The claimant was the registered owner of a leasehold flat, allowing the defendant to live in the flat while he was out abroad. The defendant first re-mortgaged the property in the claimant’s name, forging the claimant’s signature on the mortgage deed, and then, on 2 April 2001, sold the flat to himself, posing as the claimant in instructing solicitors as vendor and instructing other solicitors to act in his own name as the purchaser. Exchange of contracts and completion were simultaneous, and the defendant forged the claimant’s signature on the transfer. On 4 July 2001, using the transfer, the defendant obtained registration of the flat in his own name and he subsequently sold it to an unconnected third party.
On 2 July 2007, the claimant commenced proceedings against the defendant and also the solicitors who had acted for the defendant when he had impersonated the claimant. The action began more than six years after exchange and completion, but less than six years after registration. The limitation issue was whether the claimant suffered damage only on registration or already on 2 April 2001.
Held: The appeal failed. The claim against the solicitors was statute-barred because the claimant suffered actual damage on completion of the sale and was not simply exposed to the contingent loss of his title which would depend on whether Mr Marvi applied for registration as proprietor based on the forged transfer. From 2 April 2001, there was a blot on Mr Nouri’s title that significantly decreased the marketable value of the property.
Patten LJ said: ‘There was no valuation evidence before the judge directed to this issue but Mr Jones [Counsel for Mr Nouri] accepts that had a potential purchaser been told of the forged transfer in the period prior to registration of Mr Marvi’s title, this would undoubtedly have led to a diminution in the price he would have been willing to pay. Although the contract and the transfer to Mr Marvi were of no legal effect, they did expose any purchaser to the risk of possible litigation even if that risk was more apparent than real. This is the point taken in the respondent’s notice.
On this basis there will have been a diminution in the open market value of the Flat following completion on 2nd April 2001. Mr Jones contests this conclusion because it proceeds, he says, on a false assumption: i.e. that a potential purchaser would have been made aware of the difficulties caused by the forged transfer. He submits that there was no realistic possibility of Mr Nouri having discovered the fraud before registration on 4th July and therefore no question of his being under any obligation to disclose those matters to a potential purchaser. The facts were that he remained in ignorance of the fraud until much later.
I do not accept this analysis. It is well established that a cause of action in tort can accrue for the purposes of the Limitation Act without the claimant being aware of it. The decisions of the House of Lords in Cartledge v E. Jopling and Sons Ltd [1963] AC 758 and Pirelli General Cable Works Ltd v Oscar Faber and Partners [1983] 2 AC 1 led to limited changes to the Act to provide alternative time limits of three years running from the date of knowledge. These are now contained in ss.11 and 14A of the 1980 Act.
In this case Mr Nouri was not assisted by s.14A because he had the requisite knowledge of the fraudulent sale to Mr Marvi by 2002. But the provision of these alternative time periods to address the problem of lack of knowledge has left intact the principle that time will run under s.2 even if the claimant is unaware of the circumstances which have led to it. The existence of actual damage for these purposes does not therefore depend on the claimant’s state of knowledge in relation to the breach of duty or its consequences but on whether the breach has in fact caused actual loss.
For this purpose the correct hypothesis must be to ask whether Mr Nouri could have maintained an action for damages against [the solicitors] following completion of the sale to Mr Marvi. That requires one to assume that he was aware of the breach and to assess the impact of that on his property or other assets as at that date. Consistently with this hypothesis, any diminution in the value of the Flat attributable to the breach has to be determined on the basis that Mr Nouri was aware of the forged transfer and was under a corresponding duty to alert a purchaser to that problem. The Flat was unsaleable without such disclosure. It must therefore follow that its open market value was what a purchaser would pay for it with knowledge of the forged transfer. There was therefore actual damage suffered by Mr Nouri as of 2nd April 2001.’
Rix, Patten LJJ, Sir Mark Waller
[2010] EWCA Civ 1107, [2011] CP Rep 6, [2010] 50 EG 64, [2010] 42 EG 105, [2011] PNLR 7
Bailii
Limitation Act 1980 2
England and Wales
Cited by:
Cited – Bowling and Co Solicitors v Edehomo ChD 2-Mar-2011
The court was asked ‘when an innocent vendor whose signature is forged on the documents for the conveyance of land suffers damage, for the purposes of limitation of an action arising from a solicitor’s breach of duty. Is it on the exchange of . .
Cited – Bowling and Co Solicitors v Edehomo ChD 2-Mar-2011
The court was asked ‘when an innocent vendor whose signature is forged on the documents for the conveyance of land suffers damage, for the purposes of limitation of an action arising from a solicitor’s breach of duty. Is it on the exchange of . .
Lists of cited by and citing cases may be incomplete.
Limitation, Land
Updated: 10 November 2021; Ref: scu.425251