Maharaj and another v Johnson and others

In a professional-negligence claim involving a defective conveyance, limitation runs from actual damage, not discovery of the breach. The court must distinguish a no transaction case, where loss is measured against not entering the transaction, from a flawed transaction case, where it is measured against the value of the transaction that should have occurred. A flawed transaction does not automatically establish damage at entry. The particular facts must show a measurable reduction in value, and contingent risk alone is insufficient. Failure to convey legal title can cause immediate damage where it creates significant risks, impairs borrowing or sale, and requires third-party cooperation to cure. A continuing contractual duty cannot be manufactured to avoid limitation where solicitors wrongly perform a completed retainer rather than fail to perform an outstanding task.

Mr and Mrs Maharaj instructed solicitors in 1985 to acquire good marketable title to land. A 1986 conveyance executed under a power of attorney allegedly gave them equitable ownership but no legal title. Title concerns emerged in February 2008, after which a proposed sale failed and a deed of rectification was executed.

The claimants sued in negligence in 2012. Rajkumar J struck out the claim as time-barred under section 5 of the Limitation of Personal Actions Ordinance, and the Court of Appeal dismissed their appeal. Before the Board, the claimants argued that damage arose only in 2008 and sought permission to amend their claim to allege a continuing contractual duty. The central issues were when damage occurred in tort and whether the proposed contractual claim was arguable.

The majority judgment was delivered by Lord Wilson, with Lady Hale, Lord Carnwath and Lord Hodge agreeing. Lord Clarke dissented on the proposed contractual claim.

1. Tort and limitation. The cause of action in negligence accrued when the claimants suffered actual damage. The four-year period under section 5 of the Limitation of Personal Actions Ordinance therefore began in 1986, not when the defect was discovered in 2008.
2. Nature of the transaction. The case was an obvious flawed transaction case. The claimants had entered into a transaction which, absent the solicitors’ breach, would have been an analogous transaction conveying legal title. It was not a no transaction case. The applicable inquiry was whether the value of the equitable interest actually received was measurably less than the value of the full legal and equitable interest that should have been received. The distinction was treated as a helpful sign-post, not a substitute for analysing the facts.
3. Actual damage. The fact that a transaction was flawed did not itself establish damage on entry. The relevant inference had to be drawn from the particular facts. Here, failure to obtain legal title exposed the claimants to significant risks, was likely to obstruct borrowing or sale, and could not be remedied without the cooperation of Mrs Lambert. Those risks generated an immediate and quantifiable reduction in value. The loss was not merely contingent. The tort claim was therefore time-barred.
4. Contract. The proposed continuing-duty claim was not arguable. The solicitors had purported to complete the retainer, had been paid, and had closed their file. The complaint concerned negligent performance of the conveyance, not simple non-feasance in leaving an outstanding contractual task incomplete. There was no express or implied obligation to procure a later deed of rectification, particularly as that required a third party’s participation.
5. Dissent. Lord Clarke agreed that the tort claim was time-barred. He considered that a retainer requiring performance of a task capable of later completion could create a continuing contractual obligation until performance became impossible. He would have permitted amendment because the proposed claim was arguable and arose from the same facts. The appeal was dismissed by the majority, subject to costs submissions within 28 days.

• Privy Council. The majority dismissed the appeal and ordered the claimants, subject to submissions within 28 days, to pay the defendants’ costs.
• Court of Appeal of the Republic of Trinidad and Tobago. On 4 March 2013, the court dismissed the claimants’ appeal against the strike-out order.
• High Court. On 8 February 2013, Rajkumar J struck out the claim as barred by limitation.