Summary

A claim for breach of duty against solicitors for negligent drafting of documents was out of time and the claimant had insufficiently pleaded deliberate wrongdoing so as to postpone commencement of the limitation period. However, a claim raised in replies to further information that the solicitors had acted without instructions had an arguable prospect of success and arose out of the same facts, so the claimant would be given the opportunity to apply for permission to amend to add that claim.

Facts

The defendant firm of solicitors applied to strike out the claimant's particulars of claim or for summary judgment on its claim for breach of contract and/or breach of duty of care.

The defendants had been instructed in probate proceedings in Jersey to act for a company (S1), which was the trustee of a family charitable foundation, in respect of a dispute over the terms of bequests to the foundation of shares in S1 and another company (S2). The proceedings were settled on terms that required an amendment to S2's articles of association to provide for distribution of profits to eight new charitable sub-funds, each of which had one of the sons or daughters of the foundation's settlor as its guardian. Three of the daughters appointed the claimant to act as trustee for their sub-trusts. The claimant began the instant proceedings claiming that the defendants had inserted some additional wording into the articles of association which had resulted in a reduced distribution to the sub-funds. The defendants admitted adding the alleged wording, but claimed that it reflected the settlement agreement and that the proceedings were time-barred as they had been issued more than six years after the articles had been amended. In its response to requests for further information, the claimant claimed that the limitation period had been postposed under the Limitation Act 1980 s.32(1)(b) because of the defendants' breach of duty by deliberately inserting the additional words and deliberately failing to warn the three daughters and the claimant that it had done so.

Held

The claimant had inadequately pleaded its reliance on s.32. Where deliberate breach of duty was alleged, s.32(2) required deliberate wrongdoing by the defendants for the limitation period to be postponed, Cave v Robinson Jarvis & Rolf [2002] UKHL 18, [2003] 1 A.C. 384 followed. The claimant had not pleaded that the alleged breaches of duty had been committed with knowledge that they were wrongful. It was fanciful to think that, if the action proceeded to trial, the court would find that the three daughters or the claimant could not with reasonable diligence have discovered within the usual six-year limitation period that the defendants were responsible for adding the additional words, or could not reasonably be expected to have acquired that knowledge within that period from facts ascertainable by them or by their lawyers. However, the claimant's reply to the defence contained an alternative allegation that the defendants were in breach of a duty of care to the claimant in making the amendment without instructions from S1. Under s.35 and CPR r.17.4 the court had a discretion to permit the addition of a new claim outside the limitation period if it arose out of the same or substantially the same facts. That condition was satisfied; it was clear that the question as to what instructions had been given by S1 to the defendants would be in dispute at trial. The claimant had an arguable case that at the earliest it was not until the probate proceedings were taken in Jersey that it could with reasonable diligence have discovered or could reasonably be expected to have acquired knowledge that the defendants had acted without instructions. The defendants had an arguable limitation defence to any such new cause of action pleaded by way of amendment. Accordingly, the most cost effective and efficient course was to adjourn to allow the claimant to apply for permission to amend the particulars of claim to raise the new claim, on terms that the defendants be entitled to raise any limitation defence it would have had if the claimant had issued fresh proceedings at the date of amendment (see paras 49-50 , 56, 60, 62-64 of judgment).