Gravgaard v Aldridge & Brownlee (A Firm)

On 29 April 2004, Mr Recorder Coleman sitting in the Bournemouth County Court dismissed an action brought by the appellant, Mrs Gravgaard, against the respondents, a firm of solicitors. Mrs Gravgaard alleges in the action that the respondents acted negligently when advising her on the remortgaging of her house, 85 The Grove, Moordown, Bournemouth, and the transfer of that property by way of a Deed of Gift into the joint names of her husband and herself. Mrs Gravgaard alleges that the respondents were retained by her from February to December 1988. The Recorder found that her action was statute-barred by virtue of section 14A of the Limitation Act 1980. Accordingly, this appeal is yet another case raising the question of the true interpretation and effect of that section.

The material facts are summarised in the skeleton argument of Mr Richard Edwards, who appears for Mrs Gravgaard. The statement of facts which follows is based substantially on that summary:-

(1)

In 1982 Mrs Gravgaard inherited 85 The Grove, Moordown, Bournemouth (“the Property”) from her mother. She and her husband, Mr Peter Gravgaard, went to live there. Mr Gravgaard set himself up in business as a tour operator trading as Plantagenet Tours. The business was financed by overdrafts initially from National Westminster Bank plc and subsequently from Lloyds TSB plc (“Lloyds”). These overdrafts were supported by limited guarantees given by Mrs Gravgaard and secured on the Property.

(2)

In early 1988 the Lloyds overdraft was rising steadily towards £50,000 against a guarantee limited to £40,000. At the suggestion of the bank manager, Mr and Mrs Gravgaard decided to pay off the overdraft and raise a small amount of working capital by borrowing £50,000 (later increased to £53,000) from the Wessex Building Society (“Wessex”). They instructed Mr Bridle of the respondents to act for them on this transaction. Mr Bridle had previously been instructed by Mr Gravgaard in connection with a number of debt claims, including a claim by Mercantile Credit Company Limited.

(3)

On 3 March 1988 they attended the respondents’ offices where they signed (a) a Deed of Gift transferring the property into the joint names of Mr and Mrs Gravgaard to hold on trust for both of them and (b) a mortgage in favour of Wessex. The transaction completed on 9 March 1988 and the Lloyds mortgage securing the overdraft was released. The Property was then valued at £77,000. I refer below collectively to this deed of gift and the mortgage in favour of Wessex as “the March 1988 transactions”.

(4)

Mrs Gravgaard contended that the respondents were negligent in failing to ascertain and advise Mrs Gravgaard that Wessex did not require the Property to be put into joint names in order to allow the mortgage to proceed and that the mortgage could proceed in her sole name (with Mr Gravgaard as guarantor).

(5)

By September 1988 Mr Gravgaard had again built up an overdraft and needed to increase his limit in order to pay pressing creditors. Lloyds required a guarantee from the appellant secured by a second charge on the Property. The respondents were again instructed to act for Mrs Gravgaard on this transaction. Mrs Gravgaard did not want to provide this security but the respondents explained to her that if she did not do so Mr Gravgaard’s creditors might obtain charging orders on the property and force a sale. She therefore reluctantly agreed to provide the security required, limited to £20,000. In November 1988 she again reluctantly agreed to increase the limit to £25,000. She would not have agreed to either of these transactions were it not for the fact that the property was now in joint names and therefore vulnerable to claims by Mr Gravgaard’s creditors.

(6)

In April 1989 Mercantile Credit obtained a charging order on Mr Gravgaard’s interest in the property in the sum of £10,377.55. In October 1990 Lloyds obtained a similar order (in respect of a credit card debt) in the sum of £2,235.00.

(7)

In August 1993 Lloyds commenced possession proceedings. Mrs Gravgaard reached an agreement with Lloyds’ solicitors to pay £2,000 followed by regular payments of £500 per month. Her understanding of the agreement was that the possession summons would then be suspended or stayed provided she kept up the agreed payments. However, Lloyds went ahead with the possession proceedings and on 11 October 1993 obtained a possession order suspended on the payment terms agreed. Wessex also instituted possession proceedings about this time.

(8)

Believing she had been tricked by Lloyds, Mrs Gravgaard contacted a Legal Aid helpline only to be told that legal aid was not available for matters relating to business debts. She therefore sought advice from a Mr Strickland, a financial adviser at the Bournemouth Citizens’ Advice Bureau. He advised that the situation was a fait accompli and that she should make the best of it and do what she could to maintain the payments.

(9)

In December 1996 the appellant wrote a letter to the Bank’s solicitors complaining that she had been “conned” into signing the Lloyds charge and guarantees in September and November 1988, “without properly understanding or having [them] explained to me in the first place”. The Bank’s solicitors replied that “The Guarantee signed by you, was only signed after the contents had been explained to you by a solicitor. This discharges any obligation the Bank have to ensure that you received independent legal advice and your claim would not be against the Bank but against the solicitor who advised you.”

(10)

In May 1997 a third charging order was obtained on Mr Gravgaard’s interest in the property in the sum of £706.74.

(11)

In April 1999 the arrears owed to Lloyds were so high that the appellant again sought advice from the Citizens’ Advice Bureau; she was urged to seek legal advice and on 20 May 1999 instructed Turners, a firm of solicitors in Bournemouth. They advised her to obtain the respondents’ file, which she did shortly thereafter.

(12)

In January 2001 the appellant was informed by the Portman Building Society (successor to Wessex) that they could find no evidence that Wessex would have insisted on the deed of gift.

(13)

Proceedings against the respondents were issued on 3 May 2002.

(14)

In her particulars of claim (which were originally served on 29 January 2003 but which were subsequently amended), Mrs Gravgaard complains that the respondents were negligent in failing to ascertain that Wessex did not require her to transfer a half share in the Property to Mr Gravgaard, and in advising Mrs Gravgaard to make the transfer when such transfer was unnecessary and of no benefit to her and exposed the Property to the risk that Mr Gravgaard’s creditors would seek to enforce these debts against the Property, as indeed happened.

(15)

In her witness statement in these proceedings made on 6 August 2003, Mrs Gravgaard states:-

“I realised I was entering into a loan with the Building Society as a named joint borrower, but I did not understand the consequences of the Deed of Gift as I was not aware that Peter’s creditors could then enforce recovery of his debts against the property. I had been told by Mr Bridle the Deed of Gift was needed and assumed that he was right and that the only way of proceeding with the loan was to transfer the property into the joint names of Peter and myself.”

(16)

In her witness statement, Mrs Gravgaard also explains that she felt forced to sign the second charge and guarantee in favour of Lloyds on 2 September 1988 because:-

“Mr Bridle then told me that if I did not agree to sign something else my husband’s creditors would make him bankrupt and force a sale of our house in which my husband now had a half share. Peter said nothing at this meeting to influence me.”

(17)

Mrs Gravgaard adds:-

“I recall being so upset by what I was being asked to do, and finding it all so stressful, that I was actually shaking.”

(18)

Then:-

“On Thursday, 20 October 1988 the High Court Sheriff’s Officer came to my home in a van and tried to gain entry. Mr Bridle’s attendance note of that date at page 89 shows I telephoned him about this development. His advice was that I should rely on my mother’s Will to show that most of the contents of the property are in my sole ownership.”

(19)

Mrs Gravgaard was then put under pressure to sign a £25,000 guarantee, which she did. Mrs Gravgaard says:-

“I signed it in Mr Bridle’s presence after he had explained the content to me. I received no independent advice nor was it recommended that I should. By this stage I felt it pointless to resist as Peter’s debts had risen further and I sensed I was in a trap. I was aware Peter now had assets in the form of a half share in the property. As his creditors were pursuing him I agreed to this guarantee so the creditors could be paid off. Again, it was only because the property was in joint names and could, as I understood it, be sold by Peter’s creditors that I agreed to sign this document.”

The Recorder gave a carefully structured judgment dealing with a number of issues including causation and damage. As respects limitation, his conclusion was expressed in paragraph 47 of his judgment, which was in the following terms:-

“45.

Constructive Knowledge

Although she did not have actual knowledge of the fact that Mr Bridle’s advice had been wrong advice until 2001, I am in no doubt but that a reasonably competent solicitor or financial adviser, upon being fully informed of the material events of February and March 1988, would have had little difficulty in concluding that Mr Bridle’s advice to Mrs Gravgaard had been wrong and arguably negligent. In my judgment this conclusion could reasonably have been reached even without access to Mr Bridle’s file, although a reading of the relevant letters and file notes ought to have put the matter beyond doubt.

46.

Having regard to the wording of section 14A(1) of the 1980 Act I consider that the critical question that I have to answer is this: when might Mrs Gravgaard reasonably have been expected to seek such expert advice after becoming aware of real or potential loss or damage which was capable of being attributed, in whole or in part, to the mortgage and Deed of Gift transactions in March 1988?

47.

On the basis of the evidence before me, I answer this question by finding that Mrs Gravgaard might reasonably have been expected to seek and obtain expert advice in this matter by no later than the end of 1996, and that her constructive date of knowledge under section 14A(1) was therefore substantially more than 3 years before the issue of these proceedings in May 2002, for the following reasons:-

(1)

The date of knowledge cannot in my view be the date contended for in the Particulars of Claim (January 2001) seeing as Mrs Gravgaard had already gone to solicitors in May 1999 and Mr Bridle’s file had been obtained shortly afterwards.

(2)

It is clear from Mrs Gravgaard’s letter to the Bank’s solicitors dated 6 December 1996 that by 1996 at the latest she believed that she had been “conned” into signing the Guarantee and Legal Charge and that she had not received proper independent legal advice in September and/or November 1988.

(3)

Given that very little of note appears to have happened in the intervening period between 1993 and 1996, it is probable that she had held this belief since at least 1993.

(4)

In the light of Fennon v Hodari [2001] Lloyds Law Rep. PN 183, I find that the section 14A date of knowledge for the purposes of any Etridge claim arising from the transactions in September and November 1988 would have been no later than the end of 1996, and most probably in August 1993 when her continued occupation of the family home came under threat.

(5)

In my judgment the mortgage and Deed of Gift transactions in March 1988 and the Guarantee and Second Charge transactions in September and November 1988 are inextricably linked; it was a central part of Mrs Gravgaard’s case before me (a) that she would not have signed the latter documents had the house still been in her sole name (b) that the threat of her husband’s creditors being able to enforce judgments against the property by way of charging order and (ultimately) possession was the most effective (and the most distressing) argument used to pressurise her into signing those documents (c) that that meeting in September 1988 had been extremely traumatic for her, and that she had felt in a ‘trap’ and under ‘economic duress’ (to use words coined by her during her evidence); having seen and heard her giving evidence for a lengthy period of time, I conclude that no solicitor or other expert asking Mrs Gravgaard about what had been said and done at that meeting in September 1988 can have failed to learn in considerable detail of the circumstances of the earlier mortgage and Deed of Gift transactions in the previous March.

(6)

Mrs Gravgaard cannot reasonably contend that whereas she always had a grievance against Lloyds her sense of grudge did not extend as far as Mr Bridle: not only had he been the person on whose advice her house had been transferred into joint names in March 1988, but in September 1988 he had been the person who had brought what she regarded as unfair pressure and duress to bear on her to persuade her to sign the Guarantee and Second Charge; furthermore in their letter dated 11 December 1996 the Bank’s solicitors had in clear and unequivocal terms pointed her in the direction of Mr Bridle as the person responsible if indeed she had been ‘conned’ as she was alleging in her earlier letter.

(7)

There is evidence (339) that in 1993 Mrs Gravgaard did contact a Legal Aid helpline, only to be told that legal aid was “not available for matters relating to business debts” and that she also sought advice from a Mr Strickland, who was a Financial Adviser at the Bournemouth Citizens Advice Bureau; however, no reasonable explanation was forthcoming as to why it was she did not consult a solicitor at this time. In my judgment she might reasonably have expected to do so bearing in mind what was at stake.

(8)

On the evidence Mrs Gravgaard did eventually consult solicitors in May 1999; no satisfactory explanation for the delay in the years between 1993 and 1999 emerged during the course of the evidence, even though (a) the suspended possession order had been made in October 1993 and had remained in force throughout (despite Mrs Gravgaard’s objections to it) and (b) Mrs Gravgaard clearly found it extremely difficult to keep her financial head above water during this period.”

At trial, the respondents admitted that Mr Bridle had not given the “core minimum advice” that should have been given by them: see Royal Bank of Scotland v Etridge (No.2) [2002] 2 AC 773, 807 to 808 per Lord Nicholls. On the basis of these admissions and the evidence, the Recorder found that Mr Bridle had been negligent in the following respects:-

“(1)

He failed to advise her that it was not a necessary pre-condition to the mortgaging of 85 The Grove that the property should first be transferred into the joint names of Mrs Gravgaard and her husband.

(2)

He failed to contact the Wessex to see whether the transaction could go ahead without the property being transferred into joint names.

(3)

He failed to use his best endeavours to ensure that the transaction could proceed as a mortgage of the property by Mrs Gravgaard as sole legal and beneficial owner with her husband standing as guarantor.” (judgment, paragraph 9)

This case turns on section 14A of the Limitation Act 1980:-

“14A. (1) This section applies to any action for damages for negligence, other than one to which section 11 of this Act applies, where the starting date for reckoning the period of limitation under subsection (4)(b) below falls after the date on which the cause of action accrued.

(2)

Section 2 of this Act shall not apply to an action to which this section applies.

(3)

An action to which this section applies shall not be brought after the expiration of the period applicable in accordance with subsection (4) below.

(4)

That period is either -

(a)

six years from the date on which the cause of action accrued; or

(b)

three years from the starting date as defined by subsection (5) below, if that period expires later than the period mentioned in paragraph (a) above.

(5)

For the purposes of this section, the starting date for reckoning the period of limitation under subsection (4)(b) above is the earliest date on which the plaintiff or any person in whom the cause of action was vested before him first had both the knowledge required for bringing an action for damages in respect of the relevant damage and a right to bring such an action.

(6)

In subsection (5) above “the knowledge required for bringing an action for damages in respect of the relevant damage” means knowledge both:

(a)

of the material facts about the damage in respect of which damages are claimed; and

(b)

of the other facts relevant to the current action mentioned in subsection (8) below.

(7)

For the purposes of subsection (6)(a) above, the material facts about the damage are such facts about the damage as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment.

(8)

The other facts referred to in subsection (6)(b) above are:-

(a)

that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence, and

(b)

the identity of the defendant; and

(c)

if it is alleged that the act or omission was that of a person other than the defendant, the identity of that person and the additional facts supporting the bringing of an action against the defendant.

(9)

Knowledge that any acts or omissions did or did not, as a matter of law, involve negligence is irrelevant for the purposes of subsection (5) above.

(10)

For the purposes of this section a person’s knowledge includes knowledge which he might reasonably have been expected to acquire:-

(a)

from facts observable or ascertainable by him; or

(b)

from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek;

but a person shall not be taken by virtue of this subsection to have knowledge of a fact ascertainable only with the help of expert advice so long as he has taken all reasonable steps to obtain (and, where appropriate, to act on) that advice.”

To summarise, section 14A provides rules for ascertaining the starting date for the purpose of the three year limitation period laid down in section 14A(4)(b). This is the relevant period where, as here, the six year period specified in section 14A(4)(a) has expired. Assuming that the claimant at all material times had the right to start proceedings, the starting date is when she first had “the knowledge required for bringing an action for damages in respect of the relevant damage” (section 14A(5)). For this purpose, subsection (6) provides that she must know both the material facts about the damage and the other facts relevant to the action mentioned in subsection (8), particularly the fact that the damage was “attributable to” the act or omission alleged to constitute negligence and, in addition, the identity of the defendant. The choice of the words “attributable to” makes it clear that it is inappropriate to apply any legal test of causation. The material facts are specified in section 14A(7). They are determined objectively, being those which would lead a reasonable person who had suffered the same damage to consider it sufficiently serious to justify instituting proceedings against a solvent defendant who did not dispute liability.

In this case, the act alleged to constitute negligence is the negligent advice which Mr Bridle gave in 1988 that Mrs Gravgaard had to execute the Deed of Gift. The claimant does not have to know why the act in question was negligent. This is because subsection (9) provides that knowledge that acts did, or indeed did not, involve negligence is irrelevant for the purposes of ascertaining whether a person has the required knowledge.

It is likewise clear from section 14A(8)(a) that the court must look at the acts which on the claimant’s case are alleged to constitute negligence. The court is not to consider simply the allegations which were subsequently upheld or admitted by the defendant. This is a comparatively unusual case where the question of limitation is being decided after the findings on liability have been made. Mrs Gravgaard’s case is put in several ways in the pleadings. I am prepared to proceed on the basis most favourable to Mrs Gravgaard, namely that the essential thrust of her case is that the advice that she had to execute the Deed of Gift was wrong.

Subsection (6) deals with actual knowledge. Subsection (10) provides for the imputation of constructive knowledge. For the purposes of constructive knowledge only, the question arises whether the claimant might reasonably be expected to have acquired knowledge of facts, and whether it was reasonable for him to seek advice. However, a claimant does not have constructive knowledge of facts simply because an expert, whom it was reasonable to expect the claimant to consult, could have obtained the knowledge or helped him ascertain facts. This is because, by virtue of the tailpiece in subsection (10), a person does not have constructive knowledge of matters which are ascertainable only with the help of an expert if he has taken all reasonable steps to obtain and, where appropriate, to act on that advice. If, therefore, he has timeously instructed an expert, it must be shown that he had actual knowledge of the facts specified in section 14A(6) or constructive knowledge on some other basis. This helps to prevent a claimant who acts properly from being penalised for shortcomings on the part of his expert. In the present case, however, Mrs Gravgaard did not instruct a solicitor until May 1999, and it may be that her solicitor was not instructed to advise her on possible claims against the respondents until sometime after that. Accordingly, if the court concludes that it was reasonable to seek expert advice before that date, and that she failed to take all reasonable steps to do so, the effect of subsection (10) is that the facts that she could have ascertained with the help of solicitors will be attributed to her as at that earlier date. On the other hand, if the court concludes that it was not reasonable to expect her to consult solicitors before May 1999, and that the solicitors could not have assisted her to ascertain the material facts before she did in fact do so (and the ascertainment of those facts required expert advice: see Henderson v Temple Pier Co Ltd [1998] 1 WLR 1540), she would not be treated as having acquired knowledge of the necessary facts until she did in fact do so.

On this appeal, Mr Edwards submits that the alleged negligence consisted in the respondents advising Mrs Gravgaard that it was necessary for her to enter into the Deed of Gift. She was not aware of the vital fact that the Deed of Gift was not a necessary step until January 2001.

In addition, Mr Edwards submits that the judge was wrong to hold that Mrs Gravgaard should have taken legal advice prior to May 1999, and that the three years for the purposes of section 14A(4)(b) could not start to run before that date.

Furthermore, on Mr Edwards’ submission, Mrs Gravgaard had no defence to the claims of Lloyds. On that basis, it was unreasonable to expect her to take legal advice. In my judgment, this point is unsound. At all material times Mrs Gravgaard believed that she had a good claim against Lloyds. Indeed, she subsequently sought to raise her complaints against Lloyds in repossession proceedings where it was held that she had raised them too late. Accordingly, the fact that she was wrong in thinking that she had a good defence does not resolve the question whether she should have taken advice which would have caused the potential claim against the respondents to be exposed.

Mr Andrew Nicol, for the respondents, submits that the appellant’s case is artificial. Mrs Gravgaard contends that January 2001 is the crucial date whereas she had already been taking legal advice since 1999. This point was accepted by the Recorder: see paragraph 47(1) above.

Mr Nicol submits that Mrs Gravgaard knew in November 1988 that she had complaints about the March 1988 transactions. Accordingly, she had actual knowledge of her claims against the respondents from that time. Mr Nicol relies on Hallam-Eames v Merrett Syndicates [2001] Lloyds Law Reports 178. In that case, underwriting members of Lloyd’s made a number of complaints against the active underwriter of their syndicates, and their members’ and managing agents, alleging negligent conduct of the underwriting business, for example, that certain run-off policies had been written on inadequate terms. The relevant years of account had been closed and the outstanding liabilities transferred to the syndicates for the succeeding years. It was argued that the names had all the information that they needed to bring the action because the fact that substantial losses had been caused by writing the policies was disclosed in the syndicates’ annual accounts. The Court of Appeal held that knowledge had to be “causally relevant for the purposes of an allegation of negligence”, and that the knowledge which the names had was inadequate. The names had in addition to know that the run-off policies exposed them to potentially huge liabilities, and that these liabilities were incapable of reasonable quantification (and thus that the relevant years of account could not properly have been closed).

Accordingly, on Mr Nicol’s submission, in the present case all that was necessary for Mrs Gravgaard to know was that, as a result of the Deed of Gift, the share in the Property that she had given to her husband had become liable to meet Mr Gravgaard’s debts. In my judgment, this does not follow from the Hallam-Eames case because Mrs Gravgaard did not have the essential information that this consequence was attributable to Mr Bridle in the sense required by that case, that it is in the sense that it was caused by an act on his part which could constitute wrongful advice. Only if she had that additional information could it be said that she had knowledge of facts which were causally relevant to an allegation in negligence. This conclusion does not offend s.14A(9) since there is no question of Mrs Gravgaard’s having to know that Mr Bridle’s advice was negligent. In short, Mrs Gravgaard believed that Wessex had required her to execute the Deed of Gift and nothing that happened in the Autumn of 1988 affected her understanding in that regard.

Mr Nicol alternatively contends that Mrs Gravgaard had constructive knowledge. She should have taken legal advice about her claim against Lloyds in November 1988, and, if not then, when possession proceedings were threatened by Lloyds in 1992, alternatively, when proceedings were started by Lloyds in 1993, or alternatively, at the latest after the exchange of letters in December 1996. Mr Nicol submits that, just as a claimant who suffers several heads of damage cannot simply rely on the head of damage which is within time in order to claim that the limitation period has not expired, so, too, Mrs Gravgaard cannot confine her case to the allegation of negligence based on the failure to advise her that it was not necessary for her to execute the Deed of Gift, rather than on the more general allegation that she was not advised about the consequences of the Deed of Gift.

In my judgment, Mr Nicol’s primary submission on constructive knowledge is correct. Mrs Gravgaard knew, as a result of the Lloyds’ transactions, that the Property was exposed to risk of attachment for Mr Gravgaard’s debts. In my judgment, it was reasonable to expect that Mrs Gravgaard would take legal advice on her claims against Lloyds as soon as she had been prevailed on to execute the second guarantee in November 1988. She was outraged by the fact that she was placed in a position where she could not refuse the requests to grant the guarantees and execute a second charge. She had successfully resisted the Lloyds’ claim for an unlimited guarantee. She was undoubtedly faced with a very serious situation. She had three small children, and she, her husband and the children all lived at the Property. If further creditors could claim against the Property, the Property might have to be sold and then she and her family would be without a home. Her income was very small. She must have been concerned about the possibility of Lloyds seeking a further increase in her guarantee. In that very serious situation, it seems to me reasonable to expect her to have sought legal advice on her rights against Lloyds. I further agree with the Recorder that the Lloyds’ guarantees and second charge were so intimately bound up with the March 1988 transactions that anyone advising her would have realised that the former had to be investigated as well. If Mrs Gravgaard had turned to Mr Bridle for advice, and the question had arisen whether the advice in February and March 1988 was correctly given, he would have had to advise her to seek advice elsewhere. In my judgment, for the reasons given above, it is reasonable to expect that in those circumstances she would have sought that advice.

Mrs Gravgaard seeks to raise the point whether in fact Mr Bridle would have given her correct advice. However, Mrs Gravgaard having failed to take advice at all, section 14A(10) attributes to her matters which were ascertainable only with the help of “appropriate expert advice”. It seems to me that on the facts Mr Bridle would not necessarily have been the appropriate person to advise Mrs Gravgaard on her claims against Lloyds for the purpose of that provision. There is, moreover, a question of law here as to the meaning of the expression “appropriate expert advice” in section 14A(10), and as to whether that expression entitles the court to have regard to a specific individual in any event. Even, however, if Mr Bridle had been the appropriate person for this purpose, it is not open to Mrs Gravgaard to assert on this appeal that the matters ascertainable with his help would, in fact, have been more limited than the judge thought and, therefore, not within section 14A(10). Mrs Gravgaard would require a substratum of fact as a starting point for that submission, and those facts were not explored before the judge. Until the contrary is shown, there is no reason for the court to assume that Mr Bridle would necessarily have given inadequate advice. Furthermore, only if the facts had been found in Mrs Gravgaard’s favour would there have been an issue of law as to their relevance under section 14A(10). In the circumstances, that does not arise.

Mr Edwards submits that what Mrs Gravgaard thought was that she had a claim against Lloyds and that is the matter on which she would have taken legal advice. Further, section 14(10) is not, on his submission, wide enough to cover a case where the existence of claim B is discovered in the course of the investigation of claim A. I do not accept this submission. It involves reading a gloss into this section. The only question under section 14A is whether it was reasonable to expect her to take legal advice and whether it is reasonable to expect Mrs Gravgaard to acquire knowledge from the facts ascertainable by her with the help of a solicitor investigating the claim against Lloyds. For the reasons given by the Recorder, I consider that that test is met.

There is, of course, an issue as to whether the court should, in determining whether it is reasonable to expect a person to seek legal advice, take into account the surrounding circumstances and any special characteristic or attribute of the claimant. Section 14A(10)) is silent as to the matters which the court must take into account and leaves such matters to the courts to work out. The test, however, is clearly objective. In my judgment, the court should take into account external surrounding circumstances, such as the significance of the issues to a reasonable person in the position of the claimant.

The more difficult issue is whether the court should take into account matters such as the fact Mrs Gravgaard already had her hands full because she was a working mother and wife and was struggling hard, as the Recorder put it, “to keep her financial head above water”. These factors could make it more difficult for her to get advice (though, as regards Mrs Gravgaard’s financial position, no one has suggested that if she had sought to do so in 1988 she would not have been entitled to legal aid if she otherwise met the conditions for such assistance). Although Mrs Gravgaard does not rely on these matters, a court could not fail to observe the difficulty of her position and to admire her success at juggling the many pressures on her. She has survived her ordeal with her home and marriage intact, and she had gone on to further education and to hold public office in local government. Mr Gravgaard’s business continues to trade.

Section 14A(10) does not state that a person’s knowledge includes knowledge “which a reasonable person might be expected to acquire” but rather that a person’s knowledge includes knowledge “which he [she] might reasonably be expected to acquire” (contrast s. 14A(7)). In my judgment, this choice of wording is significant. It means, in my view, that in general the court must have regard to the characteristics of a person in the position of the claimant, but not to characteristics peculiar to the claimant and made irrelevant by the objective test imposed by subsection (10). This conclusion is consistent with the general approach of section 14A. Section 14A attaches importance to the claimant having actual knowledge. Constructive knowledge applies only if the conditions of section 14A(10) are fulfilled. Moreover, as I pointed out earlier, section 14(10) does not automatically impute the knowledge of an expert instructed by a claimant to the claimant.

Applying the foregoing, the court is entitled under section 14A(10) to assume that Mrs Gravgaard would have been concerned to know the reasons for her mistake as to the consequences of the Deed of Gift: see Adams v Bracknell Forest BC [2004] 3 WLR 89 per Lord Hoffmann at [47] to [52]. In fact, Mrs Gravgaard’s outspoken reaction to the request by Lloyds to give the second charge and guarantees marks Mrs Gravgaard out as having a sharp appreciation of the situation, even in the autumn of 1988. Her reaction supports the point that she ought reasonably then to have taken legal advice.

On the basis that section 14A(10) requires the court to have regard to the position of the actual claimant, not some wholly hypothetical claimant, in my judgment, it is appropriate to take account of Mrs Gravgaard’s belief that she had a claim against Lloyds. In my judgment, this is not inconsistent with the objective test in section 14A(10). Nor is it inconsistent with the conclusions of the House of Lords in the Adams case. That case was concerned with section 14(3) rather than section 14A(10) but the two provisions are similar. The issue relevant for present purposes was the particular problem of applying the test for constructive knowledge in section 14(3) to a claimant with dyslexia. The claimant’s case was that he had been inhibited from taking advice because of his disability. Indeed, this is the usual situation: the claimant seeks to persuade the court to take some characteristic of his into account so as to prevent the attribution of constructive knowledge. The speeches in the Adams case indicate the difficulties in the court’s drawing a hard and fast rule for this purpose. However that may be, this case is not that situation. Mrs Gravgaard seeks to rely on section 14A(10) in order to justify the court leaving out of account a belief that she actually had. In my judgment, there is nothing in the Adams case which should lead this court to ignore the actual belief of Mrs Gravgaard. In my judgment, this is so even if her belief happened to be unfounded in law.

If I am wrong on that point, Mrs Gravgaard was clearly put on notice that she might have a claim against the solicitor who advised her in 1988 by the terms of the bank’s reply to her letter of 6 December 1996. It may well be that Mrs Gravgaard was so ill-disposed to Lloyds that she did not trust the reply they had given. Nonetheless, this was their reply. Mrs Gravgaard’s situation was serious. As the Recorder points out she was having difficulty keeping up with the agreed schedule of repayments: see his judgment, paragraph 47(8)(b)). Given the seriousness of her situation, in my judgment, it was reasonable for her to consult a solicitor about her possible claim against Mr Bridle.

In those circumstances, it is not necessary for me to come to any conclusion on the alternative dates of 1992 and 1993 relied on by Mr Nicol.

For these reasons, I consider that the Recorder came to the correct conclusion. His reasoning is clear and carefully put. With the exception of the events of 1993 (on which I have not expressed a conclusion) I only differ from him in the emphasis I give to the events of the autumn of 1988 and in the approach to the construction of section 14A(10) in so far as the Recorder proceeded on a different view. Accordingly, I would dismiss this appeal.

When this judgment was circulated in draft in accordance with Practice Note (Court of Appeal: Handed Down Judgments) [2002] 1 WLR 344, Mr Edwards sought to raise new points on section 14A(10) and to make submissions for the first time based on Adams v Bracknell Forest Borough Council. I have exceptionally made some amendments to my draft judgment to reflect these new points. The points raised by Mr Edwards should have been raised in the course of the appeal. As this court explained in Robinson v Fernsby [2003] EWCA 1820, the purpose of circulating judgments in draft is to enable formal amendments to be made, for example, typographical corrections. It is not an occasion for making new submissions on matters of substance which ought to have been made during the appeal itself.

I agree.

I agree that this appeal should be dismissed for the reasons given by Lady Justice Arden.