Khan v Falvey

In a negligence claim, time begins to run when the claimant first sustains real, relevant and measurable damage. Later worsening of the same damage does not create a fresh cause of action.

Where a solicitor’s delay leaves underlying proceedings vulnerable to strike-out, damage may arise before an actual strike-out. A claimant’s right of action may have substantially diminished, or become valueless, once the delay makes strike-out a serious risk or inevitable. Hopkins v Mackenzie [1995] PIQR 43 is confined to a claim based solely on the residual value lost on the actual strike-out. It does not postpone limitation where the pleaded loss includes an earlier diminution in the value of the underlying claim.

The claimant sued his former solicitor for alleged professional negligence in the conduct of several earlier actions. The claim form was issued on 2 June 1999. The preliminary issue was whether causes of action in tort were barred by section 2 of the Limitation Act 1980.

McKinnon J held that the claims were not statute-barred because the underlying actions had been struck out within six years of the new claim. He considered himself bound by Hopkins v Mackenzie [1995] PIQR 43.

The appeal concerned claims relating to two earlier actions and a head of loss in a third. The central issue was whether loss arose when the underlying proceedings became amenable to strike-out for want of prosecution, or only when they were actually struck out.

1. Appeal allowed. Sir Murray Stuart-Smith, Chadwick and Schiemann LJJ agreed that the judge had treated Hopkins v Mackenzie too broadly. The claims concerning cases 1 and 3, and the case 4 claim for lost rent on a re-letting, were statute-barred.

2. A negligence cause of action accrues when the claimant first suffers actual damage. Actual damage is a detriment, liability or loss capable of monetary assessment, provided that it is relevant to the measure of damages for the alleged wrong. It must be real rather than minimal. A later increase in, or more precise quantification of, the loss does not start time running afresh.

3. The court held that an actual strike-out is not a necessary condition of a claim against a negligent solicitor. Where delay has left the underlying proceedings vulnerable to strike-out, the claimant’s chose in action may already have substantially diminished in value. In cases 1 and 3, the pleadings alleged that the respective claims had been amenable to strike-out from 1990 and 1992. On that pleaded basis, the opportunity to pursue them had become valueless before the relevant limitation date.

4. Hopkins v Mackenzie was explained as applying where the only pleaded loss is the loss, on the actual strike-out, of the residual right to pursue the earlier proceedings. It does not assist a claimant who relies on the earlier diminution in the value of the underlying claim. If it purported to deny that damage can arise before an actual strike-out in such circumstances, the court considered that approach inconsistent with Nykredit Mortgage Bank plc v Edward Erdman Group Ltd (No 2) [1997] 1 WLR 1627.

5. The remaining heads of claim in case 4 could not be determined on the pleaded material. The court did not strike them out under the Civil Procedure Rules 1998 without first giving the parties an opportunity to make submissions or seek permission to re-amend.

• Court of Appeal (Civil Division): Appeal allowed. The court held that the identified claims were barred by section 2 of the Limitation Act 1980.
• Queen’s Bench Division (McKinnon J): On a preliminary issue, held that the claimant’s tort claims were not statute-barred, treating Hopkins v Mackenzie [1995] PIQR 43 as determinative.