Trilogy Management Ltd v Harcus Sinclair (a firm)

For limitation purposes, deliberate concealment of a breach of duty requires deliberate wrongdoing: an intentional act or omission which the defendant knew to be wrongful. It is insufficient that the defendant intentionally committed an act which happened to breach a duty of care. A claim relying on concealment must plead the defendant’s awareness of the wrongfulness.

A claim alleging inaccurate documentation under an agreed compromise is distinct from a claim alleging that solicitors acted without their client’s instructions. After expiry of the limitation period, a new claim may be added where it arises from the same or substantially the same facts, subject to any limitation defence that would have been available in fresh proceedings.

Harcus Sinclair applied to strike out Trilogy Management’s claim or obtain summary judgment on the basis that claims arising from the drafting of an amendment to Article 96 of the articles of Jan Yee International Limited were statute-barred. Trilogy alleged that the solicitors had reduced an agreed mandatory dividend by inserting the words “of that year”, and had breached duties owed to the relevant trusts and beneficiaries.

Trilogy relied on the extended limitation provisions concerning latent damage and deliberate concealment. It also relied on its Reply, which alleged that the amendment had been made without instructions from the directors of the trustee company. The central issues were whether the pleaded concealment case was sufficient, whether the original claim had no real prospect of overcoming limitation, and whether the without-instructions allegation constituted a distinct cause of action that could be added by amendment.

1. The application was adjourned for 28 days to enable Trilogy to serve proposed amended Particulars of Claim and apply formally for permission to amend.

2. Under section 32(2) of the Limitation Act 1980, deliberate commission of a breach of duty requires deliberate wrongdoing. The defendant must have intentionally acted or omitted to act while aware that the conduct was wrongful. Trilogy had not pleaded that the alleged insertion of the words “of that year”, or the failure to warn the relevant parties, was done with knowledge of wrongfulness. The omission could be cured by amendment.

3. Nevertheless, the claim as pleaded in the Particulars of Claim had no real prospect of defeating limitation. Four of the five matters identified by Trilogy as necessary knowledge were known before the expiry of six years. The remaining matter was the physical responsibility of Harcus Sinclair for making or circulating the drafting change. The available correspondence showed that this responsibility could have been discovered with reasonable diligence within the ordinary limitation period.

4. The court rejected the submission that the allegation in paragraph 28 of the Reply was merely a subset of the existing claim. An allegation that solicitors failed to produce accurate documentation under a binding compromise was distinctly different from an allegation that they produced a document without instructions from their client. The distinction was supported by Senior v Pearson & Ward [2001] EWCA Civ 229, and by the approach in Darlington Building Society v O’Rourke James Scourfield & McCarthy [1999] PNLR 365.

5. The proposed new claim arose from the same or substantially the same facts already in issue. Under section 35(5) of the Limitation Act 1980 and CPR 17.4(2), the court therefore had power to permit amendment after expiry of the limitation period. Trilogy had an arguable case that it could not reasonably have discovered until disclosure in the Jersey proceedings that Harcus Sinclair had acted without instructions. Any amendment would be subject to Harcus Sinclair’s entitlement to raise the limitation defence available if fresh proceedings had been issued on the amendment date.

First-instance application in the High Court. The application was adjourned for 28 days for proposed amended Particulars of Claim and a formal application for permission to amend.