UK: Know Your Limits: The Accrual Of A Cause Of Action In Tort

Last Updated: 30 July 2013
Article by Ben Ogden and Roderic Jones

In Berney v Saul (t/a Thomas Saul & Co (Solicitors)) [2013] EWCA Civ 640, the Court of Appeal had to determine when the claimant's cause of action against the defendant solicitor arose in order to ascertain when the six year limitation period for a negligence claim commenced. For the cause of action to crystallise in tort, the potential claimant must suffer "damage". The question of what constitutes "damage" in negligence cases has often vexed the courts and in this case, whilst the two Court of Appeal judges who gave reasoned judgments broadly agreed on the legal test, they disagreed on its application: despite the agreed facts, they did not agree when the limitation period commenced.

The claimant (Ms Berney) brought proceedings against the defendant, her former solicitor, alleging that she had settled a previous personal injury claim at an undervalue because of the solicitor's failure to serve Particulars of Claim for her personal injury claim in time (together with other delays in obtaining medical evidence). She asserted that the settlement sum was lower than she would have obtained if the claim had gone to trial or been settled without the additional hurdle of the need to apply to serve her Particulars of Claim out of time. Counsel had advised that she had a negligible chance of succeeding in such an application. The question was when she had suffered damage. The crucial dates were:

  • 11 August 2002, the last date for service of the Particulars of Claim in the personal injury action in accordance with the Civil Procedure Rules;
  • 10 January 2005, the date six years before Ms Berney issued her negligence claim against her solicitor, on 10 January 2011. If damage occurred before 10 January 2005, then Ms Berney's claim would have been time-barred;
  • 25 January 2005, when the solicitors defending the personal injury claim withdrew their assurance that they would take no point on the late service of the Particulars of Claim; and
  • 1 November 2005, the date on which Ms Berney settled her personal injury claim.

District Judge Liston had dismissed the claim, partially on the basis that it was time-barred. On appeal to the High Court, HHJ Simpkiss agreed that the claim was time-barred "long before" 1 January 2005 because there had been a "measurable loss by reference to the diminution in the value of the [personal injury] claim" before then, though he did not say exactly when or on what basis that diminution occurred.

Lady Justice Gloster, giving the first judgment of the Court of Appeal, analysed the complex and (in her words) "arguably inconsistent approaches of this Court" in previous cases dealing with 'failed litigation' claims against solicitors. She settled on a "realistic and fact–dependant" test to be applied in assessing when time began to run, based on Lord Hoffman's judgment in Nykredit Mortgage Bank v Edward Erdman Group [1998] 1 All ER 305, which she expressed as "when was Ms Berney financially worse-off as a result of [the solicitor's] breach of his duty of care than she would otherwise have been?" At that point she certainly would have suffered damage.

Critically, Gloster LJ refused to characterise Ms Berney's claim as one for "diminution of the value of her chose in action" (the chose in action being, essentially, Ms Berney's right to sue), stating that such an approach was "unreal" "on an objective analysis of the facts". That must be a fact sensitive decision, but at first sight is a little surprising. A right to sue would lose some of its value if subject to increased litigation risk as a result of, for example, the need to apply for permission to serve Particulars of Claim out of time. Gloster LJ characterised the claim instead as one "for loss as a result of having to settle her claim in November 2005". In other words, she found that the damage was caused when the claim was settled, not when the facts which led to the settlement were in place. This was principally because she did not agree with Ms Berney's Counsel's assessment that Ms Berney had only a 20% chance in succeeding in an application to serve the Particulars of Claim out of time. Gloster LJ held on the facts that any such application would have succeeded.

Lord Justice Moses also agreed to allow the appeal, and agreed with Gloster LJ's characterisation of the test for when time should start to run.

However, his primary reason for permitting the appeal was that the defendant in the personal injury action assured Ms Berney that it would "take no point" on the late service of the Particulars until 25 January 2005. Only on that date, when the assurance was withdrawn, was Ms Berney exposed to increased litigation risk. Until 25 January 2005, therefore, there was "no risk" that she would not be granted permission to serve the Particulars late, nor that the court would consider limiting the quantum of her claim. She could not have suffered any damage as a result of the negligence of her solicitors before that point. Since that was less than six years before Ms Berney issued her negligence claim then she was not time-barred. This seems to be an orthodox approach.

That orthodoxy continues because, in direct contrast to Gloster LJ, Moses LJ held that Ms Berney's claim was indeed one for "diminution of the value of her chose in action". He held that "[i]f in fact the value of [Ms Berney's] claim was diminished before settlement then her cause of action arose before settlement." Moses LJ was of the view that "there was a real risk that prior to the date of settlement" an application to extend time for service of the Particulars of Claim would have led to Ms Berney being at risk. The decision in Price v Price [2003] 1 All ER 305 allows the court a discretion to limit the damages available when applying for an extension in order to maintain the efficiency of the administration of justice. She was, therefore, "financially worse-off" as soon as her solicitors had failed to serve the Particulars in time and the personal injury defendants had withdrawn their concession on 25 January 2005; at that point the value of her chose in action was lower than it would have been if it were not subject to an application of the principles in Price. Lord Justice Rimer agreed with the reasoning of Moses LJ.

Conclusion

This case shows that despite the existence of an ostensibly simple test to ascertain the moment at which a claim in tort accrues, the factually sensitive nature of the test means that there is often room for disagreement between judges as to when that test is triggered. For example, some judges may have thought that Ms Berney was at risk of a reduced claim as soon as the solicitors were late in serving the Particulars of Claim: there was a risk, even if it was a small one, that an application to serve them late would have failed or that she would have been limited in her damages. That must have preceded the concession and it is difficult to see why in those circumstances her damage did not arise before 25 January 2005, even if it was temporarily suspended by the defendant's concession. This case may well be seen as another example of the courts using innovative reasoning to prevent an otherwise meritorious claimant being struck out on the basis of limitation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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