Capita Pension Trustees and others v Segwick Financial Services and others

Background

This case concerns the alleged negligence by various companies within the Mercer group providing administration services and advice to a defined benefit pension scheme.Various allegations were made in relation to the failure of the defendants to advise properly on the implementation and documentation of changes to the procedures of the scheme (including equalisation of retirement ages) in 1994 and again in 2002. 

The defendants applied for summary judgment/to strike out the parts of the claim relating to the 1994 changes on the ground that these were statute-barred.

The Issue

The claim was issued in August 2011.  The primary six year limitation period in both contract and tort had clearly expired.  However, Section 14A of the Limitation Act 1980 provides an additional three year period starting from the time when the claimant has knowledge of the material facts about the damage in respect of which damages are claimed and that damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence.  For this purpose, having knowledge includes knowledge that the Claimant may reasonably have been expected to acquire. This is known as "constructive knowledge". 

The claimants sought to rely on Section 14A on the grounds that they only became aware that they had a cause of action against the defendant in question when they received a letter of advice from their solicitors. This was only a few months before the claim was issued.  

The Decision

The Court held that the claimants could not rely on Section 14A. The trustees of the scheme were aware by 2007 that there was a problem with the 1994 changes to the Scheme, and with proper investigation, would have been aware of the correct identity of the defendant. Accordingly, the three year period afforded by Section 14A had expired by the time the claim was issued.

The claimants never seriously disputed that they knew the relevant facts in respect of the damages claimed as they had been informed there was a problem with the scheme in 2007. However, they maintained that they had reasonably relied on legal advice at the time which did not identify the correct defendant.  

Despite this, the court decided that the claimants had constructive knowledge of the correct identity of the relevant defendant. This was because their predecessor trustees had been informed of the identity of the defendant at the time the relevant services were offered. The correct defendant could have been identified even without specialist legal knowledge.

Lessons to Learn

Trustees have a duty to review all previous relevant documentation when they take over the trustee role. Accordingly, knowledge attributable to previous trustees must be attributed to current trustees bringing a claim when considering limitation. When considering a limitation defence in claims brought by trustees, defendants should ensure they consider the possible knowledge and constructive knowledge not only of the trustees bringing the claim but their predecessors in the role.

Even if expert help is sought, this does not absolve claimants from their responsibility to discover facts that would have been reasonably discoverable without expert help, for the purposes of Section 14A.