In about 2007, the Claimant, Mr Al Sadik ("C") invested substantial sums of money with Investcorp. C's investments suffered during the global financial crisis in 2008 such that he incurred significant, multi-million dollar losses. As a result a dispute arose between C and Investcorp in relation to the investment and in 2009 proceedings were commenced. The Defendants (collective the "Ds") were the C's legal team in relation to that dispute.
Shortly before trial in the Investcorp proceedings, on the advice of the Ds, C applied to reamend his Statement of Claim (the "Reamendment Application"). The proposed reamendments included allegations that certain condition precedents in the investment contracts had not been fulfilled and that Investcorp had acted imprudently in structuring the investments in the way that it did. The Reamendment Application was dismissed, principally because the judge found it had been made too close to trial. The C's claim against Investcorp failed at trial and subsequently on appeal (the final appeal decision was handed down in mid-2018).
Shortly after the final appeal was dismissed, C took legal advice on the prospects of a negligence claim against the Ds although it was not until 2021 that C commenced proceedings. In essence C alleged the Ds had been negligent in pursuing the Reamendment Application too late and, in the result, C had lost the chance to pursue those claims advanced in the proposed Reamended Statement of Case (the "RASOC").
Decision
Preliminary Issue on Limitation
It was accepted by C that the primary six-year period for a claim in tort had expired as the claim was brought some ten years after the alleged negligence had occurred. C attempted to rely on the three-year period stipulated in S14A of the Limitation Act. The key question was when C had acquired the “knowledge required for bringing an action for damages in respect of the relevant damage” for the purposes of S14A. C also advanced an argument that the Ds owed him a continuing duty to advise of their own (and each other's) negligence which extended until the legal teams' retainers were terminated in mid-2018.
In light of the evidence, the court concluded that, while C’s understanding of the potential extent of his loss might be said to have improved as it became apparent that his existing claims were doomed – for instance, when the first instance judgment was handed down and when the appeals were dismissed – the court considered C knew from December 2011 that a 'loss' had been suffered. This was sufficient to satisfy the 'knowledge' requirement of s14A such that the three year limitation period began to run from that date.
In distinguishing the case from Witcomb v Keith Park Solicitors which had established that “where the essence of the allegation of negligence is the giving of wrong advice, time will not start to run under section 14A until a claimant has some reason to consider that the advice may have been wrong.”, the court concluded this was not a scenario in which C had not realised something had gone wrong until further advice was received – C knew that he had lost the opportunity to pursue the reamended claims when the Reamendment Application was dismissed. The court therefore rejected C’s case that he needed to obtain legal advice before he knew that he had suffered a loss.
In any event, even if C did not appreciate the significance of the reamended claims on his prospects of success, at the least he knew that he had suffered loss in the form of an adverse costs order following the dismissal of the Reamendment Application – this was sufficient 'knowledge' for the purposes of S14A.
C also argued that until the end of their respect retainers, each of the Ds owed C a continuing duty of care which extended to advising C if they or any of them had acted negligently or potentially negligently and/or if they perceived a conflict of interest between C and themselves and/or any other member of the legal team.
The court was content to assume that there might have been duties on the Ds to take reasonable care to identify and advise about their own negligence and that of other members of the team. However, that duty was not a 'continuing' one. The fact there was a continuing retainer did not mean that a negligent legal professional owed a duty to advise their client about their negligence which arises and is breached on every day from the date the negligence occurs until the end of the retainer.
Summary Judgment
The summary judgment aspects were more fact-specific. In short, the Court was satisfied that the claims C alleged he had lost the chance to pursue were hopeless. In arriving at that conclusion, the court highlighted the following points of general principle:
The matter involved an application for summary judgment on a loss of a chance claim. The court considered that in order for the summary judgment applications to succeed, the court would need to conclude that there was no real prospect of C proving that he would have had a real and substantial chance of succeeding on one of the disallowed claims (or of settling the case if those claims had not been disallowed). In other words, it was necessary for the Ds to show that the chance to pursue claims, which C alleged had been lost, had no real prospects of succeeding. This was described as a "low bar".
The (apparent) complexity of a case did not, in and of itself, prevent summary judgment being granted in an appropriate case. A case involving complex factual or expert disputes cannot be resolved summarily but the fact that "one might have to pick one’s way around some lengthy draft pleadings in order to understand the issues," or "hunt for the key passages in a long judgment", was not a reason for refusing summary judgment.
The court also considered the 'mathematical' aspects when dealing with a claim which needed to cross multiple hurdles in order to succeed. D1 proposed that the court should assess the percentage chance of C crossing each hurdle and then multiply those percentages. The court did not fully accept that approach as, in the context of litigation, contingencies "are never completely independent and discrete". Nevertheless it was accepted that the fact there were multiple contingencies could have a significant impact on the assessment of the chance.
Comment
This is a welcome decision from professional indemnity insurers' perspective albeit not a ground-breaking one. The analysis of S14A will be helpful to those defending professional indemnity claims on limitation grounds and the manner in which Witcomb was distinguished serves as a useful illustration of what a defendant needs to prove to circumvent the principle that time will not start to run under section 14A until a claimant has reason to consider that the advice he received may have been wrong.
It is clear the date of "knowledge" under S14A will continue to be a complex and thorny issue. The point at which knowledge is said to have arisen is fact-sensitive and to be dealt with on a case-by-case basis. Here the fact pattern and evidence fell in the Ds' favour but that is not always the case. The danger is that, if the limitation period does not begin to run until the C knows something has gone wrong, a defendant might be faced with a claim years after the alleged negligence occurred.
This decision also buttresses the existing case law on continuing duty and will make it more difficult for claimants to rely on alleged continuing duties to delay the commencement of the limitation period.
The summary judgment aspects, whilst not novel, provide useful guidance on the approach courts should adopt and comfort that the courts will not shy away from dealing with matters because they are complicated or document-heavy, provided there are no complex factual or expert disputes. It should be noted however that this principle could equally be relied on by claimants seeking summary judgment against professionals.
DAC Beachcroft acted for the Barrister Defendants.
