3M United Kingdom Plc & Anor v Linklaters & Paines

Under section 14A of the Limitation Act 1980, knowledge may include knowledge that a legally consequential state of affairs has caused damage. It is not always enough to know the underlying transactions or facts. The claimant must know, actually or constructively, the material facts about the damage and the facts connecting it to the defendant’s act or omission. In professional negligence cases, a claimant is not presumed to know that the defendant failed to take legally available steps to avoid the damage. Knowledge may be aggregated within a corporate claimant where the organisation would reasonably have brought the relevant information together. On the facts, the claimant obtained the necessary knowledge when its commercial lawyer identified the problem while reviewing a proposed deed of variation.

The claimants brought proceedings against their solicitors for negligent failure to preserve break options in leases assigned during a corporate restructuring. The negligence and resulting damage were admitted. The preliminary issue was whether the claim, treated as commenced on 1 September 1998 under a standstill agreement, was barred by section 14A of the Limitation Act 1980.

The parties differed on whether the starting date was 3 May 1989, when the assignments occurred, 30 August 1995, when the claimants’ lawyer identified the legal problem, or 25 September 1995, when the landlord expressly raised it.

1. Statutory approach. Section 14A requires knowledge of the material facts about the damage, the fact that the damage is attributable to the relevant act or omission, and the identity of the defendant. Knowledge that the conduct was negligent is irrelevant. The inquiry is broad and common-sense, directed to when the claimant could reasonably be expected to begin proceedings.
2. The relevant damage was the loss of the second claimant’s personal break option. The claimants therefore needed knowledge that the option was personal, that the leases had been assigned, that the assignment had caused the option to cease to be exercisable, and that the loss mattered to their property strategy. The loss was not an inevitable consequence of knowing only the first two facts, since competent solicitors might have taken steps to prevent that consequence.
3. The court distinguished ignorance of actionable negligence from ignorance of a damage-causing legal consequence. Section 14A(9) excludes ignorance of negligence as such, but it does not necessarily exclude ignorance of the legal consequence which constitutes the damage. The approach in HF Pension Trustees v Ellison was distinguishable because the claimant there knew that the relevant damage had occurred.
4. There was no sufficient actual knowledge attributable to the claimants on 3 May 1989. Nor was there a duty to maintain a special guide or to re-check the break options before the later property project. Properly stored title documents were sufficient.
5. By 30 August 1995, however, Mr Herd had examined the lease, recognised that the assignment had left the option exercisable only by the original tenant, and drafted amendments intended to cure the problem. His knowledge was attributable to the claimants. The three-year period therefore expired before the action was commenced. The claim was barred.

First-instance determination of a preliminary limitation issue. No appellate history is stated in the judgment.