Williams v Lishman, Sidwell, Campbell & Price Ltd

The principal issue in this appeal raises a short, difficult and novel question under section 32 of the Limitation Act 1980 (the “Act”). If, in a claim in negligence, the first (ie first in time) loss which completes the claimant’s cause of action is deliberately concealed by the defendant, does that loss remain a “fact relevant to the plaintiff’s right of action” (within section 32(1)) even after the occurrence of a second (ie second in time) source or head of loss which the defendant has not deliberately concealed? The claimants here say that it does, the defendants say that it does not. The importance of the issue is that if it does remain a “fact relevant to the plaintiff’s right of action”, then time does not even begin to run until the claimant has discovered the concealment or should have discovered it.

The appeal also concerns the interrelationship of section 32 with section 14A, which may also affect the running of time against a claimant where he or she lacks knowledge of relevant facts (albeit for reasons other than deliberate concealment). In the case of section 14A, time is enlarged if a period of three years from the date of knowledge would give a longer limitation period than the underlying period of six years from the date on which the cause of action accrued (which is the basic period for actions founded on tort, outside the case of personal injury, see section 2).

Thus the underlying limitation period is six years from the accrual of the cause of action. That may be extended to three years from the date of knowledge in a case where the knowledge needed for the cause of action is not available at the time of its accrual. But where there has been deliberate concealment of a fact necessary to the cause of action, time will only start to run when the concealment has or should have been discovered.

There are also issues as to when the claimants first knew of the facts relevant to their complaint against the defendants, which essentially relates to what is said to be negligent advice by accountants and financial consultants concerning the claimants’ pension arrangements.

It is convenient at the outset to cite the relevant sections of the Act.

Section 2 provides:

“2 Time limit for actions founded on tort

An action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued.”

Section 14A provides:

“14A Special time limit for negligence actions where facts relevant to cause of action are not known at date of accrual

(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)

The 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 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 the 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 suffered such damage to consider it sufficiently serious to justify 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;

(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 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.”

Section 32 provides:

“32.

Postponement of limitation period in case of fraud, concealment or mistake

(1)

Subject to subsections (3) and (4A) below, where in the case of any action for which a period of limitation is prescribed by this Act, either –

(a)

the action is based upon the fraud of the defendant; or

(b)

any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant; or

(c)

the action is for relief from the consequences of mistake;

the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it…

(5)

Section 14A and 14B of this Act shall not apply to any action to which subsection (1)(b) applies (and accordingly the period of limitation referred to in that subsection, in any case to which either of those sections would otherwise apply, is the period applicable under section 2 of this Act).”

The claimants, here the appellants, are John and Judith Williams, husband and wife. In these proceedings they claim damages in respect of allegedly negligent advice in relation to the transfer by them in 1997 of their pension funds from an occupational pension scheme known as an Executive Pension Plan (or EPP) with the Prudential Assurance Co Limited (“Prudential”) to personal Income Drawdown Plans (or IDP) with Wintherthur Life UK Limited (“Winterthur”). For technical reasons due to the EPPs being overfunded, the pension funds needed, on the way to Wintherthur, to pass through the hands of GA Life Assurance Limited (“GA”). That was all part of the scheme worked out for the Williams by their professional advisers, in order to get their pension funds out of plans with Prudential, where the funds could only be used to buy annuities, and into plans with Winterthur, where the funds could be left invested within the relatively favourable tax regime of a pension, while at the same time permitting of regular drawdowns to finance the Williams’ retirements. It appears that one of the attractions of the change to Winterthur was the possibility of leaving funds to their beneficiaries in the event that either or both Mr and Mrs Williams died before the age of 75. At the time of the transfer they were only in their early 50s.

Mr and Mrs Williams received advice about these matters from the first defendants (here the first respondents), Lishman, Sidwell, Campbell & Price Limited (“Lishman”), by their Mr McCabe, and from the third defendants (here the second respondents), Northern Financial Management Limited (“Northern”), by their Mr Simpson. Lishman were the financial services arm of a firm of accountants who had been the auditors to the Williams’ company and were their accountants. Lishman appear to have involved Northern in the pension planning for the Williams. The other defendants, Retirement Asset Management Limited (the third defendants) and Solicitors Financial Management Limited (the fourth defendants) are not involved in this appeal. I shall not need to refer to them again.

The pension planning for the Williams has not borne the anticipated fruit. Having transferred their pension funds to Winterthur in November 1997, the Williams had, by October 2003 at the latest, come to the conclusion that the planning had misfired and that their advisers, or at any rate Lishman, were probably to blame. On 4 November 2003 Mr Williams wrote as follows to Lishman:

“Mr McCabe thought he could help and suggested a meeting. When we met he convinced me that converting the Executive Pension into a Self Invest Personal Pension and effecting an Income Drawdown Plan would be far more beneficial. He then arranged a meeting with Mr Ray Simpson of Northern…

Mr Simpson went through the benefits of the Protector fund operated by his company and Winterthur Life. I insisted that we did not want to take any risks with the money we had worked hard to accrue and did not wish to be worse off than we would have been with the Prudential.

Mr Simpson and Mr McCabe came to see me at my house and ran through all the figures and assured me that by switching to the Protector Fund we would not only be no worse off but should be much better off.

Over the past few years it has become apparent that this is not the case and our pension funds have reduced dramatically and that by the time we are 70 the fund will be virtually worthless whereas if we had stayed with the Prudential we would have continued to have an excellent pension guaranteed for life…

I feel that in offering the advice you did without making the implications very clear you acted negligently and that compensation should be forthcoming to cover the losses caused by this obviously unrealistic advice.

We do accept that if we die before age 75 then anything left in the fund can pass to our beneficiaries but that is no compensation for the vast difference in remuneration received and for what looks like being a very poor old age…”

If the Williams had commenced proceedings immediately then, they might have been within even the basic six year limitation period, if the six years in question are to be taken as commencing only with the transfer to Winterthur on 21 November 1997. Unfortunately, they did not commence these proceedings until 16 October 2006. Even on the basis that they might not have had knowledge of their cause of action until at latest May 2003, which was the judge’s finding, they would have been in time for the purpose of section 14A for another three years, until May 2006. Hence the importance for present purposes of their section 32 argument.

The judge, HH Judge Reddihough, was dealing with the respondents’ applications to strike out and/or summarily dismiss certain of the Williams’ claims, pursuant to CPR rules 3.4 and/or 24.2, on the ground that they were time barred. In his judgment dated 12 June 2009 he agreed. There are, however, claims against at any rate the second respondents and the second and fourth defendants which survive for trial. In the circumstances, save where the judge made firm findings of fact, such as regarding the Williams’ knowledge in 2002 and/or 2003, the position between the parties is still at the stage of allegation, not findings of fact. Therefore, if I appear to state matters as though they were fact, they will for the most part be merely assumptions, based on the Williams’ pleaded case, for the purposes of these still summary proceedings. Thus the allegations of negligence are as yet unproven, and may never be.

It is reasonably clear that in the summer of 1997 Mr and Mrs Williams had built up considerable funds in their Prudential EPPs. Thus Prudential quotations as of a retirement date of 21 May 1997 demonstrated that Mr Williams had a fund value of £647,770 which would yield a pension (on an annuity) of £33,514 per year (or £28,365 if the pension were taken in part as a tax free sum); and Mrs Williams had a fund value of £222,049 which would yield £10,675 or £9,490 on the same bases. It is also accepted for present purposes that, as Mr Williams said in his letter of 4 November 2003 quoted above, the Williams made it clear to Lishman and Northern that they did not want to take any risks of being worse off than they would have been with Prudential. The figures cited are therefore the benchmark by which the performance of their Winterthur pension might have to be evaluated.

The Williams’ claim, based on this benchmark, is a large one. It has been calculated with the assistance of a report dated 19 July 2007 from an expert, Mr Christopher Hine. He there states that a sum of nearly £1 million would be needed to put the Williams back into the same position as they would have been if they had taken out annuities with Prudential in 1997.

It is not entirely clear what went wrong. One factor was the sheer cost of making the transfers. These costs were essentially of two kinds. One was commission charges which GA and Winterthur levied on the funds transferred. These, however, were either refunded by the respondents to the Williams or shared with them in amounts which the Williams knew about and agreed. The other, however, was a deduction which GA charged on transfer from GA to Winterthur, and arose as an “early surrender penalty”. This was in the amount of £38,493 (the “£38,000”). This penalty was something that the Williams did not know about, and it was only brought to light by Mr Hine in his report (at para 4.4). This, therefore, was an unknown cost of the transfer about which the Williams learned from Mr Hine in the course of these proceedings themselves. It is this sum which the Williams complain was deliberately concealed from them by the respondents, and is the essential and primary basis of their submission based on section 32. I will revert in a moment to the alleged significance of the timing of this loss for the purposes of the section 32 argument.

Another factor may have been the fall in annuity values over the years, as interest rates fell and remained low (see Shore v. Sedgwick Financial Services Ltd [2008] EWCA Civ 863, [2009] Bus LR 42). The effect of these falls was probably both to put pressure on the ability of the Winterthur pension funds to generate the income to replace the drawdowns effected by the Williams and to increase the capital amount which would be needed to match the higher annuity returns available from Prudential in 1997. This is because someone who gives up a guaranteed annuity income, in the expectation of making up for that by investment gains, takes the risk that a fall in interest rates (with a corresponding increase in the cost of an annuity to produce a given return) will make it difficult or impossible to come out on top of that strategy.

A third factor may have been the poor investment performance of the market as a whole in the era of the dot-com bubble and subsequent collapse around the turn of the millennium, allied with the consequences of the 9/11 disaster. A fourth factor may have been the actual nature of the so-called Protector Fund in which the Winterthur funds were invested. It would seem that at any rate by May 2003, Winterthur had written to the Williams to say that they would be closing the Protector Fund, since the combination of market performance and the investment policy of the fund had made it impossible to recoup its equity losses, even given a market recovery. The letter pointed out that the fund would therefore be reclassified as a fixed interest fund.

The judge made the following findings as to the Williams’ knowledge of the inadequacy of Winterthur’s performance and the failure of their and their advisers’ pension strategy:

“31.

In my judgment, the starting point in considering the Claimants’ date of knowledge within Section 14A is the fact that the Claimants had been advised at the outset that there would be no erosion of their capital in the IDP and that they would be no worse off than if they had left their funds with the Prudential. In my judgment, it must have been abundantly clear to the Claimants by the end of 2002, and certainly by May 2003, that the state of their funds was seriously deteriorating in terms of capital erosion and that they were in a much worse position than if they had remained with the Prudential. By 8^th March 2002, there had been an erosion of their capital by £136,636, and by 9^th May 2003, by £180,532. Even ignoring the reduction in the potential annuity figures compared with staying with the Prudential, these large erosions of capital should have very much put the Claimants on notice that the situation was completely at odds with the advice which they had been given in 1997, and that such advice was flawed. In my judgment, this means that by the end of 2002, and at the latest by mid-2003, the Claimants had knowledge that their loss was attributable in whole or in part to the acts or omissions of the First and Third Defendants alleged to constitute negligence within Section 14(8)(a) in the sense set out in Haward v. Fawcetts ante [[2006] UKHL 9, [2006] 1 WLR 682]; namely, they had knowledge in broad terms of the facts upon which their complaints are based and of the Defendants’ acts and omissions, and knew that there was a real possibility that such acts or omissions had been a cause of their loss. Thus, it means, in the words of Lord Nicholls, they had knowledge with sufficient confidence by those times to justify embarking on the preliminaries to issuing a writ such as taking advice and collecting the evidence…In my judgment, [Mr Williams] could and should have carried out at the end of 2002, or by mid-2003, the calculations he in fact carried out in late October 2003, which had led him to write the letter of claim to [Lishman]. Alternatively, in my judgment, at those times he might reasonably have been expected, within the meaning of Section 14A(10), to obtain independent expert advice as to the Defendants’ acts or omissions which would have resulted in him having the knowledge stipulated in Section 14A(8)(a)…”

The judge resumed these findings again at para 34 in these words:

“I have reached the firm conclusion on that material that the Claimants had the requisite knowledge under Section 14A(5) from their actual knowledge, alternatively constructive knowledge arising under Section 14A(10), by the end of 2002 and not later than mid-May 2003.”

It is accepted by the Williams that at any rate in late October 2003, shortly before Mr Williams wrote his letter of complaint of 4 November 2003, and thus just within three years of the commencement of proceedings on 16 October 2006, they had section 14A knowledge of their loss and of their claim against at any rate the first respondents, Lishman. For that reason they submit that their claim is in any event within time. However, they also maintain as their now primary argument that, by reason of deliberate concealment, the true limitation period only expired far beyond late October 2006, namely six years after that concealment had come to light.

The primary aspect of their deliberate concealment argument centres on the £38,000 early surrender penalty charged by GA. The Williams submit that this penalty, which for reasons I will explain below they date to 3 November 1997, was the very first loss which they sustained arising out of the respondents’ negligence, prior to switching their pension to Winterthur on 21 November 1997. Therefore, they submit, time began to run in respect of their cause of action in negligence against the respondents only when the £38,000 penalty came to light: and that was through Mr Hine’s expert report in July 2007. Therefore they had until July 2013 to commence proceedings.

The (very much) secondary aspect of their deliberate concealment argument concerns only the second respondents, Northern, and arises out of the events of late October 2003, when Mr Williams on his own account realised that he had a complaint to make. At that time he approached Northern’s Mr Simpson (see Mr Williams’ first witness statement at para 6.17). The upshot of their conversation was that Mr Simpson said that the Williams would have a claim for negligent advice against Lishman. That was the catalyst of Mr Williams’ letter of 4 November to Lishman. The Williams submit that, in thus seeking to distance themselves from responsibility and in singling out Lishman for blame, Northern were deliberately concealing their own role and responsibility.

This circumstance was also the principal basis of the Williams’ reliance before the judge on section 14A(10). They submitted that Northern were an “appropriate expert” within the meaning of that subsection: so that, when over the years Mr Simpson had encouraged the Williams to think that the performance of the Protector Fund would improve, or when Mr Simpson obscured his and his company’s own role in the 1997 advice, they argued that they could rely on the proviso at the end of the subsection to acquit themselves of knowledge (“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”. As appears above, however, the judge rejected that submission. Northern were not an appropriate expert: they were not independent, but themselves responsible (with Lishman) for the advice given in 1997. Moreover, the judge found in any event that the Williams had actual or constructive knowledge of their cause of action against both respondents by at latest May 2003. For these purposes section 14A knowledge of course includes knowledge which the Williams might reasonably have been expected to acquire both from facts observable or ascertainable by themselves, and from facts ascertainable with the help of appropriate expert advice which it was reasonable to seek. In effect, the judge took Mr Williams’ evidence and submission about the need to seek appropriate expert advice and held it against him: but regarded the need to seek that advice as occurring at an earlier time, namely at latest by May 2003.

There is, moreover, no sustained appeal from the judge’s findings quoted above. The grounds of appeal appealed the judge’s findings under section 14A primarily with respect to his alternative finding of constructive knowledge under section 14A(10) by reason of Northern’s response to Mr Williams’ complaints in and before the autumn of 2003 (see ground of appeal 6). Otherwise, the only complaint (ground 7) was that the judge misinterpreted Mr Williams’ letter of 4 November when he there said that “Over the past few years it has become apparent…”. But these limited grounds of appeal disputing the judge’s findings of section 14A knowledge were in effect not pursued. On behalf of the Williams, Mr Peter Knox QC made it clear at the hearing of this appeal that he did not challenge the judge’s findings of fact, save for the submission that the judge was there speaking only of knowledge of short-term loss. He maintained a submission that the Williams had no knowledge of medium to long-term loss. I will deal with that submission below. Otherwise, however, there was no appeal against the judge’s findings of actual knowledge for the purposes of section 14A(5)-(8). As for ground 6, that was maintained in the appellants’ skeleton arguments, but abandoned at the appeal hearing itself. In the circumstances, whereas the primary argument before the judge was in terms of section 14A, the primary argument on appeal was in terms of section 32.

It is now appropriate to set out the critical dates for the purposes of arguments raised by Mr Knox on this appeal. The advice from Lishman and Northern was given to the Williams at a meeting on 19 June 1997. Effect was given to this advice in the first place by transferring the pension funds from Prudential to GA in September 1997: on 3 September in the case of Mr Williams, and on 8 September in the case of Mrs Williams. On 20 October 1997 GA sent to the Williams a 14 day “cooling off notice”: at that stage, if they had wanted to, the Williams could within that period have rescinded their transfers to GA Life without incurring any charges. Of course, acting on the scheme which had been worked out for them, they had no intention of changing their plans in mid-stream. At the end of that period, on 3 November 1997, the Williams became committed to the GA transfers. It is from this date that Mr Knox dates the first loss suffered by the Williams by reason of the allegedly negligent advice which they had started to act upon, namely the £38,000 early surrender penalty to which the Williams were now committed at such time as they completed the onward transfers from GA to Winterthur. On 21 November 1997, those transfers were carried out. The pension funds left GA and went to Winterthur, and the early surrender penalty was suffered. Mr Knox submits that, following Shore v. Sedgwick, that date, 21 November 1997, marks the moment when the second (and ultimately major) loss arising from the negligent advice occurred, namely when the Williams entered a scheme involving greater risks than they were willing to bear.

Thus, on the Williams’ case, the cause of action for negligent advice arose with the first loss caused by that advice, on 3 November 1997. Under the fundamental six year limitation rule (section 2), that cause of action was prima facie barred by 3 November 2003. But because that first loss was deliberately concealed, time did not start to run in respect of that cause of action until that loss first came to light, which was not until Mr Hine reported in July 2007 (section 32). Thereafter, the Williams had another six years to issue their claim. Alternatively, time did not start to run until they knew, not merely of any short-term losses caused by market fluctuations, but of the medium to long-term loss involved in the ruin of their retirement strategy (see section 14A(5) and its reference to “the relevant damage”). That was not until late October 2003, very shortly before Mr Williams’ letter to Lishman dated 4 November 2003. Thereafter the Williams had another three years to issue their claim form (section 14A(4)(b)). On either submission, the claim form issued on 16 October 2006 was within time: on the section 32 route, that claim even preceded the start of time running; on the section 14A route, the claim preceded the expiry of the relevant three years by a small margin. That is the essence of the Williams’ case.

The respondents, however, submit that section 32 became irrelevant once (as a result of the allegedly negligent advice) the Williams had suffered loss which had not been deliberately concealed. Once that further loss had happened, the earlier loss that had been deliberately concealed ceased to be relevant for section 32 purposes. In terms of section 32(1)(b), it was no longer “any fact relevant to the plaintiff’s right of action”. In any event, there were no earlier and later losses. All loss had been incurred at the same time: either on 3 and 8 September 1997 when Mr and Mrs Williams had transferred their pension funds from Prudential to GA, or on 21 November 1997 when they had transferred their pension funds from GA to Winterthur. As for section 14A, the judge had found that by end 2002 and by May 2003 at the outside the Williams had actual and/or constructive knowledge of what was needed to be known for section 14A purposes. That finding embraced what Mr Knox characterised as medium to long-term damage, but in any event all that the section required was knowledge of relevant material damage, and the judge’s findings in this respect were more than accommodating to the Williams’ case.

The Williams also have a fall-back position relating to late October 2003 and Northern alone. They have pleaded a separate cause of action relating to Northern’s failure to give them proper advice at that later time. That has not been affected by the judge’s strike-out. What has, however, been struck out (paragraphs 43 and 44 of the Williams’ particulars of claim) is the allegation that Northern participated in the 1997 negligence already pleaded against Lishman. In that connection, the Williams say that Northern’s October 2003 deliberate concealment of their role in the 1997 negligence was a separate basis upon which time could be stopped running under section 32 in respect of the 1997 negligence. This is a puzzling submission which, like the others, will be discussed below. It does not figure in the “Amended voluntary further information served by the claimants” dated 27 May 2009 which the Williams drew up for the purpose of the argument before the judge. That document is confined to the allegation of deliberate concealment concerning the £38,000. To find what the Williams say about the separate October 2003 concealment by Northern alone one has to go to a document headed “Claimants’ Note re deliberate concealment in and after October 2003 by [Northern]”, dated 4 June 2009.

Shore is a relatively recent decision of this court published in July 2008. It considered a similar factual scenario for the purposes of an argument about section 14A. There was however no section 32 issue there. The question was when loss had been incurred in a situation where the owner of pension funds transferred them from an EPP environment where they could be used to buy an immediate annuity to an IDP environment where the owner was exposed to market and interest rate risks. In that case there was no intermediate stage from transfer out of the EPP to transfer into the IDP (ie no GA stage as occurred in our case). This court held that loss completing the cause of action in negligence (there too still at the stage of alleged negligence) occurred at the time of transfer, ie on 29 (sometimes stated as 28) April 1997. Thus Dyson LJ said this:

“13…On 29 April [1997], that sum was transferred to the PFW scheme and Mr Shore’s rights under the Avesta scheme terminated…

33.

The question that arises, therefore, is whether this is a transaction case: did Mr Shore suffer damage as soon as he gave up his rights under the Avesta scheme in favour of the PFW scheme?...

34.

Mr Soole QC submits that he did not suffer loss immediately on the investment in the PFW scheme for the following reasons. First, it is common ground that the benefits surrendered in the Avesta scheme were properly valued at £637,507. Secondly, that sum was used to invest in the PFW scheme. The price paid for this investment was its then current market price…

35.

Thirdly, the transaction cases are all ones concerning transactions in which there is a risk that the claimant will be financially worse off than he would have been if he had not entered into the transaction. None of them concerns a transaction in which it is possible that the claimant will be financially better off than he would have been if he had not entered into it.

36.

Fourthly, to hold that the loss was suffered when Mr Shore invested in the PFW scheme is inconsistent with what was said by the House of Lords in the Nykredit case…

37.

I cannot accept these submissions largely for the reasons given by Mr Wardell QC. It is Mr Shore’s case (assumed for present purposes to be established) that the PFW scheme was inferior to the Avesta scheme because it was riskier. It was inferior because Mr Shore wanted a secure scheme: he did not want to take risks. In other words, from Mr Shore’s point of view, it was less advantageous and caused him detriment. If he had wanted a more insecure income than that provided by the Investa scheme, then he would have got what he wanted and would have suffered no detriment. In the event, however, he made a much riskier investment with an uncertain income stream instead of a safe investment with a fixed and certain income stream which is what he wanted.”

Subject to the complication of the interposition of GA and the £38,000 early surrender penalty, the equivalent date in our case would be either 3/8 September 1997, when Mr and Mrs Williams left the security of the Prudential EPP scheme and the annuities which it could have bought them, or 21 November 1997, when they left GA and entered the Winterthur scheme.

As for the date when Mr Shore was fixed with section 14A knowledge, Dyson LJ said this:

“61…But the judge was obviously right to say that Mr Shore knew what advice he had been given and what advice he had not been given. By May 2000, Mr Shore knew or should have known that at the age of 60 he would receive an income that was substantially lower than that which he could have expected to receive if he remained a member of the Avesta scheme. The judge was right to find that there was a real possibility (to put it no higher) that the loss he had suffered as a result of not remaining in the Avesta scheme was caused by the failure of SFS to advise him to do so. In my judgment that was sufficient to fix Mr Shore with knowledge of the facts relevant to the alleged breach of the advice duty for the purposes of section 14A. He had sufficient knowledge to make it reasonable to investigate whether there was a claim against SFS for their responsibility for his leaving the Avesta scheme for the PFW scheme.”

It is plain on our facts that the Williams were in the same position as Mr Shore had reached, by at latest May 2003, when Mr Williams had received Winterthur’s letter dated 12 May 2003, and learned that it was closing the Protector Fund to new business, that its equity holdings had been wiped out (“With the dramatic decline in the stockmarket as we have seen, the Equity Linked Deposits within the fund have little value”), that there was no money to purchase any more (so that there would be no opportunity to share in any uplift in equity markets), and that the fund was therefore to be reclassified “into the Fixed Interest Sector”. The letter continued: “You may wish to take financial advice to determine whether the fund is still suitable for your needs”. Nevertheless, Mr Knox submits that the relevant (medium to long term) damage of which knowledge is required still remained unknown until later in the year.

Logically the first issue is whether the £38,000 penalty was a loss which preceded the Shore loss of leaving a secure scheme for a riskier scheme. In my judgment, it was not. The matter can be looked at in one of two ways. Either the Shore loss was incurred when the Williams acted on the advice which they had received, to exit their EPPs in favour of entering into IDPs, that is to say in early September 1997 when each of them transferred their pension funds out of Prudential into GA as a preparatory step for the further transfer into Winterthur; or the Shore loss was incurred when the final transfer was made into Winterthur on 21 November 1997. Mr Knox nevertheless seeks to find a middle way, on the basis that the funds in GA could still have been used to buy annuities, had the Williams changed their minds: which indicates he submits that the Shore loss was not in fact incurred until the final transfer; whereas the £38,000 penalty became an incurred loss on 3 November 1997, when the Williams became irrevocably committed to the transfer into GA.

In my judgment, however, this is an illogical mixture of two positions. If the Williams had changed their minds and used the pension funds in GA to buy annuities, there would have been no £38,000 penalty and (I will assume) no loss of any kind. On that hypothesis, all loss is avoided by an abandonment of the scheme proposed by the respondents. If, however, the Williams were to go through with the proposed scheme, then the date at which the transfer to GA became irrevocable (on the expiry of the 14 day notice issued on 20 October 1997) is irrelevant: the Williams were always going to use GA merely as a necessary technical means to effect the ultimate transfer to Winterthur. So, either the Williams’ loss is all to be regarded as incurred once the scheme was put into effect and the security of Prudential abandoned (as in Shore), which was in early September, or, if the mere possibility of a change of mind is to be taken into account, their loss is all to be regarded as incurred only when all possibility of that change of mind has gone, namely on the final transfer to Winterthur. In either event, all loss is suffered at the same time.

In my judgment, therefore, the factual premise on which the Williams’ section 32 submission has been based does not exist.

If, however, I assume that that is not so, and that the £38,000 penalty does in fact precede the Shore loss, then the question is whether the £38,000 loss retains its status as “any fact relevant to the plaintiff’s right of action” once the Shore loss has arisen.

For this purpose, it is necessary to take into account the jurisprudence on section 32, from which it is clear that that phrase has a more limited meaning than might be supposed. Thus it has been established that only those facts which are necessary to the ability to plead the cause of action in question are within the phrase. That jurisprudence has been set out in AIC Limited v. ITS Testing Services (UK) Ltd (The “Kriti Palm”) [2006] EWCA 1601, [2007] 1 Lloyd’s Rep 555: see at paras 322/324, where the earlier authorities of Johnson v. Chief Constable of Surrey (CA, 19 October 1992, unreported), and C v. Mirror Group Newspapers [1997] 1 WLR 131 (CA) are cited. As I put it (at para 307 of AIC v. ITS):

“This is important because the purpose of section 32(1)(b) appears to be designed to cater for the case where, because of deliberate concealment, the claimant lacks sufficient information to plead a complete cause of action (the so-called “statement of claim” test). It is therefore important to consider the facts of deliberate concealment vis-à-vis a claimant’s pleaded case.”

See also at para 384 (Sir Martin Nourse) and at paras 452/3 (Lord Justice Buxton). At para 453 Buxton LJ said:

“The court therefore has to look for the gist of the cause of action that is asserted, to see if that was available to the claimant without knowledge of the concealed material.”

In the present case, Mr Knox submits that the £38,000 loss was a relevant fact within that test because it was only with the arrival of that (first) loss that the cause of action in tort (as distinct from contract) arose. Therefore, that loss was a vital part of the Williams’ case for the purpose of pleading their cause of action. Once that loss had arisen, it became attached irrevocably to that cause of action (section 32(1)(b)’s “right of action”), so that, in the later words of the subsection, “the period of limitation shall not begin to run until the plaintiff has discovered the… concealment…” It is irrelevant that in the meantime other heads of loss may have occurred, as to which there was no deliberate concealment. Alternatively, if the later loss is capable of being in any way relevant, it cannot be so until that loss is itself known about by the claimant. On that basis, the later Shore loss only becomes relevant at the earliest at the end of 2002 or as of May 2003 (on the judge’s findings) or as of late October 2003 (on the Williams’ case). On any view of that matter, time does not begin to run until at earliest the end of 2002, which gave the Williams a further six years to commence their claim – and they were well within that.

On behalf of the respondents, however, Mr Mark Simpson QC for Lishman and Mr Charles Phipps for Northern submit that Mr Knox’s arguments are mistaken. Thus, on the basis of Mr Knox’s primary argument, they submit that it is counter-intuitive to suppose that a cause of action which the Williams in fact referred to in their claim form on 16 October 2006 was still the subject of deliberate concealment until July 2007 when the £38,000 penalty came to light. The doctrine of section 32 is designed to protect a claimant who, by reason of deliberate concealment, could not plead his case before the concealed fact is or ought to have been discovered. It is not designed to put such a claimant in a better position than if there had never been deliberate concealment at all. One cause of action may give rise to many different heads of loss. If one head of loss is not known about because of deliberate concealment, but another head of loss is not concealed and is known about, then the claimant knows about his cause of action and can plead it: the various heads of loss will emerge in the course of the proceedings. If one head of loss remains deliberately concealed and cannot be discovered with the use of reasonable diligence, then it is likely that the claimant has other remedies. He has nevertheless in the meantime taken his cause of action to law.

As for Mr Knox’s fall-back position, which is that time does not begin to run under section 32(1)(b) until the claimant knows (or no doubt should have known) of some other loss to complete his cause of action, it is submitted that this is to confuse section 32 and sections 2 and 14A. There is a special rule for deliberate concealment, which postpones the commencement of the period of limitation. Once, however, some other loss completes the claimant’s cause of action, the first loss ceases to be “any fact relevant to the plaintiff’s right of action” and section 32 drops away – unless the first loss is relied on for the purpose of a separate cause of action. It may be that the £38,000 penalty could have been the subject-matter of an entirely separate cause of action, the start of whose limitation period was postponed until July 2007. However, no such separate cause of action has been pleaded. If, however, as here, there is only one cause of action but several heads of damage, then, in the absence of its deliberate concealment, time will begin to run from the occurrence of the second loss. Prima facie that time will start to run, under section 2, on the date on which the cause of action accrued. On the hypothesis under consideration, which is that the existence of an earlier loss is deliberately concealed, there is only the second loss to start time running. If, however, the second loss is not known about (even though there has been no deliberate concealment), then there is room for section 14A to operate. Under its provisions time may be extended, beyond section 2’s six years, to three years beyond the relevant knowledge. There is no warrant to give the claimant the benefit of section 32 in respect of another loss which has not been deliberately concealed.

These are powerful submissions on both sides. The judge side-stepped them by regarding the £38,000 loss not so much as a first loss giving rise to the consequences of the negligent advice, but as being the subject-matter of a separate cause of action. At any rate he regarded ‘‘the cause of action in question’’ as being confined to the share loss. Thus he said (at para 48 of his judgment):

“The essence of those claims is that by reason of the allegedly negligent advice in 1997 by the First and Third Defendants, the Claimants transferred their pension funds into the IDP (see Paragraph 131 of the Particulars of Claim). Thus, in the context of those claims, the loss or damage occurs at the point when the funds are transferred into the IDP (as per Shore v. Sedgwick Financial Services Limited (ante). The fact that an earlier loss occurred, namely the event of the inevitable liability to the GA charges, is, it seems to me, irrelevant to the completion, by the transfer to the IDP, of the cause of action in question.”

In my judgment, the matter could perhaps be tested in this way. Suppose the first loss is not known about (because of deliberate concealment) but the second loss is patent and appreciated. Suppose, moreover, that on knowing of the second loss, a claimant knows everything he needs to know to plead his claim in negligence. He thinks he knows the true date of the accrual of his cause of action (the date of the second loss) and he is in ignorance of the fact that in truth his cause of action began somewhat earlier (on the date of the first loss). He delays more than six years from the date of his second loss. He then finds out about the first loss. Can he say that time only began with the discovery of the first loss and its concealment? It could be said with some force that that would make a nonsense of the statute as a whole. The claimant knows that he has a cause of action in negligence but waits six years to bring his claim. The deliberate concealment is irrelevant to his ability to plead his claim (although not of course to his ability to plead all his heads of loss).

On the other side it may be said: but if the claim is brought more than six years after the first loss, albeit less than six years after the second loss, and the first loss has ceased to offer protection as a “fact relevant to the right of action” for the purposes of section 32, then the claimant will be vulnerable, once the first loss emerges, to a defence of time bar. There are perhaps two answers to that objection. One is that a defendant may not be able to rely (is estopped from relying) on a cause of action accrual date which he has deliberately concealed. That would leave only the occurrence of the second loss as the date from which the cause of action accrues. However, it might be said in response that that is the function of section 32, to stop time running in the case of deliberate concealment, rather than the function of the general law of estoppel. Secondly, it might be argued that once the fact of the first loss has become unnecessary to the pleading of a claimant’s cause of action, there is no reason why the running of time from a date reflecting that first loss and the original accrual of the cause of action should be critical. If the second loss is known about but the first loss is not, the second loss will in practice mark the accrual of the cause of action. If the second loss is not known about but has not been deliberately concealed, section 14A will extend time as may be necessary for a further three years from the date of knowledge. However, this second answer is not compelling. It is true that if the first loss is never known about at any time when any question of limitation has to be dealt with in an action, then it simply falls out of account as an unknown. The question raised assumes, however, that the first loss does emerge (as in this case) and creates a difficulty for the very reason that the second loss has, it is said, rendered the deliberate concealment of the first loss irrelevant for the purposes of section 32. It is not easy in those circumstances to understand why the date of the accrual of the cause of action has to be postponed from the time of the first loss to that of the second.

Moreover, it may be said: but what if (unlike the present case) the first loss is a very substantial loss and has been deliberately concealed, and the second loss, although known about, is, while real and material, nevertheless comparatively minor and not such as would lead a claimant to commence proceedings. In the circumstances the claimant allows six years to pass without proceedings and it is said with force that his cause of action in negligence is time barred. Why, however, in those circumstances should the claimant lose the protection of section 32 in respect of the first loss? A similar issue might have arisen in the present case if, although the Shore damage had come to be known about, nevertheless, because of market movements, it had never resulted in any erosion of the Williams’ pension funds, while the hidden cost of the transfer had remained a matter of deliberate concealment.

There is no satisfactory answer that I can find for myself to this last question. The problem was not expressly posed during the appeal, and thus we have not had adversarial argument on it. In some cases, of course, there might be a separate cause of action in respect of the first loss which will protect such a claimant, because in such a case section 32 will continue to protect that cause of action for six years after its discovery. In the absence of a separate cause of action, however, there will be no protection, certainly none from section 32, on the respondents’ submissions.

The arguments therefore appear to gain or lose force depending on the particular factual circumstances posited. Although the issues in this case are different, I find a useful parallel in Sheldon v. RHM Outhwaite (Underwriting Agencies) Ltd [1996] 1 AC 102. The issue there was whether section 32 protected a claimant from deliberate concealment which post-dated the first accrual of the cause of action. The arguments were nicely poised, as demonstrated by the fact that Saville J decided at first instance that section 32 protected the claimant ([1994] 1 WLR 754), this court reversed that decision by a majority (Sir Thomas Bingham MR and Kennedy LJ, Staughton LJ dissenting, [1996] 1 AC 102 at 108ff), and the House of Lords split 3-2 (Lord Mustill and Lord Lloyd of Berwick dissenting) in reversing this court’s decision. It has been said that the policy considerations of the majority there outweighed Lord Lloyd’s linguistic analysis (Limitation of Actions, 1998, by Oughton, Lowry and Merkin, at pp 68/69), but the authority demonstrates the power of section 32. Ultimately, the winning argument was that a claimant should be protected against ignorance caused by the dishonourable conduct of a defendant, even if, on certain facts, as where the deliberate concealment occurs at the very end of what would otherwise have been the limitation period, the claimant is assisted by a very great extension of the normal six years.

This point is not unconnected with section 32(5), which I have considered. It begins “Sections 14A and 14B of this Act shall not apply to any action to which subsection (1)(b) applies…” Section 14B provides a 15 year long-stop to latent damage cases in negligence (outside personal injury and section 11). It might seem that section 32(5) supports Mr Knox’s argument that once section 32(1)(b) comes into play because of the deliberate concealment of a first loss, the cause of action in question has to be dealt with solely under section 32. A counter-argument might be that this will not be the case where subsection (1)(b) no longer applies because a fact which had at one time been “relevant to the plaintiff’s right of action” ceases to be. However, the essence of the matter is that section 32 cannot overlap (for instance) with section 14A. There are two separate statutory regimes: section 2 and 14A and section 32. But in a case of deliberate concealment section 32 takes precedence. There is therefore something rather unhappy about giving section 14A (or section 14B) precedence where a cause of action begins with deliberate concealment and never loses its original accrual date. Suppose the second (and not deliberately concealed) loss remains latent for 15 years. Why should the cause of action be lost because a second loss has been unknown for 15 years, when the first loss has been deliberately concealed for as long or longer?

On balance, therefore, while I see great force in the respondents’ arguments, particularly on the facts of our case, I would, somewhat to my surprise, have ultimately concluded that the Williams’ appeal would have succeeded, if the facts relating to a first loss followed by a second loss had been in their favour. It turns out that there is no compelling reason why the difficulties of the respondents’ arguments on the statute should be smoothed away. If time in respect of a cause of action “shall not begin to run” until the concealment has been discovered, and section 14A “shall not apply” to an action to which deliberate concealment under section 32(1)(b) applies, ultimately I see no compelling reason why a defendant responsible for the deliberate concealment which marks the original accrual of a right of action should not have to take the rough with the smooth: and so find that he has to answer for a (second) loss which he has not concealed and about which his claimant has known for too long together with the (first) loss which he has deliberately concealed and about which his claimant has only more recently discovered.

In this connection, I am indebted to Lord Justice Elias for the interesting possibility, which the facts and arguments of this appeal have generated, of a qualification on the "statement of claim" test. It may be that in the context of a cause of action which involves different losses at different times a first loss should not be regarded as "relevant" for the purposes of section 32(1)(b) where, even if it had been known about, it would not have led to the issue of proceedings. Thus a material loss, although capable of creating a cause of action and necessary in the "statement of claim" sense to the pleading of that cause of action, will nevertheless not be regarded as "relevant" to the right of action where the claimant, if he had known about what has in fact been deliberately concealed from him, nevertheless would not have gone to law about it within six years. This might ensure that a claimant could not, after waiting too long to commence proceedings in respect of a claim about which he did know or ought to have known, seek to find a haven from the storm by uncovering some "first loss" which he claims to have been deliberately concealed from him. In effect, it is to discount as "relevant" a loss which, although arguably recognised by the law, is not part of the "gist" of the claim which the claimant wishes to maintain.

Of particular interest is Lord Justice Elias's example of the material but minor first loss which is known about, but is not considered worthy of proceedings. Time therefore runs out while some major second loss has been deliberately concealed. Could the defendant here rely on the first loss in order to bar the whole of the claimant's cause of action? In this example, it is tempting to view the second concealed loss as still "relevant" despite the ability to plead a cause of action at the time of the first loss. Here, "relevant" is used not in order to require a further limitation on the "statement of claim" test, but as creating an exception to it. Such a case may fall within the scope of the rationale of Sheldon: time has begun to run, with the first loss, but the deliberate concealment still extends time for the benefit of the deliberately concealed loss. On the other hand, even in the absence of section 32, there is still section 14(A), with its carefully crafted subsection (7), to assist a claimant.

Since, however, my Lord's argument was not advanced by either of the parties at the appeal and could not in any event have been decisive, I would prefer to say nothing further about it, other than to express a doubt as to whether it would in any event have availed the respondents in this case.

Mr Knox submits that, if the first deliberate concealment by both Lishman and Northern of the £38,000 GA penalty does not suffice to stop time running until the discovery of the penalty, then at least Northern’s deliberate concealment in late October 2003 of its part in the negligent advice of June 1997 would suffice to protect the 1997 cause of action against Northern. I regret that I do not understand this submission. Ex hypothesi the 1997 cause of action has time running against it. Time runs out under section 14A either too early in at latest May 2006 (on the judge’s findings) or in late October 2006, thus just preventing a time bar (on the Williams’ case). I do not see that this fall-back element of Mr Knox’s submissions adds anything. By late October 2006 either there has been a time bar or there has not. In any event, I fail to understand how it can be said that any alleged dissembling on the part of Northern in October 2003 can be said to conceal the fact, which has always been known to the Williams, that Northern had participated in the June 1997 advice from the beginning. I see no merit in this fall-back submission.

That leaves Mr Knox’s alternative fall-back submission under section 14A. As I have remarked above, Mr Knox does not dispute the judge’s findings concerning actual and/or constructive knowledge by at latest May 2003, but he submits that such findings should be limited to knowledge of short-term loss only, and that the medium to long-term loss which concerned the Williams was not known about until late October.

In my judgment, however, this submission will not do. First, there is nothing that happens between May and October 2003 which makes a difference other than that Mr Williams says that it was only in late October 2003 that he made the calculations which showed him that, as he wrote in his letter of 4 November, “Over the past few years it has become apparent that this [that we would not only be no worse off but should be much better off] is not the case and our pension funds have reduced dramatically and that by the time we are 70 the fund will be virtually worthless…”. His evidence is that he did this at the very end of October as a result of a telephone conversation with Mr Simpson of Northern in which Mr Simpson told him that Mr McCabe of Lishman should have, back in 1997, outlined the risks involved in the transfer to the Winterthur IDP, and that he would have a claim against Lishman if he had not. It is plain, however, that Mr Williams could have done these calculations at any time since (say) late 2002 or May 2003 at the latest.

Secondly, the new pension arrangements entered into in the autumn of 1997 had now been running for nearly six years, and throughout that time, as the Williams were withdrawing sums which were not being made good by their pension fund investments, matters had been getting steadily worse. As Mr Williams said in his letter: “Over the past few years it has become apparent…” What Mr Williams says in his evidence about this passage in his letter is that:

“it had become apparent that the last few years’ events meant that we would not be better off. I was not saying that we had become aware for a number of years that we would be worse off.”

However, it seems to me that Mr Williams was here recognising that over the past few years the passing of time had been showing him that he had entered on to a riskier path than that which, as he had made clear to his advisers at the beginning, he had wished to tread, and that the facts had increasingly been demonstrating to him the significance of the risk that he would be substantially worse off. In my judgment that completely justifies the judge’s finding that “it must have been abundantly clear to the Claimants by the end of 2002, and certainly by May 2003, that the state of their funds was seriously deteriorating in terms of capital erosion and that they were in a much worse position than if they had remained with the Prudential”.

Thirdly, it is plain that the judge is talking about long-term loss. Since the judge’s findings are not challenged, it follows that this fall-back point has no substance.

Fourthly, however, although it is not necessary to my conclusion, it seems to me that there is a real difficulty, at any rate where a claimant is a worldly and experienced man of business like Mr Williams, for knowledge of the section 14A kind (see section 14A(10)), to escape him for long in the context of a Shore loss. The very essence of the loss is that the path taken is riskier than the path desired. Of course, such a risk can have at least two results: it can prove profitable or it can turn bad. However, that is not to say that the risk is only obvious when things go wrong. It is hard, for instance, to think that Mr Williams did not appreciate that, if interest rates fell, it would be increasingly difficult to match the lifelong returns of an annuity. However, at a preliminary stage where the contest is under the summary judgment provisions of CPR rules 3.4 and/or 24.2, it may be necessary to go some way down the path of experience in order to be sufficiently sure about the likelihood of section 14A knowledge. However, it has to be remembered that the section 14A knowledge is only of “such facts about the damage as would lead a reasonable person who has suffered such damage to consider it sufficiently serious to justify his instituting proceedings” etc (section 14A(7)). What seems to me in these circumstances to be abundantly clear is that the judge’s conclusion, that at latest by May 2003 the Williams had the necessary knowledge of their loss, was justified.

It follows that in my judgment this appeal should be dismissed. The Williams are time barred from their 1997 complaints against Lishman and Northern. For the rest, however, their claim survives.

I agree with Rix LJ's conclusions as to the disposal of this appeal for the reasons he gives. But I do not wish to make any comment on the views expressed obiter either by Rix LJ or Elias LJ

I gratefully adopt the description of the facts given by Rix LJ. I respectfully agree with him that the appeal should be dismissed. However, I wish to make certain observations of my own with respect to the proper construction of section 32 (1)(b) of the Limitation Act. Essentially this stops time from running against a claimant where “any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant.”

This case is concerned with what constitutes a “fact relevant to the plaintiff’s right of action.” That concept has been considered in a number of decisions of this court; see e.g. Johnson v ChiefConstable of Surrey; The Times, 23 November 1992; C v Mirror Group Newspapers [1997] 1 WLR 131, and AIC Limited v ITS Testing Services (UK) Ltd, “The Kriti Palm” [2006] EWCA Civ 1601; [2007] 1 Lloyd’s Rep 555. The judges in these cases have adopted what has become known as the “statement of claim” test. That approach requires that in order to be a “relevant fact” within the meaning of section 32, any fact which is concealed must be a fact which should be pleaded in a statement of claim. The cases have distinguished between facts relevant to the right of action itself and facts which evidentially strengthen a party’s case. In Johnson, a case concerning an alleged wrongful arrest, Russell LJ put the matter as follows:

“In order to give relief to the plaintiff any new fact must be relevant to the plaintiff’s ‘right of action’ and is to be contrasted with the facts relevant, for example, to ‘the plaintiff’s action’ or ‘his case’ or ‘his right to damages.’ The right of action in this case was complete at the moment of arrest. No other ingredient was necessary to complete the right of action. Accordingly, whilst I acknowledge that new facts might make the plaintiff’s case stronger or his right to damagaes more readily capable of proof they do not in my view bite upon the ‘right of action’ itself. They do not affect the ‘right of action,’ which was already complete, and consequently in my judgment are not relevant to it.”

The issue in this case, about which there appears to be no authority, concerns the application of that test to a situation where the claimant suffers losses which arise out of the same unlawful act, and therefore result from a single cause of action, but arise at different times. On the statement of claim test, it was as I understand it common ground that section 32(1)(b) cannot provide any protection to a deceived claimant if the first loss flowing from the negligent act is not concealed from him. This is because the cause of action in negligence is established when the damage is suffered, and time will in the usual case run from that date. The fact that a later loss resulting from the same act of negligence has been concealed from a claimant will not prevent him from pursuing his cause of action. Accordingly, it is not a relevant fact. It follows that it is not even arguable that section 32 can give the claimant any protection unless the concealed damage is the first loss.

Even where the concealed loss is the first loss, the question then arises whether, where there is a second loss which is not concealed from the claimant, time begins to run at least from when that loss is suffered. The claimants in this case submit that it is the first loss which completes the cause of action and that thereafter the existence of further losses, even if not concealed, will not affect the application of section 32. A fact relevant to the cause of action remains concealed. The respondents say that even if the first loss was concealed and would prevent time running, a cause of action was completed by the subsequent and non-concealed loss. Thereafter the claim could be pursued and proved without any reference to the concealed loss. That loss could not, therefore, be said to be relevant to the cause of action in negligence.

In this case Rix LJ has concluded that the concealed loss, namely the loss of the £38k penalty, and the non-concealed loss resulting from the claimants being put in a riskier financial environment, occurred simultaneously. I respectfully agree with that analysis, given that we are bound by the principles established by this court in Shore v Sedgwick Financial Services Ltd, which Rix LJ has discussed. It follows that the concealed loss was not the first loss, or at least not the only first loss, and so the section cannot be relied upon by the claimant to extend time. There were sufficient facts established to enable the claimants to bring their claim at the point where the concealed loss was incurred. So the appeal fails on the facts.

However, Rix LJ has gone on to consider whether the section would have applied even if the concealed loss had been the first loss. Does the first concealed loss remain a “relevant fact” within the meaning of section 32 so that its concealment prevents time running until that fact is known, even if shortly thereafter a further – and potentially much greater – loss is incurred which is not concealed? Or is the cause of action completed by the second loss so as to start time running at that point?

As Rix LJ has pointed out, there are odd consequences whichever solution is adopted. It may be said that there is no logic or justice in allowing a potentially small concealed loss to extend the time for bringing a claim when the claimant subsequently incurs a much larger loss but still has not acted sufficiently promptly with respect to that loss. As against that, why should the existence of a small second loss, which a claimant may well consider is not worth suing for, set time running against a claimant who only discovers too late that he has suffered a far greater earlier loss that has been concealed from him?

Where the consequences vary and may, depending on the particular facts, favour either claimant or deceiver disproportionately, then I see considerable force in Rix LJ’s conclusion that the section should be construed in favour of the former rather than the latter. That is consistent with the approach adopted by the House of Lords in the Sheldon case (see para 47 above). If that analysis is correct, the claimant would not have been time-barred had the concealed loss been the first loss.

However, there are strong counter-arguments. In particular, on the assumption that there is only one cause of action giving rise to different heads of loss, it is difficult to see why the statement of claim test is not satisfied once some non-concealed loss is suffered. All the facts necessary to plead the cause of action are then in place. It is not obvious why the first loss should be identified as a “fact relevant to the plaintiff’s right of action” within the meaning of section 32(1)(b) once some non-concealed damage is suffered, for that damage on its own suffices to make the cause of action complete. The first loss is not thereafter a necessary averment whose omission makes the claim amenable to a strike out.

I have not found this an easy question to resolve. Since it is not in the event necessary to reach a conclusion on this point and furthermore, as Rix LJ has pointed out, we did not hear argument on some potentially material aspects of it, I would prefer not to do so.

However, I do wonder whether the statement of claim test should be applied without qualification in a case of this nature. I cannot think that justice is best served by fine distinctions such as whether the concealed loss is the first in time or not. This may have very unfair consequences even where the first loss is not concealed. For example, a claimant may suffer a small and unimportant first loss which is not worth litigating about, followed by a very much larger concealed loss. On the statement of claim test as adopted in argument in this case, section 32 would not provide any protection. The concealment would be effective to defeat the claimant’s right. That seems to defeat the very object of the subsection.

On reflection, I think it may be possible to modify the statement of claim test so as to reach a more satisfactory outcome.

The argument I would float is this. The context in which the court has to determine whether a relevant fact has been concealed is when a claim is made and the defendant alleges that it is out of time. The claimant responds by seeking to rely upon a relevant fact which has been concealed from him. The argument is that having regard to the purpose of section 32(1)(b), a fact is relevant to the claimant’s right of action if it is causally relevant to the decision to pursue that right, i.e. ignorance of the fact explains why the claimant did not bring that particular right of action earlier. This involves a modification of the statement of claim test. If the fact of which he is ignorant is a necessary element in the right of action itself, i.e. if it satisfies the statement of claim test, then it will necessarily satisfy the requirement of causative relevance. Without knowledge of this fact, a claimant could not be expected to know that he had any right of action at all. But facts may be causally relevant to pursuing a cause of action even where a claimant knows enough to know that he could, in principle, pursue his right of action. To take the example I have already given, if a loss of which he knows is small it may not be worth litigating but once a much larger concealed loss is discovered, it fully explains why he only decided to pursue the legal action at that point. The concealed fact is relevant to this particular cause of action. But for ignorance of the second loss, he would have pursued the case earlier. By contrast, if the concealed fact does not explain why the action was not pursued earlier, it is not a relevant fact even though the claimant was in ignorance of it.

In effect, this approach discounts as a relevant fact any loss which, although recognised by the law, is not part of the “gist” of the claim which the claimant wishes to maintain. If correct, it would deal with the anomalies identified by Rix LJ in paragraphs 43 and 45 of his judgment.

However, this argument was not advanced by either of the parties at the appeal and it may well be that after proper consideration it proves unsustainable. In any event, even if correct I doubt whether it would have made any difference in this case since the concealed loss was dwarfed by the non-concealed losses.