This recent decision of the Court of Appeal considered the application of s.14A of the Limitation Act 1980 in relation to an action against financial advisors for negligent advice in relation to investments.

The Facts

In September 2005 a representative of the Defendant advised the Claimant to invest £65,000 in a particular investment bond. However, by February 2012, when the Claimant surrendered the bond, its value was only £53,152.32. Proceedings were issued in November 2012 and the Claimant alleged that it was not until February 2012 that she knew she had either suffered a loss or may have received inappropriate advice. The Claimant brought a claim for negligence, alleging that the Defendant provided negligent advice and recommended a product unsuitable for her requirements.

The Defendant alleged that the Claimant was time barred. The Defendant argued that the Claimant had sufficient knowledge to bring a claim in July 2009, as by that time she had received four annual statements, the latter two showing a significant fall in the value of her investment.

The Law

It was for the Court of Appeal to decide on the application of s.14A Limitation Act 1980, which provides that an action may be brought up to three years from the date of which the Claimant had both the knowledge and the right to bring the claim.

In considering the degree of knowledge required, the Court of Appeal referred to the House of Lords decision of Haward v Fawcett [2006] 1 WLR 682 where it was held that the knowledge required did not mean knowledge “sufficient to enable his legal advisors to draft a fully and comprehensively particularised statement of claim”, but instead knowing enough for it to be reasonable to begin to investigate further.

The Court of Appeal held that that starting point for any enquiry into the application of s.14A is to identify the damage in respect of which damages are claimed and ascertain when knowledge of the material facts about the damage was obtained.

On this basis, on the facts of the case, the a Court of Appeal held that by July 2009 the Claimant had acquired relevant constructive knowledge, in the sense that she might reasonably have been expected to learn that she had suffered damage because the return on the amount invested was not guaranteed. The Court held in July 2009 the Claimant might reasonably have been expected to ask if she was guaranteed to recover the £65,000 invested and to have looked for the documentation provided to ascertain the true position.

Analysis

This decision is a reminder to litigants that the knowledge required for s.14A is not full detailed knowledge, but rather knowledge sufficient to warrant further investigation. Accordingly, it is likely that the Courts will find knowledge occurred a lot earlier than a claimant envisages. This case is therefore a reminder that litigants should not delay in bringing claims.