Cole & Ors v Scion Ltd & Ors

For limitation purposes under Limitation Act 1980, constructive knowledge requires an objective assessment of what a reasonable person with the claimant’s general characteristics might reasonably have acquired. Knowledge need not establish negligence or permit a fully particularised claim, but the claimant must know, in broad terms, the facts, acts or omissions and real possibility of attribution, together with sufficiently serious actionable damage. In an investment-advice case, awareness that a scheme has failed to deliver its promised benefits is not necessarily knowledge of actionable damage. The relevant comparison is with the position in which the claimant would have been had the investment not been made. Detailed and technical correspondence may leave a triable issue as to whether the claimant should obtain expert advice before time begins to run. Summary judgment is inappropriate where those issues reasonably remain open.

Eight investors in film-finance schemes brought negligence claims against Carpenter Rees Ltd, alleging liability for the conduct of its appointed representative and a direct failure to supervise it. The primary six-year limitation period had expired. The claimants relied on the latent-damage provisions in section 14A of the Limitation Act 1980.

Carpenter Rees relied on letters sent in October and November 2012, contending that they gave the claimants constructive knowledge more than three years before proceedings were treated as commenced on 6 November 2015. The claimants disputed the sufficiency and receipt of the letters, and contended that expert advice was reasonably required. The issue was whether the claims had no reasonable prospect of success and should therefore be summarily determined.

1. Application dismissed. Carpenter Rees had not established that the claims had no reasonable prospect of success. The applications for summary judgment and strike-out were dismissed.
2. Section 14A requires knowledge of sufficiently serious actionable damage, knowledge in broad terms that the damage was capable of being attributed to the relevant act or omission, and knowledge of the defendant and any person whose acts are relied on together with the facts supporting liability. Knowledge that conduct amounted to negligence is unnecessary.
3. Constructive knowledge is assessed objectively by reference to what a reasonable person with the general characteristics of the claimant might reasonably have been expected to acquire. A reasonable person is expected to read correspondence, but the court must consider its length, technicality and practical meaning for a person in the claimant’s position.
4. In an investment-advice case, the relevant damage is not simply the failure to obtain the benefits promised. The claimant must appreciate, or reasonably be expected to appreciate, that he or she is worse off than if the investment had never been made.
5. The October and November letters were detailed and technical. They described possible settlements, tax consequences, loan liabilities and uncertain future outcomes, but did not clearly explain that the claimants had suffered actionable loss or that it was attributable to negligent advice. It was reasonably arguable that a reasonable professional footballer or manager would refer the material to an adviser to determine whether there was a problem, rather than merely how serious an identified problem was. If expert advice was reasonably required to acquire a fact, the claimant was not deemed to know it until a reasonable opportunity to obtain that advice had elapsed.
6. There were also triable issues concerning whether three claimants had received the letters before the critical date and whether the claimants could reasonably have been expected to discover Carpenter Rees’s responsibility for Formation’s conduct from public records or historic terms of business. The court expressed substantial doubt that information not actually received could be treated as ascertainable merely because it might have been available had the claimant acted differently.