Daniels v Thompson

A negligence claim accrues when the claimant first suffers measurable damage. Where a client enters an inadequate transaction because of negligent professional advice, uncertainty about future consequences ordinarily affects quantification rather than accrual.

However, inheritance tax arising only on death is a loss of the estate, not of the deceased client. If the client suffered any loss from an ineffective lifetime tax-planning transaction, it occurred when she transferred the property without securing the intended tax advantage. If no damage occurred before death, no cause of action in tort vested in her and none survived for her estate under the Law Reform (Miscellaneous Provisions) Act 1934.

The claimant, as executor and sole beneficiary of his mother's estate, sued the solicitor who had advised her to give him her home as part of an inheritance tax-planning arrangement. The solicitor allegedly failed to advise that her continued rent-free occupation would constitute a reservation of benefit. On her death, the property was treated as part of her estate and inheritance tax of £30,980.80 was paid.

Walsall County Court held that the contractual and tortious claims were statute-barred and that section 14A of the Limitation Act 1980 did not assist. The claimant appealed only against the finding that the tort claim accrued when the gift was made. During the appeal, he also sought permission to plead a duty owed to him as personal representative.

1. Appeal dismissed. On the pleaded and assumed case that the deceased suffered damage, that damage occurred when she transferred the property without taking the steps required to secure the intended inheritance tax advantage. The uncertainty whether tax would eventually become payable concerned the quantification of loss rather than its existence. The claim was therefore brought more than six years after accrual.
2. The inheritance tax liability claimed as damages was not, in truth, a loss which the deceased could suffer. Liability arose only on death and burdened the estate. Frustration of her wish to reduce the tax payable by her estate was not itself detriment capable of assessment in money. The pleaded claim based on breach of the duty owed to her was therefore inherently defective.
3. If no relevant damage arose until after death, no complete cause of action in tort had vested in the deceased when she died. Section 1(1) of the Law Reform (Miscellaneous Provisions) Act 1934 preserves only causes of action vested at death. Section 1(4) extends protection where a tortfeasor dies before damage occurs, but contains no equivalent extension for a potential claimant.
4. The personal representative suffered no separate recoverable loss merely because section 200(1)(a) of the Inheritance Tax Act 1984 imposed liability for the tax on him as personal representative. That liability was limited to estate property received and the tax formed part of the estate's general expenses.
5. Permission to amend was refused. The proposed personal-representative claim had no real prospect of materially assisting the case. Dyson LJ also considered the application too late and disproportionate after trial of the preliminary issue and substantial appellate argument. Carnwath LJ and Gray J agreed that the proposed claim lacked a real prospect of success.
6. The court also refused to reopen argument after circulation of draft judgments. That jurisdiction should be exercised sparingly where justice requires it, and further argument here would have been disproportionate.

1. Court of Appeal (Civil Division): The appeal was dismissed and permission to amend the particulars of claim was refused: [2004] EWCA Civ 307.
2. Walsall County Court: His Honour Judge Rundell held that the contractual and tortious causes of action accrued in August 1989, that both were statute-barred, and that section 14A of the Limitation Act 1980 did not assist. The claimant appealed only the ruling on accrual of the tort claim.