The recent Court of Appeal decision in Berney v Thomas Saul & Co Solicitors concerned the date of damage pursuant to section 2 of the Limitation Act 1980. The case concerned a claim for damages arising out of negligently handled litigation, where that litigation was settled at an alleged undervalue. The case reaffirms the principle that the date of damage will be the date at which the claimant suffered a quantifiable loss.

Background

The Claimant, Ms Berney, sustained injuries after being involved in a car accident, in which her car was hit by Mrs Liddell. Ms Berney instructed the Defendant solicitors to act on her behalf in relation to her claim against Mrs Liddell for £50,000. Mrs Liddell admitted liability pre action. The Defendant solicitors failed, however, to file the Particulars of Claim within the relevant time period. Ms Berney subsequently instructed new solicitors, Martin Ross (“MR”). MR advised Ms Berney, on 2 June 2004, that her claim was, as a result, “now vulnerable to an application to strike out”. Counsel advised Ms Berney that any application to extend time for filing Particulars of Claim only had “20% chance of success”. Taking this risk into account, together with the risk of having to pay Mrs Liddell’s costs if she chose to proceed with the litigation, Ms Berney settled the claim on 1 November 2005 for £25,000.

On 10 January 2011, Ms Berney issued a claim against the Defendant solicitors seeking damages for having lost the ability to recover more than the £25,000 settlement sum. In the Defendant solicitors’ defence, it was admitted that the firm “had failed to file and serve Particulars of Claim within the time permitted by the Court or at all”. The Defendant solicitors asserted, however, that Ms Berney’s claim was statute barred on the basis that:

  1. Ms Berney suffered damage, at the latest, by 2 June 2004 when she was advised by her new solicitors that her personal injury claim was vulnerable to an application to strike it out; and
  2. her cause of action in tort had, therefore, accrued by that 2 June 2004 at the latest.

Decision

At first instance, the district judge held that Ms Berney’s claim against the Defendant solicitors should be struck out on the ground that it was time-barred. Ms Berney appealed but that appeal was dismissed by HHJ Simpkiss, sitting in the Brighton County Court. Ms Berney subsequently appealed to the Court of Appeal.

Giving the lead judgment of the Court of Appeal, Gloster LJ stated that the key question was: “when did Ms Berney first suffer actual damage as a result of professional negligence? Was it before or after 10 January 2005?” (being six years prior to Ms Berney issuing the claim against the Defendant solicitors).

Gloster LJ chose to adopt the approach taken in Nykredit Mortgage Bank Plc v Edward Erdman Group Limited (No. 2) [2013] EWCA Civ 15 and “answer the realistic and fact-dependent question formulated by Lord Hoffman: when was Ms Berney financially worse-off as a result of the Respondent’s breach of his duty of care than she would otherwise have been?”. She held that Ms Berney’s case was for loss as a result of having to settle her claim in November 2005. Despite the advice of counsel that she probably would not get permission to serve her Particulars of Claim out of time, Gloster LJ stated that this risk was “if not fanciful, at least extremely small”, as Ms Berney had a “cast-iron” claim for damages for personal injury and loss, where liability had been admitted. Whilst the settlement reflected that risk and the costs risk of proceeding with the litigation, Gloster LJ held that it was impossible to say that Ms Berney was financially worse off prior to the November 2005 settlement.

Gloster LJ went on to say that there will, of course, be cases where a solicitor’s negligent delay renders a chose in action worthless and in those circumstances, it is likely that the claimant will have suffered actual loss at that point, rather than at a subsequent settlement or strike-out. On the facts of this case, however, “it was only on the date of settlement itself that she suffered any actual loss: that loss was the loss of her ability to pursue her claim against Mrs Liddell in an amount in excess of the settlement sum”.

Whilst agreeing that the appeal should be allowed, Moses LJ did not share Gloster LJ’s view that there was no real risk that Ms Berney would have failed to obtain an extension to serve her Particulars of Claim. Moses LJ felt that, prior to the November settlement, a real risk had arisen that the value of the claim would be restricted. Moses LJ held that Ms Berney suffered actual damage on 25 January 2005. Prior to this date, Mrs Liddell’s solicitors had given Ms Berney’s solicitors, MR, an express assurance that they would take “no procedural point over the additional delay”. When this assurance was withdrawn on 25 January 2005, actual damage “measurable by the risk of a restriction being imposed” was suffered by Ms Berney. As this date was after 10 January 2005, and so still within the six year limitation period, Moses LJ’s differing approach made no difference in this instance. The third Court of Appeal judge, Rimer LJ, agreed with Moses LJ’s judgment. Accordingly, all three judges agreed that the claim was not time-barred (albeit, disagreeing about the date of damage) and, therefore, the appeal was allowed.

Comment

The decision serves as a reminder that whilst these cases are “notoriously fact-sensitive”, a cause of action will not accrue until a quantifiable loss has occurred i.e. at the point that a claimant became “financially worse-off”. In a litigation claim which has resulted in either a settlement or strike-out, the date of damage will not necessarily be the date of the settlement or strike-out. Rather, a cause of action will accrue at the point at which a claimant has suffered actual loss because the value of the litigation has been diminished or rendered worthless, which as highlighted by all three judges in this case, may well be prior to settlement or strike-out.

Further reading: Berney v Thomas Saul & Co Solicitors [2013] EWCA Civ 640