was negligent.

Having made these presumptions, the court was able to assess the question of s.14A limitation.

As is clearly set out by s.14A, the claimant’s knowledge that the advice was negligent was not necessary. What is of importance is whether or not the claimant had knowledge that the advice was wrong, and whether she should have carried out further investigations into the same.

It was unanimously agreed by the three Court of Appeal judges that the claimant’s claim was time barred, and did not fall within the s.14A test as the claimant had, or should have had, knowledge of the incorrect advice.

One of the appeal judges found that the claimant had actual knowledge of the incorrect advice at the time it was given and therefore fell outside the s.14A test. The judge held that the claimant had known of the two main negligent assertions to be levelled at the NHS, and also knew that the defendants had not advised her on these points. She therefore had actual knowledge of the incorrect advice, at the time it was given.

The two remaining appeal judges found that the claimant had constructive knowledge of the incorrect advice. What this means, effectively, is that the claimant knew enough about the incorrect advice, and had sufficient doubts as to that advice, that further investigations would have been appropriate. Lord-Justice Jackson drew attention to the claimant’s evidence which stated that she was “dumbfounded” at the advice she was given by the defendants. It was therefore held that it would have been appropriate for the claimant to seek alternative legal advice at some point in the following 6 years.

Conclusion

Whilst s.14A is an option to be used when parties aren’t aware of incorrect advice, or shouldn’t have been aware of incorrect advice, until after the initial 6 year limitation period has expired, the recent judgment of the Court of Appeal reinforces the difficulties that claimants will have in relying on this point.

Knowledge, for the purposes of s.14A, is a very low threshold. Knowing, or should have known, or knowing that further investigations were reasonable, is all that is required.

One final point to always bear in mind; even if the claimant has an argument under s.14A, any claim in negligence bought after 15 years from the date of the cause of action will fail, irrespective of s.14A.

The message to take from this is if you think you have received wrong or bad advice, you should investigate it immediately. Waiting until someone tells you it was wrong could be the difference between a successful or unsuccessful claim.

About the author

Matthew Goodwin

Associate-Solicitor-Advocate

As an associate within the tax and financial services litigation team, Matthew regularly acts for corporates and individuals, dealing with a variety of disputes.

Matthew Goodwin

As an associate within the tax and financial services litigation team, Matthew regularly acts for corporates and individuals, dealing with a variety of disputes.

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