Trainer v Cramer Pelmont (a firm)

claiming for the tort of negligence to benefit from a special time limit of three years from what I shall call “the section 14A alternative starting point”. The section 14A alternative starting point is the earliest date when a person whom I shall call “a vested person” first had both what I shall call “section 14A cumulative knowledge” and a “section 14A right”.

was a vested person, ceased to be such a person when assets were transferred to a trustee in bankruptcy, and became such a person again pursuant to an assignment of rights from the trustee. The main questions, however, concern section 14A cumulative knowledge.

start to run merely on the basis of suspicion. As stated by Lord Nicholls at paragraph 9 of his speech in Haward, “knowledge” for this purpose means that:

are:

knowledge of the material facts about the damage in respect of which

knowledge that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence (“causation knowledge”); and

knowledge of the identity of the defendant (“identity knowledge”).

Charnley, acted as Mrs Trainer’s solicitors in certain property matters and in the matrimonial proceedings. It also acted for Mr Trainer on occasion. However it was not named as a defendant when the claim form was issued.

Claim for damages in tort and/ or equitable compensation and/ oraccount for breach of trust and/ or breach of contract and/ or breach of fiduciary duty and/ or pursuant to the Misrepresentation Act 1967 and or for other relief arising from the circumstances leading to the claimant entering into a Deed of Variation to a sale contract and otherdocumentation, on 105 October 2011 resulting in the claimant receiving significantly less consideration on the sale of the properties known as and situate at Wildwood Lodge, 9 North End, London, NW3 7HH and 4 North End, London NW3 7HL than she was originally entitled to, and undermining her entitlement to receive an equal share in such pursuant to an order of DJ Robinson of the Family Division dated 28 September 2010, given that the first defendant ultimately received a greater share following a separate secret agreement for deferred consideration.

Pelmont contended that relevant claims were, at the time of the amendment on 31 January 2018, time barred, not only under the normal 6 year time limit but also under s 14A.

refer to them as “the precautionary proceedings”.

that it was not reasonably arguable that Mrs Trainer’s claim against Cramer Pelmont was time barred: on the contrary, she had effectively shown she was entitled to judgment on any issue that might have arisen in fresh proceedings concerning her ability to avail herself of section 14A. He accordingly refused Cramer Pelmont’s application to disallow the amendment. In the present appeal against that conclusion Mr Tom Asquith, instructed by Kennedys Law LLP, appears for Cramer Pelmont, and Mr Simon Wilton, instructed by the Specter Partnership, appears for Mrs Trainer. On both sides the representation is identical to the representation below. I am grateful to the legal teams on both sides for the care with which written material has been assembled and oral arguments have been presented.

them a net benefit of £1.45 million. However the Wildwood Lodge contract included special condition 9:

10,113 sq ft gross and 9,612 sq ft net. Later in February 2011, Allanton completed the purchase of 4 North End.

in para 21, that unbeknown to her Mr Trainer had also agreed with Allanton, as an inducement to exchange contracts, that he would be paid a further £50,000 by way of a separate and undisclosed payment, to be paid to him by Allanton four months after the date of exchange, and to be credited against the sums due on completion of the sale of Wildwood Lodge;

in para 25, that in October 2010 Allanton completed its purchase of the two adjacent properties, that Cramer Pelmont acted for Mrs Trainer in those respects, and that the previously negotiated £50,000 and a further undisclosed £25,000 advance payment were made available to Mr Trainer by Allanton in respect of the sale of Wildwood Lodge on terms that they, or at least the first £50,000 and £12,500 of the second £25,000, would be deducted from the sums payable on completing the sale;

that (paras 28 to 30) if (which Mrs Trainer denied) the planning consent for 4 North End had to be at least 10,000 sq ft measured by net internal area, then there were contractual provisions which regulated the parties’ rights in the events which had happened;

that (para 31) notwithstanding those contractual provisions, Allanton sought to renegotiate the terms of the Wildwood Lodge sale contract, “initially via Mr Trainer alone”;

that (para 32) an email of 25 March 2011 from Mr Trainer to Mr Dodi attached a document which I shall call “the Terms of Contract” and which the particulars of claim summarised as:

that (para 33) Mrs Trainer was not privy to or bound by the negotiations between Allanton and Mr Trainer, the objective of which was to reduce the amount payable by Allanton on completion, principally at Mrs Trainer’s

that (para 34) on 30 March 2011 Mr Trainer emailed his solicitor, Ms

that (para 35) Mr Trainer and Allanton’s shareholders agreed that Mr Trainer would become a shareholder and director of Allanton after completion of the sale of Wildwood Lodge;

that (para 36) in August 2011 Mrs Trainer was told by Mr Dodi that Allanton was not obliged, or prepared, to complete its purchase of Wildwood Lodge because the planning permission for 4 North End was less than 10,000 sq ft, and after some negotiation told Mrs Trainer that the most she could have on completion was £300,000;

that (para 37) Mrs Trainer:

that (para 38) Mrs Trainer, who was not offered a deferred consideration:

that (para 39) Mrs Trainer:

We are hopeful of an exchange and simultaneous completion very shortly on this matter. I enclose the documentation as it currently stands, and as it affects Monique:

A copy of the latest (5^th) version of the Deed of Variation, an updated version is anticipated shortly which I will forward to you.

I also enclose a copy of the draft Transfer. The figure in the Transfer varies slightly from that in the Deed of Variation but they will of course coincide when the exact date for completion is known.

Monique has also paid to me the sum of £3,600.00 on account of costs, these include my firm’s costs and Counsel’s fees. Her share of these fees will be deducted from her figure of £275,000.00. Please let me have the bank details to which Monique’s share should be forwarded on completion.

Mr Eric Charnley of Cramer Pelmont. What was envisaged was that the Family Court would approve proposed amendments to the matrimonial consent order. On 23 September 2011 Mr Charnley reported to Downs that the court had refused to amend that order. In accordance with a suggestion made by the Family Court, Mr Charnley drew up a proposed document which I shall refer to as “the matrimonial variation deed”. Under this deed Mr and Mrs Trainer would agree that as regards the sale of Wildwood Lodge the matrimonial consent order would not apply. Instead, the proceeds of sale of Wildwood Lodge should, after being used to discharge relevant mortgages, be used to pay the conveyancing costs and disbursements of Downs, and to pay barrister’s fees in connection with the sale, after which they would be distributed by making a payment to Mrs Trainer of £300,000 and making payment of the balance to Mr Trainer.

executed a deed of variation of the sale contract for Wildwood Lodge (“the Deed of Variation”), the matrimonial variation deed, and a deed of transfer.

… was unattended by any solicitor and she executed the documents without having received any advice from Downs or Cramer Pelmont, without a proper understanding of the documentation, and simply believing that it reflected what she had previously been told was agreed, that the revised terms were the best available, that she and Mr Trainer were receiving similar sums on completion, and that she had no alternative but to execute the documents in the form proposed.

paragraphs 51 to 57 of the particulars of claim stated:

Re: Monique Trainer

I hereby certify that I have explained the terms and implications of the Deed which my client, Monique Trainer anticipates entering into with her former husband Nicholas Trainer in relation the sale of the former matrimonial Home, Wildwood Lodge, 9 North End, London NW3 7HH.

In particular I have drawn her attention to the fact that the lump sum of £300,000.00 she proposes to accept on the sale of the property is potentially much less than she would be entitled to under the terms of the Consent Order entered into and approved by the court in her divorce.

Having considered the above my Client wishes to enter into the deed in consideration of the accelerated receipt by her of the lump sum, which she wishes to utilise in another transaction.

particulars of claim states that Mrs Trainer received £300,000 in addition to the £75,000 which she had received as her share of the deposit.

letter stated:

appointed as trustee in bankruptcy: see section A3 below.

read the witness statement of [Mr Trainer] and confirm that insofar as it relates to matters in my knowledge… it [is] true.

from a transcript of Mr Trainer’s evidence are set out in section A7 below.

in relation to Mr Trainer:

in relation to Downs:

as against Cramer Pelmont, it was asserted:

particulars of claim included allegations of breach of contract. The master noted, however, at paragraph 14 of his judgment that allegations against Cramer Pelmont asserting breach of contract must be disallowed. This was accepted by Mrs Trainer. The reason is that the benefits given by section 14A apply only to claims for the tort of negligence. There is no comparable provision assisting claimants who sue for breach of contract. Prior to issue of the amended claim form all contractual claims by Mrs Trainer against Cramer Pelmont had become statute barred under section 5 of the 1980 Act. The consequence is that Mrs Trainer cannot now maintain those contractual claims.

however, mean that assets which vested in the official receiver automatically revested in Mrs Trainer.

claim against Cramer Pelmont.

letter with paragraph numbers inserted in square brackets:

ever advised as to the Deed of Variation referred to in your letter being in existence …”.

After an exchange of correspondence with Mr Cramer steps were taken on behalf of Mrs Trainer to bring about an assignment from the official receiver of Mrs Trainer’s rights to bring further claims, including claims against Cramer Pelmont. Those rights were assigned on 31 January 2018, and the amended claim form was issued that day.

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

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.

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

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

That period is either -

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.

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

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.

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

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.

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

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.

decision of the master unless the court considers that in the circumstances of the appeal it would be in the interests of justice to hold a rehearing. Neither side suggests that the interests of justice require a rehearing. I proceed accordingly on the basis that the appeal is limited to a review. On this basis, CPR 52.21 provides that the appeal court will allow an appeal where the decision of the lower court was:

wrong; or

unjust because of a serious procedural or other irregularity in the

the master. Accordingly, proceeding by way of review, the question I must decide is whether the master’s decision was wrong. In the present case there has been an evaluative judgment by the master. In those circumstances, I proceed on the basis that the appeal court is reluctant to interfere with such a decision, but will do so where the decision below has taken into account immaterial factors, omitted to take into account material factors, erred in principle or come to a decision that was either impermissible or “plainly wrong”: see the notes in Civil Procedure 2019 at page 1824. Additionally, on the present appeal each side has, without objection from the other, advanced submissions differing from those below. This has led me to reach conclusions on material factors which were not highlighted in submissions before the master.

was only to decide whether there was a reasonable argument that the claim against Cramer Pelmont was time-barred. If there is such an argument, then the question whether the claim is indeed time-barred is to be determined in the precautionary proceedings: see section A1.5 above.

master was right to conclude that there was no reasonable argument that the claim against Cramer Pelmont was time-barred. If, on an issue relevant to that question, there may be a reasonable argument open to Cramer Pelmont, it is important that this court should not pre-judge the eventual determination of that issue in the precautionary proceedings.

dispose of the claim against Cramer Pelmont by a number of different routes. I am concerned with only one of these routes: the application to disallow the amendment to Mrs Trainer’s claim form introducing Cramer Pelmont as an additional defendant (see section A1.5 above). This application was made under CPR 17.2. Matters relied on in that regard were set out in a first statement of Mr Patric Rouendaal, the solicitor at Kennedy’s Law LLP with conduct of the matter on behalf of Cramer Pelmont. Mrs Trainer 1 (see section A2.7 above) was made on 30 April 2018 in response to the application. It was supplemented by a second statement on 3 July

2018 (“Mrs Trainer 2”) and by a third statement made on 13 July 2018 (“Mrs Trainer 3”). This was followed by a second statement of Mr Rouendaal on 13 July 2018 (“Rouendaal 2”). Exhibited to Rouendaal 2, among other things, was the email of 22 September 2011 sent from Mr Buswell’s email address (see section A2.5 above).

16 July 2018 (“Mrs Trainer 4”). Paragraph 10 of Mrs Trainer 4 referred to the email of 22 September 2011 and stated:

Mr Rouendaal found a way to contact Mr Buswell, who was in South Africa, and after a telephone call they had an exchange of emails, in which Mr Buswell explained that he had around summer /autumn 2011 spent time with C, who was a friend, and had indeed stayed in her spare room for some while. He confirmed that the email address was his, that he had a distant memory of having sent some three emails for C, and that he had been out of touch with her for some years;

Mr Buswell also explained, however, that he had very recently heard from C, and he forwarded to Mr Rouendaal a string of emails between himself and C, which I summarise as follows;

15 July 2018, 2:23 pm C asked “Can you call me” and gave her number;

16 July, 10:38, Mr Buswell replied “My god! Tapper! How the devil are you. I’ll call this evening.”

16 July 12:08, C responded “Please call ASAP. PLEASE.”;

16 July 11:56 [there being a one-hour time difference] Mr

Buswell – “I can’t. Till later. I’m at the navy base. I’m not allowed to use my phone here. What’s up?”

16 July 13:20 – C: “Will let you know when you call. Xx”

Mr Buswell then spoke to C (who by that time had signed her witness statement) and told her he had been in touch with, and spoken to, Mr Rouendaal;

on 17 July, at the hearing, Mr Wilton offered an apology on behalf of C, and an explanation that I did not altogether understand. He suggested that at first C had not recollected Mr Buswell, and that everything in the case was “free-wheeling, fast-moving and lastminute” (and it was indeed true that copious evidence emerged just before the hearing, as described above). She suggested that her eventual recollection of him proceeded “in parallel” with the preparation of the new (4^th) witness statement in which she had denied such knowledge. But it seems clear that she allowed her witness statement to be signed and served after she had made her first approach to contact Mr Buswell by email.

convenience I shall call paragraph [35A], along with paragraph 36:

Mr Asquith submits further that this sequence of events suggests that C may not have an altogether trustworthy approach to historical accuracy, and that I should view all the direct evidence that she gives about the history with a particular degree of caution. I have some sympathy with this. His Note goes further, and makes the point that “If C cannot be trusted, then there is obviously (at least) a real chance that her date of constructive knowledge is not when she says it was”. Whilst I understand this point all too well, I do consider that – as Mr Wilton submits – it is necessary to avoid broad generalisation if possible, and I should rather drill down into the facts and the evidence; and I do consider that there is a wealth of contemporaneous documentation which assists me in getting to a conclusion.

permission to appeal, and ordered a speedy hearing.

appeal court to uphold the master’s order on an additional ground. I set out that additional ground, with paragraph numbering added by me in square brackets for convenience:

was filed by Mrs Trainer on 15 February 2019.

argument as soon as possible after 15 March 2019, along with procedural directions designed to ensure efficient preparation for the restored hearing.

Pelmont’s reply skeleton”). It was accompanied by a further revised list of issues (“Cramer Pelmont’s reply list of issues”).

Cramer Pelmont’s reply skeleton. I shall refer to it as “Mrs Trainer’s rejoinder skeleton”.

note”) comprised two parts. Part A concerned issue 1(2), and is dealt with in section B2 below. Part B concerned issue 1(1), which does not arise: see section D below.

discontinued their claims against each other. It was not suggested by either side in the present appeal that this affected the issues arising on the present appeal.

[9.1] The initial burden is on C to show that D3 would have no real prospect of establishing a limitation defence. As the current White Book puts it, at note 24.2.5:

In ED&F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472, it was said that under r.24.2the overall burden of proof rests on the applicant to establish that there are grounds to believe that the respondent has no real prospect of success and that there is no other reason for a trial. The existence of this burden is indicated by para.2(3) of the Practice Direction supplementing Pt 24; the applicant must (a) identify concisely any point of law or provision in a document on which they rely, and/or (b) state that the application is made because the applicant believes that on the evidence the respondent has no real prospect of succeeding on the claim or issue or (as the case may be) of successfully defending the claim or issue to which the application relates, and in either case state that the applicant knows of no other reason why the disposal of the claim or issue should await trial. The essential ingredient is the applicant’s belief that the respondent has no real prospect of success and that there is no other reason for a trial.

If the applicant for summary judgment adduces credible evidence in support of their application, the respondent becomes subject to an evidential burden of proving some real prospect of success or some other reason for a trial. The standard of proof required of the respondent is not high. It suffices merely to rebut the applicant’s statement of belief. The language of r.24.2 (“no real prospect … no other reason …”) indicates that, in determining the question, the court must apply a negative test. The respondent’s case must carry some degree of conviction: the court is not required to accept without analysis everything said by a party in his statements before the court (ED&F ManLiquid Products Ltd v Patel [2003] EWCA Civ 472; [2003] C.P. Rep. 51at [10]). In evaluating the prospects of success of a claim or defence judges are not required to abandon their critical faculties (Calland v Financial Conduct Authority [2015] EWCA Civ 192at [29]).

[9.2] This suggests that there is at least a modicum of potential burdenshifting, if C can produce credible evidence in support of her contention that there is no good limitation defence.

[10.1] The effect of all this is that if by 31 January 2015 (i.e. the date three years before the amendment) the “starting date” had passed in relation to C’s claim against D3, then there would be a reasonably clear limitation defence.

[10.2] I thus need to keep in mind the point at which C came to “know” (within the extended meaning provided for by section 14A):

The complication here is that – on her case – C knew that she was getting much less than she was expecting, but need not have realised that this was because others were conniving behind her back.

Thus, knowledge of the fact of damage is not quite the same as knowledge of any relevant act or omission constituting negligence, let alone knowledge of the identity of D3 as a putative tortfeasor.

already set out (in section A6.2 above) observations by the master which formed part of this section. In addition I note here that, in relation to Mr Trainer’s witness statement and its exhibits in the Ebgui proceedings, the master said at paragraphs 41 to 44:

said at paragraph 45 of his judgment:

I have asked myself whether a party may have suffered “damage” for the purposes of section 14A of the 1980 Act in circumstances where something has gone wrong, but it is not evident that it is anyone’s fault (so as to make it worth bringing an action), and the other prospective co-contractor, who on the face of it may stand to lose pretty much the same, and is himself a solicitor (and so knowledgeable about such matters) accepts that this is inevitable. I am not sure that in such circumstances damage has necessarily been suffered.

Eaton-under-Heywood at paragraph 90 of his speech in Haward:

See also paragraph 5-096 of Jackson & Powell on Professional Liability:

I suspect that this leads to the conclusion that C knew that something had gone wrong, i.e. that she had suffered “damage”, at a comparatively early stage. Indeed, on her own case, she knew that D1 had the prospect of further sums. Furthermore, even if the arrangements may have been kept secret at first, their deployment at an early stage in the Ebgui litigation suggests that D1 was prepared to risk C finding out that he had obtained the prospect of significant deferred consideration in the future.

cumulative knowledge. In the circumstances of the present case, those facts were, as set out in s 14A(8)(a) and (b):

I accept that what counts here is the actual or imputed knowledge of [Mrs Trainer] – save to the extent that the [official receiver] (her trustee in bankruptcy) may have acquired further relevant knowledge during the period between the bankruptcy and the assignment of the cause of action; but there is no suggestion that the [official receiver] did acquire any such knowledge.

Trainer’s case was not put forward as a case of Cramer Pelmont giving bad advice about entering into the Deed of Variation. Rather, the nature of the case put forward by Mrs Trainer against Downs and Cramer Pelmont was that they both:

61:

I accept, on the material before me, that there is no evidence that C had actual knowledge of any prospective claim against D3, or that “the damage was attributable in whole or in part to the act or omission” of D3, until late in 2017.

in paragraph 62, that Mrs Trainer had taken assignments of the official receiver’s cause of action against Mr Trainer and Downs in December 2016, but did not at that time seek an assignment of any cause of action against Cramer Pelmont;

in paragraph 63, that the letter written to Cramer Pelmont on 15 September 2017 by Mrs Trainer’s then solicitors Sears Tooth evidenced a belief that Cramer Pelmont had been misled every bit as much as she claimed she had been misled;

in paragraph 64, that none of the documents from September and October 2011 which had been produced “comes anywhere near” showing knowledge on the part of Mrs Trainer of Cramer Pelmont knowing of or being involved with the various “extra” payments to Mr Trainer.

paragraphs 65 and 66 with the Ebgui proceedings:

case of imputed knowledge, the master said in paragraphs 67 to 69:

went on in paragraphs 70 and 71 to add:

Please confirm the earliest date when the court considered D3 could reasonably arguably show C had imputed knowledge of iniquity between her and D1.

Please confirm whether the basis for this imputed knowledge is the potential reading of the Deed of Variation (it was executed on 5 October 2011 – see para 26 of the judgment) and/or the potential reading of the exhibits to D1’s witness statement in the Ebgui proceedings (both D1’s and C’s statements in that matter were dated 25 October 2011 – see “later in October” at para 41 of the judgment) and/or otherwise.

Please confirm the earliest date when the court considered D3 could reasonably arguably show C had actual knowledge of iniquity between her and D1.

Please confirm the basis for the date of actual knowledge.

Paragraphs 1 and 2 stated:

master’s conclusion was set out in paragraph 8:

said at paragraph 45 of his judgment:

GOA 1

If the court considers the Judgment contains no such finding, the Master was wrong in law and/or fact not to find that C was fixed with knowledge (s.14A(10) of the 1980 Act) of the contents of the Deed of Variation and/or the Terms of Contract exhibited to D1’s witness statement in the Egbui Freezing Injunction proceedings.

GOA 2

The Master was wrong in law and/or fact to dismiss the indications C already had or may have had that D3 might be responsible for the damage of which she (at least reasonably arguably) was aware. Had they not been dismissed, the Master would have found that D3 had a reasonably arguable case that she had the relevant knowledge prior to February 2015.

GOA 3

The Master was wrong in law and/or fact to reject D3’s argument that if it was reasonably arguable that C gained knowledge of damage in 2011/12 then it was reasonably arguable that she would have gained knowledge of D3’s alleged responsibility for it within a year or so, not least because on her case that was what had happened (albeit 5 years later), and therefore she should be fixed with knowledge of the same for the purposes of s.14A(10).

GOA 4

Given C’s willingness to lie in the face of court and seek to interfere with a potential witness in advance of the hearing, her evidence should have been treated with more caution, such that the only available conclusion was that she

which arose from the grounds of appeal (set out above) and the respondent’s notice (set out in section A6.5 above). So far as material, the parties agreed that there were two such issues. Below I set out those initially agreed issues, and summarise aspects of them identified by the parties:

section 14A:

Trainer in this way:

section D below.

Issue 1(2): While it is agreed that there must be knowledge that things could and should have been different, would it have been sufficient for Mrs Trainer to acquire actual or constructive knowledge of the inequitable apportionment between her and Mr Trainer, or was it also necessary to know that Allanton had no contractual right to insist on the varied terms and/or that there was no contractual warrant for the inequitable apportionment;

knowledge provisions in section 14A(10). The first sub-issue is dealt with in section B3 below. I shall call it issue 1(3)(a):

Issue 1(3)(b): Under section 14A(10) can knowledge be imputed to a claimant in respect of the claim and damage in issue on the footing that she might reasonably have been expected to acquire knowledge of facts material to a potential claim against a different party (Mr Trainer) in respect of different damage, which might then have led to a trail of enquiry ultimately implicating Cramer Pelmont.

this category the parties identified 4 issues. What I shall call issues 2(1) and (2) are two sides of the same coin. They are dealt with together in section C1 below:

with in section C2 below:

Application of section 14A

issues falling under agreed category 1. This category concerns issues described by the parties as being issues of law, or mixed fact and law, as to the application of section 14A of the 1980 Act.

1(2) and 1(3). Issue 1(1) is dealt with in section D below.

Haward, and to set out observations in the speeches of members of the Appellate Committee about the irrelevance of knowledge that there had been negligence. In section B1.3 I set out observations in those speeches concerning material facts knowledge. In section B1.4 I set out observations in those speeches on causation knowledge.

the headnote to the report in the Weekly Law Reports:

from the decision of the Court of Appeal was allowed. They arrived at that outcome, however, by routes which differed in certain respects. One such respect concerns the approach the speeches took to section 14A(7), concerning the material facts knowledge required before the section 14A alternative limitation period starts to run. Lords Nicholls and Scott did not discuss this to any great extent. However Lords Walker, Brown and Mance gave speeches which made observations in relation to material facts knowledge.

knowledge of negligence before the alternative limitation period began to run, it is convenient to begin by referring two earlier cases, Dobbie v Medway Health Authority [1994] 1 WLR 1234 and Hallam-Eames v Merrett Syndicates Limited

Dobbie v Medway Health Authority [1994] 1 WLR 1234 was a case in which a patient had had a lump on her breast. The surgeon, without first subjecting the lump to a microscopic examination in order to determine whether it was cancerous or benign, removed the breast. This was in 1973. The lump was subsequently found to be benign. The patient knew very soon after the operation that the lump was benign but did not know until 1988 that that meant her breast need not have been removed. She began proceedings for negligence in 1989. Sir Thomas Bingham M.R. (as he then was) referred to the “knowledge” test formulated by Lord Donaldson of Lymington M.R. in Halford v Brookes[1991] 1 WLR 428at 443 and continued at 1240:

“This test is not in my judgment hard to apply. It involves ascertaining the personal injury on which the claim is founded and asking when the claimant knew of it.”

and, at 1243, expressed this conclusion

“The personal injury on which the plaintiff seeks to found her claim is the removal of her breast and the psychological and physical harm which followed. She knew of this injury within hours, days or months of the operation and she at all times reasonably considered it to be significant. She knew from the beginning that this injury was capable of being attributed to, or more bluntly was the clear and direct result of, an act or omission of the health authority. What she did not appreciate until later was that the health authority's act or omission was (arguably) negligent or blameworthy. But her want of that knowledge did not stop time beginning to run.”

And in Hallam-Eames v Merrett Syndicates [2001] LlR PN 178, in which a number of members of Lloyd's facing re-insurance underwriting liabilities were alleging negligence on the part of the active underwriter, their members' agents and their syndicates' managing agents and where limitation defences had been raised, Hoffmann LJ (as he then was) emphasised the statutory words

“attributable … to the act or omission which is alleged to constitute negligence” and gave this explanation at 181 (left hand column)

“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 … It is this idea of causal relevance which various judges of this court have tried to express by saying the plaintiff must know ‘the essence of the act or omission to which the injury is attributable’ (Purchas LJ in Nash v Eli Lilly & Co [1993] 1WLR 782 at 799) or ‘the essential thrust of the case’ (Sir Thomas Bingham M.R. in Dobbie [1994] 1WLR 1238 ) or 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’ (Hoffmann LJ in Broadley [1993] 4 Med LR 328, 332)”.

Hallam-Eames v Merrett Syndicates … was another claim for pure economic loss. Hoffmann LJ delivered the reserved judgment of the Court (Sir Thomas Bingham MR, Hoffmann and Saville LJJ). It merits quotation at some length (at p 181):

“In our judgment this [the judge's view of what the claimants had to know] is an over-simplification of the reasoning in Broadley and Dobbie. 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. There may be many acts, omissions or states which can be said to have a causal connection with a given occurrence, but when we make causal statements in ordinary speech, we select on common sense principles the one which is relevant for our purpose. In a different context it could be said that a Name suffered losses because some member's agent took him to lunch and persuaded him to join Lloyd's. But this is not causally relevant in the context of an allegation of negligence.

It is this idea of causal relevance which various judges of this court have tried to express by saying the plaintiff must know the ‘essence of the act or omission to which the injury is attributable’ (Purchas LJ in Nash v Eli Lilly & Co [1993] 1 WLR 782, 799) or ‘the essential thrust of the case’ (Sir Thomas Bingham MR in Dobbie [1994] 1 WLR 1234, 1238) or 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.’ (Hoffmann LJ in Broadley [1993] 4 Med LR 328, 332).

If one asks on common sense principles what Mrs Dobbie was complaining about, the answer is that the surgeon had removed a healthy breast. It would in our view be a seriously incomplete statement of her case to say that it was simply that the surgeon had removed her 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. It was part of the essence of her complaint. Nor is it requiring knowledge of fault or negligence. The court's emphatic rejection of such a requirement is entirely consistent with characterising the act complained of (and of which knowledge was therefore required) as the removal of a healthy breast. But the judge, as it seems to us, has read Dobbie to mean that knowledge that the surgeon had removed her breast would have been enough.

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. She was suspected of having a cancerous lump and if this had been the case, the removal of her breast would not have been a matter for complaint. Likewise Mrs Broadley's complaint was the surgeon had caused damage to her foot when he was supposed to be mending her knee. Mr Clarke QC, for the auditors, and Mr Toulson QC, for the members' 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 and Dobbie.) 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 Hoffmann LJ said in Broadley, 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.”

In many cases the distinction between facts (relevant) and the legal consequence of facts (irrelevant) can readily be drawn. In principle the two categories are conceptually different and distinct. But lurking here is a problem. There may be difficulties in cases where a claimant knows of an omission by say, a solicitor, but does not know the damage he has suffered can be attributed to that omission because he does not realise the solicitor owed him a duty. The claimant may know the solicitor did not advise him on a particular point, but he may be totally unaware this was a matter on which the solicitor should have advised him. This problem prompted Janet O'Sullivan, in her article ‘Limitation, latent damage and solicitors' negligence’, 20 Journal of Professional Negligence (2004) 218, 237, to ask the penetrating question: unless a claimant knows his solicitor owes him a duty to do a particular thing, how can he know his damage was attributable to an omission?

It is to be noted that subsections (6)(a) and (7) refer to … “… the material facts about the damage”. The limited character of the reference is underlined by the definition of the expression in subsection (7). What is wanted is knowledge of “such facts about the damage” as would be expected to lead to the institution of a claim against a solvent defendant who had no defence to the claim. This demonstrates that the sub-section (6)(a)“material facts” of which knowledge is needed do not include any facts about the acts or omissions of the defendant that allegedly constitute the negligence.

What was the “damage” allegedly caused by Fawcetts' negligence of which the respondents complain? The damage was the investment of the Haward money first in acquiring the Company and its business premises in 1994 and subsequently in trying to bring the Company to profitability. The damage, as I think was common ground, was the making of a bad investment. The measure of the loss depended on the eventual worth of the Company but the damage allegedly caused by Fawcetts' negligence was the making of the investment. Mr Haward plainly had knowledge that the investment of Haward money in 1994 and 1995 had taken place. He knew the exact amount of money that had been invested. But, on the footing that it was indisputable that Fawcetts' advice in respect of the investment had been negligent, at what date did Mr Haward know that the investment was a sufficiently seriously bad one to justify suing them? Mr Haward needs to establish that he did not have this knowledge until after 6 December 1998. This is the sub-section (6)(a) issue.

… considering the matter for the present simply by reference to the statutory text, I think that it is clear that although section 14A(9) has the effect just mentioned, it cannot go so far as to free the section entirely of any hint of legal technicality. There are three pointers to this, all of which I have already mentioned: the word “damage” (which must in this context mean actionable damage, or at any rate what the claimant believes to be actionable damage, the cause of action being negligence); the words “attributable to” which are concerned in some way with causation, in the context of what becomes (once proceedings have been commenced and the claim pleaded) an allegation of negligence; and the words “acts or omissions alleged to constitute negligence.” So although the claimant need not, at the starting date, know anything about the tort of negligence (not even its name) his or her state of knowledge cannot be assessed, with hindsight, without some reference to legal concepts, including what is causally relevant in the context of a negligence action.

This point can be illustrated by the facts of a reported case which was discussed before your Lordships, HF Pension Trustees Ltd v Ellison [1999] Lloyd's Rep PN 489. The background to the case appears from the judgment of Knox J in Hillsdown Holdings Plc v Pension Ombudsman [1997] 1 AER 862. The matter arose from the takeover in 1983 of Fatstock Marketing Corp Ltd (FMC) by Hillsdown Holdings Plc (Hillsdown). The trustees of one occupational pension scheme (the FMC scheme), acting on the advice of solicitors, transferred the entire assets of the scheme to another occupational pension scheme (the HF scheme). Soon afterwards the trustees of the HF scheme made a transfer of funds to the principal employer, Hillsdown. That company received about £11.1m and a further sum of about £7.4m (that is 40% tax on the gross sum) was paid to the Inland Revenue. The Pension Ombudsman's decision, upheld by Knox J, was that the first transfer was an improper exercise of a fiduciary power and was therefore invalid. Hillsdown repaid the sum transferred to it but recovery of the tax was uncertain. The trustees of the FMC scheme sued the solicitors for damages for professional negligence. The first transfer was made in November 1989 in reliance on advice given in May 1989. The second transfer was made in two tranches in December 1989 and June 1990. The writ was issued in October 1997. On a striking-out application it was accepted that the claim was statutebarred unless the plaintiff trustees could rely on section 14A. The solicitors argued that the last date on which damage occurred was in June 1990 (when the second tranche of the second transfer was paid) and that the plaintiff trustees then knew all the facts relevant to the pleaded case in negligence. They knew the advice that the solicitors had given, and that they had acted in reliance on it. It was not necessary, the solicitors' counsel argued, for them to know that the advice was wrong. The case seems to have been decided on a concession, recorded (after a reference to Perry v Moysey [1998] PNLR 657) at p 495:

“In the instant case, by contrast, the plaintiff made the payments and thereby (to its knowledge) incurred the damage. The fact that at the time it did not realise that in making the payments it was suffering damage (in the sense of damage recoverable by legal action) is, as [counsel for the trustees] accepted, nothing to the point for present purposes.”

In my opinion that concession was wrongly made, and should not have been accepted. Until the FMC scheme trustees knew that they had received seriously incorrect advice which overlooked the need for propriety in exercising fiduciary powers, they did not know that the interests of their beneficiaries, the scheme members, were being prejudiced. This lack of knowledge did not mean merely that they were ignorant of having a cause of action in negligence against the solicitors; more fundamentally and more relevantly, they did not know that they (on behalf of the beneficiaries) had suffered any damage at all. They did not know that what had happened was not a more or less technical reorganisation of two pension schemes, but an improper abstraction of funds which might (if the tax was not recovered) deprive their beneficiaries of over £7m. In short, they knew the bare facts, but they were ignorant of their real significance. Their ignorance was at a different and more basic level than that addressed by section 14A(9).

include paragraphs 87 and 88:

concerned, begin with paragraphs 106 and 107:

As Charles J rightly observed, there are tensions arising from the inter-action of subs.(8)(a) and subs.(9) of s.14A. Under subs.(9)if a claimant knows the relevant circumstances, it is irrelevant that he does not appreciate that they, as a matter of law, involve negligence. And the history of the legislation, which I have already recited, shows that the aim was also to eliminate awareness of fault from the knowledge required. Yet in everyday life we may only be prepared to attribute responsibility if and when we appreciate what ought normally or properly to have happened, and so it is not surprising the authorities contain not only clear statements in line with the Law Reform Committee's intention in its 20th report, but also statements showing the difficulty of avoiding terminology which has some flavour of faultbased thinking.

This problem, which can arise most acutely in relation to omissions in professional negligence cases, is closely examined by Janet O'Sullivan in Limitation, latent damage and solicitors' negligence (2004) 20 Journal of Professional Negligence 218, 233–244. It is, as she shows, most acute in a case of alleged negligence on the part of a solicitor or other adviser, where the negligence consists simply in omitting to do something which it was the adviser's duty in law to do (or in doing something that it was his duty not to do) and where the only reason why the client does not attribute any resulting damage to the adviser is that he does not know that the adviser would have been expected so to do (or not to do). Even in such a case, Hart & Honoré, in Causation in the Law (2nd Ed.) p. 38, demonstrate that the concepts of causation (dependent on knowing what is factually usual) and reprehensibility (central to the concept of breach of duty) are conceptually distinct, although on the particular facts coincident.

Whatever the position in such case, it is in any event not on all fours with a case where an adviser causes or allows a client to enter into a transaction but the client has no reason to attribute loss suffered in the transaction to his adviser until he discovers that the transaction was from the outset intrinsically unsound. In such a case there is authority that knowledge that the transaction was from the outset unsound (giving rise to a prima facie right to complain) may be distinguished from the (under s.14A(9)irrelevant) knowledge that the adviser was negligent: see Hallam-Eames v. Merrett Syndicates [2001] Ll.R. Prof. Neg. 178, decided by a Court of Appeal consisting of Sir Thomas Bingham MR and Hoffmann and Saville LJJ (as they then were). The distinction may in such a case be narrow, as Hoffmann LJ giving the judgment of the court himself recognised at p.181 (right column) in that case and as Janet O'Sullivan points out in her article at p.236, but it is an important, and I think a just, one.

I add that I do not consider that the focus of subss.(6)(b) and (8)(a)on facts and the irrelevance under subs.(9)of knowledge, as a matter of law, that such facts involve negligence mean that the decision in HF Pension Trustees Ltd. v. Ellison [1999] Ll.R. Prof. Neg. 489 was correct. The court there treated the impermissibility of transfers, which resulted from advice given by the defendants, as a matter of law. In my view, this impermissiblity should, in context, have been regarded as an (unknown) fact — an aspect of the acts or omissions alleged to constitute negligence — or possibly (as my noble and learned friend Lord Walker has suggested) as unknown damage resulting from such acts or omissions. In either case, it should not have been until the impermissibility was known to the claimants that time started running against them. The distinction between fact and law has never been that rigid (cf e.g Cooper v. Phibbs(1867) LR 2 HL 149and, in the present field, the decision of Judge Raymond Jack QC, as he then was, in Perry v. Moysey[1998] PNLR 657), while subs.(9) of s.14Agoes no further than to make irrelevant knowledge that acts or omissions involved negligence.

For present purposes what matters is that it is, in my opinion, wrong to suggest that all a claimant needs to know is that he has received professional advice but for which he would not have acted in a particular way which has given rise to loss, or that he has not received advice when, if he had received it, he would have acted in a way which would avoided such loss. The defendants' primary contention to that effect was, I think, accepted by the judge at first instance (cf paragraph 103 above), and was advanced again before the House by counsel for Fawcetts. But it is, in my view, untenable, and could lead to unjust results. Mere “but for” causation is insufficient. This was pointed out by Hoffmann LJ in Hallam-Eames v. Merrett Syndicates [2001] Ll.R. Prof. Neg. 178, 181. The decision in that case illustrates the point, since it was not the writing of the run off policies or of the reinsurances to close (“RITCs”) or the certification by the auditors of the accounts which were alone regarded as the acts or omissions alleged to constitute the negligence. Rather it was those facts plus the fact that they exposed the Names to potentially huge liabilities (and in the case of the accounts also attributed values to incurred but not reported losses — “IBNRs”) none of which were capable of reasonable quantification: see especially at p.181 (top right and the whole left column). A claimant who has received apparently sound and reliable advice may see no reason to challenge it unless and until he discovers that it has not been preceded by or based on the investigation which he instructed or expected. A claimant who has suffered financial loss in a transaction entered into in reliance on such advice may not attribute such loss to the advice unless and until he either makes the like discovery about the inadequacy of the work done, or at least discovers some respect in which the transaction was from the outset unsound giving him (as Hoffmann LJ said) prima facie cause to complain. Such a scenario may well occur where there are other causes of loss which appear to him capable of explaining the whole loss.

examined questions about the degree of detail required:

I agree with the Court of Appeal. I agree with the Court of Appeal that the judge in the present case fell into the same error as the first instance judge in Hallam-Eames v Merrett Syndicates Ltd [2001] Lloyd's Rep PN 178. The language and intent of section 14A(8)(a)are clear. As already noted, in addition to having knowledge of the material facts about the damage, a claimant must know there was a real possibility the damage was caused by (‘attributable to’) the acts or omissions alleged to constitute negligence. The conduct alleged to constitute negligence in the present case was not the mere giving of advice. The conduct alleged to constitute negligence was the giving of flawed advice: Mr. Austreng did not give the advice appropriate to the true financial state of the company's affairs.

This feature of the advice cannot be brushed aside as a matter of detail. Nor can it be treated, as it was by the judge, as a matter going only to particulars. Far from it. This feature is the very essence of Mr Haward's claim. Stated in simple and broad terms, his claim is that Mr Austreng did not do his job properly. Time did not start to run against Mr Haward until he knew enough for it to be reasonable to embark on preliminary investigations into this possibility.

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.

The statutory language in sub-section (8)(a)has been considered in a number of cases and raises the question whether a claimant, in order to obtain the extended period of three years, need show no more than a lack of knowledge of an allegedly negligent act or omission that is a link in the causation chain leading to the damage, and regardless of the importance of that link in the chain. In other words, a causative connection is a necessary part of attributability but is it necessarily sufficient to constitute attributability?

In Nash v Eli Lilly & Co.[1993] 1 WLR 782, a personal injuries case, Purchas LJ, giving the judgment of the Court of Appeal, said, at p.799, that

“It was not … the intention of Parliament to require for the purposes of section 11 and section 14 of the [1980] Act proof of knowledge of the terms in which it will be alleged that the act or omission of the defendants constituted negligence or breach of duty. What is required is knowledge of the essence of the act or omission to which the injury is attributable.” (emphasis added)

The critical issue, therefore, is whether by that date Mr Haward lacked knowledge that the “damage”, i.e. the investment of Haward money in 1994 and 1995, “was attributable in whole or in part” to the acts or omissions of Fawcetts alleged to constitute negligence. This is the sub-section (8)(a)issue.

As to this I would, for my part, accept and apply the opinions expressed in Nash v Eli Lilly , Dobbie v Medway Health Authority and the Hallam-Eames case that the requisite knowledge is knowledge of the facts constituting the essence of the complaint of negligence.

A decision of your Lordships in favour of the respondents, enabling the action to be brought within three years of the discovery by Mr Haward of why it was that the advice he had received from Fawcetts was negligent (if that is what it was), or why it was that

Fawcetts had not given him the advice that he alleges they should have

given, would expand section 14Ato cover cases that had nothing whatever to do with latent damage or losses. It would expose those who give advice on financial matters to potential liability not simply until the expiry of three years after the loss-making consequences of the advice are known but until the expiry of three years after all the reasons why that advice was negligent are known. This, in my opinion, is an unjustifiable extension of the scope of section 14A, substantially altering the balance between claimant and defendant that Parliament has struck.

In her article ( p 236) Janet O'Sullivan makes this comment:

“A further problem with the reasoning in Hallam-Eames, as Hoffmann LJ recognised, is that it comes close to saying that which is forbidden by section 14A (9), namely that time does not start to run until the claimant has knowledge that the defendant was negligent.”

The second aspect of knowledge required under s.14Ais that the damage was attributable in whole or part to the act or omission which is alleged to constitute negligence. It is clear from both the heading and language of s.14Athat this aspect deals with difficulties facing a claimant separate from those which are presented by cases where the fact or quantum of damage itself is latent. The background to s.14Aconfirms this. The 20th Report of the Law Reform Committee of May 1974 (Cmnd. 5630) led to the definition of knowledge in personal injury cases in the Limitation Act 1975, which became by consolidation s.14 of the Limitation Act 1980. In paragraphs 42, 49 and 54–55, the Law Reform Committee treated the two aspects as independent. In particular in paragraph 49 it said:

“It has not been suggested to us, and in our view could not reasonably be suggested, that the plaintiff's date of knowledge should arrive until he has knowledge (actual or constructive) both of his injured condition and of its having been caused by an act or omission of the defendant.”

The Committee went on to consider whether there should be any further requirement that the plaintiff should know that he had a worthwhile cause of action, or (taking an intermediate possibility suggested, uniquely, by Lord Pearson in Central Asbestos v. Dodd [1973] AC 518) that he should at least be aware that his injury was attributable to some fault of the defendant. They rejected both possibilities. At paragraph 55, they therefore accepted as (they believed) “a date capable of precise definition and not presenting any particular difficulties of proof” the date “when the plaintiff has knowledge, actual or constructive, both of his injured condition and of its having been caused by acts or omissions of the defendant”. In the later Law Reform Committee's 24th Report (Latent Damage) of November 1984, which led to the insertion by the Latent Damage Act 1986s.14A, applying to cases of negligence not involving personal injury, the Committee at paragraph 4.7 preferred to model s.14A on s. 14, rather than on s.11(3) of the Prescription and Limitation Act (Scotland) Act 1973, because it was arguable that s.11(3)

“does not cover lack of knowledge of its [the damage's] causation, or the identity of the person (or persons) liable. By comparison awareness of such matters, which could sometimes be difficult to ascertain in a latent damage context, is specifically included in the definition of knowledge contained in section 14 of the 1980 Act”.

The reference in parenthesis to awareness of causation being “sometimes … difficult to ascertain in a latent damage context” cannot mean that the Committee intended that it should only be where damage remained latent that knowledge of causation was to be relevant. Indeed, so long as damage remains latent, knowledge regarding causation cannot really arise as a problem. Another point in this Report which it is of interest to note is the Committee's recognition at the end of paragraph 4.7 — in contrast with the optimism of the 1974 Report — that an approach adapted from s.14“does have its disadvantages too” and “is a complicated formulation”.

Under the terms of s.14A(8)(a), it is relevant to consider what is meant by (i) “knowledge”, (ii) “the act or omission which is alleged to constitute negligence” and (iii) knowledge that damage was “attributable” to such an act or omission. For the moment, I confine myself to actual knowledge.

The degree of certainty of knowledge required under s.14was considered by Purchas LJ giving the judgment of the Court of Appeal in Nash v. Eli Lilly (at p. 792C–D and also p. 796C–D. At p 791G–H Purchas LJ also quoted the conclusion of Lord Donaldson of Lymington MR in Halford v. Brookes[1991] 1 WLR 428, 443, that knowledge here “clearly does not mean ‘know for certain and beyond possibility of contradiction’”. Purchas LJ proceeded at p 792 C–D “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 this 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 & Co.[1993] 4 Med LR 328, 334, Hoffmann LJ re-phrased the purpose of s.14(1)as being “to determine the moment at 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”. This was taken up by Brooke LJ in another case under s.14,Spargo v. North Essex District Health Authority[1997] PIQR P235, P242, where he said:

“(3)

A plaintiff has the requisite knowledge when she knows enough to make it reasonable for her to begin to investigate whether or not she has a case against the defendant. Another way of putting this is to say that she will have such knowledge if she so firmly believes that her condition is capable of being attributed to an act or omission which she can identify (in broad terms) that she goes to a solicitor to seek advice about making a claim for compensation.

(4)

On the other hand she will not have the requisite knowledge if she thinks she knows the acts or omissions she should investigate but in fact is barking up the wrong tree; or if her knowledge of what the defendant did or did not do is so vague or general that she cannot fairly be expected to know what she should investigate; or if her state of mind is such that she thinks her condition is capable of being attributed to the act or omission alleged to constitute negligence, but she is not sure about this, and would need to check with an expert before she could be properly said to know that it was.”

All such formulations seem to me relevant also under s.14A, provided that it is remembered that under subs.(8)(a)the requisite knowledge must be of the attributability in whole or part of the damage suffered to the act or omission alleged to constitute negligence. The passage from HHJ Playford's judgment cited in paragraph 103 above was therefore, in my view, incorrect in law.

Turning to the phrase “the act or omission which is alleged to constitute negligence”, the word “constitute” is in my view significant. It indicates that the claimant must know the factual essence of what is subsequently alleged as negligence in the claim. Once such knowledge has been acquired, it is under subs. (9)irrelevant whether or not the claimant knew that the relevant act or omission “did or did not, as a matter of law, involve negligence”. So, there must be knowledge of the act or omission allegedly constituting negligence, but there need not be knowledge that, as a matter of law, such act or omission involved negligence. Whether an act or omission involves negligence is a matter of law for the court, even though a court may of course hear a good deal of evidence (e.g. about accountancy principles and practices) in order to determine it. Evidence of relevant accountancy principles or practices will commonly be deployed on the issue whether, as a matter of law, such act or omission involved negligence. The difficulty is that knowledge of such principles or practices may also in some cases be said to bear on the question whether a person suffering loss would attribute such loss to accountants who had advised or not advised him. 134. Lord Mance added at paragraphs 119 to 121:

On the other hand, as counsel for the claimants accepted in his note to the judge (paragraph 99 above), a claimant cannot postpone the running of time almost indefinitely by reference to detailed factual points which often only become known in the course of investigation of a possible claim, or during litigation itself. The Court of Appeal was right in Broadley v. Guy Clapham & Co. to disapprove a test adopted by Hirst J in Bentley v. Bristol & Weston Health Authority [1991] 2 Med LR 359, in so far as it would have required a claimant to know all factual matters necessary to establish negligence or to draft a fully and comprehensively particularised claim.

The authorities have thus adopted as the relevant test when the claimant acquired “knowledge of the essence of the act or omission to which the injury is attributable”: see Nash v. Eli Lilly & Co. [1993] 1 WLR 782, 799C per Purchas LJ and Hallam-Eames v. Merrett

Syndicates [2001] Ll.R. 178, 181. The Court of Appeal in HallamEames thus distinguished between, on the one hand, “elaborating the detail by requiring knowledge of precisely how he had come to do the act complained of” (which is irrelevant) and, on the other, knowledge of facts which are “part of the essence of [the] complaint”. An example given of the latter was the fact in Dobbie v. Medway Health Authority[1994] 1 WLR 1234that the breast removed by the surgeon had been healthy. In Hallam-Eames, the essential facts of which knowledge was required were of a reverse character — viz that the run-off policies and reinsurances to close and the certified accounts were in effect unsound (or “unhealthy”). Hoffmann LJ explained:

“… 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. There may be many acts, omissions or states which can be said to have a causal connection with a given occurrence, but when we make causal statements in ordinary speech, we select on common sense principles the one which is relevant for our purpose.

…

It is this idea of causal relevance which various judges of this court have tried to express by saying that the plaintiff must know the ‘essence of the act or omission to which the injury is attributable’ (Purchas LJ in Nash v. Eli Lilly[1993] 1 WLR 782, 799) or ‘the essential thrust of the case’ (Sir Thomas Bingham MR in Dobbie …

[1994] 1 WLR 1234, 1238) or 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’ (Hoffmann LJ in Broadley[1993] 4 Med LR 328, 332).

…

He [the claimant] must have known the facts which can fairly be described as constituting the negligence of which he complains. …” 121. Hoffmann LJ continued:

“What, on these principles, are the facts which constitute the negligence of which the Names complain? It would in our view be incomplete to say that it was the writing of the run-off reinsurance policies or the RITCs or the certification of the syndicate accounts. These facts in themselves do not amount to acts of which the Names would even prima facie be entitled to complain. It is necessary to add the allegation that the run-off policies and RITCs exposed the Names to potentially huge liabilities and that the certified accounts attributed values to IBNRs [incurred but not reported losses], none of which were in fact capable of reasonable quantification.” 135.Lord Mance continued in paragraph 122:

as the “could and should concession”. This is that, in order for Mrs Trainer to have section 14A cumulative knowledge, she must have:

… knowledge that things could and should have been different …

… that Allanton had no contractual right to insist on the varied terms and/or that there was no contractual warrant for the inequitable apportionment;

to distinguish between material facts knowledge (which is concerned with knowledge of damage) and causation knowledge (knowledge that the damage was attributable to the act or omission alleged to constitute negligence): see section A1.4 above; and

to bear in mind under section 14(9) of the 1980 Act, as regards relevant

“knowledge” provisions, that knowledge that any acts or omissions did or did not, as a matter of law, involve negligence is irrelevant: see section B1.2 above.

section A7.4 above), is at first sight surprising. If it were used in the sense that there was a defendant who ought to have done something, there would be a potential inconsistency with the clear statement in section 14A(9) that knowledge of negligence is irrelevant. Similarly, if used in that way, the word “should” seems potentially inconsistent with Lord Brown’s paragraph 90, indicating that it was not

necessary to know that Fawcetts had failed to carry out necessary investigations.

explains Cramer Pelmont’s agreement to the use of the word “should” by citing Lord Brown’s paragraph 88, Lord Nicholls’s paragraph 14, Lord Walker’s paragraphs 61 and 67, and Lord Mance’s paragraphs 116 and 117.

however, is that the word “should” nowhere appears. It is clear from paragraph 88 that Lord Brown adopts the explanation of Dobbie that is given in Hallam-Eames:

Mrs Dobbie would have suffered no damage had her removed breast been unhealthy.

above. Consistently with Lord Brown’s paragraph 88, Lord Nicholls states:

where an adviser causes or allows a client to enter into a transaction but the client has no reason to attribute loss suffered in the transaction to the adviser until the client discovers that the transaction was from the outset intrinsically unsound. In this circumstance Lord Mance’s analysis adopted the approach of the Court of Appeal in Hallam-Eames.

the court, rather than any defendant, ought to have done. The context concerns HF Pensions Trustees Ltd, where an impermissible transfer was made. In this context, for there to be causation knowledge, the claimant would need to know that the transfer was impermissible. Lord Mance added that this was “possibly” also something which a claimant needed to know for material facts knowledge, as Lord Walker had suggested.

could have obtained a better outcome.

renegotiation. If so, she says that (at best) she would have received her half share of the Wildwood Lodge contractual purchase price. At worst, she says that she might have agreed to some reduction in the overall amount paid by Allanton, but even so the overall amount paid by Allanton would have been greater than was paid by Allanton in the event.

is that, whatever the amount paid by Allanton, if properly advised she could have negotiated with Mr Trainer to obtain a 50/50 split, or at least a better split than in the event she received. The parties have described this as Mrs Trainer’s “inequitable apportionment” claim. That wording is shorthand for Mrs Trainer’s case that, on the one hand, she was told by Mr Trainer that he was getting much the same as her by way of a small payment on completion with a possibility that he would get more, only because he was prepared not to insist on payment of his entire share upon completion, if and when the development was completed successfully, while on the other hand, under the arrangements Mr Trainer in fact made with Allanton, he received on completion £400,000 rather than Mrs Trainer’s £300,000, very substantial sums by way of deferred consideration, and undisclosed payments of £50,000 and £12,500.

when entering into the new arrangements, had believed would be his, then that would inevitably have caused her intense concern. As I understand it, the parties when formulating issue 1(2) have used “the inequitable apportionment” to refer to

the postulated knowledge by Mrs Trainer of an apportionment “much more advantageous” to Mr Trainer than she had believed would be his.

judgment (see section A7.4 above), made no distinct ruling relevant to the present issue. This is not surprising: it is only on this appeal that the present issue has been formulated with any degree of precision. What the master indicated at paragraph 57 was that he suspected that Mrs Trainer had material facts knowledge at a comparatively early stage. After making observations in relation to this suspicion, he went on at paragraph 58 onwards to deal with causation and identity knowledge.

constitute material facts knowledge because of the cumulative effect of a series of pre-requisites. I can summarise them in this way:

first response proposition: nothing in section 14A says that, in order to have material facts knowledge, Mrs Trainer must have known about all the damage: on the contrary in Hamlin v Edwin Evans (1996) 29 HLR 414 the Court of Appeal held that in a case, such as the present, where there is a single and indivisible cause of action for negligence, the reference in section 14A(5) to “relevant damage” will be satisfied once a claimant has knowledge of damage (great or small) in respect of that negligence;

second response proposition: this court accordingly need not concern itself with the date on which Mrs Trainer knew that she could have been better off by rejecting Allanton’s claim; and

third response proposition: in order to have material facts knowledge Mrs Trainer did not need legal advice as to her contractual rights against either Allanton or Mr Trainer.

at least a reasonable argument that Mrs Trainer had material facts knowledge once she had knowledge of the inequitable apportionment. Certainty is not required. Nor is knowledge of negligence. The substantial difference between what Mr Trainer had told her, and what the inequitable apportionment involved, makes it at least arguable that on learning of the inequitable apportionment Mrs Trainer would have sufficient knowledge that something must have gone wrong.

knowledge. Mrs Trainer advances a proposition that a defendant cannot, in order to deny a claimant the protection of section 14A, rely upon constructive knowledge (as opposed to actual knowledge) of “damage” or “attributability” before “damage” has been sustained and the cause of action is complete. Mrs Trainer acknowledges that there is no authority for the proposition, but submits that it is self-evident because it follows necessarily from the purpose, wording and structure of section 14A.

only be engaged in a case where the cause of action in negligence is complete. That is undoubtedly true: see the express words of section 14A(1) and the observations of the Court of Appeal in Hamlim at page 422.

have suffered latent damage. It could not, she submitted, be right that carelessness prior to damage should deprive a claimant of that benefit.

precisely how section 14A strikes a balance between on the one hand assisting those affected by damage they were actually unaware of, and on the other hand limiting that assistance where a claimant might reasonably have been expected to gain section 14A cumulative knowledge. In that regard section 14A does not say that knowledge of damage in itself is a barrier to benefiting from section 14A: the benefit provided by section 14A will only cease to assist a claimant at a stage when the claimant not only has material facts knowledge, but also has both causation knowledge and identity knowledge. This may be thought to undermine Mrs Trainer’s further proposition described above.

is whether the claimant had that knowledge on the date on which the cause of action accrued. Such knowledge might well be derived from things that were known before the cause of action accrued. If that is the case for actual knowledge, then it is arguable that it should similarly be the case for constructive knowledge. As to the overlap with contributory negligence, it does not seem to me that this necessarily prevents the two concepts from being distinct.

weighed the balance may lie in favour of permitting reliance by a defendant, for the purposes of section 14A(10), upon facts observable or ascertainable before the cause of action accrued.

it concerns an aspect of section 14A(10) on which there is a potentially relevant Court of Appeal decision.

19 the facts are conveniently summarised in the headnote at page 319 of the Professional Negligence Law Reports:

Trainer.

mere fact that it may be open to Mrs Trainer to run the argument in the present case does not mean that the argument is bound to succeed.

Inferences and conclusions drawn by the master

issues 2(1) and (2): see section A8.8 above. In the light of my conclusions in section B above I can deal with these matters relatively briefly. As noted in section B2 above, these were matters which the master did not need to analyse, and did not analyse, in any detail.

present case, denying that she read either of these documents, and submits that there is no evidence that she did. It seems to me that this, at least arguably, takes too limited an approach to what is needed. As Cramer Pelmont observes, Mrs Trainer is an experienced property developer. There is, to say the least, a real possibility that she became aware of the inequitable apportionment by reading either or both of the Deed of Variation and Terms of Contract. It was urged on her behalf that there might have been a reasonable explanation for Mr Trainer receiving £400,000 on completion as opposed to Mrs Trainer’s £300,000. That submission, however,

misses the point: such a substantial disparity from what she had been told would, at least arguably, make her aware that a better outcome, from her point of view, was possible and that something had gone wrong. I recognise that Mrs Trainer has given evidence of personal difficulties which were affecting her at the relevant time. A question may arise as to whether those personal difficulties were such as to lead her not to do things which she might otherwise have been expected to do. That question, however, is pre-eminently, a question to be decided after a trial at which her evidence has been tested.

there is no evidence that she saw the relevant letter. As to this, however, the master observed in paragraph 57 of his judgment that Mr Trainer seems to have been prepared to risk Mrs Trainer finding out, in the course of the Ebgui litigation, things which had been kept secret earlier. A question may arise whether as part of the Ebgui litigation Mr Trainer passed on the relevant letter to Mrs Trainer, or in some other way informed her of the secret payments. This, too, seems to me to be preeminently a matter for trial.

knowledge. The first of these is at sub-paragraph (a) of issue 2(2). This does no more than mirror the questions which arose under sub-paragraph (b) of issue 2(1). For the reasons given above when dealing with that sub-paragraph, there is a reasonable argument open to Cramer Pelmont in this regard which calls for trial.

contractually insist on the renegotiated terms, and lack of knowledge that there was “no contractual warrant” for the inequitable apportionment. For the reasons given in section B2 above neither of these assertions prevents Cramer Pelmont from having a reasonable argument on material facts knowledge.

in issues 2(3) and 2(4), are set out in section A8.9 above. Here, as in section C1 above, I can take matters relatively briefly in the light of the conclusions set out earlier in the present judgment.

September 2017 letter was “altogether inconsistent” with Mrs Trainer “then having knowledge” that Cramer Pelmont was a defendant against whom a claim for relevant damage could be brought. As to actual knowledge, however, the material question is not what view Sears Tooth had formed in late 2017. I accept that the letter written by Sears Tooth on 15 September 2017 is a pointer against Mrs Trainer having actual knowledge, so far as relevant for present purposes, at that time. But it does not rule out the possibility that Mrs Trainer had relevant actual knowledge earlier, and this is, to my mind, a matter meriting trial.

have been expected to acquire and which would give rise to causation knowledge and identity knowledge. As to how long would be needed for this purpose, each side sought to make points by reference to the time that had been required in 2017. While evidence as to what occurred in 2017 may have relevance, it does not seem to me that it can be determinative one way or the other: the matter calls for a trial at which the position at earlier stages is examined.

those before the master, I conclude that issues 2(3) and (4) must be decided in favour of Cramer Pelmont.

Other issues

Trainer’s bankruptcy. This issue only arises if Mrs Trainer had not, prior to her bankruptcy, acquired, as regards her claim against Cramer Pelmont, section 14A cumulative knowledge. For the reasons given earlier in this judgment, however, I have concluded that Cramer Pelmont have reasonable arguments which, if right, would have the consequence that Mrs Trainer had acquired section 14A cumulative knowledge prior to her bankruptcy. That being so, this issue does not arise. It involves novel arguments in an area of developing law, and I consider that if it were to arise it is best dealt with at a full trial.

master described as “disappointing” events: see section A6.2 above. For the reasons given earlier in this judgment, however, it is not necessary for me to examine those events in order to reach the conclusion that Cramer Pelmont has reasonable arguments meriting trial. The evidence concerning those events may be highly relevant at that trial, and I consider it to be undesirable for me to seek to analyse that evidence at the present stage.

parties to seek to agree consequential orders.