Roger Ward Associates Ltd & Ors v Britannia Assets (UK) Ltd

INTRODUCTION

This is an appeal by the appellants/defendants against the reserved judgment of Master Kay QC dated 25 January 2013. In that judgment, the Master concluded that, although the claimant’s claim for breach of contract against the defendants was statute-barred, it was arguable that the concurrent claim in tort was not. He therefore declined the defendants’ application to strike out the entirety of the claim. Before me, a potentially important issue arose as to the inter-action between, on one hand, the slow resolution of a planning dispute and, on the other, the accrual of the necessary knowledge for the purposes of section 14A(4)(b) of the Limitation Act 1980 (“the Act”).

The defendants’ original application was to strike out pursuant to CPR r.3.4 and/or for summary judgment pursuant to CPR Part 24. For the purposes of this Judgment it is unnecessary for me to go through the various legal principles underpinning such applications. That is because, as Mr Horton QC rightly said, the issue here is very straightforward. If, on the balance of probabilities, and on the basis of the evidence before the court, I conclude that the claim in tort against the defendants is statute-barred, then the defendants are entitled to strike out the claim and/or to enter summary judgment. If, on the balance of probabilities, the claim is not statute-barred then the appeal will be refused and the defendants’ underlying applications dismissed.

I should say at the outset that this is not one of those cases where the court could conclude that the claim may be statute-barred, but could not give a concluded view because it was said by one party (or agreed by both parties) that further evidence will or may come to light which could be relevant on the limitation issue. There was no application to amend the Particulars of Claim (which Mr Horton stressed that he did not draft). There was no application by the claimant to put in any further evidence. There was no suggestion by either side that there might be further information available in the future which could assist the court in resolving the ‘knowledge’ issue. Thus, as we shall see, the appeal and the underlying application turns solely on the application of the well-known principles arising under s.14A(4)(b) of the Act to the brief facts set out in the papers.

THE FACTUAL BACKGROUND

In about March 2003 onwards, the claimant engaged the defendants to provide planning advice in respect of a former Conoco oil distribution site in Rochester (“the site”). Paragraphs 11-14 of the Particulars of Claim make clear that the claimant asked the defendants whether planning consent was required to demolish the numerous large fuel storage tanks at the site. The defendants advised that planning permission was not required, and the fuel storage tanks were immediately removed. The defendants also advised that the site could be let out for storage and distribution.

Paragraphs 20 and 21 of the Particulars of Claim set out the claimant’s case that this advice was negligent. It is common ground that the allegations of negligence do not go beyond that original advice in 2003.

In 2005/2006, it became apparent that the Planning Department of Medway Council (“the Council”) were concerned that the site, which had planning permission for fuel storage, was now being used for general storage and distribution. Correspondence in 2006, all of which was copied to the claimant, made plain that the Council had decided that no planning consent existed for the new use of the site (see the defendants’ letter of 19 September 2006), and that a fresh planning application had to be made. Indeed, the defendants took a number of preparatory steps for the making of such an application, and repeatedly made it clear to the claimant that these steps were necessary because the Council had insisted on a retrospective planning application. The defendants’ letter of 13 October 2006 made plain that such an application “will be contentious”. The usual additional documents, such as traffic impact studies and the like, were also going to be required.

Although it was apparent to everyone that the Council required a retrospective planning application, no such application was ever made. Accordingly, on 30 March 2007, the Council served on the claimant a Planning Contravention Notice (“PCN”). The PCN said:

“It appears that there has been a breach of planning control at the above mentioned premises in that there appear to be unauthorised operations being conducted within the site. In the circumstances, I require additional information prior to the commencement of Enforcement Action in regard to this matter.”

It appears that nothing happened in relation to that notice and an Enforcement Notice (“EN”) was served on 13 July 2007. There then began a lengthy series of appeals and public hearings; the issue of 11 further ENs on 3 November 2008; and, on 14 June 2010, the dismissal of the appeals against those 11 ENs (although, at the same time, the original EN was quashed). The further appeals against that dismissal were themselves refused on 27 July 2011. Permission to appeal against that decision was refused by Sullivan LJ on 13 July 2012.

The claim form was issued over two years’ earlier, on 5 June 2010.

WHAT IS NOT IN ISSUE

The claimant accepts that any claim against the defendants for breach of contract, which would have accrued at the date of the breach, is statute-barred. Since all the relevant breaches occurred in 2003, and the proceedings did not start until 2010, it seems to me that such a concession is rightly made.

A rather more curious point arises in respect of damage. There can be no doubt that the Particulars of Claim proceeds on the basis that damage occurred in 2003. That is the only sensible reading of paragraph 22 of the Particulars of Claim, which is expressly concerned with loss and damage. That paragraph concludes that, as a result of the events in 2003 (namely the removal of the fuel storage tanks in reliance on the defendants’ advice), the site had “a nil use in terms of its lawful use” (Footnote: ¹).

However, before me, Mr Horton developed an argument (which had not been advanced in front of Master Kay), to the effect that, although the allegedly negligent advice in 2003 meant that the claimant immediately lost its bargaining position with the Council in relation to what could be done with the site, and had therefore suffered a loss in 2003, damage did not occur until the final resolution of the planning process in 2012.

I do not find this rather novel distinction between loss, on the one hand, and damage, on the other, particularly helpful. As I have said, the Particulars of Claim say in clear terms that damage occurred in 2003. Moreover, even on Mr Horton’s new argument, it appears to be accepted that some damage occurred in 2003 (namely the loss of the bargaining position) so that what remained was the identification of the particular heads of loss and/or quantification. I think Mr Brannigan QC is right when he says that, on the logic of the claimant’s case, the failure to deal with the planning position before removing the tanks meant that, even on the claimant’s case, there was always going to be loss and extra expense when the Council subsequently insisted on a retrospective planning application.

There is also a further anomaly raised by Mr Horton’s new argument as to when damage occurred. If he is right, and the damage did not occur until 2012, then it must follow that these proceedings were commenced in 2010 at a time when the claimant did not have a cause of action (damage being a necessary ingredient to any cause of action in tort). Of course, in those circumstances, the remaining claim would be liable to be struck out in any event.

In the round, it seems to me that the only sensible conclusion must be the one that was agreed in front of Master Kay, namely that the damage occurred in 2003. That is what is pleaded and that, so it seems to me, is the basic assumption behind the claimant’s entire claim.

THE ISSUES AS TO KNOWLEDGE

In those circumstances, the claimant is driven to argue that the claim is not statute-barred because of s.14A(4)(b) of the Act, and in particular, the submission that the claimant did not have the necessary knowledge until less than three years before 5 June 2010. That is really at the heart of the dispute between the parties. There are, so it seems to me, three issues:

THE LAW

Section 14A is in the following terms:

“(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.”

In Nash and Others v Eli Lilly and Co and Others [1993] 4 All ER 383, at page 396, Purchas LJ made a number of observations about the ‘knowledge’ trigger under s.14A(4)(b) and subsection (5). He said that:

“The onus is on the plaintiff to plead and prove a date within the three years preceding the date of the issue of the writ.”

That was confirmed by Lord Mance in Haward and Others v Fawcetts (A Firm) and Another [2006] 1 WLR 682 where, at paragraph 106, he said:

“Under s.14A the onus is on a claimant to plead and prove that he first had the knowledge required for bringing his action within a period of three years prior to its bringing.”

In Halford v Brookes [1991] 1 WLR 428, Lord Donaldson MR said that knowledge here “clearly does not mean ‘know for certain and beyond possibility of contradiction’”.

In Nash Purchas LJ said:

“On the basis that knowledge is a condition of mind which imports a degree of certainty and that the degree of certainty which is appropriate for the purpose is that which, for the particular plaintiff, may reasonably be regarded as sufficient to justify embarking upon the preliminaries to the making of a claim for compensation such as the taking of legal or other advice.”

In Broadley v Guy Clapham and Co. [1994] 4 All ER 439, at 449, Hoffmann LJ (as he then was) said that the section was designed “to determine the moment which the plaintiff knows enough to make it reasonable for him to begin to investigate whether or not he has a case against the defendant”. At page 448 he said that “one should look at the way the plaintiff puts his 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.”

In Haward v Fawcetts, the House of Lords repeated that the knowledge required by s.14A(4)(b) meant knowledge in broad terms of the facts on which the claimant’s complaint was based, and held that what was required was knowing that there was a real possibility that the defendant’s acts or omissions had been a cause of the damage. In his speech, Lord Nicholls of Birkenhead said “it is not necessary for the claimant to have knowledge sufficient to enable his legal advisors to draft a fully and comprehensively particularised statement of claim”; referring again to Nash, he said that what was required was knowledge of the ‘essence’ of the act or omission to which the injury was attributable. And at paragraph 12 he emphasised that “a claimant need not know he has a worthwhile cause of action.” Furthermore, on the facts of the case, (which was concerned with negligent accountancy advice), at paragraph 21 he said:

“There may be cases where the defective nature of the advice is transparent on its face. It is not suggested that was so here. So, for time to run, something more was needed to put Mr Haward on inquiry. For time to start running there needs to have been something which would reasonably cause Mr Haward to start asking questions about the advice he was given.”

ISSUE 1: HAS THE CLAIMANT ADVANCED A PROPER CLAIM UNDER SECTION 14A(4)(b)?

Bearing in mind the principle noted at paragraph 18 above, that the onus is on the claimant to advance a proper case under s.14A(4)(b) of the Act, I must conclude at the outset that the claimant has done no such thing. The provision is nowhere pleaded by the claimant. More significantly, there is no evidence at all from the claimant as to what levels of knowledge it had, and how and why it did not have the necessary knowledge before the final resolution of the planning process. There is therefore no evidence on which the claimant could prove that it did not know of essential facts until less than three years before the commencement of proceedings. That, so it seems to me, is a fundamental flaw in the claimant’s position. And, as I have already observed, this was not through inadvertence; it was not suggested that the claimant wished to adduce any such evidence.

Mr Horton’s argument that, as a matter of principle, it was only at the end of the long drawn-out planning process that the claimant ‘could have had the necessary knowledge’, does not seem to me to address the right question. S.14A(4)(b) (and sub-sections (5) and (6)) require evidence of actual knowledge, against which the ‘reasonable person’ test in s.14A(7) is then measured. So what matters, at least initially, is what the claimant actually knew, and when, and how and why it can be said that the knowledge that the claimant says that it acquired less than three years before the commencement of the proceedings prevented the accrual of a cause of action any earlier. On that topic, both the claimant’s pleadings and the claimant’s evidence are silent. The only fair inference that I can draw is that the claimant is unable to put forward any specific evidence on this point, and has chosen instead to rely on a broader argument of alleged principle as to what a party involved in a lengthy dispute about the absence of planning permission could and could not have known about the possibility of challenging the advice that he had originally been given.

The claimant’s own case illustrates the fundamental difficulty with the approach that it has adopted. As already noted, Mr Horton maintains that, as a matter of principle or inference, the claimant could not have had the requisite level of knowledge or certainty until the end of the planning process, and the final confirmation that the claimant could not validly challenge the ENs. But in my view, it cannot be right to conclude that, without more, the fact that the planning process and the various appeals took four years meant that s.14A(4)(b) was not triggered until the end of the process. After all, the claimant might have been advised right at the outset that it had a very weak case and that, in effect, the ENs would be upheld. In those circumstances, the claimant could not possibly argue that the necessary knowledge under s.14A(4)(b) - that there was a possible claim against the defendants arising out of their 2003 advice - was in some way incomplete or insufficiently certain until the final rejection of its arguments about the ENs; on this premise, it would have known all along that those arguments were doomed to fail.

In short, I consider that the precise nature of the claimant’s knowledge, its scope and extent, is a basic ingredient if the claimant is successfully to maintain a defence based on s.14A(4)(b). It therefore follows that, in the absence of any such evidence, and in the absence of any application to adduce such evidence, the claimant’s belated attempt to rely on s.14A(6)(b) cannot succeed. For those reasons, I conclude that the ‘knowledge’ defence is not made out on the evidence, and the appeal must be allowed. However, if I am wrong about that, I go on to deal with the remaining issues that arise under s.14A(4)(b), in particular Mr Horton’s point of principle about when knowledge could be said to have accrued during the planning process.

ISSUE 2: WHAT IS THE REQUISITE LEVEL OF KNOWLEDGE?

ISSUE 3: WHEN ON THE FACTS DID THE CLAIMANT HAVE THAT KNOWLEDGE IN THIS CASE?

As set out in paragraphs 19-22 above, the requisite level of knowledge is the claimant’s knowledge of the ‘essence’ of the defendants’ acts or omissions; something which would reasonably have caused the claimant to begin asking questions about the advice it had been given in 2003; a degree of certainty which was sufficient to justify embarking upon the preliminaries to the making of a claim. For the three year period to start running, the claimant was not required to know everything about his case; he did not need to know that he had a worthwhile cause of action, and he certainly did not need know precisely how his damages might be quantified.

This was a case in which, on the facts, the validity of the advice of 2003 was called into question in 2005-2006. During 2006, the defendants were expressly advising the claimant that the Council required a retrospective planning application, which (on the claimant’s case) was completely contrary to the advice given by the defendants in 2003. On one view, therefore, loud alarm bells must have started ringing then: the essence of the act or omission in this case is that the 2003 advice may well have been wrong. I find that the claimant would have been aware of that in 2006. Putting the point another way, the Council’s uncompromising stance in 2006 (that a retrospective planning application was required) would inevitably have caused the claimant to start asking questions about the advice that they had been given.

At one point, Mr Horton argued that the requisite knowledge could not be said to be in place until the Council had ‘resolved its position’ in respect of the planning situation at the site, which he said was after 2006. I disagree, for the reasons that I have given. But if I am wrong about that, then the Council’s stance was plain to everyone by 30 March 2007.

When, despite the advice from the defendants, the claimant did not make a retrospective planning application, it was inevitable that the Council were going to start taking a more proactive stance. They did that on 30 March 2007 when they served the PCN (paragraph 7 above). Accordingly, it seems to me that, if the requisite knowledge on the part of the claimant depended on the actions of the Council, then Mr Brannigan is right to say that the relevant date under s.14A(4)(b) could not be later then 30 March 2007. I reject Mr Horton’s alternative suggestion that, in some way, the claimant did not have the necessary knowledge until the first EN in July 2007. The EN was simply a logical consequence of the stance which the Council had adopted from 2005/2006 onwards, and followed on naturally from the PCN (which said that the information was required “prior to the Commencement of the Enforcement Action”).

For these reasons, therefore, it seems to me that, for the purposes of s.14A(4)(b), the claimant had the requisite knowledge in this case no later than 30 March 2007. If three years are then added to that date, I note that 30 March 2010 was still over two months before these proceedings were commenced. On that analysis too, this claim is statute-barred.

The argument of principle that time under s.14A(4)(b) could not begin to run until the planning appeals process was finally exhausted in 2012 is, in my view, hopeless. First, it was not the approach the claimant actually took, because these proceedings were commenced two years before that, when the planning process was still ongoing. Secondly, I do not accept that, just because the planning process took a long time, the cause of action against the defendants could not accrue until the process was finally exhausted; for the reasons that I have given, the s.14A(4)(b) trigger will always depend on the state of the claimant’s actual knowledge, and the claimant has not provided any evidence of that.

Thirdly, the argument depends on the assumption that the cause of action could not accrue until the claimant knew with complete and utter certainty that the ENs were valid, and that therefore the original advice from the defendants (that planning permission was not required) was wrong and negligent. As Mr Horton put it, “without a shadow of a doubt, damage was suffered in 2012”. But that argument/assumption is incorrect in law: for the reasons set out in paragraphs 19-22 above, such a high degree of certainty is not required for the necessary knowledge to arise under s.14A(4)(b).

Fourthly, the notion that a claiming party can delay until other Appeal processes are exhausted, and then rely on s.14A(4)(b), is contrary to the approach set out in The Law Society v Septhon & Co [2006] 2 AC 543 and Axa Insurance Ltd v Akther & Darby Solicitors [2009] EWHC 635.

For completeness, I should say that the decision in R v Kuxhaus (1988) 56 P&CR, upon which Mr Horton relied so heavily, makes no difference to my conclusions. I acknowledge that this case is authority for the proposition that, when an appeal against an EN fails, the time for compliance only starts at that stage. But that is not at all the same thing as saying that damage can only be suffered at that point, or that the necessary knowledge is only obtained when all legal avenues in respect of the EN have been exhausted. For the reasons given, I reject those submissions.

CONCLUSIONS

In my judgment, for the reasons set out in Section 6 above, the claimant has failed to plead a proper case under s.14A(4)(b) and has failed to adduce the necessary evidence. The s.14A(4)(b) argument seems to me to have been put forward because it is the only possible way in which the claimant can avoid the consequences of the usual limitation position (6 years from breach or damage), and as such has been advanced out of necessity, rather than with any real conviction.

For the reasons set out in Sections 7 and 8 above, I consider that, in the absence of any contrary evidence from the claimant, and on the basis of the agreed factual material before me, the claimant had the requisite knowledge either in 2006 or certainly no later than 30 March 2007. For that reason too, the claim is statute-barred.

For these reasons, I allow the appeal against the decision of Master Kay QC and I strike out the claimant’s claim and/or grant the defendant summary judgment. All consequential matters will be dealt with either at a further hearing or in writing, at the convenience of the parties.