In Al Sadik v Clyde & Co LLP & Ors [2024] EWHC 818 (Comm), the Commercial Court has provided a useful reminder of the circumstances in which the primary limitation period may be extended in professional negligence cases. The decision, which arose on an application for strike out/summary judgment, emphasises the importance of keeping any potential claim under careful review.
Our Commercial Litigation team acted for law firm Harney Westwood and Riegels, one of the successful defendants in the case.
Background
In 2009 Mr Al Sadik brought proceedings against Investcorp before the Grand Court of the Cayman Islands in relation to certain investment losses. Although he ultimately appealed the claim all the way to the Privy Council, he was unsuccessful at every stage.
Mr Al Sadik then issued professional negligence proceedings against the entire legal team that acted for him in the Investcorp proceedings, seeking damages of US$90 million. Although he did not allege that the lawyers were negligent in the conduct of the trial or subsequent appeals, his primary allegation was that his legal team were negligent in failing to advise him to amend his statement of case at an earlier stage in the proceedings. He argued that, had they done so, he would have succeeded in his claim (or alternatively, been able to reach a favourable settlement with Investcorp).
The defendants denied the allegations and applied for summary judgment. Harneys and Mr Al Sadik's former leading and junior counsel also contended that. in any event the claim was time-barred, and applied to strike out the claim. In response, Mr Al Sadik sought to rely on section 14A of the Limitation Act 1980 to extend the primary limitation period.
Section 14A Limitation Act 1980
Statutory limitation periods, which provide a complete defence to claims that are not brought within specified time limits, can operate as dangerous traps for claimants and valuable tools for defendants in all cases. The standard rule in a claim in tort is that (absent fraud), limitation expires on the date falling six years from the date of the tortious act.
Section 14A provides an alternative time limit in negligence actions where the facts relevant to the cause of action were not known to the claimant at the date of accrual. In those circumstances the claimant has three years to bring proceedings from the earliest date on which they had the knowledge and right to bring the action, subject to an absolute fifteen-year longstop.
To fall within this provision, a claimant must show that they brought proceedings within three years of the date when they first had the "relevant knowledge", and not more than fifteen years from the date on which the cause of action accrued.
Relevant Knowledge
The three constituent parts of "relevant knowledge" for the purposes of section 14A are:
- Material Facts Knowledge (knowledge of the facts on which the complaint is based);
- Attribution Knowledge (knowledge that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence); and
- Identity Knowledge (knowledge of the identity of the defendant).
In Al Sadik, identity and attribution knowledge were not in issue. As to material facts knowledge, Deputy Judge Sean O'Sullivan KC concluded that Mr Al Sadik had knowledge of the material facts in relation to his claim against his legal team at the date when his application to amend his claim failed in December 2011. It was at this date that he knew that "something had gone wrong" which prevented him from pursuing the additional claims in the proceedings. Indeed, on the claimant's own evidence, he knew that he had lost the opportunity to pursue those claims and was aware of the Cayman judge's ruling and that he would have to pay Investcorp's costs of the re-amendment application and his own costs, even if he won at trial.
The judge rejected Mr Al Sadik's argument that it was not until he obtained independent legal advice in 2019, that he acquired the requisite knowledge of material facts. He held that the scenario the claimant was in was not akin to a "patient who believes that the operation had been required to remove a tumour until an expert tells him that it was actually a healthy organ that was extracted". Rather, the claimant could "see for himself that the reamendment had been refused and that new claims could not be pursued. He did not need a lawyer to tell him that this amounted to a disadvantage." The question of the extent of the loss suffered was a separate matter - the relevant issue was the claimant's knowledge that some loss had been suffered.
Continuing Duty
The claimant also argued that his legal team had a continuing duty to advise him of their allegedly negligent acts/omissions, and each day they failed to do so amounted to a fresh breach. As a result, he contended, the three-year period under section 14A did not start to accrue until his retainer with each of his legal teams ended. However, the judge held that, in the circumstances of this case, no such continuing duty arose, noting that a solicitor does not generally owe a continuing duty to advise its client as to whether it has been negligent in the performance of its own retainer. However, a solicitor may owe a duty to revisit its previous advice if it expressly agrees to do so or such a duty is a necessary incident of some other duty which the solicitor has undertaken to perform.
Impact
The three-year "extension" in section 14A can be very helpful in cases where a lengthy period has elapsed before a potential claimant even becomes suspicious that acts or omissions on the part of one of their professional advisers have caused them loss. However, as this case demonstrates, the court will not rescue parties who could and should have taken action earlier. Where negligence is suspected, potential claimants may need to think quickly and carry out appropriate investigations to ensure that they do not fall foul of a limitation defence.
We note that whilst the judge granted the parties' applications for summary judgment in relation to Mr Al Sadik's claim, a relatively small residual claim subsists against Clyde & Co in relation to advice provided on an anti-suit injunction.