General Limitation Rule
Time limits within which a party must bring a claim or give notice of a claim to the other party are imposed under the Limitation Act 1980 (the Act). There are different limitation periods for different types of causes of action but, as a general rule, a party has six years to issue a claim in tort or for breach of contract (or twelve years if the contract was created by deed). Section 14A of the Act however stipulates that it may be possible to bring a claim outside the primary six year limitation period; often referred to as the ‘secondary limitation period’. The secondary limitation period extends limitation by a further three years calculated from the ‘date of knowledge’ of loss or the date when the claimant ought reasonably to have known of the loss.
Under section 14A(10) a person’s knowledge includes knowledge that they might reasonably have been expected to acquire either:
i) From observable or ascertainable facts; or
ii) From facts ascertained with the help of appropriate expert advice if it is reasonable to seek such advice.
The Decision in Jacobs v Sesame Ltd
In the recent 2014 Court of Appeal decision of Jacobs v Sesame Ltd the court held the claimant could not take advantage of Section 14A as the date of knowledge was much earlier than that found by the trial judge at first instance.
Mrs Jacobs invested £65,000 in an investment bond in 2005. The investment however lost money and when Mrs Jacobs surrendered the bond in February 2012 its value was only £53,152.32. In November 2012 she issued a claim for £7,668.32 on the grounds the financial advice given by Sesame Ltd was negligent and it was not until February 2012 that she knew she had either suffered a loss or received inappropriate advice.
Sesame defended the claim and argued Mrs Jacobs knew there had been a fall in the value of the bond in 2009 as she had received four annual financial statements, the last two of which highlighted a significant fall in the value of her investment. Sesame therefore argued she had acquired sufficient knowledge to enable her to bring a claim three years earlier – which would have been within the primary six year limitation period. Consequently Sesame argued that the claim was time-barred.
Mrs Jacobs was successful at first instance as the Court held she was entitled to rely upon the secondary limitation provision afforded by Section 14A of the Act. Sesame sought leave to appeal the Court’s decision and its application was successful; the Court of Appeal dismissed the claim on the grounds it was time-barred as Mrs Jacobs had the requisite knowledge of loss to bring a claim within the primary limitation period. In reaching its decision the Court of Appeal held:
• Mrs Jacobs had acquired constructive knowledge of the loss by July 2009 as she knew the bond had decreased in value at that time.
• Mrs Jacobs was able to ascertain the facts and identify the potential loss by asking the investment provider direct questions or by looking again at the product literature of the bond/investment and annual financial statements.
• She could have obtained the help of an appropriate expert before expiry of the limitation period.
The case provides useful guidance as to how the Courts are likely to interpret the question of secondary limitation and highlights that a claimant can be held to have acquired the requisite knowledge, not necessarily with the assistance of professional advice, but through observation of the facts ascertainable to them. The availability of statements and information is therefore likely to trigger time running for the purpose of section 14A, so long as they are such as to constitute “relevant constructive knowledge”.
Following this decision the Courts are likely to more inclined to find knowledge occurs much sooner than a claimant might envisage. It is therefore imperative claimants ensure that they investigate their prospective claim as soon as possible (including revisiting relevant product literature and available documentation); if there is information that may warrant further investigation a claimant should not delay in taking action otherwise there is a real risk of the claim being dismissed on the grounds of limitation. Accordingly it is a good idea to consult a solicitor and seek legal advice on the potential claim at an early stage.
If you are involved in a dispute and would like advice on this or an unrelated issue, please contact Richard Slater by telephone (01392 210700) or email DRX@stephens-scown.co.uk.