Limitation Periods in Professional Negligence.
In Holt v Holley & Steer Solicitors (a firm) [2020] EWCA Civ 851 the Court of Appeal reviewed limitation periods and in particular the question of when the clock starts to run within which to bring a claim in professional negligence against a solicitor firm.
The Limitation Act 1980 provides time limits within which a claim must be brought, which are dependent upon the cause of action. A claim in contract must be issued at court within 6 years of the date of the breach (s.5 Limitation Act 1980); an action in tort must be issued at court within 6 years of the date that damage is sustained; or within 3 years of the date of knowledge of the potential claim (s.14A Limitation Act 1980) and in any event, no later than 15 years from the date of the alleged negligent act (s.14B Limitation Act 1980). For the purposes of this claim, the court was concerned with s.2 and s.5 of the Limitation Act 1980.
Ms Holt brought a claim in Professional Negligence against Holley & Steer Solicitors which acted on her behalf in relation to divorce proceedings. Ms Holt claimed that the solicitor firm overvalued some of her personal assets which lead to her suffering significant loss in the court settlement. The final hearing took place over 4 days, the final date being 16 March 2012, a draft Judgment was circulated on 10th April 2012 and judgment was handed down on 30th May 2012.
Ms Holt issued her professional negligence claim on 5th April 2018 premised on both contract and tort.
The solicitor firm argued that Ms Holt’s claim was statute barred due to limitation and applied to the court for Summary Judgment. It was held at first instance, that the claim in contract was statute barred by virtue of s. 5 of the Limitation Act 1980 as time begins when the cause of action accrues (the breach of duty), but the claim in tort could proceed, as a cause of action in tort accrues only once damage is sustained. The solicitors appealed and were successful, the court determining that Ms Holt had no real prospect of succeeding in her claim and Summary Judgment was granted. Not to be put off, Ms Holt appealed to the Court of Appeal.
Ms Holt argued that loss was sustained when the final judgment was handed down, being 30th May 2012, and therefore her claim was not statue barred as it was properly brought with the 6-year period. Ms Holt sought to rely upon the argument that the Judge had a wide discretion in determining the division of assets and therefore her loss was contingent, sustained only when judgment was handed down.
The solicitors argued that Ms Holt’s perceived loss was measurable at the point the Judge was assessing the assets during the financial remedy hearings, the opportunity to adduce valuation evidence passing her by at that stage.
The court reviewed the leading authorities to establish when loss was sustained and in doing so provided refreshed guidance in determining when damage occurs. The question for the court to answer was at what point was Ms Holt financially worse off and had suffered measurable damage.
This was the first time the court had applied these principles in a claim of ‘lost litigation’, a claim where the value is reduced rather than extinguished entirely.
The court did not agree that this was a contingent liability claim as for it to be so, damage would not be measurable until the contingency occurred. Ms Holt had argued the contingency was the handing down of the judgment and therefore when damage was suffered. In producing valuation evidence Ms Holt had measured the loss, which could have been adduced by her solicitors during the ancillary relief proceedings. The Claimant’s loss was not contingent but measurable at the stage she lost the opportunity to adduce valuation evidence.
The court did not specify the precise date when loss was sustained, as it was not necessary to determine this claim, but did state the latest possible date loss occurred would have been the last day of the final hearing, being 16th March 2012, as that was the latest date upon which permission could have been sought to adduce valuation evidence.
Ms Holt has requested permission to appeal to the Supreme Court.