Biggs & Anor v Sotnicks (a firm) & Ors

Under section 32(1) of the Limitation Act, the question is whether the claimant could, through reasonable diligence, have discovered the fraud. The burden rests on the claimant. Reasonable diligence is assessed by reference to a person with adequate but finite resources and a reasonable, rather than excessive, sense of urgency.

A claimant has discovered enough when the available facts permit the claim in deceit to be pleaded. Further evidence need not be obtained merely to strengthen that pleading. If a former solicitor’s file is reasonably required, diligent enquiries include promptly tracing the responsible practitioners through their professional body and pursuing unanswered requests within months rather than years.

Elderly homeowners transferred their home to their son after a conveyancing executive allegedly represented that the arrangements protecting them were “airtight”. Their son mortgaged and later remortgaged the property, became bankrupt and left them exposed to possession proceedings. The homeowners alleged that the conveyancing executive had adopted their son’s fraudulent representations and was liable in deceit.

His Honour Judge Thompson QC dismissed the action as statute-barred by an order dated 22 February 2001. Permission to appeal was confined to the deceit claim. The central issue was when the homeowners had discovered, or could with reasonable diligence have discovered, the alleged fraud for the purposes of section 32(1) of the Limitation Act.

1. Appeal dismissed unanimously. Lady Justice Arden held that the claimants’ solicitors possessed sufficient information by 26 February 1991 to formulate the deceit claim which was eventually pleaded. Lord Justice Robert Walker agreed, and Lord Justice Aldous agreed with both judgments.

2. The solicitors then knew that the conveyancing executive had held himself out as a solicitor acting for the claimants and had described their protection as “airtight”. They also knew from the son that the property had in practice been purchased from his parents with mortgage money which had then been lent back to him. Those were the essential facts underlying the pleaded allegation that the executive had adopted or reinforced the son’s representations dishonestly or recklessly.

3. For the purpose of section 32(1) of the Limitation Act, the court examined the claim that had actually been pleaded. The claimants possessed sufficient facts to plead that case and seek to prove it before the critical limitation date. The conveyancing file was therefore unnecessary. The later discovery of material capable of strengthening the inference of dishonesty did not postpone the commencement of the limitation period.

4. Alternatively, if obtaining the conveyancing file had been necessary, reasonable diligence required the solicitors to seek it in February 1991, even if they were then considering only negligence. Since the original firm had ceased practising, they could have asked the Law Society for accurate information about the whereabouts of its former partners. If requests remained unanswered, reasonable diligence required pursuit and possible professional escalation within months, not years. The court rejected the submission that locating the file would inevitably have taken more than 26 months.

5. Lord Justice Robert Walker expressly declined to adopt Crane J’s suggested removal of “exceptional” from Millett LJ’s formulation in Paragon Finance v Thakerar & Co [1999] 1 All ER 400. The reference to exceptional measures formed part of the proposition that claimants must show that they could not have discovered the fraud without measures which they could not reasonably have been expected to take.

6. The court found it unnecessary to decide whether the statement of case adequately pleaded deceit. The appeal was dismissed with costs, subject to postponement of the determination of the claimants’ costs liability and suspension of payment until further order.

1. Court of Appeal (Civil Division): The appeal in [2002] EWCA Civ 272 was dismissed unanimously. Permission to appeal had been confined to the deceit claim.

2. High Court, Queen’s Bench Division: His Honour Judge Thompson QC, sitting as a deputy High Court judge, dismissed the action as statute-barred by an order dated 22 February 2001.