The High Court decided a limitation defence does not prevent a summary judgment application in a recent case.

On 9 March 2018, His Honour Judge Russen QC granted an application for summary judgment by the Defendant (the Company) in Davy v 01000654 Limited [2018] EWHC 353 (QB). This is a useful decision for two reasons: it shows (i) limitation issues can be summarily decided under CPR 24 and (ii) the different approaches the Court takes when considering an application for strike out under CPR 3.4 and/or summary judgment under CPR 24.

Facts

On 18 September 2001, the Claimant (Mr Davy), a senior flight engineer with British Airways, met with the Company to discuss his pension. On 2 November 2001, and following the Company's advice, Mr Davy transferred out of his occupational pension scheme with British Airways into a personal pension scheme with Skandia Life (the 2001 Advice). Mr Davy sought further advice from the Company again in August 2006 (the 2006 Advice), which Mr Davy said was wrong because he was not told to seek independent advice on the reasonableness of the 2001 Advice. Mr Davy then sought advice from a different financial advisor on 17 July 2011 (the 2011 Advice).

On 16 January 2015 (and nearing the end of a standstill agreement between the parties), Mr Davy issued his claim. He sought damages for negligence or breach of contract, or for alleged breaches of duty under the Financial Services and Markets Act 2000, because of 2001 Advice.

On 12 January 2017, the Company made an application asking for an order (i) striking out Mr Davy's claim under CPR 3.4 because it disclosed no reasonable grounds for bringing the claim and/or was an abuse of process and/or (ii) giving summary judgment under CPR 24 (the Application).

The parties agreed Mr Davy's case turned on whether he could overcome a limitation defence by relying on Section14A of the Limitation Act 1980 (the Act) (which extends limitation by three years from the date a claimant knows or ought to have known of his cause of action) or Section.32 of the Act (which postpones the start of limitation where a claimant has discovered a deliberate concealment by a defendant of his cause of action).

Limitation: is a paper determination appropriate?

When considering an application for summary judgment involving limitation, the Court is usually mindful of the principles against conducting a mini trial and any reasonable prospect there might be of further evidence, beyond that filed with the Application, later coming before the Court (see Easy Air Limited v Opal Telecom Limited [2009] EWHC 339 (Ch)). The Judge applied the principles in Easy Air but also noted those same principles 'sound a note of caution against timidity in engaging with the application and the evidence filed on it'.

Based on the evidence, the Judge, as a matter of principle, decided the claim could be summarily decided under CPR 24.

Strike out: No reasonable grounds for bringing the claim and/or abuse of process

On 14 January 2016, Mr Davy served his particulars of claim. The Judge decided the Particulars of Claim disclosed a reasonable grounds for bringing the claim because there was 'nothing within it which is repugnant or deficient when viewed from the perspective of it revealing a viable cause of action'.

The Company, however, also argued there had been an abuse of process caused by Mr Davy's delay in bringing the proceedings because the Company's key witness was now of ill-health. The Judge said the problem for the Company was showing any of the delay was Mr Davy's delay. The Judge therefore dismissed the strike-out part of the Application.

Summary Judgment: Limitation

Section 32 of the Act

Section 32 of the Act postpones the start of limitation where a claimant has discovered a deliberate concealment by a defendant of his cause of action. The onus is on the claimant to make out his case. Mr Davy's case was he should have been told in the 2006 Advice that the 2001 Advice had been deficient and the Company ought to have told him to seek independent advice.

Whether or not there has been a deliberate concealment by a defendant of his earlier negligence is a question of fact. If the defendant's retainer is a continuing one to provide investment advice there is generally no obligation on the advisor to "exercise a continuing vigilance to discover past mistakes and put them right".

The Judge therefore decided the allegation of deliberate concealment was flawed. Mr Davy had failed to make out a realistic case the 2006 Advice concealed the flaws of the 2001 Advice.

Section 14A of the Act

Section 14A of the Act extends the limitation period in negligence (subject to a 15 year long-stop) until a claimant has knowledge (of sufficient quality to take the complaint forward) of the essential matters which form the key parts of that claim. Mr Davy said he did not have the knowledge until the 2011 Advice but the Company said he had knowledge much earlier.

The Judge concluded, based on the evidence before him (which included documents disclosed by Mr Davy), Mr Davy had knowledge for the purposes of Section 14A by no later than the 2006 Advice. This was because by that time, Mr Davy knew the investment he had made on the 2001 Advice was a risky one (relative to the certainty provided by his British Airways pension). Mr Davy's investment, following the 2001 Advice, resulted in a loss within the first year which he said was unacceptable for someone with his risk appetite and with his expectation of an annual income otherwise than from the direct capital. Those were the essential grounds of his later complaint to the Company.

The Judge therefore decided the claim was statute barred and granted summary judgment on the whole of the claim.

Conclusion

This decision, and His Honour Judge Russen's detailed judgment, is a useful insight in to the Court's approach under CPR 3.4 and CPR 24. There is now a clear line of decisions where the Courts have given summary judgment on limitation. The pre CPR decisions which suggest otherwise now appear to have been overruled. There should be no reason why a limitation point should not be determined summarily.

This decision is also an important reminder of the impact of Section 32 of the Act. This delays the start of the limitation period in certain circumstances. The whole point of limitation is to provide finality to matters. It would be an entirely unsatisfactory position if a claimant could simply say a claim is not time-barred because something has been concealed. There must be something more: there is no onus (except in unusual situations where there is a contractual duty to do so) for a person to essentially review old advice and, if it is wrong, essentially confess. It must therefore follow there can be no 'duty' which was concealed by the Company.