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The Actuary The magazine of the Institute & Faculty of Actuaries

No worries!

Until the Court of Appeal’s decision in the case of Brocklesby v Armitage & Guest in 1999, it had been pretty safe for professionals to assume that they would be able to stop claims made arising out of matters which occurred many years ago. This assumption arose because, under the Limitation Act 1980, defendants have a complete defence to claims that are not brought within the ‘limitation period’. Normally that period is six years from the date of the act that is complained of.
For example, if a professional was sued by a former client for being allegedly negligent in the work he had done for that client ten years previously, the professional could stop that claim from continuing just by using the defence of limitation. The point of the limitation defence is to give people more certainty that they will not have to deal with claims arising out of matters that occurred a long time ago. It means that they do not have to worry about fading memories of those events, or that their files of those matters may have long since been lost or destroyed.

Beyond the six-year limit
Sometimes, however, the client is not able to find out that their adviser had been negligent until after six years have passed. In these cases, the client may be able to use section 32 of the Act. Under this section, a defendant cannot rely on a limitation defence if he ‘deliberately concealed’ facts relevant to the claim. Before Brocklesby, it was generally thought that for this section to apply, the professional had to know that his act (or omission) had been negligent.
In 1997, Mr Brocklesby issued proceedings against a solicitor arising out of a conveyancing transaction in 1989. The six-year period for making a claim had therefore passed. However, Mr Brocklesby could not show that the solicitor had in any way known that the work he did in 1989 had been negligent. The court in Brocklesby, however, said that such knowledge by the solicitor was not necessary; it was only necessary for the solicitor to have deliberately committed an act in the sense that he intended that act, even if he never realised that that act was negligent.

The reaction
This decision provoked outcry among professionals and their insurers. Partners in firms of professionals faced the prospect of claims relating to matters that dated back many years, where they had been unaware that an error had been made and where they had probably destroyed all their files. Partners had to consider whether in future they should keep their old files indefinitely, instead of destroying them after six years, as had been the usual practice. Retiring partners also had to consider maintaining run-off insurance cover indefinitely, since, in theory, claims could be made against them many years after their retirement.
Many clients began to make claims against their former advisers that they would not otherwise have been able to bring because those claims would previously have been barred because of the limitation defence. There was general uncertainty about whether those claims would succeed.

The latest decision
However, the House of Lords recently had to consider the same point in the case of Cave v Robinson Jarvis & Rolf. In this case, Mr Cave’s solicitors had failed to secure him some mooring rights which he had instructed them to do in 1989. Mr Cave was unaware of this failure and in fact he used the mooring rights believing he had ownership of them until 1994, when his ownership was successfully challenged. He started proceedings against the solicitors in 1998. Again, Mr Cave was not able to show that his solicitors had been aware at the time they did the work for him of their failure to secure the mooring rights and so he also tried to rely on section 32. The House of Lords, however, refused to allow him to do so. It held that the client must show that the professional knew that he was committing a negligent act in circumstances where the client was unlikely to discover that negligent act for some time.
Therefore once more partners in professional firms do not really need to be concerned about those older matters where they are unaware of any negligence. Professional bodies do not have to worry about redrafting their guidelines on the length of time that old files need to be kept. And retired partners once more should not have to worry about claims being made against them long into their retirement.