Haward & Ors v Fawcetts (A Firm) & Anor

Under the extended limitation regime in the Limitation Act 1980, a claimant need not know that the defendant was legally negligent. The claimant must, however, know the facts identifying the defendant’s act or omission which is causally relevant to the negligence allegation. Knowledge that money was paid, loss occurred, or advice was relied upon may be insufficient where there are competing possible causes. The constructive-knowledge issue requires factual investigation and cannot ordinarily be resolved on appeal where it was not argued or tried below.

The appellants claimed damages from Fawcetts, their accountants, for negligence and breach of contractual duty in connection with the acquisition and subsequent financing of an agricultural machinery company. Proceedings were issued on 6 December 2001. Fawcetts pleaded that losses arising before 6 December 1995 were statute-barred.

The appellants relied on section 14A of the Limitation Act 1980, arguing that Mr Haward did not acquire the required knowledge until after 6 December 1998. HHJ Playford QC decided the preliminary limitation issue in Fawcetts’ favour. The central questions were whether Mr Haward had actual knowledge of the relevant attribution facts before that date and, alternatively, whether he had constructive knowledge.

The appeal was allowed unanimously. The preliminary limitation issue was determined in the appellants’ favour, subject to the unresolved question of constructive knowledge.

1. Section 14A distinguishes knowledge of facts from knowledge of law. The claimant must know the material facts about sufficiently serious damage and that the damage was attributable to the act or omission alleged to constitute negligence. Knowledge that the act or omission was negligent is irrelevant.
2. Attributability means that the damage is capable of being attributed to the relevant act or omission. It does not extend to every factor which played some part in the events. The act or omission must be causally relevant to the negligence allegation. The claimant must know the broad facts constituting the complaint, but need not know how those facts amount to negligence. The Court applied the reasoning in Hallam-Eames & ors v Merrett Syndicates & ors [2001] Lloyds LR 178, and distinguished cases such as Bradstock Trustee Services Ltd v Nabarro Nathanson [1995] 4 All ER 888 and HF Pension Trustees v Ellison [1999] Lloyds Rep PN 489, where there were no competing possible causes.
3. On the evidence, Mr Haward knew of the payments and the losses, but there were several possible causes of the Company’s failure, including matters concerning Mr Brunt. The judge therefore erred in treating the causal connection with Fawcetts’ advice or non-advice as obvious. The only permissible finding was that knowledge of the causally relevant acts or omissions arose no earlier than May 1999.
4. Constructive knowledge under section 14A(10) had not been argued or investigated before the judge. There had been no relevant cross-examination or findings. The Court could not determine that issue on appeal.

The appeal was allowed with costs assessed on the standard basis. Costs below were costs in the action. The sum paid into court was to be returned with interest, £15,000 was payable on account of the respondents’ costs, and leave to appeal was refused.

1. Court of Appeal (Civil Division): allowed the appeal and determined that the appellants had not acquired the requisite actual knowledge before 6 December 1998. The constructive-knowledge issue was left unresolved.
2. High Court, Queen’s Bench Division: HHJ Playford QC decided the preliminary limitation issue for Fawcetts and barred claims relating to damage before 6 December 1995.