The case of Seton House Group -v- Mercer Ltd [2014] EWHC 4234 (Ch) shows the importance of being certain of a limitation period and issuing well before that date. In this case, however, the limitation period had passed well before the claimants instructed solicitors. Section 14A of the Limitation Act can be unforgiving.


The claimants were suing for negligence in failing to advise on the need to equalise the pension age in a pension fund. The total claim was for £5.4 million plus £750,000 for the costs of investigations.

  • The negligence was said to arise between 1990 and 2000.
  • In 2000 the claimants had obtained a report stating that a non-compliant method of equalisation was possibly being used. That report recommended that legal advice be obtained.
  • The parties had been in a standstill agreement and the claim was deemed to be issued on the 30th September 2010.
  • The defendant argued that it could be inferred that the report was seen by the fund trustees and their legal advisers. Primary limitation, it was argued, expired in October 2004 and the material facts were known prior to 1st October 2007.
  • The claimants did not file a Reply to the Defence.


The claimants wished to rely on s.14A of the Limitation Act. It was held that they could not. The evidence demonstrated that they had the requisite knowledge under that section well before proceedings were issued.


The claimants argued that they first acquired requisite knowledge in 2010 when the failure to validly implement equalisation was discovered by advisers to the Trustee. They adduced no evidence from any of the parties who may have reviewed the report in 2000.


“14A Special time limit for negligence actions where facts relevant to cause of action are not known at date of accrual

…(3) An action to which this section applies shall not be brought after the expiration of the period applicable in accordance with subsection (4) below.

(4) That period is …

(b) three years from the starting date as defined by subsection (5) below…

(5) … the starting date for reckoning the period of limitation under subsection (4)(b) above is the earliest date on which the plaintiff or any person in whom the cause of action was vested before him first had both the knowledge required for bringing an action for damages in respect of the relevant damage and a right to bring such an action.

(6) In subsection (5) above “the knowledge required for bringing an action for damages in respect of the relevant damage” means knowledge both—

(a) of the material facts about the damage in respect of which damages are claimed; and

(b) of the other facts relevant to the current action mentioned in subsection (8) below.

(7) For the purposes of subsection (6)(a) above, the material facts about the damage are such facts about the damage as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment.

(8) The other facts referred to in subsection (6)(b) above are—

(a) that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence; and

(b) the identity of the defendant…

(9) Knowledge that any acts or omissions did or did not, as a matter of law, involve negligence is irrelevant for the purposes of subsection (5) above.

(10) For the purposes of this section a person’s knowledge includes knowledge which he might reasonably have been expected to acquire—

(a) from facts observable or ascertainable by him; or

(b) from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek;

but a person shall not be taken by virtue of this subsection to have knowledge of a fact ascertainable only with the help of expert advice so long as he has taken all reasonable steps to obtain (and, where appropriate, to act on) that advice.”



61. An evaluation of the evidence for the purposes of Mercer’s application has to be underpinned by the principles that are applicable to a Part 24 application. At a trial, it will be for the Claimants to establish that they are entitled to the benefit of section 14A and that they did not acquire knowledge, as defined in that section, before 29th September 2007. I have to consider whether they each have a real prospect of doing so. I must not conduct a mini-trial but, equally, the court need not be credulous about the Claimants’ evidence or ignore the gaps in it. The likelihood of anyone having a recollection of events 13 years ago in the absence of contemporaneous documents is plainly a material factor here. And I have already remarked about the lack of any evidence concerning the likelihood of (a) Eversheds’ file being available and/or (b) Mr Selway providing a statement that assists the Claimants. This is not a case in which the Claimants can demonstrate that further evidence of a helpful nature can reasonably be expected to be available at a trial. It does not appear to me the Claimants can realistically say that a trial will lead to a fuller investigation of the facts that has a real prospect of providing additional evidence that is helpful to the Claimants in discharging the burden on them.

62. Mercer’s application is based upon constructive knowledge, rather than actual knowledge, but given the very limited evidence that the Claimants have provided the distance between the two on the facts of this case is not great. Mercer’s case is that Appendix 2 must have been read by someone of suitable seniority as part of Project Rhinestone but for the purposes of the Part 24 application actual knowledge is not relied upon. In considering whether the Claimants had constructive knowledge for the purposes of section 14A I have to look at two elements. First, is it fanciful to think that the Passage ought reasonably to have been read by an employee of both Claimants of sufficient seniority? Secondly, if that threshold is passed, is it fanciful to think that the statutory test as to knowledge will not be met on the facts of this case.”
HHJ David Cooke then summarised the master’s findings:-
  1. He went on to hold that it was fanciful to think the claimants would succeed at trial in showing that the Passage ought not to have been read by a senior employee of BSG (para 63) or that if it had been it would not have sufficiently alerted the reader to a potential issue regarding equalisation justifying further investigation. Such investigation would have involved taking legal advice as the Passage envisaged (although it was of course directed to the purchaser not BSG) which would have required an examination of the scheme documentation in place at the time of the Barberdecision that would have revealed the issues now the subject of the claim (para 66). In those circumstances BSG (and through it the Trustee) were fixed with constructive knowledge under both s14A (10) (a) and (b). In relation to the latter, the claimants would not be able to avoid the imputation of knowledge by showing that they had taken all reasonable steps to obtain expert advice, because they had not asked for any advice about the Passage or the appendix in which it was included (Para 78).”


The judge rejected the argument that the master had applied the wrong tests.
  1. I do not consider that in following this chain of reasoning the Master was wrong in his conclusions, or that, read as a whole, his judgment shows that he committed any of the other errors alleged along the way.
  2. Firstly, it was not challenged that both the company and the Trustee had the full E&Y Report. That in itself would have been somewhat unusual; it was a detailed due diligence report prepared for a purchaser and would normally be expected to be confidential to the purchaser. It was no doubt disclosed, as the claimants’ witnesses said, for the purpose of negotiating a reduction in price based on the matters it referred to. It would also have been relevant to negotiation of warranties and indemnities. It is not credible to suggest that BSG and the Trustee would not both be expected to look at it to see what issues might have been identified by E&Y relevant to them in the context of the sale.
  3. There is no doubt that the Report was seen by someone senior at BSG, because someone (presumably Mr. Selway though that was not I think conclusively shown) prepared a slide show presentation considering in some detail the main points that might be relevant to negotiation of the terms of the deal. To do that he or she marked up fairly heavily the Executive Summary section of the Report, though not the main body of it. The fact there was such a presentation shows that a number of people at the company, not just Mr. Selway, were involved in the transaction at a sufficient level of seniority to be considering the issues relating to the negotiations.
  4. Given the importance of the transaction and the significance of the report, the conclusion that both claimants could reasonably be expected to look at its content was in my view inevitable. It would have been slapdash not to do so. While it would not necessarily be the case that such a review would require every page or statement in it to be considered in detail, it would at least require that the principal sections be looked at to identify any points of potential significance for the transaction. The Master was right to say that pensions and the transfer from the pension fund were material parts of the transaction, and it seems to me inevitable that the seller, and the trustee of the fund involved, could reasonably be expected to review what the purchaser had disclosed in relation to its due diligence investigations. The letter from the actuaries was an important part of the section dealing with pensions, and it follows that it would be reasonable for those involved in the transaction dealing with pensions issues to have read that, including the Passage.
  5. If such a review had been carried out, therefore, the Passage would have been read by someone with responsibility for the pensions aspects of the transaction. The content of the Passage would therefore have been within the knowledge of both claimants. That content falls in my judgment within the scope of the constructive knowledge imposed by s 14A(10)(a), since the chain of enquiry thus far is one it would be reasonable to expect the claimants themselves to follow, even if they might have delegated it to an advisor. The content of the Passage (as distinct from the import of that content) was not a matter ascertainable only with expert advice.
  6. Would it then be reasonable to expect that one or other of the claimants once aware of the Passage would cause further enquiry to be made, by taking legal advice? In my judgment the Master was again right to conclude that it would be, for the reasons he gave. Although as was pointed out the actuary’s letter was not directed to the claimants but to the purchaser, it flagged up what might obviously be a significant problem and it would be, as the Master said, incautious to ignore such a warning from a responsible and knowledgeable source.
  7. Mr. Anderson submits that it could have been reasonably concluded from the Passage that implementation had been validly achieved, because it stated that the method “set out in the Rules appears to comply with legislative requirements”. But this it seems to me misses the point; what the Passage points out is that it appeared that the Rules say one thing but members have been told another, a situation which has obvious potential to cause problems that might have significant financial implications.
  8. It was suggested that if legal advice had in fact been taken directed at the suggested inconsistency of method of equalisation, it was possible that it would not have revealed the issue of non-implementation. That suggestion was not however strongly pressed, and in my view was unrealistic. The Master’s conclusion was that a solicitor investigating the inconsistency would have needed to see the scheme Rules in force since the equalisation announcement had been made, from which it would be immediately apparent that no rule changes had been made until 2000 and, on the claimants case, that the change then made was not retrospective in effect. That knowledge would be constructive knowledge imposed by s 14A(10)(b), since the legal issue that the change of rules did not have its purported retrospective effect would not be one that the claimants could be expected to have realised without expert advice.
The judge rejected arguments that the master had adopted the wrong approach in relation to the test for summary judgment; the expert evidence and a “collective retainer”.   One particular point was that the claimants had not obtained any evidence from their former solicitors.


The master had refused to allow witness evidence in which appeared to be evidence of a “quasi expert” type. Further there were gaps in the claimant’s evidence in response to the application.
  1. So far as Mr. Punter’s evidence is concerned, the Master’s decision to exclude it was well within his discretion. It was produced in the course of the hearing, I was told because of concerns at the views it appeared the Master was forming during the first day. It was thus very late, and the defendant had no opportunity to respond to it. If the claimants had wished to rely on evidence as to the invariable method of conducting such transactions, there was no reason they could not have sought permission for it earlier. Further, the Master held that it would be unlikely to assist the court and would have been refused if applied for at the earlier CMC. I agree; the idea that there is an invariable way of dealing with documents received during a corporate transaction, let alone that the responsible employees of the seller invariably do not read such documents themselves, is incredible.
  2. Mr. Selway’s actual approach to the transaction was a matter of fact that Mr. Punter could not deal with. Other witnesses spoke to it, but there was no evidence from Mr. Selway and, as the Master held, no reason to think that he would give evidence at trial. Mr. Anderson submitted that his appearance could not be ruled out, but that is not enough. The claimants had had ample time to contact him and obtain his evidence if it would assist them, and there was no reason beyond wishful thinking why they might be more successful in future.”