Ross & Anor v Attanta Ltd

The Defendant, Attanta Limited, is a company providing financial advice, against whom the Claimants bring a claim in respect of allegedly negligent advice provided to them by an employee of the Defendant when they remortgaged their home in May 2007. The Defendant applies for summary judgment to be granted in its favour pursuant to CPR 24.2 or in the alternative for an order striking out the Particulars of Claim pursuant to CPR 3.4.

I should record that I was asked to and did grant permission pursuant under Schedule 3 paragraph 1(2)(b) of the Legal Services Act 2007 for Mr Knibbs, the Defendant’s solicitor, to appear on the Defendant’s behalf, on the footing that whilst he does not have Higher Court rights, he has significant experience of advocacy in the lower courts and his familiarity with the case made this a desirable cost saving measure on a one off basis. If in future Mr Knibbs wishes to appear in the Higher Courts on a regular basis then it will of course be necessary for him to seek Higher Court rights.

Self-evidently, and as is common ground, the primary limitation period under section 2 of the Limitation Act 1980 has long since expired. The first plank of the Defendant’s application is a limitation point, namely that s14A(4)(b) is not available to the Claimants and that the Court should so decide at this stage. Secondly, and more broadly, the Defendant submits that the statements of case disclose no reasonable grounds for the Claim and/or the Claimants have no real prospects of succeeding.

Since the application was proceeding as a heavy application under the Commercial Court rules, the Claimants’ evidence in response was due 28 days after service of the application on them some 10 months ago, but that evidence was not served until 14:39 on 12 February 2021, a timescale which, nonetheless, would have complied with the requirement under CPR Part 24 that evidence be served 7 clear days before the hearing, had that been the applicable rule. There was no adequate explanation, other than oversight, for this.

The evidence in question comprised a witness statement from the Claimants’ solicitor, Mr McBride, to which were exhibited witness statements for each of the Claimants (in largely identical terms) and an expert report, on the footing that this was evidence they would be in a position to deploy at trial and which should therefore be taken into account in determining whether there were properly arguable issues. The evidence from the Claimants themselves largely related to matters of which the Defendant would already have been broadly aware from the Particulars of Claim, but they provided more context and detail and they did (as further described below) raise one new area of factual dispute which had not as far as the Defendant is concerned been previously foreshadowed. Another new element was the expert report dated 3 February 2021, exhibited by Mr McBride. This was from an individual with some 23 years industry experience in providing financial advice, including as an independent mortgage broker. The report was expressed as containing a “provisional” opinion and as having been prepared in compliance with CPR Part 35.

Permission has not at this stage been sought or given for expert evidence but it is reasonable to expect, given that this is a professional negligence claim against financial advisers, that such permission would be granted in due course were the matter to proceed to trial. On that basis, the expert report is relevant in showing that there is a reasonable expectation that the Claimants will be able to adduce favourable expert evidence at trial (whether or not precisely in this form). I do not read CPR 35.4 as precluding me from taking it into account for that strictly limited purpose or as requiring permission to be granted before I could do so. That rule must be applied consistently with the overriding objective. In these circumstances, as in Pipia v Bgeo Group Ltd [2019] EWHC 325 (Comm), that makes it appropriate for the Court to take a flexible approach, rather than requiring compliance with CPR 35. That flexibility is appropriate precisely because it cannot be the right approach, on a summary judgment application, to conduct any sort of mini trial of the expert evidence and the considerations are therefore not the same as those discussed by Marcus Smith J, in a different context where for example cross-examination of the experts might well be appropriate, in New Media Distribution Company Sezc Limited v Kagalovsky [2018] EWHC 2742 (Ch).

The late evidence is therefore relevant and to exclude it from consideration would be unjust to the Claimants. I had to consider whether the hearing should be adjourned in whole or in part in light of the late service of this evidence.

Mr Knibbs submitted that the Defendant might (and he put it no higher than that) want to adduce expert evidence of its own. He did not suggest that the Defendant would want to put in additional factual evidence. That was doubtless because one unfortunate result of the fact this action is brought so long after the events in question is that the Defendant by that time no longer had its file, which had been destroyed in the ordinary course of business, and the individual who gave the relevant advice and who would, as I understand it, have been the only person able to give evidence in response to that of the Rosses, is sadly deceased, having died before the Claimants made a complaint to FOS. Mr Knibbs asked either that the application be adjourned or dealt with on the basis solely of the limitation point.

Mr James, Counsel for the Claimants, was frank in accepting that the fault lay with the Claimants for not having served in good time but he questioned the utility of an adjournment, given that it would be wrong in principle to seek to resolve any disputed expert issues on a summary judgment application, and he opposed separating the limitation point from the rest of the application, on the footing that there is an overlap.

It seemed to me wholly unrealistic to suppose that any expert report in response (however pertinent and persuasive it might be if the matter goes to trial) could land a complete knock-out blow for summary judgment purposes and, to be fair, Mr Knibbs did not really press that point. He put it no higher than wanting to give this further consideration and, sensibly, did not want to definitively commit his clients to the expense of obtaining a report which at this stage could not, in my view, have advanced their cause on this application. If that expert, hypothetically, agreed with aspects of the Claimant’s expert’s report, that could not help the Defendant, and if he or she disagreed I would not be able to adjudicate at this stage as to who was right.

Equally, the Defendant will be no better off, in terms of demonstrating the Claimant’s factual case to be unarguable, if the matter is adjourned, since there is no further factual evidence they can muster on their side at this stage. Any such attack on the

The heart of the Defendant’s application really lies in the limitation point, but, as that has to be addressed on the basis of identifying accurately how the Claimants do, or reasonably could, put their claim, it does not make sense to seek to separate it from the broader question of whether, subject to limitation, there is an arguable claim (and if so what). Seeking to deal with the application in two bites rather than one risked unnecessarily incurring additional costs and encountering difficulty as to areas of potential overlap.

In those circumstances, I determined that I should admit the late evidence and refuse an adjournment, on the basis that the entire application could without injustice to the Defendant be dealt with now and, depending on the outcome of the application, the late service of the evidence could if necessary be taken into account when considering costs.

I therefore turn to the substantive application.

The Claimants claim, as damages for negligent advice in respect of the remortgage of their home in May 2007, the sum of £250,995, that being the entire capital sum of their interest-only mortgage. I shall come back later to whether that could be the correct quantum of any claim. Mr Ross was, according to his witness statement, a self-employed Investment Manager at the time of the remortgage, having begun investing in stocks and shares in 2001. On his own evidence he was someone with some financial know how, as for example shown by his comment that although credit was relatively easy to come by at that time, and financial institutions were relaxed about lending criteria, a self-employed applicant could be assisted by having a mortgage broker. Mr Ross says, and for the purposes of this application I accept, that despite that general know how he was not up to date as to the options available specifically in respect of mortgages and was looking to the Mortgage Broker for guidance in this respect. Mrs Ross was a teacher.

The Rosses had an existing interest only mortgage on their house of £100,000 with a 15 year term, arranged in 2005, before Mr Ross became self-employed. There was only very limited evidence before me as to the circumstances in which the Rosses came to enter into that mortgage. I was told that no claim is made in respect of it (although the pleaded case in negligence does appear to reference it). How and why the Rosses came to have an existing interest only mortgage might well turn out to be pertinent to the suitability for them of the 2007 interest only mortgage but that could only be explored at trial.

Mr Ross’s evidence is that the purpose of the remortgage in May 2007 was to consolidate debt, help their daughter, who was a student, with tuition fees and living expenses, and carry out home improvements. The mortgage application refers to some £84,000 in unsecured debts (of which £70,000 related to outstanding credit card debts), all of which was consolidated into the mortgage. The remortgage therefore raised an additional £66,000 for the other purposes mentioned, after deduction of fees,

Mr Ross says his self-employed income in the two immediately preceding years had been around £74,000 and £78,000, whilst his wife was earning £29,000 as a teacher. On an interest only basis the mortgage was on any view highly affordable on those earnings, in that monthly repayments were £1,127.39, based on the rate at inception of the mortgage of 5.39%. The Claimants’ expert calculates by way of comparison that if the whole borrowing of £250,995 had been raised by way of a repayment mortgage, the monthly payments would have been some £2,380.75 and that, if only £66,000 had been added by way of mortgage on a repayment basis, in addition to their existing mortgage, and the remaining debts been left unsecured, the combined monthly outgoings to service those debts would have been some £4,276.95 per month. I take those figures simply as broadly illustrative for present purposes, although doubtless another expert might produce different calculations.

Based on the Rosses’ combined earnings as at May 2007, they could, on Mr Ross’s evidence as to their outgoings, have afforded the higher payments required for a repayment mortgage for the full borrowing of £250,995, instead of the interest only payments they in fact made. As it happens, not all that long afterwards they fell on hard financial times as a result of the 2008 financial crash, when Mr Ross’s portfolio suffered and he ceased to be self-employed and instead returned to teaching English (at, presumably, a salary significantly lower than his previous self-employed earnings). Their financial difficulties, at a time when they were paying some £1,3001,400 a month in mortgage payments (well short of what they would have been paying, based on any of the hypothetical alternatives referred to above) were sufficiently severe that at one point they sought some help from a School Benevolent Fund. However, they were rescued by plummeting interest rates, which left them paying only some £303 per month from July 2009, falling latterly to a mere £219. None of those later developments could have been anticipated at the time of the advice, of course, but it is on the face of it somewhat difficult to see how they could have weathered the financial storm, on reduced income, had they not consolidated their substantial unsecured debts so as to make servicing those more affordable.

Turning back to the mortgage application process in May 2007, the relevant forms have been obtained from the lender’s file and were in evidence before me, but Mr and Mrs Ross’s evidence raises issues as to how those forms came to say what they do say. Those issues had not been raised prior to service of their evidence in response to this application, in which the Defendant had placed reliance on that documentation.

The Intermediary Mortgage Supplementary Application Form includes a question asking how the borrower intends to repay the mortgage, in the case of an interest only mortgage. This has been filled out in handwriting which Mr Ross says is not theirs stating “inheritance money due & sell of property in near future due to down grade to a smaller house”. There was also another reference in a communication from the broker to the lender to their intention being to down-size near retirement age. Mr Ross says (and, in all of this, his evidence is duplicated by his wife) there was no inheritance due (such inheritance as either of them could expect from parents had been, or would be, only very modest compared with the sum to be repaid) and they had no plans to down grade to a smaller house.

A further form required details of “Savings Plan for interest only or combination mortgages” and has been answered “max isa and personal pensions”. Mr Ross says of this that their pensions were for retirement purposes and too small anyway to pay off the capital sum and that he had never held an ISA. He denies that the broker had discussed this with them and more generally he denies the broker ever discussed how they intended to pay off the capital in future.

He says they were sent blank forms, which they signed and returned, and which were subsequently filled in by the broker in the course of telephone calls between them, such that he was unaware of the inaccurate statements in the forms as to how the loan would be repaid.

The credibility of those assertions would (if necessary) have to be a matter for crossexamination at trial, against the backdrop of the disclosure, for example, as to what assets were held by the Rosses and as to what was said and by whom as to plans for repaying the capital at the time of the earlier 2005 mortgage. They are not matters on which I could reach a conclusion at this stage.

For present purposes, therefore, I have to assume that the Rosses were advised to take out an interest only mortgage without there having been discussion as to how they would repay the capital sum and in circumstances where they did not have existing savings, pension or inheritance monies that could be applied to that end. They would therefore either need to set up an appropriate new savings vehicle for that purpose or sell the house at the end of the term in order to repay the capital sum borrowed.

As regards the term of the 2007 remortgage, this was set as 13 years, in line with the remaining term of the 2005 mortgage that was being replaced. Mr Ross says he was told by the Broker that the term “could not go beyond 2020 as by then I would be 70 years old (my wife would be 66). However I understood him to indicate that this was a “lifetime mortgage” i.e. that we could roll it over beyond 2020 without any difficulty and it would be a Lifetime Tracker Loan. He clearly indicated to us that the loan could be extended well beyond 2020 if required and that the Lender would readily accept this, subject to relevant criteria at that time.”

I take that evidence at face value, for present purposes. There is, however, at first blush an inherent and obvious contradiction between being told that the term specified at inception “could not go” beyond age 70 and yet that, somehow, the lender would readily “extend” it once Mr Ross got to age 70. The reference to any extension being subject to the relevant criteria at the time would seem a clear indication that those criteria might change and hence, whatever might be said now, an extension might not in the event be forthcoming. There is, equally, an obvious discrepancy between Mr Ross’s claimed understanding that this was a lifetime mortgage (i.e. a quite different mortgage product, open-ended as to the term, such that the capital sum need be repaid only following death) and the terms of the mortgage as set out in the mortgage documentation. I come to develop this further, below, in the context of what the Rosses are to be taken to have known, for the purpose of the limitation issue.

The Particulars of Claim assert, without elaboration, that the representation was “false”. It is unclear whether what is meant by that is that the broker did not have any reasonable basis for expressing an opinion as to the likely attitude of the lender at the

I, likewise, assume for the purposes of this application the correctness of Mr Ross’s evidence that the broker “didn’t offer as such any advice as to whether or not our general approach was the best one or not, for example regarding consolidating debt into a long term mortgage” and that the Rosses never received anything from the Brokers as to why the mortgage that was proposed was the best product for them or any comparison with other products. Again, any dispute about any of these factual matters would have to be a matter for trial.

The mortgage offer dated 16 May 2007 identified the fact the mortgage was interest only, specified the term of the mortgage as 13 years and spelt out very clearly that “you will still owe £250,995 at the end of the mortgage term as your payments only cover interest on this amount of your mortgage. You will need to make separate arrangements to repay this. Where you have provided this information to us, any repayment vehicles for this mortgage are stated on your mortgage application form. When comparing the payments on this mortgage with a repayment mortgage, remember to add any money that you may need to pay into a separate savings plan to build up a lump sum to repay this amount.” Below that, in bold, appears the following text: “It is important to ensure that you have a suitable savings plan in place and to check regularly that your savings plan is on track to repay this mortgage at the end of the term.”

The mortgage completed on 25 May 2007. Over the ensuing ten years the Annual Mortgage Statements that were sent to the Claimants by the mortgage lender each described the mortgage as interest only, stated the remaining term of the mortgage, showed the capital sum borrowed as being still fully outstanding and on the final page of each Statement carried the reminder, in bold, that: “This is an interest-only mortgage. Your mortgage payments do not include the costs of any savings plan or other investment you may have arranged to build up a lump sum to repay the amount you borrowed. It is important to check regularly that your savings plan or other investment is on track to repay this mortgage at the end of the term.”

On 8 April 2014, the mortgage lender wrote to the Claimants reminding them of the approaching maturity date of the mortgage, of 16 May 2020, “when it will need to be repaid”. This reiterated the need for them to ensure they had suitable repayment plans in place to repay the capital sum borrowed at the end of the term, which was then 6 years and 2 months away. A second such letter, in similar terms, was sent to the Claimants by the lender on 20 February 2017, by which time the remaining term was 3 years 3 months.

In between those dates, Mr Ross says he had heard a “Moneybox” program on the radio which spoke of potentially missold interest only mortgages and the fact many of these had been sold without any or any adequate repayment vehicle to pay off the capital at the end of the term. He listened to that program on 29 October 2016 and again on 6 November 2016. He says “It struck home that this might well apply to us and that our mortgage might have been missold to us. It raised a suspicion but it was far from clear whether that was indeed the case.”

He then describes how, following hearing the program, he contacted the lender with a view to confirming the understanding he says he then had, to the effect that, notwithstanding the stated term, the mortgage “could be extended for the duration of our lives should we wish to do so”. He says the lender indicated that was not in fact the case and he says that it was only following this exchange with the Lender that he realised that the full sum would indeed need to be repaid in May 2020 and that, as matters stood, they would not be able to pay off the loan without selling the house or remortgaging.

The Rosses’ complaint to FOS was rejected in a letter dated 14 June 2017. It appears from that letter that they complained that they had been led to believe they had been sold a lifetime mortgage, but their communications to the lender and to FOS are not in evidence, so I cannot be sure quite how they put it. FOS rejected the complaint on the basis they were out of time, because it should have been apparent to them within 6 years of being sold the mortgage that what they had been sold was not a lifetime mortgage but an interest only mortgage with a 13 year term, as was evident from the mortgage statement, key facts, application and mortgage offer documents, and they should have brought their complaint earlier if that was not what they wanted. Whilst I note that conclusion, which was reached with reference to the rules of the compensation scheme, I have approached the matter afresh by reference to the provisions of the Limitation Act 1980 and based on my own assessment of the evidence.

According to Mr Ross’s witness statement, things “lost momentum” after that but on an unspecified date he came across adverts for a mortgage claim company whom he contacted, they put him in touch with his present solicitors, and by 22 November 2018 he was in possession of a report from the same expert who has produced the subsequent CPR part 35 report exhibited by Mr McBride. The earlier report is not itself in evidence but is said to have very clearly indicated that the advice given in

The claim form was issued on 28 October 2019 and served on 27 February 2020, following exchange of pre-action protocol letters during the interval between those two dates. The application for summary judgment or strike out was issued on 22 April 2020 and a holding defence (denying the claims generally but advancing no more particularised defence, in light of the pending application) was served on the same date.

The primary limitation period expired 6 years after the mortgage completed on 25 May 2007 and therefore the claim is time-barred unless the Claimants can rely on section 14A of the Limitation Act 1980 to extend time for their claim in negligence. If the relevant date of knowledge, for limitation purposes, was on or later than 29 October 2016, when Mr Ross first heard the radio program, the claim was brought in time. If, however, the Rosses had the requisite knowledge any earlier than that, the three year extended period provided for in section 14A does not assist them and they are still out of time.

As appears from the factual background summarised in Claimants’ expert report, but was not otherwise dealt with in their evidence or Skeleton Argument, the mortgage (which would have reached its term on 27 May 2020) has in fact, it seems, now been redeemed (said by the expert to have taken place “around June 2020”). The Claimant’s Counsel was unable to provide me with any further details in this respect (but did not suggest this to be incorrect). That redemption would have post-dated the preparation of the witness statements of Mr and Mrs Ross, which were signed in January 2020, which no doubt explains why it is not mentioned in those witness statements but, surprisingly, it also was not dealt with at all in their solicitor’s witness statement, served on 12 February 2021. It appears not to have been appreciated that this development was pertinent.

Section 14A of the Limitation Act 1980 provides as follows, under the heading “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)

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.”

The question that arises in this application is when the Claimants first had “the knowledge required for bringing an action for damages in respect of the relevant damage”. That involves two elements: first, knowledge of material facts about the damage under ss.(6) and (7); and, second, knowledge of the “other facts” under ss.(8), a category which includes knowledge “that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence” (ss.(8)(a)).

It is important, in that respect, to bear clearly in mind that on this application the Court is being asked to decide that it is unnecessary for there to be a trial in order to be able to answer that question. In Jago v Mortgage4You Limited [2019] EWHC 533 (QB), Mrs Justice May, on an appeal from the County Court, adopted the following formulation by the Judge below as a correct approach when the Court is asked to determine summarily that there is no realistic prospect of a claimant being able to rely on section 14A: “it seems to me at this summary judgment stage of the litigation, all that the claimant has to do to defeat the first defendant’s application is to satisfy me that it is not fanciful for her to say that her date of knowledge arose within three years before the issue of proceedings and that it is again arguable by her that the contrary contentions of the first defendant either for a yet earlier date of knowledge than she contends for, or for fixing her with constructive knowledge are not so good as to render her claim fanciful.” Whilst that was an application solely for summary judgment, it makes no difference to the approach in this respect that the present application is also brought by way of strike out. I adopt that approach as correct.

As was emphasised by Sir Thomas Bingham MR (as he then was) in Spencer-Ward v Humberts [1995] 1 EGLR 123 (in particular at 125L-M and 126M), issues as to the application of section 14A are to be approached in a broad common sense way, bearing in mind the object of the section and the injustice it was intended to mitigate. “There is a danger of being too clever and it would usually be possible to find some fact of which the plaintiff did not become sure until later.” Time is intended to start to run once the plaintiff has the “factual rudiments” of the claim, giving them three years from then to seek legal advice and get their tackle in order before issuing proceedings.

The leading case is the decision of the House of Lords in Haward v. Fawcetts [2006]

In Broadley v Guy Clapham and Co [1994] All ER 439, at 449, Lord Justice Hoffman said that the purpose of the section was to determine the moment at which a plaintiff knew enough to make it reasonable for him to begin to investigate whether or not he has a case against the defendant and (at 449) he summarised the task of the Court in these beguilingly simple terms: “One should look at the way the plaintiff puts the case, distil what he is complaining about and ask whether he had in broad terms knowledge of the facts on which that complaint is based.”

On some sets of facts, however, that is easier said than done. In Haward itself, for example, the task proved sufficiently complex as to require consideration by five Law Lords over 50 pages of analysis.

The submissions before me focussed, in particular, on what will amount to sufficient knowledge of attribution for the purposes of sub-section (8)(a). That was also the central question in Jago and in Haward. In each of those cases, the fact the claimant had experienced a serious loss was painfully apparent, in that they had ploughed large sums into investments which had failed, but the issue was whether they knew enough to attribute that loss to the advice they had received and start investigating whether they had a claim against their adviser. Mrs Justice May helpfully cites at length from key passages from Haward discussing the relevant principles, including in particular the relationship between subsections (8) and (9). I gratefully adopt her summary at [18]-[22], which is in the following terms:

“18.

In Haward v. Fawcetts [2006] 1 WLR 682, the House of Lords addressed the operation of s.14A, including an examination of the extent of knowledge required by the section. Lord Nicholls summarised the position as follows, at [8] to [11]:

“8.

Two aspects of these “knowledge” provisions are comparatively straightforward. They concern the degree of certainty required before knowledge can be said to exist, and the degree of detail required before a person can be said to have knowledge of a particular matter. On both these questions courts have had no difficulty in adopting interpretations which give effect to the underlying statutory purpose.

The outcome in Jago turned on the specific facts of that case, which were such that Mrs Justice May could not safely conclude on a summary basis that there was no prospect of success.

Ms Jago had taken out interest only mortgages on her home in 2004 and 2005 to fund an overseas development property investment, on the basis that the investment returns would fund her repayment of the capital sums borrowed. By 2009 she knew the property investments to be worthless. In 2008 she consulted solicitors and, on their advice, brought proceedings against the conveyancing solicitors who had acted for her, making a partial recovery by way of a settlement, but it was her case that it was not until she was cold-called by a mortgage claims company in 2014 that she first appreciated the possibility of a claim against those who had advised her on the mortgages. Proceedings were issued in January 2017.

It was argued for the defendants in Jago that Ms Jago had had the requisite knowledge by the end of 2009 at the latest, by which time she knew the investments to be worthless, leaving her with no means of paying off the mortgage other than by selling her home. She also knew who had advised her on the mortgages. On the face of it, there was a parallel with the position of the plaintiff in Haward, who knew that the company in which he had invested heavily had collapsed into insolvency and was worthless, and also knew that his accountants had advised him on the investment. It was submitted that Ms Jago did not need to know she had a cause of action against the advisers, since she knew enough to start the process of investigating this, and that, like Mr Haward, she was time-barred.

It was argued for Ms Jago, however, that this was not enough, on the basis that she was unaware that her financial loss constituted damage attributable to the advisers, within the meaning oof subsection 14A(8). She was not in a position to know that “that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence” until she understood that the scope of the duty owed to her encompassed an obligation to refuse to recommend any mortgage at all and also to advise her to obtain financial advice regarding extricating herself from the investment.

Whereas the defendant in Jago argued that the duties owed by mortgage advisers as regards advising on the suitability of mortgages were well understood by 2009, it was contended for Ms Jago that the “wider duty” on which she relied for her claim “was not evident” at that time, until the decision of the Court of Appeal on a case involving similar facts in Emptage v FSCS [2013] EWCA Civ 729. By “wider duty” what was meant was that Ms Jago’s case was that on the facts of her situation, the duty of the mortgage broker when advising on the suitability of her mortgage extended to advising her against taking out any form of mortgage at all for the purpose of making the investment.

In that context, Mrs Justice May referred to these further passages in Haward, as follows:

“38.

In Haward at [62] Lord Walker cited with approval the judgment of Hoffman LJ (as he then was) in Hallam-Eames, including the following passage:

“..If all that was necessary was that a plaintiff should have known that the damage was attributable to an act or omission of the defendant, the statute would have said so. Instead it speaks of the damage being attributable to the act or omission which is alleged to constitute negligence. In other words, the act or omission of which the plaintiff must have knowledge must be that which is causally relevant for the purposes of an allegation of negligence. …

…If one asks, on common sense principles what Mrs Dobbie was complaining about, the answer is that the surgeon had removed a healthy breast. This is not a matter of elaborating the detail by requiring knowledge of precisely how he had come to do the act complained of, such as this court rejected in Broadley’s case. It was part of the essence of her complaint. Nor is it requiring knowledge of fault or negligence. …If one asks what is the principle of common sense on which one would identify Mrs Dobbie’s complaint as the removal of a healthy breast rather than simply the removal of a breast, it is that the additional fact is necessary to make the act something of which she would prima facie seem entitled to complain…Mr Clarke QC for the auditors and Mr Toulson QC for the member’s agents, protested that such a principle was a back-door way of introducing a requirement that the plaintiff must have known that the defendant had been negligent (which section 14A(9) expressly declares to be irrelevant) or was by some other criterion at fault (which this court rejected in Broadley’s and Dobbie’s cases.) We do not agree. The plaintiff does not have to know that he has a cause of action or that the defendant’s acts can be characterised in law as negligent or as falling short of some standard of professional or other behaviour. But, as Hoffman LJ said in Broadley’s case, the words ‘which is alleged to constitute negligence’ serve to identify the facts of which the plaintiff must have knowledge. He must have known the facts which can fairly be described as constituting the negligence of which he complains. It may be that knowledge of such facts will also serve to bring home to him the fact that the defendant has been negligent or at fault. But this is not in itself a reason for saying that he need not have known them.” (emphasis added)

39.

At [66] Lord Walker referred to the above as “clear general guidance” as to the principle to be applied in difficult borderline cases. Lord Walker went on, at [77] to say this:

“In [the cases of Ali and Dobbie] the claimant did not know whether his physical disablement was attributable to his working conditions, for which his employer was responsible, or to some more or less natural cause such as ageing. He was therefore in a state of ignorance on a fundamental point, and his ignorance could be dispelled only by a medical expert. I see no useful parallel with Mr Haward’s situation. The relationship between a man’s working conditions and his natural ageing as competing causative elements in his deafness is quite different, to my mind, from the relationship between a financial adviser’s alleged professional incompetence and the various factors which eventually lead to the collapse of the business on which he advises.” (emphasis added)

Mrs Justice May then went on to say (at [40]) that Ms Jago’s facts were “right at the borderline of the two situations with which Lord Walker was dealing in the above passage.” On one view, Ms Jago’s ignorance of M4Y’s obligation to advise as to the wisdom of taking out any further mortgage at all was a matter of law and irrelevant, on the other (at [41]) “it may be said that ignorance of M4Y’s duty to advise against taking out any mortgage at all was a vital missing factual ingredient, like the fact of a healthy breast in Dobbie, or the fact of a fiduciary duty exceeded in HF Pension Trustees” such that without such knowledge Ms Jago could not know that her damage was attributable to the act or omission alleged to constitute negligence.

Mrs Justice May considered it “at least arguable that Ms Jago’s purpose in consulting M4Y was not to seek advice about whether or not to re-mortgage her house at all but rather what mortgage product was most suitable for raising further funds”. However, the “overriding consideration” was the fact the Court was being asked to determine the point before the evidence had been heard and before it could be addressed in the light of that evidence. Her conclusion (at [47]) was that: “This case involves a decision as to which side of a very fine line Ms Jago’s ignorance falls: whether it is more accurately to be characterised as an unawareness that M4Y’s omission to advise involved negligence, which is statutorily irrelevant under ss.(9), or ignorance of a fundamental fact concerning M4Y’s obligation to advise, going to attributability under ss.(8). The determination of what was the “essential thrust of the case” is in my view (just) capable of falling on Mr Cannon’s side of that borderline depending upon nuances in the interpretation of all the evidence.”

Thus, to sum up, the outcome turned on the fact that the essence of Ms Jago’s case was, not that she had been wrongly advised as to which type of mortgage was more suitable for her needs, but that the adviser had wrongly failed to advise her against any form of mortgage at all. Mrs Justice May decided she could not safely determine at a summary stage whether Ms Jago’s ignorance of the fact that giving such advice fell within scope of what she could expect from her adviser was properly to be characterised as ignorance of a fact going to attribution, and hence something she

In Kays Hotels v Barclays Bank [2014] EWHC 1927 (Comm) Mr Justice Hamblen similarly declined to give summary judgment or strike out a claim on the basis of section 14A of the Limitation Act 1980. The defendants in that case had sought to characterise the “essence” of the claim as being that advice on an interest hedging product was unsuitable because the claimant was told that interest rates would rise and it was not explained to him that the effect of the “floor” was that if they instead fell he would have to make payments to the Bank. Having so characterised the essence of the claim, they sought to argue that the claimant had had the necessary knowledge when he first had to make a payment, upon the floor being breached.

Mr Justice Hamblen, having analysed the pleaded case, concluded (at [26]) that this was “far too narrow and does not correctly identify the essence of the complaint. If the complaint had simply been that the claimant had been advised that he would incur no interest rate loss, then one could understand that as soon as it became apparent that the claimant was having to pay interest rate losses, he would or should have known the facts necessary to investigate into such a claim”. However, his case was that the product was unsuitable because his aim was to achieve protection without exposure to “excessive” risk (so the mere fact of some such payments would not of itself lead him to know there was lack of suitability in that regard) and that was in any event but one facet of a far broader case on unsuitability which included that he had been wrongly told that he had to take out the product if he wanted a loan from the bank and that the associated risks over the whole life of the product which included not just his exposure in respect of interest but also liability for a termination payment had not been properly explained (at [17]). On that basis, the evidence relied on by the defendant as to the claimant’s knowledge that some interest payments were being made did not give rise to an “unanswerable case” as to his knowledge (at [26]). Mr Justice Hamblen noted that whilst the test as to constructive knowledge in subsection 10 is objective, it refers to facts observable or ascertainable by the claimant and had to be considered in the circumstances applicable to the person in question (at [28]). He concluded, given the view he had taken as to the proper characterisation of the claim, that the facts would be important and needed investigation at trial.

The defendants apply to strike out the claim under CPR 3.4 (2) and in the alternative for summary judgment pursuant to CPR 24.2. I have already cited the passage from Jago which I take as encapsulating the correct approach, specifically, as to whether or not the limitation issue arising under s14A(8) can be summarily determined in favour of the defendant. That passage is consistent with the applicable principles on strike out and summary judgment applications more generally, which are well established and were not in dispute before me. Jago and Kays Hotels are instructive examples of cases where applications to dispose summarily of a limitation point based on section 14A have failed but it does not of course follow that such a point cannot succeed in an appropriate case.

I bear in mind in particular:

What then is the essence of the Claimant’s case on the facts before me?

As articulated in the Particulars of Claim (and even more so in the Letter of claim) there is something of a “kitchen sink” aspect to the particulars of negligence, which are pleaded in somewhat catch-all and generic terms more descriptive of the general class of cases relating to unsuitable mortgage advice than the specifics of the Claimants’ own particular complaint. However, it is clear from paragraphs 11 and 12 of the Particulars of Claim that the basic thrust of the claim is that the Defendant failed to advise the Claimants of the need for, or to ensure that they had, a suitable repayment vehicle, and negligently advised them to enter into an interest only mortgage when a capital repayment mortgage would have been more suitable for their needs. In addition, at paragraphs 13 and 14 the allegation is made that they were induced to enter into the mortgage by the representation that it could readily be extended beyond 2020 “subject to the relevant criteria at the time”.

Whilst it was also alleged, as part of the particulars on unsuitability, that the defendant had failed to advise on the appropriateness of consolidating unsecured debt into the mortgage, Counsel for the Claimants indicated to me in the course of submissions that that is not now pursued in light of the expert report. That is a sensible concession. As mentioned above, the Claimants were burdened with a very high level of unsecured debt, relative to their income, which on their expert’s calculation it would have cost them very substantially more per month to service had it remained unsecured (and,

The three elements therefore, which both Mr James and Mr Knibbs agreed were the essence of the Claimants’ case, were the failure to advise them as to a suitable repayment vehicle, the advice to enter an interest only mortgage when a repayment mortgage would have been more suitable and the fact they should not have been advised that they could extend the term.

The first and second of those points really come back to the same thing. The basis for saying a capital repayment mortgage would have been more suitable is that it would not have exposed the Rosses to the risk of being left with the principal debt outstanding at the end of the term and no repayment vehicle in place, or a repayment vehicle which proved to be inadequate for the purpose. On the figures set out in their expert’s report, a capital repayment mortgage would have appeared at the time of the advice to be within the range of what they could reasonably afford on their income as it stood at that time. By the same token, however, it would have appeared that they could have afforded to save into an alternative repayment vehicle.

I have not overlooked that the Rosses’ evidence is that they were, until their solicitor obtained the Lender’s file, unaware that the lender had been misled by statements on the forms as to how they planned to repay the capital at the end of the term which (as they allege) were not based on anything they had told the broker and were untrue. However, that amounts to saying the lender was duped into offering them a mortgage which on the true facts was unsuitable. It does not alter the nature of their claim against the broker, which is for misadvising them in respect of that mortgage, and, if the lender was indeed misled, that is not something they needed to know for the purposes of bringing their claim and is not relevant to the analysis under section 14A.

One therefore comes back, in that respect, to what knowledge they had that would reasonably cause them to start asking questions about the suitability, for their needs, of an interest only mortgage with a fixed term ending in May 2020, such as to make it reasonable for them to begin to investigate whether or not they had a case.

Mr Knibbs, for the Defendants, submitted that the actual knowledge the Rosses had at the time of entering into the mortgage, from the documentation they received at that time (described above) and from their knowledge of their own affairs, included:

Mr James emphasised that his clients were not claiming that they were unaware they had an interest only mortgage. Indeed, that would plainly be unsustainable given the documents they saw at the time, which I have described above. They either must actually have known this or at least could reasonably be expected to know it, such that it comes into account as constructive knowledge by virtue of subsection (10).

In essence, Mr James, for the Claimants, did not take issue with Mr Knibbs’ list as to what was evident on the face of the documents or from their own knowledge, but said that body of knowledge did not go far enough because:

Mr James relied in particular on the passages in Haward, cited above, and on Jago. He contended that the “full scope” of the obligations owed to the claimants by the defendant was fundamental to their knowledge for the purposes of subsection (8).

The present case does not appear to me analogous to the facts which persuaded Mrs

On the facts before me in respect of this claim, there is no question of any such “wider” duty to steer the claimants away from any mortgage at all being engaged, and no question of any equivalent ignorance about the scope of the duty owed.

The Rosses went to a broker “to assist us in locating for a suitable mortgage” (as they themselves express it in their witness statements). They were therefore, on their case, not in any doubt about the fact they were looking to the broker to advise them on a mortgage that was suitable for their needs. They therefore knew enough, in layman’s terms, about the scope of the duty owed to them and they knew what advice they had and had not been given. Moreover, provided that the Rosses did know enough about the unsuitability of the mortgage for their needs to begin investigating whether they had been given flawed advice (which I consider below) they did not need to know what specific steps a broker acting in compliance with MCOB would have taken to assess suitability. That is a matter of law which could and would have been identified by investigation, once they knew enough to make it reasonable to begin investigating.

I came very close to concluding that Mr Knibbs was right in his submissions and that one could safely conclude at this stage that the knowledge that the Rosses had at the outset of the mortgage was sufficient to carry them over the requisite threshold, or at least that they had the relevant knowledge more than three years before issuing the claim, because:

However, with some considerable hesitation, I have eventually concluded that there are features of this case which mean one cannot safely reach a conclusion on the limitation point at this preliminary stage, without the benefit of evidence and submissions at trial. The answer I have outlined above is (at least) arguably correct, certainly, but that is not enough: it is not so plainly and unanswerably correct that one can decide that now.

Whilst the argument before me focussed mainly on subsection (8)(a), and knowledge of attribution, with particular reference to how that was analysed in Haward and Jago, it seems to me on reflection that subsection (7) may be critical. That defines the

Now, for the purposes of when a cause of action accrued, the “damage” is undoubtedly the act of entering into an allegedly unsuitable mortgage. However, it seems to me arguable (i.e. not fanciful) that the Rosses did not have the requisite knowledge of their “damage” for the purposes of section (7) until a date within 3 years of issuing the claim. That is on this basis:

For those reasons, I have concluded that this is not a case in which I should determine the s14A issue at this stage and more generally that the Claimants have put forward arguable claims which should be permitted to go forward to trial. Mr Knibbs did mount an attack in his Skeleton Argument on the merits of the claims, independently of the section 14A point, pointing to what he said were various contradictions and inconsistencies in the Claimants’ evidence, but it is sufficient to say that these are matters for cross examination or submission at trial and I will not lengthen this judgment further by dealing with them in any more detail. On that basis, I dismiss the application for summary judgment.

However, it does seems to me that there is one particular aspect of the Claimants pleaded case, which I have not so far addressed in detail in this judgment, which is plainly misconceived and, correspondingly, there is one aspect of the Defendant’s strike out application which should succeed.

In the particulars of damage under paragraph 16 of the Particulars of Claim the loss is identified in these terms: “As at May 2020, being the end of the Re-mortgage, the Claimants have lost the difference between having entered into the said interest only loans and having entered into capital repayment mortgages on the same terms.” The Claimant then purports to quantify that difference in these terms: “The said sum amounts to £250,995.00 which is the sum the Claimants will now be due to pay.” That same sum of £250,995 is also referred to in the prayer.

Mr Knibbs submitted in his Skeleton Argument for the Defendant that this was not a recognisable claimable loss. The Claimants were seeking to have the Defendant pay their mortgage for them, despite having had the benefit of the loans. They would still have had to repay the capital balance if they had had a repayment mortgage, as they say they should have done. I put this point to Mr James. I cannot see that there is an answer to it. Certainly, Mr James was not able to suggest one. It seems to me of primary importance that these parties should not be proceeding to an eventual trial under a fundamental misapprehension about the value of this claim.

In my judgment it is absolutely plain that, if the advice to enter into this interest only mortgage was flawed, the measure of the financial loss which would have flowed from that flawed advice is not, as currently pleaded, the capital sum borrowed. Unlike Ms Jago, this claim is not based on the proposition that the Rosses should have been advised against mortgaging their home at all and, unlike Ms Jago’s adviser, the broker’s liability is not for causing the loss of a capital sum which should not have been borrowed and ploughed into an unsuccessful investment. Rather, they have had the intended use of the capital sum they borrowed, inter alia in clearing their significant unsecured debts and in funding home improvements. It was never going to be “free” money and the broker has no liability in respect of the ways they chose to spend it.

On the basis of the hypothetical non-negligent advice they say they should have been given, namely to enter into a repayment mortgage instead, they would by now have had to repay the capital sum borrowed in any event. Had the risk to which they were exposed (of a forced sale of their home to repay the debt) in fact eventuated there might have been some form of consequential losses. However, as matters stand, although I have no detail at all as to how this result has been brought about, it appears that the 2007 mortgage has now been redeemed. It would seem, therefore, that the risk of the Rosses being forced out from their home has been avoided. There is certainly no pleaded claim for any consequential loss, or for any costs that may arguably have been incurred in mitigating their losses. If any such costs have in fact been incurred, they will need to be pleaded by way of amendment.

I would add that even if the broker’s representation had proved to be an entirely correct prediction of the lender’s attitude, and they had rolled over seamlessly and painlessly into a lifetime mortgage as at 20 May 2020, that would not have caused the liability of £250,995 somehow magically to disappear. It would then have stood as a debt against the asset of their home, and even though it may only have had to be paid out of their estate after their death (assuming such were the terms of the lifetime mortgage) that liability still has to be brought into the calculation to arrive at their net loss.

Damages are compensatory. By seeking damages of £250,995, the Claimants are seeking to be made better off than they would have been in any hypothetical, nonnegligent comparative situation.

Leaving aside the possibility of some as yet unidentified consequential loss or cost incurred in mitigation, it seems to me that, in principle, the true measure of their loss (assuming that they were to establish at trial that they ought to have been advised to take out a capital repayment mortgage and that they could and would have done so) would be the difference in the cost of borrowing over the term of the mortgage. Instead of paying interest on the entire capital sum of £250,995 for 13 years, they would have been paying interest on a steadily reducing capital amount, because they would have been making capital repayments throughout the term. The cost of their borrowing a capital sum of £250,995 on a capital repayment basis, i.e. the cumulative interest paid over the term of the loan, would therefore have been somewhat less than it was on an interest only basis.

The Defendant’s strike out application should therefore succeed to this limited extent:

The Claimants, at the same time as amending to strike out those parts of the Particulars of Claim, should amend to set out what sum(s) they allege are properly due by way of damages and on what basis. Even if what is said now in that regard may need further refinement in the light of any expert evidence at a later stage (if permission is in due course given), sensible case management requires that the parties (and the Court) at least know, and know relatively soon, which ballpark they are in in terms of quantum. Equally, the Defendant will need to amend the Defence to put forward their substantive position in response to the claims generally, since what has been filed to date was merely a holding Defence pending the hearing of this application. That would be better done after the Claimants have repleaded their case on loss. I will hear from the parties (in writing, unless a hearing to deal with consequential matters appears necessary) as to what consequential directions are appropriate and on costs. As to the latter, the factors I would particularly invite the parties to address are the late service of the Claimants’ evidence (and the impact that late evidence has had on the outcome of the application) and the fact that the Defendant has been successful in part (but not on the aspect to which most of the argument was directed).