To the relief of professional services firms (and their insurers), the House of Lords has overturned recent decisions on section 32 of the Limitation Act 1980. The effect of those decisions had been that claims for negligence could be brought long after the time when it had previously been thought the limitation period had expired.
In a widely anticipated decision, the House of Lords gave judgment on 25th April 2002 in an appeal from the Court of Appeal in Cave v. Robinson Jarvis & Rolf  1 WLR 581 which now establishes the proper interpretation of Section 32 of the Limitation Act 1980. In effect, the House of Lords has found that the interpretation of Section 32 in an earlier Court of Appeal decision (Brocklesby v. Armitage & Guest  1 All ER 172) was wrong, and that the law is as it had been understood to be before Brocklesby.
As Lord Millett noted in his judgment, the effect of the reasoning of the Court of Appeal judgment in Brocklesby was that a professional subject to a claim for negligent advice would never have a limitation defence, even where he denied that the advice was negligent, or even wrong. Only once he had shown on the merits that the advice was not negligent could he have asserted a limitation defence. It had always previously been considered that the limitation period would only be extended where facts relevant to the claimant's right of action had been deliberately concealed, or where the defendant had deliberately committed a breach of duty in circumstances in which it was unlikely to be discovered for some time.
Section 32 of the Limitation Act 1980
Section 32(1)(b) of the Limitation Act 1980 postpones the commencement of the limitation period where "any fact relevant to the plaintiff's right of action has been deliberately concealed from him by the defendant". If so, the period of limitation does not begin to run until the claimant discovers the concealment or could with reasonable diligence have discovered it. Further, section 32(2) of the Limitation Act 1980 provides "for the purposes of sub-section (1) above, deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty".
It had always been considered that, although differently worded, this preserved the broad effect of section 26 of the Limitation Act 1939, so that "the start of the limitation period is postponed whenever the defendant has committed the wrong, knowingly or recklessly, in circumstances such as to prevent a plaintiff coming to know of his cause of action" (para 33-25 of Clerk & Lindsell on Torts, 18th Ed. (2000)).
Recent Court of Appeal decisions
However, in Brocklesby, in which a firm of solicitors were alleged to have failed to procure their client's release from his mortgage obligations but were not alleged to have been aware of the fact that they had been negligent, Morritt LJ held that
"it is not necessary for the purpose of extending the limitation period pursuant to section 32(1)(b) to demonstrate that the fact relevant to the plaintiff's right of action has been deliberately concealed in any sense greater than that the commission of the act was deliberate in the sense of being intentional and that that act or omission, as the case may be, did involve a breach of duty whether or not the actor appreciated that legal consequence" (p605).Thus, any intentional act, or presumably failure to act, which constitutes a breach of duty, whether or not the actor knows it, in circumstances in which the breach of duty is unlikely to be discovered for some time, would postpone the commencement of the limitation period until the breach could have been discovered. In other words, mere negligence would be enough to prevent a limitation defence.
Brocklesby was followed in two cases. In the first, Liverpool Roman Catholic Archdiocese Trustees Inc v. Goldberg  1 All ER 192, Laddie J held, applying Brocklesby, that it was sufficient to bring the case within section 32 that the defendant had intentionally given the advice in question and that (if negligent) it amounted to a breach of duty. It was not necessary to appreciate that the advice was wrong or negligent.
In the second, Cave, another case concerning a claim that a solicitor had been unknowingly negligent, this time in failing to ensure that Cave acquired enforceable mooring rights for 100 years over land in the Isle of Wight sold in 1989, Newman J applied Brocklesby and ruled out a limitation defence under section 32. Before the Court of Appeal, much of the argument related to whether it was bound to follow the decision of Brocklesby, a two-man Court of Appeal which gave an extempore judgment in a case in which numerous authorities had not been cited (and which had subsequently been heavily criticised). The Court of Appeal concluded that it was so bound, and therefore that it was obliged to dismiss the appeal. In doing so, Jonathan Parker LJ said
"However, I confess to being uneasy about the decision in the Brocklesby case. In particular, I find the reasoning and the decision difficult to reconcile with the observations of Lord Browne-Wilkinson and Lord Nicholls in Sheldon v. RHM Outhwaite (Underwriting Agencies) Limited  AC 102 to the effect that Section 32 is concerned with unconscionability and impropriety... Yet if [Brocklesby] is right, a wholly innocent act or omission may suffice to deprive a defendant of a limitation defence.The House of Lords Judgment in Cave
I am also concerned that the effect of the decision in the Brocklesby case, as I understand it, is to render the word "deliberate" in section 32(2) more or less otiose."
In a unanimous decision, the House of Lords held that the construction of section 32 by Morritt LJ in Brocklesby was wrong, and that Goldberg and Cave had therefore been wrongly decided. Following Sheldon, the Lords considered the ordinary and natural meaning of the words of section 32(2), as well as the purpose for which section 32(2) was enacted (which Lord Millett noted was explained by decisions on the 1939 Limitation Act). They concluded that section 32(1)(b) requires deliberate, or active, concealment of the breach of duty. Where there was no deliberate concealment of the breach, section 32(2) covers cases where there was deliberate commission of a breach of duty in circumstances where it was unlikely to be discovered for some time. Mere negligence in such circumstances could not be sufficient to postpone the limitation period. Lord Scott further noted that, while it was difficult to think of a case of deliberate concealment or commission of a breach of duty that did not involve unconscionable behaviour, the Act does not require a further criterion that the defendant's behaviour be shown to be unconscionable.
In summary, therefore, the effect of section 32(1)(b) and section 32(2) of the Limitation Act 1980, is, as previously thought, that the limitation period will only be postponed if:
- The defendant takes active steps to conceal his breach of duty after becoming aware of it; or
- The defendant was guilty of deliberate wrongdoing, and conceals it or fails to disclose it in circumstances where it is unlikely to be discovered for some time.
© Herbert Smith 2002
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