CLAIM AGAINST SOLICITORS WAS STATUTE BARRED: THAT SIX YEAR LIMITATION PERIOD MAY NOT ALWAYS START WHEN YOU THINK

It is surprising how many of the reported cases relating to mis-service of the claim form are professional negligence cases.  It appears to be a common practice to run a case up to the end of the limitation period and, even then, serve at the last moment (by the wrong method). The judgment of the Court of Appeal today in  Holt v Holley & Steer Solicitors (a firm) [2020] EWCA Civ 851 is not about service, however it does highlight the real dangers of leaving a case until the end of the assumed limitation period.

 

THE CASE

The claimant brought proceedings for alleged professional negligence, alleging negligence in the course of their acting for her in financial relief relief proceedings against her former husband.  The allegation being that the solicitors failed to obtain appropriate valuations of the marital assets.

The ancillary relief hearing took place between 16th February and 16th March 2012. The judgment was handed down in draft on 10th April 2012.  The judgment was handed down formally on 30 May 2012 with the order being made on that date.

The claimant issued proceedings against the solicitors on the 5th April 2018.

 

THE FINDING THAT THE ACTION WAS STATUTE BARRED

The judgment reviews the findings of the Circuit Judge who had held that the claims in both contract and tort were statute barred.

    1. On 19 September 2018, the Firm’s solicitors issued an application for summary judgment, on the basis that the claim was statute barred, and was therefore bound to fail. The application came before District Judge Watkins on 18 January 2019. He handed down his judgment on 22 May 2019, granting summary judgment to the Firm in respect of the contract claim and dismissing that part of the claim, but finding that the claim in tort was not time barred.
    2. Permission to appeal from District Judge Watkins’ order was granted to the Firm by HH Judge Ambrose on 1 July 2019. Ms Holt had also sought to appeal from that part of the order that was unfavourable to her, but her appeal was apparently not pursued. The Firm’s appeal was heard by HH Judge Ralton on 1 October 2019 and was allowed by his judgment and order of 23 October 2019. Summary judgment was granted in favour of the Firm, dismissing Ms Holt’s action.
    3. It has, of course, been common ground between the parties throughout that a claim in tort cannot be brought after the expiry of six years from the date on which the cause of action accrued: s.2 of the 1980 Act. In tort, the cause of action accrues when damage is sustained. The dispute in this case is as to the date upon which the alleged damage was sustained. In their careful judgments on this issue, District Judge Watkins and HH Judge Ralton disagreed. The District Judge decided that Ms Holt’s alleged loss was suffered, and the damage was sustained, on 30 May 2012 when District Judge Daniel’s judgment in the financial relief proceedings was handed down and his order was made. For his part, Judge Ralton decided that the date of the damage was the date when the claimant was financially worse off. Where legal proceedings are said to have been negligently conducted that date was,
“… not necessarily the date on when [sic: which] the claim is permanently damaged or lost (e.g. by being struck out) because of the negligence but when the negligence causes a material diminution in the claimant’s prospects of success and thus its value” (Judgment at [41(5)])
    1. Judge Ralton found that the relevant date was reached on 16 March 2012. He said:
“43. In my judgment the latest possible date of quantifiable damage must be 16th March 2012 – the last day of the final hearing – because the parties would know without doubt on that date that District Judge Daniel would make his mind up on the basis of the values presented. The loss to the Claimant at that date was measurable as the difference between the value of her properties and jewellery as presented and their true value albeit it was known that the value to be given to the jewellery was contentious and required a discrete factual finding.
44. It is arguable that the date of damage was earlier albeit I cannot see that date arising until after the financial dispute resolution and the fixing of a hearing date for the final hearing…
46. I do not accept that the professional negligence in this case resulted only in a contingency. The damage done could be provisionally valued on 16th February 2012 (when the final hearing started) and that value might have required adjustment up or down when the judge handed down his judgment but as I read the authorities such “crystallisation” (if that is the right description) does not mean that the cause of action starts on that date any more than the causes of action in the lost civil claims started on the date when they were struck out …”
(Emphasis and underlining in the original)
  1. The judge decided, therefore, that Ms Holt’s claim in tort against the Firm for professional negligence was barred by the 1980 Act and that she had no real prospect of succeeding on that claim for that reason. Accordingly, he gave summary judgment in the Firm’s favour and dismissed the claim in its entirety.
THE JUDGMENT OF THE COURT OF APPEAL
The Court of Appeal upheld the Circuit Judge’s finding that the action was statute barred.
  1. In my judgment, as I have already said, I consider that Ms Holt’s Particulars of Claim show that her loss was sufficiently well measurable, if not precisely quantifiable, when she lost the ability to adduce the evidence that she avers that she should have been able to produce before District Judge Daniel in the financial remedies proceedings. That date may, in reality, have been shortly after the FDR. It may have been when the Firm (as is to be inferred) recognised, in January 2012, that any application to the Family Court to adduce more valuation evidence would have been bound to fail. In the present case, it could hardly have been later than the end of the hearing on 16 March 2012.
  2. It goes without saying that Ms Holt did not have to issue her proceedings against the Firm before the District Judge’s judgment. She could wait until quantification became clearer after the judgment. On any footing, however, she would have had nigh on the full six years to do that, even assuming that damage had been suffered in late 2011 or early 2012.”

THE DATE OF THE LOSS

Lord Justice McCombe went on to consider the pre-existing principles relating to the date of the loss in tort.  He found that the Circuit Judge was correct to find that the loss occurred more than six years prior to the issue of proceedings.

  1. In the present case, judged by these standards, it is clear that after the FDR, or at latest after the Husband’s solicitors made it clear in January 2012 that they would object to new valuation evidence, there was a real risk (indeed perhaps a near certainty on the present facts) that the base line value of Ms Holt’s assets would be taken at what she says was an inflated value for the purpose of the financial relief proceedings. That inevitably meant that the value of her rights vis-à-vis the Husband were diminished (or “restricted”, per Moses LJ). If one postponed that inevitability to 16 March 2012 (the end of the hearing), as Judge Ralton did, it makes no difference to the outcome: damage was still suffered more than six years before the commencement of this action.
  2. I do not ignore the theoretical possibility of a judge in divorce proceedings, of his/her own motion, taking the view that the evidence before the court is unsatisfactory and requires improvement or clarification. Authority shows that a judge can change his/her mind as to the outcome of a case, before an order is drawn up, even after delivering a draft judgment: see Re L and anor. (Children) (Preliminary Finding: Power to Reverse) [2013] 1 WLR 634 (SC (E)). However, in a case like the present the reality is that the expert evidence of values upon which a party may rely, and upon which proceedings will be resolved, will be settled well prior to the date of the hearing. If one party, owing to a solicitor’s negligence, loses the opportunity to adduce the expert evidence that puts his/her case in the best possible light then the value of that party’s claim is inevitably diminished. As Mr Fowler put it, at that stage (as in any other civil claim) an important and identifiable part of that party’s “armoury” has gone.
  3. I also accept Mr Fowler’s submission that, on the pleaded case, Ms Holt’s chance of achieving in the divorce proceedings the result which she contends that she should have achieved was most unlikely (absent the further evidence). It is nothing to the point that other outcomes were theoretically possible. Those possibilities are not ingredients of the cause of action. They are not ones which it is said in this case that Ms Holt would, on balance of probabilities, have achieved.
  4. In the result, I consider that, on her case, Ms Holt suffered “measurable damage” and was “financially worse off” at the latest by the end of the hearing on 16 March 2012, as Judge Ralton held, and in all probability much earlier than that. Therefore, her claim for damages in tort was barred by s.2 of the 1980 Act before the claim form was issued on 5 April 2018.