Orchard (Developments) Holdings Plc Orchard (Huthwaite) Ltd v National Westminster Bank Plc

For limitation purposes, a claimant need not know that conduct amounts to negligence or that a worthwhile cause of action exists. Under section 14A of the Limitation Act 1980, time begins when the claimant has sufficient knowledge of the material damage, the broad essence of the acts or omissions complained of, and a real possibility that the damage is attributable to those acts or omissions. In a flawed-advice claim, reliance on the advice may make attributability readily apparent once the claimant knows that the advice was materially incomplete or wrong. A reasonable belief sufficient to justify investigating a claim is enough; absolute certainty is unnecessary. The statutory balance leaves no discretion to extend time on grounds of fairness. Summary judgment is appropriate where there is no real prospect of establishing at trial that the claim was brought in time.

The claimants sought approximately £48.3 million in damages from the defendant bank for alleged negligent mis-selling of interest rate hedging products entered into in 2002 and 2004. The bank applied for summary judgment, contending that the remaining negligence claim was statute barred under section 14A of the Limitation Act 1980.

The parties agreed that the claim was barred if the claimants had the requisite knowledge before 29 June 2012. The issues were whether, by that date, they knew the material facts about their loss, the broad essence of the alleged deficiencies in the bank’s advice, and that their loss was capable of being attributed to those deficiencies.

1. The court granted summary judgment to the bank. The claimants had no real prospect of showing at trial that the negligence claim was not statute barred.
2. Under section 14A, the claimants had the requisite knowledge of the material facts about the damage by July 2011, when they alleged a loss exceeding £3 million on the sale of a property. The statutory threshold concerns damage sufficiently serious to justify proceedings.
3. Applying the guidance in Haward v Fawcetts [2006] 1 WLR 682, the court adopted a two-stage analysis under section 14A(8)(a): first, whether the claimants knew the broad essence of the acts or omissions relied upon; and secondly, whether they knew that the damage was attributable to those acts or omissions. The claimants knew before 29 June 2012 that the bank’s explanations concerning break costs and alternative products were allegedly inadequate.
4. The claimants relied on the bank’s advice when entering into the products. Once they knew that the advice was seriously flawed, they knew with sufficient confidence that their loss was capable of being attributable to those flaws. Exact pleading detail and certainty as to the legal case were unnecessary.
5. Knowledge that the conduct constituted negligence, or that the claimants had a worthwhile cause of action, was irrelevant. The possibility that they only recognised a negligence claim after 29 June 2012 did not prevent time running.
6. The court also accepted the bank’s fallback case based on knowledge reasonably obtainable from observable or ascertainable facts. Fairness supplied no discretion to disapply the statutory limitation scheme.