Limitation and deliberate concealment in professional negligence claims
Professional negligence is a complex area of law and a number of requirements need to be satisfied for a claim to be feasible.
One of these requirements is that an action for damages for professional negligence should usually be brought within six years from the date on which the cause of action accrued. This period of limitation is prescribed by statute (the Limitation Act 1980). Since damage is an essential part of the cause of action in negligence claims, in these cases the limitation period runs from the date on which the damage occurred.
There are a number of circumstances under which the general period of six years may be postponed. Section 32 of the Limitation Act 1980 provides that where any fact relevant to the cause of action has been deliberately concealed from the claimant by the defendant, the period of limitation shall not begin to run until the claimant has discovered the concealment, or could with reasonable diligence have discovered it.
Deliberate means that the fact has been concealed either by a positive act of concealment or by a withholding of relevant information, in either case with the intention of doing so. Relevant fact means any fact without which the claimant would lack sufficient information to bring his claim.
Ford & Warren v Warring-Davies  EWHC 3523
A recent reminder of this rule was provided in the case of Ford & Warren v Warring-Davies  EWHC 3523.
The case involved an inventor of heart-monitoring technology (the claimant), who in 1999 instructed a firm of solicitors (the defendant), to assist him with licensing the invention. The agreement was that the claimant would not be charged for the legal services until the invention was successfully licensed, after which the accumulated fees would become payable.
In late 2003 / early 2004 the claimant was close to signing a deal with a company of investors. The accumulated fees he owed to the defendant at that point were close to £250,000, which could not be covered by the up-front payment of the potential deal. The claimant attempted to change the terms of his agreement with the defendant so that the full amount of fees was not payable immediately upon completion of the deal. The defendant did not agree to do so, following which the deal collapsed.
A claim for breach of contract and/or negligence was issued against the defendant in November 2010. The defendant argued that the claim was statute-barred since more than 6 years had passed between the breach (January 2004) and the issue of the claim (November 2010).
The claimant, trying to rely on section 32 of the Limitation Act 1980, argued that deliberate concealment had occurred on the defendant's part, since the claimant was unaware of the reason why the deal had not proceeded. His main argument was that unless and until he knew why his instructions had not been followed, he had no complete cause of action. The limitation period, he argued, should therefore have run from 2009 (rather than 2004) on discovering the defendant's concealment.
Handing down the judgment in the case, Coulson J refused to accept the claimant's argument on the following grounds:
- The claimant did not have to know why the defendant had failed to comply with his instructions before he had a complete cause of action for breach of contract and/or negligence. The breach itself gives rise to the cause of action and not the reason for it. The cause of action therefore crystallised in January 2004 when the breach occurred;
- even if the reason for the breach was an essential element of the cause of action, the claimant knew or ought to have known why the deal collapsed as early as 2003-2004;
- in either case, the defendant did not at any time seek to conceal the fact that the deal did not proceed because they had not dated or otherwise completed the proposed agreements due to their outstanding fees;
- even if the claimant did not know why the deal had collapsed, he could have reasonably have discovered within a few weeks of the investors' decision not to proceed on 15 January 2004.
For these reasons Coulson J concluded that the claimant's claim against the defendant was statute-barred and that the claimant could not rely on section 32 of the Limitation Act 1980 to postpone the 6 year limitation period. Accordingly, the claim was dismissed.
The case is an example of courts' continuing willingness to restrict attempts to postpone the limitation period in professional negligence claims.
It is important to note that a defendant has an absolute defence to any claim for which the limitation period has expired, no matter how strong the claim is. Therefore, if you think you may have a claim in professional negligence, you should seek professional advice and issue proceedings in good time to stop the limitation period from running.