Negligence and Limitation in financial Remedy

This negligence case investigates limitation in financial remedy proceedings, with W complaining about her solicitors (the ‘firm’) negligence. 

The district judge decided that W’s claim against the ‘firm’:

            so far as founded in contract, was time barred, after expiry of the six-year limitation period, see s.5 of the Limitation Act 1980,

            but as founded in tort was not so barred by the equivalent provision in s.2 of that Act.

The ‘firm’ appealed against the DJ's order regarding the claim in tort.

The Circuit Judge allowed that appeal. He found that W's claim as a whole was barred by both s. 2 and s. 5 of the 1980 Act.  He awarded summary judgment in favour of the ‘firm' pursuant to CPR Part 24. 

W claimed her solicitors negligently failed to obtain expert evidence as to the value of certain real properties and jewellery, and to secure permission to admit such evidence at the (final) financial remedies hearing.

The parties owned a marital home and 9 buy to let properties, seemingly in one name or the other.  H claimed W owned jewellery of value.

On the 1st July 2011 at the FDA the value of the marital home was ordered to be obtained, but not the 9 buy to lets.

On the 11th October 2011at the FDR it was ordered that H provide evidence of jewellery and it’s value he claimed W owned.

The ‘firm’ did not ask for valuations of the 9 buy to let properties, W having given to them her valuations of properties in her name.

On 10/2/12 estate agents drive-by valuations of W’s buy to let properties were sent to H’s solicitor; they did not accept the valuations, and said they would object to their production at the forthcoming final hearing.

That seems to be the state of evidence at the final hearing.

The DJ hearing was 4 days between 16 February and 16 March 2012. Judgment was circulated, prior to handing down, which was done  and order made on 30th May 2012.

On 6th February 2016, W sent to the ‘firm’ a "formal letter of complaint", claiming to have suffered losses, for which the firm was responsible, in the sum of £268,000, made up under numerous heads of loss, including £100,000 for distress and £100,000 in respect of the property valuations.

On 26 April 2016, Ms Holt's present solicitors asked the ‘firm’ to send to them the financial relief file, in respect of which the ‘firm' then claimed a lien in respect of their unpaid costs.

In January 2017, Ms Holt made an application for pre-action disclosure of the file. That order was granted on 8 March 2017.

On 28 March 2018, the ‘firm’ issued proceedings against Ms Holt in respect of their unpaid fees in a sum of £48,708.71.

On 5 April 2018, the Claim Form in the present proceedings was issued.

The ‘firm’ said, the claim was instituted after the expiry of the six-year limitation period.

W's case was, the proceedings were issued within that period.

On 1 On August 2018, Particulars of Claim were served, claiming a total of £124,470.

In the Cost of Appeal, McCombe LJ, gave the leading judgement, in which it was said:-

The parties agreed that a claim in tort cannot be brought after the expiry of six years from the date on which the cause of action accrued: s.2 of the 1980 Act.  In tort, the cause of action accrues when damage is sustained.  What was to the date upon which the alleged damage was sustained?

W claimed it was when the judgement was handed down (same date as order,).

Both counsel also agreed that the decision has to be intensely fact specific and is dependent upon the nature of the cause of action levelled against the defendant.

It had to be loss ‘falling within the measure of damage applicable to the wrong in question’.

There was no difficulty in measuring a loss at a time when the chance of introducing further valuation evidence became in reality impossible.  At that stage, W had lost the opportunity to invite the judge to assess her case based on what she asserted were the proper values of the properties and the jewellery.  On that hypothesis, she had lost a chance of arguing her case for a better outcome on fuller evidence.

The core question was still to identify the point at which W was ‘financially worse off’/had suffered ‘measurable' damage.

Mc Combe LJ considered that W's loss was sufficiently well measurable, if not precisely quantifiable, when she lost the ability to adduce the evidence that she avers that she should have been able to produce before the District Judge in the financial remedies proceedings.  That date may, in reality, have been shortly after the FDR.  It may have been when the ‘firm’ recognised, in January 2012, that any application to the Family Court to adduce more valuation evidence would have failed.  In the present case, it could hardly have been later than the end of the hearing on 16 March 2012.

In this case, W's prospective result in the financial remedies hearing was diminished in quality because the base line for distribution of the matrimonial assets would be defined by what she contended were the inflated values of an important part of her assets. The sum that she would be likely to receive either on settlement or upon judgment would be calculated on those inflated values.

A claim to division of assets upon divorce is, however, a valuable right sounding in money. The object of the law is to compensate for damage caused by the loss or diminution of valuable rights by professional negligence.

The amount in money terms that a client is likely to realise in matrimonial proceedings will become clearer as the case progresses and his or her ‘rights' will have a readily estimable value that might fluctuate in estimation, in the course of the case.  That is not to say that it does not have value at the outset or until judgment or settlement.  It does not mean either that that value cannot be damaged by negligent conduct of the litigation in the period up to judgment.

A client's rights can be sensibly evaluated, and can be damaged by negligence, at almost any stage of the proceedings.

It is clear that after the FDR, or at latest after the Husband's solicitors made it clear in January 2012 that they would object to new valuation evidence, there was a real risk (indeed perhaps a near certainty) that the base line value of W's assets would be taken at what she says was an inflated value for the purpose of the financial relief proceedings. That inevitably meant that the value of her rights vis-à-vis the Husband were diminished. If one postponed that inevitability to 16 March 2012 (the end of the hearing), as the Circuit Judge did, it makes no difference to the outcome: damage was still suffered more than six years before the commencement of this action.

It is an interesting case because there is a tendency to think that the loss was only known when judgement was given, as W’s Counsel unsuccessfully argued.