Haward and others (Respondents) v. Fawcetts (a firm) (Appellants) and others

Under section 14A of the Limitation Act 1980, time begins when a claimant knows enough to make it reasonable to investigate whether damage is attributable to the factual essence of the defendant’s alleged act or omission. Certainty, detailed particulars and knowledge of a worthwhile claim are unnecessary.

The claimant must know there is a real possibility that the damage is attributable, at least partly, to the relevant conduct. Mere “but for” causation is insufficient, but knowledge that the conduct amounted in law to negligence is irrelevant.

A claimant relying on the extended three-year period bears the burden of proving that the requisite knowledge arose within that period.

Haward and others v Fawcetts concerned investments made in reliance on advice from the appellants, a firm of accountants. The investments included £160,000 in 1994 and £431,000 in 1995. The acquired company suffered persistent losses and required much larger cash injections than had originally been expected.

The claimants commenced contractual and tortious professional-negligence proceedings on 6 December 2001. Fawcetts contended that claims relating to investments before 6 December 1995 were barred by the ordinary six-year period. The claimants relied on the alternative three-year period under section 14A of the Limitation Act 1980.

HHJ Playford QC determined the preliminary limitation issues in Fawcetts’ favour. The Court of Appeal allowed the claimants’ appeal: [2004] EWCA Civ 240. The central issue before the House was when the claimants had actual knowledge that their losses were attributable, in whole or part, to the acts or omissions alleged to constitute negligence.

1. Appeal allowed unanimously. Lord Nicholls delivered the leading speech. Lord Scott, Lord Walker, Lord Brown and Lord Mance each gave reasons for reaching the same result. The order of HHJ Playford QC on the preliminary limitation issues was restored.

2. Per Lord Nicholls, the knowledge required by section 14A of the Limitation Act 1980 is knowledge sufficient to make it reasonable for the claimant to begin investigating whether there is a claim. Reasonable belief normally suffices; certainty is unnecessary. The claimant need not possess enough information to plead a fully particularised case.

   The claimant must know, in broad terms, the factual essence of the conduct complained of. Detailed knowledge of how or why a professional failed to perform the relevant duty is unnecessary. The approach in Hallam-Eames v Merrett Syndicates Ltd [2001] Lloyd's Rep PN 178 was accepted and applied.

3. Per Lord Nicholls and Lord Mance, “attributable” requires knowledge of a real possibility that the damage was caused, at least partly, by the act or omission alleged to constitute negligence. The conduct must be causally relevant to the complaint; mere “but for” causation is insufficient. Knowledge that the conduct amounted in law to negligence, involved fault or gave rise to a worthwhile cause of action is irrelevant under section 14A(9).

   Language suggesting that advice was “flawed” or that something had gone wrong may describe the relevant facts compendiously. Its use does not necessarily import the legally irrelevant conclusion that the defendant was negligent.

4. Per Lord Scott, Lord Walker and Lord Brown, the relevant damage was the loss-making investment, rather than the eventual failure of the acquired company. Mr Haward knew the investments had been made in reliance on Fawcetts’ advice and knew by the material date that the money was lost. Other possible causes of the company’s failure did not prevent the losses from being capable of attribution in part to the advice.

5. Per Lord Nicholls and Lord Mance, the claimants bore the burden of proving that Mr Haward lacked the requisite knowledge before 6 December 1998. Their evidence addressed when he first learned that he might possess a legal claim, rather than the earlier point at which it became reasonable to investigate the possibility that Fawcetts’ advice was defective. The marked disparity between the advice and the disastrous outcome was apparent long before the material date. The claimants therefore failed to discharge their burden.

1. House of Lords: The appeal was allowed unanimously: [2006] UKHL 9. The Court of Appeal’s order was set aside and the order of HHJ Playford QC was restored.
2. Court of Appeal: The claimants’ appeal was allowed on 11 March 2004. The court held that they had not acquired the requisite actual knowledge before 6 December 1998: [2004] EWCA Civ 240.
3. First instance: On 15 April 2003, HHJ Playford QC determined the preliminary limitation issues in favour of Fawcetts. The issues had been directed for preliminary trial by Master Leslie.