Khan v R M Falvey and Co (a Firm): CA 22 Mar 2002

The claimant sought damages from his former solicitors for failing to act to avoid his case being struck out. The second action was itself delayed, and the defendants asserted that the cause of action occurred not when his claim was actually struck out, but at the time when it could have been struck out.
Held: ‘where a tort is actionable only on proof of damage, the cause of action is not complete and time does not begin to run for the purposes of statutory limitation until actual damage occurs.’ The cause of action accrued on the occurrence of the first item of material loss. Damage in a claim for pure financial loss arose before the action was actually dismissed, and limitation ran accordingly.
Chadwick LJ said: ‘Typically, the effect of cumulative delay has been that it becomes increasingly difficult to resist an application to strike out based on the contention that it is no longer possible to have a fair trial. Although it may be possible to say in such cases that before a certain date the claim is not vulnerable to being struck out, and after another and later date it was so vulnerable, there would usually be a period of some months in respect of which there is room for a legitimate difference of view. But what can be said with some confidence is that during that period the value of the claim is diminishing as its vulnerability to strike out increases. It seems to me that once the action has entered that period it is impossible to say that damage has not occurred as a consequence of the previous delay. It is no answer that the damage may be difficult to quantify.’
Schiemann LJ said: ‘By the phrase ‘amenable to be struck out’ the pleader intended to convey that after 1990 there was no arguable defence to an application to strike out. This is common ground. On that basis the claimant had suffered damage from the defendant’s negligence by, at the latest, January 1, 1991 and his cause of action had arisen then. What had been (let us assume) a right of action against the debtor which was worth something, had become a right of action which was worth nothing. All the alleged negligence by the solicitor had occurred by then. The present action was not started until more than six years later. In those circumstances it is time barred.’
Sir Murray Stuart-Smith referred to the judgment of Hobhouse LJ in Hopkins v Mackenzie and said of it: ‘I share Hobhouse LJ’s difficulties. A claimant cannot defeat the statute of limitations by claiming only in respect of damage which occurs within the limitation period, if he has suffered actual damage from the same wrongful acts outside that period.’
Lord Justice Schiemann, Lord Justice Chadwick and Sir Murray Stuart-Smith
Times 12-Apr-2002, Gazette 10-May-2002, [2002] EWCA Civ 400, [2002] Lloyd’s Rep PN 369, [2002] PNLR 28
England and Wales
DisapprovedHopkins v Mackenzie CA 27-Oct-1994
A loss arising from a solicitor’s failure to pursue a case arose only when the claim was struck out, not earlier when compromised, and even though value already diminished. Accordingly the limitation period began to run from that time. . .
CitedNykredit Mortgage Bank Plc v Edward Erdman Group Ltd (No 2) HL 27-Nov-1997
A surveyor’s negligent valuation had led to the plaintiff obtaining what turned out to be inadequate security for his loan. A cause of action against a valuer for his negligent valuation arises when a relevant and measurable loss is first recorded. . .
CitedKnapp v Ecclesiastical Insurance Group Plc and Another CA 30-Oct-1997
A claim in negligence was brought against insurance brokers for failing to advise the claimant of certain matters with the result that an insurance policy entered into by the claimant was voidable for non-disclosure.
Held: The claimant . .

Cited by:
CitedHatton v Messrs Chafes (A Firm) CA 13-Mar-2003
The defendant firm appealed against a refusal to strike out the claimant’s claim for professional negligence, asserting that the judge should have considered the limitation issue in the light of Khan v Falvey.
Held: By the time that the . .
CitedThe Law Society v Sephton and Co and others CA 13-Dec-2004
The Society appealed dismissal for limitation of its claim against the defendant firm of accountants arising from alleged fraud in approval of a solicitor’s accounts.
Held: The liability did not arise until the Society decided to make . .
CitedIqbal v Legal Services Commission CA 10-May-2005
The claimant had been a partner in a firm of solicitors. They came to be suspected by the respondent of overclaiming legal aid payments and sums were withheld. For this and other reasons the practice folded, and the claimant became insolvent. He . .
CitedVision Golf Ltd v Weightmans (A Firm) ChD 26-Jul-2005
A lease had been forfeited. The defendant firm of solicitors had negligently failed to apply for relief. They argued that that failure had in fact caused no loss to the claimants, since they would have lost the lease anyway.
Held: The ‘but . .
CitedLuke v Kingsley Smith and Company and Others QBD 23-Jun-2003
The claimant sued various of those who had represented him in a claim against the Ministry of Defence. He believed that he had had to accept an inadequate sum in settlement after being at risk of losing the claim for non-prosecution. The defendant . .
CitedSt Anselm Development Company Ltd v Slaughter and May ChD 1-Feb-2013
The claimants appealed against rejection of their claim in negligence said to have been out of time. They had set out to sublet flats but their mistiming disallowed reclaiming of certain rents under the 1993 Act.
Held: The two flats were to be . .

Lists of cited by and citing cases may be incomplete.
Updated: 15 October 2021; Ref: scu.168538