Summary
In a negligence claim involving economic loss, the date on which actual damage occurs is fact-sensitive. There is no hard and fast rule that a claimant suffers damage when induced to enter a transaction which would otherwise have been avoided, or merely because the transaction exposes the claimant to a risk of future loss. The court must examine the claimant’s legal position, assets, rights and liabilities, and determine when the claimant became financially worse off. A contingent vulnerability may amount to detriment without amounting to actual damage. Where the claimant’s legal rights and pension assets remain unchanged until a later event, damage may arise only when those rights are altered and the loss becomes measurable.
Factual background
Former employees of British Telecommunications Plc (“BT”) were transferred to the employment of e-peopleserve Ltd. in August 2000. They alleged that BT had fraudulently or negligently represented that their employment and pension position would remain protected indefinitely. After BT left the joint venture, the claimants ceased to participate in BT’s pension scheme on 31 August 2002 and entered a less advantageous replacement scheme.
The claimants commenced proceedings on 27 August 2008. Master Leslie struck out the contractual claim as time-barred but refused to strike out the tort claim and struck out BT’s limitation defence to that claim. BT appealed, arguing that damage occurred when the claimants transferred to e-peopleserve in August 2000. The central issue was when actual damage was suffered for limitation purposes.
Held
- Appeal dismissed. The Master was correct to conclude that the tort claim was not shown to be time-barred on the pleaded facts.
- The authorities, including Law Society v Sephton [2006] 2 AC 543, Shore v Sedgwick Financial Services [2008] PNLR 874, Pegasus Management Holdings v Ernst & Young [2010] PNLR 438 and Axa Insurance v Akther & Darby [2010] 1 WLR 1662, establish no universal answer. Whether economic damage has occurred depends on the particular facts.
- The possibility or risk of future loss can constitute actual damage in an appropriate case. However, there is no presumption that a claimant suffers damage merely because negligence caused entry into a transaction which would otherwise have been avoided, or because the claimant did not receive what was expected.
- On the pleaded facts, the claimants’ contractual rights and pension membership remained unchanged when they transferred from BT to e-peopleserve. Although the transfer exposed them to vulnerability and a likely future loss, it was not then possible to identify which employees would suffer loss or to say that their pension assets had depreciated. The actual loss arose when they were removed from the BT scheme and moved into the less advantageous replacement scheme on 31 August 2002.
- The policy of bringing parallel contractual and tortious causes of action into closer alignment, identified in Nykredit Mortgage Bank v Edward Erdman [1997] 1 WLR 1627, could not displace the requirement for actual and measurable damage in tort. The issue under section 32 of the Limitation Act 1980 was unnecessary to decide.
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Appellate history
- High Court (Queen’s Bench Division) — On appeal from Master Leslie, BT’s appeal against the refusal to strike out the tort claim and the limitation defence was dismissed. The issue under section 32 of the Limitation Act 1980 was left undecided.
Key cases cited
8 authorities cited.
- Law Society (Original Respondents and Cross-appellants)v.Sephton & Co (a firm) (Original Appellants and Cross-respondents) and another and others (Original Appellants and Cross-respondents) [2006] UKHL 22
- Nykredit Mortgage Bank plc v Edward Erdman Group Ltd (formerly Edward Erdman) (No 2) [1997] 1 WLR 1627
- Pegasus Management Holdings SCA & Anor v Ernst & Young (A Firm) & Anor [2010] EWCA Civ 181
- Axa Insurance Ltd v Akther & Darby Solicitors & Ors [2009] EWCA Civ 1166
- Axa Insurance v Akther & Darby [2009] PNLR 455
- Shore v. Sedgwick Financial Services Ltd [2008] PNLR 874
- Gordon v JB Wheatley [2000] LRPN 605
- First National Commercial Bank Plc. v. Humberts (a firm) [1995] 2 All ER 673
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Cases citing this case
1 later case · 1 negative
Most senior citing decisions:
- Su (aka Hsin Chi Su, Su Hsin Chi And Nobu Morimoto) v Clarksons Platou Futures Ltd & Anor [2017] EWHC 337 (Comm) not followed
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