In the recent case of Berney v Saul (t/a Thomas Saul & Co) [2013] EWCA Civ 640, the Court of Appeal considered the issue of when time started to run for the purposes of the Limitation Act 1980 in a professional negligence claim against the claimant’s former solicitors.

Factual summary of the case

The claimant, Ms Susan Berney, had instructed the defendant solicitor’s practice, Thomas Saul & Co, to advance her personal injury claim.

On or about 16 April 2002, Thomas Saul & Co issued Ms Berney’s claim form in order to protect her claim from becoming time barred under the Limitation Act 1980. On 20 April 2002, the three year limitation period for the claim expired.

On 11 August 2002, the time for serving the particulars of claim expired, but no particulars of claim had been filed or served.

Thereafter, the parties engaged in correspondence at a leisurely pace. There were various discussions about expert evidence but matters did not progress. The defendants to the personal injury case did not, in the first instance, take any point about the lapse of time for serving the particulars of claim, but by early 2004 still no particulars of claim had been filed and served.

Further, it was said by Ms Berney that by April 2004, despite her chasing him to progress the claim, Thomas Saul & Co’s principal, Mr Saul, had become altogether unresponsive and was not answering her calls.

In March 2004, Ms Berney instructed new solicitors (MR) and shortly thereafter terminated Thomas Saul & Co’s retainer.

Upon discovering the lack of progress of the claim, on 2 June 2004, MR wrote to Ms Berney informing her that she was vulnerable to have the claim struck out for lack of prosecution, particularly because the claim form had been filed over two years ago, yet no particulars of claim had been filed.

Matters continued to progress at a slow rate (and the parties continued in their attempts to resolve issues arising from expert evidence) until, in the spring of 2005, MR took counsel’s advice on the prospect of Ms Berney succeeding in an application to retrospectively extend time for filing the particulars of claim. Counsel’s advice was that the prospects were poor and no more than 20%, and that advice was conveyed to Ms Berney.

In June 2005, MR wrote to the defendants’ solicitors (DWF) requesting their consent to an application to file the particulars of claim out of time. DWF responded saying that the application would be opposed, but also sent a without prejudice offer of £10,000 to settle the claim.

After some negotiations, Ms Berney’s claim was settled on 1 November 2005 for £25,000 plus costs.

Thereafter, a report dated 14 December 2005 by a consultant in anaesthetics and pain management suggested it was likely that Ms Berney had sustained musculo-ligamentous and facet joint capsule strains in her neck and low back.

The professional negligence claim

On 10 January 2011, Ms Berney issued a claim against Thomas Saul & Co for professional negligence (the PN claim). She alleged in the PN claim that in settling the personal injury claim for £25,000 she had taken into account the risks involved in declining to settle for that sum and instead applying to file particulars of claim out of time. Those risks included the risks of having to pay the defendant’s substantial costs of the action if the application failed.

She alleged that, therefore, as a result of Thomas Saul & Co’s negligence, she had had to settle for a sum below the true value of her claim.

Limitation

Thomas Saul & Co relied on, among other things, a limitation defence.

The general position in claims for professional negligence is that the six year limitation period begins to run at the time that the claimant suffers loss. It was therefore necessary for the court to consider when Ms Berney could properly be said to have incurred actual loss as a result of Thomas Saul & Co’s negligence.

Thomas Saul & Co advanced that Ms Berney had first suffered loss by, at the latest, 2 June 2004, by which time the value of her claim had suffered, and that by the time the PN claim was issued, it was statute barred. Ms Berney’s case was that she first suffered loss on 1 November 2005, when she settled her claim at less than its value.

Thomas Saul & Co applied for summary judgment which was granted by the district judge on the basis of its limitation defence, a decision that was upheld on appeal to the circuit judge before Ms Berney appealed to the Court of Appeal.

The law

The Court of Appeal was required to consider whether Ms Berney first suffered actual loss at the time when she decided to settle her claim, or if actual loss was first suffered before that, at a time when the value of her chose in action became substantially diminished. Did the susceptibility of her claim to being struck out (which arose by, at the latest, June 2004) amount to actual loss for the purposes of the Limitation Act 1980?

The court considered the leading authorities on the issue, namely Forster v Outred [1982], Khan v Falvey [1995], Hopkins v MacKenzie [1994] and Hatton v Chafes (a firm) [2003], and revisited the following principles:

  • the time at which limitation begins to run in such a case is essentially a factual question: namely, when did the claimant first suffer actual damage as a result of the professional negligence;
  • where a claimant is suing for the loss of right to advance his claim, this is to be distinguished from suing for diminution in the value of his chose in action: in the case of the former, actual financial loss is suffered on the date when his claim is struck out, as opposed to an earlier date on which the value of his chose in action diminished;
  • however, (and perhaps in some contrast to the above principle) even in such a case, the courts may find that, if there is an earlier inevitability or serious risk that a claim will be struck out, the facts of a case may determine that the value of a chose in action has almost entirely diminished earlier than the date of strike out, and that the limitation period begins to run from that earlier date.  

On the facts of the present case, it was not disputed at Court of Appeal level that, despite the advice she had received from her counsel, it was far from inevitable that Ms Berney’s application to file particulars of claim out of time would fail and, taking into account the criteria the court would apply on such an application, it in fact stood a good prospect of success.

Ms Berney’s appeal was allowed. The grounds set out by Gloster LJ were, in brief, that in the present case Ms Berney’s cause of action did not accrue until November 2005, when she settled her claim, on the basis that the prior risk of strike out was not sufficient to amount to actual loss.

Rimer and Moses LLJ assented but differed from Gloster LJ in their reasoning. They reasoned that, on the facts of the case, the likely outcome of Ms Berney’s application to file particulars of claim out of time was that she would indeed be allowed to do so but that her claim would be limited to either the £50,000 she had originally claimed or such other, lower sum as the medical evidence at time might suggest was appropriate. On the facts, that substantial risk of diminution amounted to actual loss for the purposes of limitation, but did not arise until 25 January 2005 (less than six years before issue of the PN claim) on which date the defendant’s solicitors had informed MR that an application would be opposed.

The fact that the Court of Appeal Judges, although agreeing on the outcome of the appeal, dissented on when, on the facts of this particular case, the limitation period began to run, illustrates the complexity of limitation in cases of professional negligence and the care that is required of legal practitioners to ensure that a claimant’s case is not prejudiced.

When acting for a claimant it is best practice to avoid if possible any scope for doubt at all by entering into a standstill agreement or issuing a protective claim form within six years of any event that might sensibly be viewed as actual loss.