The defendant solicitors had negligently advised the claimant in connection with a mortgage scheme he operated for customers. His case was that the defendants had negligently failed to advise him to register under s3 of the 1986 Act. The claimant had to underwrite his customers’ losses because of his failure to register. The SIB began its investigation into the claimant’s business less than six years before he brought his action against the defendants, and its obligation compensate arose within the limitation period. However, his claim against the defendants was held to be time-barred, because the claimant had first suffered actionable loss, and therefore his cause of action had accrued, when the first customer entered into the mortgage scheme. He claimed that ‘. . . actual loss is not the same as a serious risk of loss, and . . that until at the earliest the claimant signed the Deed of Undertaking and Indemnity (which was within the six year period) there was no more than a serious risk of loss.’
Held: Kennedy LJ put the argument: ‘Forster’s case there was immediate damage to a discernible asset, the plaintiff’s equity of redemption, not merely a risk of damage to her assets as a whole.’ and rejected those submissions relyining on Milton -v- Walker and Stanger. ‘ . . it is necessary to identify the loss claimed, and to measure it against the duty allegedly breached. Here the breach of duty relied upon is an alleged failure to advise the claimant how to operate in such a way as not to be likely to attract adverse criticism for the SIB, in consequence of which negligence vulnerable transactions were made which were all completed before the beginning of the six year period, and before the SIB began to investigate.’
Judges:
Kennedy LJ, Kay LJ
Citations:
Times 06-Jun-2000, Gazette 15-Jun-2000, [2000] EWCA Civ 173, [2000] Lloyds LR PN 605
Links:
Statutes:
Financial Services Act 1986 3, Limitation Act 1980
Jurisdiction:
England and Wales
Citing:
Cited – Milton v Walker and Stanger 1981
The plaintiff instructed her solicitor to prepare documents and advise on a gift from P’s uncle to P and her cousin W in the proportions 2/3:1/3. P and W agreed that, should the farm be sold, the costs and capital gains tax (CGT) arising there from . .
Cited – Forster v Outred and Co CA 1981
A mother signed a mortgage deed charging her property to H as security for a loan to her son. She claimed the solicitor had been negligent in his advice. The solicitor replied that the claim was out of time. The loss accrued not when demand for . .
Cited – D W Moore and Co Ltd v Ferrier CA 1988
The company took in a new director and shareholder, and relied upon their solicitors to draft a covenant to restrain him competing within a set time of leaving the company. The covenant turned out to be ineffective. The defendant solicitors replied . .
Cited by:
Cited – The 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 . .
Lists of cited by and citing cases may be incomplete.
Damages, Limitation, Financial Services, Professional Negligence
Updated: 31 May 2022; Ref: scu.147206