St Anselm Development Company Ltd v Slaughter and May (A Firm)

In a professional-negligence claim concerning separate transactions, a solicitor’s duty and cause of action may arise independently for each transaction, even where the transactions involve the same legal issue and earlier advice. Advice given on one transaction does not discharge the solicitor’s continuing duty in relation to another.

For the extended limitation period under Limitation Act 1980, knowledge that advice may be flawed is sufficient; knowledge of negligence is unnecessary. The claimant must know, actually or constructively, the material facts about the damage and that the damage is attributable to the relevant act or omission. Knowledge may exist where the facts provide a real possibility of loss caused by the advice and justify further investigation.

St Anselm appealed against Master Teverson’s summary dismissal of its negligence claim against its solicitors. The claim concerned advice given during the statutory extension of leases of two flats under Part I of Chapter II of the Leasehold Reform, Housing and Urban Development Act 1993.

St Anselm alleged that the solicitors wrongly advised that the detailed terms of the replacement leases did not need close scrutiny. The new leases omitted provisions allowing recovery of a proportion of the headlease ground rent, and St Anselm alleged that equivalent provisions or compensation should have been secured.

The issues were whether the claims concerning the two flats constituted one cause of action for limitation purposes, and whether the claim concerning the first flat qualified for the extended limitation period under section 14A of the Limitation Act 1980.

1. Disposition. The appeal was allowed in relation to the primary limitation period for the claim concerning flat 26, but dismissed in relation to the application of section 14A to the claim concerning flat 27.
2. The solicitors were instructed separately in respect of each lease. Their duty was to exercise reasonable skill and care to protect the claimant’s interests in relation to each lease. The duty concerning flat 26 continued independently of the advice previously given concerning flat 27. Approval of the first lease did not discharge the duty concerning the second lease.
3. The alleged failure in June 1999 to identify the absence of an indemnity provision in the draft lease for flat 26 was capable of constituting a separate breach. The fact that proper performance might also have prevented loss concerning flat 27 did not convert the duty concerning flat 26 into a duty concerning both flats. The cause of action concerning flat 26 was not complete until agreement was reached on that lease in November 1999. The claimant therefore had a real prospect of showing that this part of the claim was within the primary six-year period.
4. Under section 14A of the Limitation Act 1980, the claimant needed knowledge of the material facts about the damage and knowledge that the damage was attributable in whole or in part to the relevant act or omission. Knowledge that the advice might be flawed was sufficient; knowledge that it was negligent was not required. The degree of knowledge had to exceed mere suspicion, but need only establish a real rather than fanciful possibility warranting further investigation.
5. By December 1999 the claimant knew, or constructively knew, that it could not recover the relevant proportion of the headlease ground rent from the tenant. That knowledge gave reasonable cause to question the earlier advice and to appreciate that the loss might have resulted from the solicitors’ acts or omissions. The claimant also knew or ought reasonably to have known that the loss might be sufficiently serious to justify proceedings, having regard to the forthcoming rent review. The extended limitation period was therefore unavailable for the claim concerning flat 27.

• High Court (Chancery Division): On appeal from Master Teverson, the court allowed the appeal concerning the primary limitation period for flat 26, but dismissed the appeal concerning section 14A and flat 27.
• Master Teverson: Summarily dismissed the claim under CPR Part 24 as time-barred.