In Booker & Anor v RT Financial Services UK Limited  EWHC 3186 (Ch) the High Court considered arguments (in the context of alleged mis-selling) for extending the limitation period for in a claim in negligence under s.14A of the Limitation Act 1980 (the Act) and delaying the start of the limitation period under s.32 of the Act.
The court decided that s.14A did not help the customers. Is it only necessary to consider when a Claimant had knowledge of the primary facts and awareness of those facts. The court also decided that s.32 did not help. S.32 should be interpreted in a narrow way. A Claimant (once again) need only have knowledge of the primary facts; they need not appreciate the legal inference to be drawn for the clock to start running.
In or around March 2007, RT Financial Services UK Limited (RT) provided investment advice to Mr & Mrs Brooker (Customers). After relying on the advice, the Customers entered into a Japanese yen mortgage secured on their business property. The mortgage was to raise £300,000 which could then be invested into a bond fund with a return more than the low rate of interest payable on the mortgage (which would leave a margin).
In a meeting in March 2007 the paperwork was signed. The Customers entered into the mortgage and invested into the bond's fund. The Customers received further advice in May 2007 recommending borrowing further monies under another Japanese yen mortgage (which was secured against the Customers' home).
In 2008, the financial crisis hit and the yen value of the mortgage grew in sterling terms. The Customers made a significant loss.
Claim and Application
On 9 March 2015, the Customers issued a claim against RT alleging breach of contract, negligence and breach of statutory duty. They claimed they thought they were entering into a risk free investment.
RT made an application for summary judgment under CPR 24.2 and strike out under CPR 3.4. It argued the claim was time-barred. RT claimed all the claims were outside of the limitation period because the events had taken place in 2007 (more than 6 years before the date of issue). The Customers argued (a) the time period could be extended for the negligence claim under s.14A of the Act or (b) the start of the limitation period ought to be delayed under s.32.
Master Matthews decided that Section 14A did not help. He considered Section 14(5). This says limitation runs from:
"the earliest date on which the claimant had both the knowledge required for bringing an action for damages in respect of the relevant damage, and a right to bring such an action."
After considering the relevant case-law (including the House of Lords’ decision in Haward v Fawcetts (A Firm)  UKHL 9 and the Court of Appeal’s decision in Shore v Sedgwick Financial Services Limited  EWCA Civ 863), Master Matthews decided it was only necessary to consider when the Customers had knowledge of the primary facts and awareness of those facts (i.e. when they knew the defendant's acts or omissions and the facts on which the complaint is based). After considering the facts, Master Matthews decided that the Customers had knowledge before March 2012 because of (amongst other things) (a) the financial crash in 2008 (when they started to lose a lot of money) and (b) the Customers’ complaint to the Financial Ombudsman Service in January 2012.
Master Mathews also considered s.32 did not help. After considering the relevant case-law (including Arcadia Group Brands Limited v Visa Inc  EWCA Civ 883 and Sheldon v RHM Outhwaite (Underwriting Agencies) Limited  A.C. 102), the Court interpreted s.32(1)(b) in a narrow way. The Court decided that, on the facts, there was no primary fact that was not known to the Customers. Whilst the Customers may well not appreciate the legal inference to draw from the primary facts, they knew who had provided the advice and that they had suffered a loss as a result of relying on that advice.
This case is a useful reminder of (1) the test under s.14A and the requirement to only know of the facts and not necessarily to have drawn the correct legal inference, and (2) the narrow interpretation of s.32. The Court’s decision is plainly right. The cause of action accrued when the allegedly wrong advice was given. This has been established by the Court of Appeal in Shore v Sedgwick Financial Services Limited  EWCA Civ 863 and by the County Court in Ginn v FirstPlus Financial Group plc (2012), Unreported, County Court (Birmingham), 19 April 2012. When considering an application for permission to appeal in Ginn, the Court of Appeal noted the Recorder’s decision was undoubtedly correct. It is therefore likely that many claims alleging mis-selling of financial products which took place more than six years ago are time-barred and the provisions in s.14A and s.32 will only help in the most unusual of cases. Such an approach must be welcomed. The whole purpose of limitation is to stop parties having a risk of being involved in proceedings many years later. It is therefore appropriate that the principles and case-law continue to be robustly applied, and such issues can be dealt with summarily by the Court.
By Russell Kelsall (Partner) and Alanna Tregear (Solicitor), TLT LLP
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