Negligence – limitations

Citation

Waterson, G. and Lee, R. (2001), "Negligence – limitations", Property Management, Vol. 19 No. 4. https://doi.org/10.1108/pm.2001.11319dab.002

Negligence – limitations

Negligence – limitations

The two following cases concern the interpretation of s.32(2) of Limitation Act 1980 which extends the normal time limit for bringing a claim, Section.32(2) provides:

1. 1.

   … where in the case of any action for which a period of limitation is prescribed by this Act either –

2. 2.
   1. a.

      the action is based upon the fraud of the defendant; or

   2. b.

      any fact relevant to the plaintiff's right of action has been deliberately concealed from him by the defendant; or

   3. c.

      the action is for relief from the consequence of a mistake; the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it …

3. 3.

   For the purposes of subsection (1) above, deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty.

In Brocklesby v. Armitage & Guest [2001] 14 EG 150, [2001] 1 A11ER 172 CA. Mr Brocklesby owned one share in a company called Levelaction controlled by a Mr Tranter. This company owned two commercial premises in Dewsbury, West Yorkshire. It was agreed between the parties that Mr Brocklesby would buy one of the properties with the aid of a mortgage from Alliance and Leicester Building Society for £155,400. The loan was repayable over 25 years. The solicitor, Armitage and Guest, acted for all three parties to the transaction. Unfortunately, shortly after the deal went through, Mr Brocklesby fell ill and it was agreed that Levelaction would repurchase the property from Mr Brocklesby. No money would change hands, but Levelaction would secure Mr Brocklesby's release from his obligations to the Building Society. The solicitor was instructed to act for both Mr Brocklesby and Levelaction. As far as Mr Brocklesby was aware that was the end of the matter. The contract and transfer were executed in April 1989, Mr Brocklesby went out of possession of the property and stopped paying installments to the Building Society.

Unfortunately, Levelaction went bankrupt in November 1990 and had by this time ceased to make any payments on the mortgage. In mid-1992, the Building Society notified Mr Brocklesby of Levelaction's default and Mr Brocklesby discovered that the contract of re-purchase had not been completed and he had not been released from his obligations to the building society. In September 1992, the building society sold the property and sued Mr Brocklesby for the shortfall of £212,895. This action was compromised in February 1996 when it was agreed that Mr Brocklesby would pay the building society £25,000. There was no order for costs but Mr Brocklesby's own costs were £24,941. He then commenced proceedings in negligence against the solicitor intending to recoup these losses together with interest. He alleged that the solicitor had been negligent in failing to secure the release of the building society obligations. The solicitor contended that the limitation period had expired. The appellant sought to rely on an argument and reply that the negligent solicitor had concealed the negligent act so that the period of limitation was extended by s. 32 of the Limitation Act 1980. The reply was disallowed at first instance as lacking in sufficient particulars. The appellant appealed.

The appeal turned on the correct interpretation of s. 32 of the Limitation Act 1980. For the defence it was argued that the word "deliberate" as used in s. 32 requires that the act in question should be deliberate and the person committing it should know that the act so committed involves the legal consequence of a breach of duty. This, it was argued, the claimant had failed to establish.

In his judgement Morritt L.J. rejected any construction of s. 32 that would have the effect of reintroducing by the back door cases and interpretations based upon the equitable doctrine of concealment as Parliament in this Act had chosen not to adopt that formulation. He went on to say:

… when one term to the terms of section 32 itself, under section 32 (1) there is a clear contrast between the aclion based on fraud and para(b) (the concealment of any fact relevant to the plaintiff's right of action being deliberate). The requirement is that the fact relevant to the cause of action had been deliberately concealed from him by the defendant. But subsection (2) amplifies what is meant by deliberate concealment and requires that, for the purposes of subsection (1), deliberate commission of a breach of duty etc. amounts to deliberate concealment of the facts involved in the breach of duty. Generally speaking … the civil law does not require that a person should know the legal consequences of the act that he commits … if he knows of the act and he intends the act, but is unaware of the legal consequences, his unawareness is immaterial, for it is trite law that ignorance of the law is no defence.

Thus his Lordship concluded that for the purpose of extending the time limit under s. 32 (1)(b) all the plaintiff need demonstrate is:

• •

  that the fact relevant to his right of action has been deliberately concealed, i.e. that it was an intentional act; and

• •

  that the act of omission did involve a breach of duty.

It is irrelevant whether or not the actor appreciated the legal consequences. The appeal was allowed.

The decision in the Brocklesby case was followed by the Court of Appeal in Cave v. Robinson Jarvis & Rolf [2001] EGCS 28. In this case, the defendant solicitor had been instructed in 1989 to sell land at Fishbourne, on the Isle of Wight, subject to legally enforceable mooring rights for 100 years in favour of the vendors. The defendant had lailed to draft the necessary deed and register the mooring rights with the result that when the purchaser of the land went into liquidation in 1994 the receivers denied the existence of the mooring rights. Until this time the claimant had had use of his moorings without difficulty and so had had no reason to suspect any negligence on the defendant's part. The claimant issued proceedings in negligence and breach of contract. It was accepted by both parties that the action was statute barred unless there had been "deliberate concealment" of the claimant's right of action by the defendant within s. 32 of the Limitation Act 1980. If that were so then time began to run from the date that the claimant had discovered the mistake, that is February 1994. The matter was heard as a preliminary issue and the judge held that he was bound by the Court of Appeal decision in Brocklesby v. Armitage & Guest [2001] 1 A11ER 172. The defendant appealed claiming that Brocklesby had been wrongly decided and that the word "deliberate" in section 32(2) of the Act connoted intention or awareness as opposed to negligence or inadvertence.

The main reason for the dismissal of the appeal was the well-known rule in Young v. Bristol Aeroplane Co Ltd [1944] KB 718 that the Court of Appeal is generally bound to follow its own previous decisions except in the exceptional circumstances laid down in that case and in the subsequent cases of Boys v. Chaplin 1968 2 QB 1 and Langley v. North West Water Authority [1991] 1 WLR 697 (where it was held that a full Court of Appeal may overrule an interlocutory decision of two Lords Justice, which the Court considered to be "manifestly wrong").

The Court held that the decision in Brocklesby was not "manifestly wrong". The argument in the case had been skeletal but careful and the judgment had been carefully considered. In addition the case had been followed and reinforced in Liverpool Roman Catholic Archdiocese Trustees inc v. Goldberg [2001] I A11ER 182.

What had been concealed in this case was the fact that the content of the deed was inadequate to achieve the claimant's purpose. In the circumstances the omission was unlikely to be discovered for some time and on the reasoning in Brocklesby it amounted to deliberate concealment under s. 32(2). The claimant could not have discovered the concealment prior to the events in 1994.