Honda Group-UK Pension Scheme Trustee Limited & Ors v Mercer Limited & Anor

On applications for strike out and summary judgment, the court must apply a common test: whether the claim has a realistic, rather than fanciful, prospect of success and is not bound to fail.

For the 15-year long-stop limitation period, the relevant question is whether any later negligent act or omission occurred within the period. A continuing retainer alone is insufficient, but a professional may remain under a duty to review work while an agreed task is still being performed. Whether that duty exists depends on the scope of the retainer and the facts.

A claim form need only give a concise statement of the nature of the claim. Documentation and related services may encompass legal issues arising in drafting scheme documents.

The claimants, comprising the trustee and employers of an occupational pension scheme, alleged negligence by the defendants, pension advisers involved in preparing scheme documentation. The principal complaint concerned failure to identify that a benefit structure had not been validly incorporated in 1986 and failure to address that issue during preparation of a consolidating deed executed in 1998.

The defendants sought strike out and summary judgment, arguing that the claim was barred by section 14B of the Limitation Act 1980 and fell outside the scope of the claim form. The claimants sought permission to amend their particulars of claim and claim form.

The issues were whether a later negligent omission was realistically arguable, whether the claim form adequately described the claim, and whether the proposed amendments introduced time-barred new claims.

1. The defendants’ applications were allowed only in part. The allegations concerning work on the 1999 deed were struck out. The remaining allegations concerning the 1998 consolidating deed had a realistic prospect of success.

2. Applications under CPR 3.4(2) and CPR 24.2 should be considered together. The court must determine whether the claim is realistic rather than fanciful, without conducting a mini-trial. It must consider evidence available on the application and evidence reasonably expected at trial. A short point of law or construction may be decided summarily where the court has the necessary material.

3. Section 14B of the Limitation Act 1980 requires identification of the last act or omission alleged to constitute negligence and to which the claimed damage is attributable. The authorities show that a continuing retainer, by itself, does not impose a continuing obligation to revisit completed work. The question remains fact-sensitive and depends on the scope of the duty.

4. Here, the defendants’ task was the production of a new consolidating deed, not merely a first draft. The claimants had a realistic prospect of establishing that the defendants never considered whether the HUM benefit structure had been validly incorporated and continued throughout the drafting process to work on that assumption. The omission could therefore have continued until completion of the drafting exercise, or could have arisen on later occasions when the document was reviewed. It was premature to determine the limitation issue summarily.

5. The position was different for the 1999 deed. That was a separate task responding to the Pensions Act 1995. Nothing pleaded gave the defendants cause to revisit the HUM benefit structure during that work. Those allegations had no realistic prospect of success and were struck out.

6. The claim form complied with CPR 16.2. The phrase documentation and related services was sufficiently wide to include legal issues arising in the preparation of scheme documents. In a consolidation exercise, references to amendments to governing documents may include changes needed to reflect historic amendments and the terms required to ensure that the consolidating deed operates validly. The claim form did not need to specify the precise breach dates or the methodology for calculating loss.

7. Permission was granted for most proposed amendments to the particulars of claim. Amendments concerning the retrospective application of the HUM benefit structure and causation were arguable and arose from the same or substantially the same facts. Permission was refused for a freestanding breach based on failure to identify a conflict of interest, because no knowledge or suspicion of the earlier error was pleaded. Amendments concerning the 1999 deed were refused.

8. Permission was also granted to amend the claim form, although the amendments were considered unnecessary on the court’s construction of the existing claim form.

This was a first-instance decision. The judgment records earlier related proceedings concerning the 1986 HUM benefits error:

• Honda Motor Europe Limited and others v Powell and another, decided by the High Court at [2013] EWHC 3149 (Ch).
• The Court of Appeal decision in the same litigation was [2014] EWCA Civ 437.