Polley v Warner Goodman & Streat (a firm)

In a negligence claim against solicitors, limitation runs from the claimant’s first real and compensable damage caused by the breach. Damage may arise before the loss is finally crystallised or quantified. Where solicitors fail to serve proceedings within time, and an application to extend service would have been bound to fail for want of good reason, the claimant suffers actionable loss by the expiry of the service period. It is unnecessary to await an order striking out or otherwise terminating the underlying claim. A claimant cannot avoid limitation by relying only on later damage when damage from the same wrongful act occurred earlier.

The appellant claimed damages for negligence and breach of contract against former solicitors who had issued personal injury proceedings but failed to serve the summons within the prescribed period. An ex parte extension of time was later set aside because no good reason for the extension had been shown. The appellant then brought proceedings against the solicitors.

At Portsmouth County Court, His Honour Judge Thompson QC held on a preliminary issue that the claim was time-barred and gave judgment for the respondents. The contractual claim was accepted to be out of time. The central issue on appeal was whether the tortious cause of action accrued when the extension was set aside or earlier, when the time for service expired.

Appeal dismissed unanimously. Clarke LJ gave the leading judgment. Auld LJ agreed with the result on closely related reasoning, and the Lord Chief Justice agreed with both judgments.

1. Accrual of damage. A cause of action in negligence accrues when the claimant suffers real, non-minimal damage caused by the negligent act or omission. Actual damage includes a detriment, liability or loss capable of monetary assessment, including contingent liability. The loss must be relevant to the applicable measure of damages. Difficulty in quantifying or crystallising the loss does not postpone the occurrence of damage. These principles were drawn from Hatton v Chafes [2003] EWCA Civ 341, Cartledge v Jopling [1963] AC 758, Forsted v Outred [1982] 1 WLR 86, Nykredit Mortgage Bank plc v Edward Erdman Group Ltd No 2 [1995] 1 WLR 1627 and Khan v Falvey [2002] EWCA Civ 400.
2. Application to failed service. A claimant cannot avoid limitation by pleading only later damage where damage from the same wrongful act occurred earlier. The relevant test for extending time for service under the Rules of the Supreme Court Order 6, rule 8, and the corresponding County Court Rules, required good reason for non-service. Full legal aid was available before expiry. The existing medical report was sufficient to permit service, and the later report added nothing significant that could not be corrected subsequently. Avoiding additional expense or piecemeal litigation was not good reason.
3. The application to set aside the extension was therefore bound to succeed. Clarke LJ held that actionable loss, and hence accrual of the tortious cause of action, occurred on or about 24 September 1993, when the service period expired. Auld LJ considered that damage arose when the first District Judge wrongly granted the extension. Both analyses placed the damage well before 14 April 1994 and made the tort claim time-barred.
4. The court did not decide whether the broader “doomed to failure” test was necessarily correct. It was unnecessary to decide that question because the application to set aside was bound to succeed on the facts.
5. The appeal was dismissed with costs. The costs order was not enforceable without permission of the court, and the appellant’s costs were subject to Legal Services Commission assessment.

• Court of Appeal (Civil Division): In [2003] EWCA Civ 1013, the appeal against the limitation judgment was dismissed with costs.
• Portsmouth County Court: His Honour Judge Thompson QC held on 23 October 2002 that the proceedings were time-barred. The order was later varied on 11 November 2002 to record judgment for the respondents on the preliminary limitation issue.