Negligent advice – when are you too late to claim?

This case involves the trial of a preliminary issue in whether the Claimants’ claim was time-barred. The usual rule is that a claim for negligent advice must be brought within six years of the loss arising from the negligent act, or within three years of the date of knowledge if later.

The Claimants received negligent advice in 2009 but were not aware until 2 May 2017. After some 18 months investigating the Claimants were advised on 28 September 2018 that there were historic issues which required rectifying, resulting in the Claimants incurring significant additional losses.

The Claimants issued a claim form on 26 May 2021 (some 12 years after the negligent advice). Evidently, the negligent advice had not occurred within the six years prior to the date of the claim form. However, the issue to be determined was when the Claimants had the requisite “knowledge” under section 14A of the Limitation Act. The Claimants asserted that they acquired knowledge on 28 September 2018 and the Defendant proposed an alternative date of 2 May 2017.

The court held that the Claimants could only have had sufficient knowledge to “embark on the preliminaries to commencing proceedings” after the advice received on 28 September 2018. It followed that proceedings were issued within the three-year statutory period and the claim was not time-barred.

What does this mean?

This should be nothing new to legal professionals but it does highlight the fact that potential claims where the negligent act occurred more than six years ago should not be simply written off without first considering the date knowledge was acquired by the potential Claimant. Some 18 months had passed from the first suggestion that there may historic issues to be dealt with, and yet the Claimant was not deemed to have sufficient knowledge to embark on the preliminaries to issuing proceedings. It was only once firm advice had been received that the court considered the Claimants had sufficient knowledge.

There are key points to take away from this judgment:

• 1. Limited knowledge of a potential claim can be insufficient for the purposes of the date of knowledge. Even where the Claimant is aware of a potential issue (as in this case), this will not automatically become the date of “knowledge” for the purposes of the Limitation Act. However, knowledge is subjective and the case also highlights the not insignificant risk that a Defendant might argue an earlier date of knowledge – when in doubt assume the earliest date and take legal advice.
• 2. Deputy Judge Clare Ambrose noted that “the Defendant could fairly comment that the work took longer than might be expected”. Parties should still seek to investigate potential claims efficiently and without delay, and should avoid relying on lack of knowledge simply due to lack of investigation.
• 3. If firm advice is received which suggests a potential claim, you should act without delay this could be the date of “knowledge” and the three-year time limit to issue proceedings will start to run.

If in a position where the limitation date is looming, parties to a dispute may consider entering into a standstill agreement. Such an agreement effectively pauses time for the purposes of limitation, which could in turn avoid the need for costly and time-consuming litigation to determine the issue and is therefore of benefit to all parties involved.

If you think you have a potential claim but are concerned about limitation, contact our Commercial Litigation team who can advise you on your circumstances.