Capita ATL Pension Trustees Ltd & Ors v Sedgwick Financial Services Ltd & Ors

On a summary judgment application, the court must decide whether the claim has a realistic, rather than fanciful, prospect of success without conducting a mini-trial. Where a material issue is factual and may be affected by oral evidence or cross-examination, final judgment should ordinarily be withheld.

A novation requires the agreement of all relevant parties and may be inferred objectively from conduct. For limitation under section 14A of the Limitation Act 1980, knowledge includes knowledge of the material damage, its attribution to the alleged negligence and the defendant’s identity. Knowledge of negligence as a legal conclusion is unnecessary. Constructive knowledge may arise from facts reasonably ascertainable without specialist legal advice.

Under section 14B, the limitation period runs from the relevant negligent act or omission, and losses attributable to acts outside the 15-year period are time-barred.

The claimants, trustees of an occupational defined benefit pension scheme, sued professional advisers for negligence concerning intended amendments to the scheme’s governing documentation in 1994 and 2002. The amendments were alleged to have failed to equalise retirement ages and alter benefit and contribution provisions effectively.

The defendants sought summary judgment on two issues. First, the first defendant contended that it had been replaced by the second defendant through novation. Secondly, the second defendant argued that the claims were barred by sections 14A and 14B of the Limitation Act 1980.

The court therefore considered whether the novation issue required a trial, when the trustees acquired the statutory knowledge necessary for section 14A, and which acts or omissions fell outside section 14B’s 15-year period.

1. Summary judgment and novation. The novation issue involved disputed questions of fact, including whether a December 1993 letter had been sent and received and what the parties objectively understood from subsequent conduct. Although the documentary evidence supported the defendants’ case in several respects, the surrounding evidence was mixed. Oral evidence and cross-examination might materially affect the outcome. The claimants therefore had a realistic prospect of success, and summary judgment was refused on the novation and termination issues.
2. A novation requires agreement by the original parties and the incoming party. It may be express or inferred from conduct, and the question is judged objectively. The court found that the second defendant had acted as principal rather than as the first defendant’s agent, but this did not resolve whether a novation had occurred.
3. Section 14A. The relevant knowledge comprised knowledge of the material facts about the damage, knowledge that the damage was attributable in whole or part to the alleged negligence, and knowledge of the defendant’s identity. Knowledge that the conduct amounted to negligence was unnecessary. The trustees and their predecessors had sufficient actual knowledge by 12 June 2007, when correspondence raised doubt about the effectiveness of equalisation. They also knew by 4 March 1997 that the second defendant provided administration services under terms of business.
4. The trustees were additionally fixed with constructive knowledge. The relevant facts were reasonably ascertainable by a professional trustee from the available documents and did not require expert legal advice. The claim against the second defendant was therefore statute-barred under section 14A. The relevant paragraphs of the Particulars of Claim were struck out and the proceedings against the second defendant were dismissed.
5. Section 14B. In any event, section 14B barred causes of action accruing before 23 August 1996, fifteen years before the claim form was issued. Losses attributable to negligent acts or omissions outside that period could not be recovered. The claims against the first defendant remained because summary judgment had not been granted on the novation or termination issues.