Gravgaard v Aldridge & Brownlee (A Firm)

Under section 14A of the Limitation Act 1980, knowledge that damage is attributable to an alleged act or omission requires facts causally relevant to an allegation of negligence. It does not require knowledge that the conduct was legally negligent.

Constructive knowledge may arise where it was reasonable for the claimant to seek expert advice and the relevant facts would have been discovered through that advice. An investigation prompted by one potential claim may reveal a different claim. Reasonableness is objective but takes account of the external circumstances and characteristics of a person in the claimant’s position, excluding peculiar characteristics made irrelevant by the objective test.

The appellant sued a firm of solicitors for negligently advising her during a 1988 remortgage that her solely owned home had to be transferred into the joint names of herself and her husband. The transfer exposed her husband’s share to his creditors. The solicitors admitted that the required core minimum advice had not been given.

Mr Recorder Coleman in Bournemouth County Court dismissed the claim as statute-barred under section 14A of the Limitation Act 1980. He held that the appellant might reasonably have been expected to obtain expert advice by the end of 1996, more than three years before proceedings began in May 2002.

The central issue on appeal was when the appellant had, or was to be treated as having, the knowledge required to start the extended three-year limitation period.

1. The appeal was dismissed. Lady Justice Arden gave the leading judgment. Mrs Justice Black and Lord Justice May agreed.

2. For actual knowledge under section 14A, the claimant had to know material facts about the damage and facts making it attributable to the act or omission alleged to constitute negligence. “Attributable to” did not import a legal test of causation. Nor did the claimant have to know why the relevant act was negligent, because section 14A(9) made knowledge of negligence in law irrelevant.

3. The appellant did not have actual knowledge merely because she knew in 1988 that transferring the property into joint names exposed her husband’s share to his creditors. She still believed that the building society had required the transfer. She therefore lacked the additional information connecting that consequence to advice by the solicitor which could constitute wrongful advice. Hallam-Eames v Merrett Syndicates was applied on the need for knowledge that was causally relevant to an allegation of negligence.

4. The appellant nevertheless had constructive knowledge. By November 1988 she faced a serious threat to the family home, believed she had a claim against the bank and had been prevailed upon to grant a further guarantee and charge. It was reasonable to expect her to obtain legal advice. The bank transactions were so intimately connected with the earlier deed of gift and mortgage that a solicitor investigating the bank claim would also have investigated the earlier advice.

5. Section 14A(10) was not confined to facts concerning the particular claim which prompted the request for advice. Its language covered relevant facts discovered while an expert investigated another claim. Because the appellant had failed to obtain advice, facts ascertainable with appropriate expert assistance were attributed to her. The court would not assume, without an evidential foundation, that the adviser would necessarily have given inadequate advice.

6. The inquiry under section 14A(10) was objective, but external circumstances and characteristics of a person in the claimant’s position were relevant. Peculiar characteristics rendered irrelevant by the objective standard were excluded. The appellant’s actual belief that she had a claim against the bank could be considered even if that belief was legally unfounded. Alternatively, the bank’s December 1996 letter expressly put her on notice of a possible claim against the solicitor, making it reasonable to seek advice by then.

• Court of Appeal (Civil Division): The appeal was dismissed unanimously in [2004] EWCA Civ 1529. The court upheld the conclusion that the negligence claim was statute-barred, although it placed greater emphasis on the events of autumn 1988.
• Bournemouth County Court: Mr Recorder Anthony Coleman dismissed the action on 29 April 2004. He held that the claimant had constructive knowledge under section 14A of the Limitation Act 1980 by no later than the end of 1996.