Graham v Entec Europe Ltd. (t/a Exploration Associates)

For limitation under the Limitation Act 1980, a nominal claimant suing in his own name on a subrogated claim is treated as having the knowledge of the insurer for whose benefit proceedings are brought. That knowledge may include knowledge held by a loss adjuster investigating and advising on the claim, whether employed by the insurer or independently instructed. There is no general rule postponing knowledge until a final expert report is delivered. The issue is fact-sensitive. An experienced loss adjuster may have the requisite knowledge from existing expert investigations, even while awaiting a further confirmatory report.

The claimant brought proceedings in July 2000 concerning allegedly negligent advice about remedial works for subsidence at his bungalow. The insurers sued in his name after becoming subrogated to his rights on payment of the insured loss. The remedial works had been completed in 1992, but further cracking subsequently appeared.

On a preliminary issue, HHJ Alton held that the claim was time-barred under section 14 A(4)(b) of the Limitation Act 1980. She found that the claimant personally lacked the relevant knowledge until receipt of a final expert report, but that the loss adjuster had acquired the necessary knowledge by November 1996 and that it should be attributed to the claimant. The appeal concerned whether the insurer’s and loss adjuster’s knowledge was relevant, and whether knowledge was postponed while a final expert report remained outstanding.

The Court of Appeal unanimously dismissed the appeal. Potter LJ gave the leading judgment. Chadwick LJ and Cresswell J agreed with his reasons, with Chadwick LJ adding that the loss adjuster had actual knowledge by November 1996.

1. Subrogated claims. Section 14 A(5) of the Limitation Act 1980 makes the relevant starting date the earliest date on which the plaintiff, or a person in whom the cause of action was previously vested, acquired the requisite knowledge. Subrogation vests the insurer with the insured’s rights and remedies on payment of the loss, although proceedings must be brought in the insured’s name. The statutory reference to the plaintiff therefore extends to a nominal plaintiff suing by way of subrogation. The relevant knowledge was that of the insurers.
2. Loss adjuster’s knowledge. Knowledge held by a loss adjuster investigating and advising on a claim for insurers for the purpose of pursuing a subrogated claim is treated as the insurers’ knowledge. There was no logical distinction between knowledge held by an insurer’s employee and knowledge held by an independent loss adjuster instructed for reasons of efficiency. The result did not depend on treating the loss adjuster as the claimant’s agent.
3. Expert evidence. No general rule postpones knowledge until delivery of a final expert report. The observations in Nash v Eli Lilley & Co [1993] 4 All ER 395 and Spargo v North Essex District Health Authority [1997] PIQR 235, concerning inexperienced personal-injury claimants and the insufficiency of mere belief or suspicion, did not assist in determining the knowledge of an experienced loss adjuster.
4. Application. The judge was entitled to find that Mr Handford knew the material facts concerning the damage, its attribution to the defendants and the defendants’ identity by November 1996. The outstanding report was not expected to negate the conclusions already available. Chadwick LJ regarded this as actual knowledge, so section 14 A(10) was not engaged. The appeal was dismissed with costs here and below.

• Court of Appeal (Civil Division): In [2003] EWCA Civ 1177, the court unanimously dismissed the appeal and ordered costs here and below.
• Lower court at Birmingham: On 24 January 2003, HHJ Alton, sitting as a High Court Judge, held on a preliminary issue that the claim was time-barred under section 14 A(4)(b) of the Limitation Act 1980.