British Telecommunications Plc v Luck & Ors

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.

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.

1. Appeal dismissed. The Master was correct to conclude that the tort claim was not shown to be time-barred on the pleaded facts.
2. 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.
3. 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.
4. 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.
5. 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.

• 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.