England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT
QUEENS BENCH DIVISION (HHJ Playford QC
Sitting as a judge of the Queens Bench Division)

		Royal Courts of Justice Strand, London, WC2A 2LL
		11 March 2004

Lord Justice Jonathan Parker :

INTRODUCTION

1. The appellants in this appeal are the three claimants in the action, namely Mr John Haward ("Mr Haward"), W. J. Haward Ltd ("WJH Ltd") and W. J. Haward Family Trust No 1 ("the Trust"). They appeal against an order made by HHJ Playford QC, sitting as a judge of the Queen's Bench Division, on 15 April 2003 on the trial of a preliminary issue in an action brought by them against Fawcetts (a firm of accountants) and Whitehead Vizard (a firm of solicitors) ("Whiteheads").
2. I granted permission to appeal on the papers on 24 July 2003.
3. Mr Haward has at all material times been the controlling shareholder of WJH Ltd and a trustee of the Trust.
4. In the action, which was commenced on 6 December 2001, the appellants advance two separate claims. In Part 1 of their Amended Particulars of Claim they claim damages against Fawcetts for negligence and breach of a contractual duty of care in connection with Mr Haward's acquisition on 9 December 1994 of a controlling interest in a company dealing in agricultural machinery called Kings Stag Engineering Ltd, which later changed its name to Haward Agriculture Ltd ("the Company"); and in connection with subsequent investment in the Company by each of the appellants. In Part 2 of their Amended Particulars of Claim they claim damages against Whiteheads for negligence and breach of a contractual duty of care in connection with the administration of the estate of Mr Haward's late father.
5. Both Fawcetts and Whiteheads pleaded limitation defences, and by an order dated 26 November 2002 Master Leslie directed that the limitation issues be heard as preliminary issues.
6. The preliminary issue which is the subject of the judge's order relates only to the claim against Fawcetts (Part 1 of the Amended Particulars of Claim). We are informed that the limitation issue in the claim against Whiteheads has fallen away, and that judgment has been entered against Whiteheads in the sum of £41,677.
7. By its Amended Defence to Part 1 of the claim, Fawcetts pleads that the appellants' claims in respect of alleged breaches of a contractual duty of care occurring prior to 6 December 1995 (that is to say six years before the action was commenced), and their claims in tort in respect of losses accruing prior to that date, are statute-barred. By their Reply the appellants rely on section 14A of the Limitation Act 1980, alleging that they did not acquire the requisite knowledge concerning the claim in negligence until after 6 December 1998 (that is to say, within three years of the commencement of the action). They allege that the earliest date on which they acquired such knowledge was 17 December 1999.
8. The judge rejected the appellants' case as to limitation. In paragraph 26 of his judgment he expressed himself as:

"…. not prepared to hold that the [appellants] have established a date of knowledge after the 6^th December 1998 that they had a claim against Fawcetts".

9. By his order, the judge entered judgment for Fawcetts on the preliminary issue, and debarred the appellants from pursuing damages claims arising prior to 6 December 1995. In money terms, the effect of the judge's order is to dismiss the greater part of the appellants' claim against Fawcetts.

SECTION 14A OF THE LIMITATION ACT 1980

10. Section 14A is in the following terms, so far as material:

"(1) This section applies to any action for damages for negligence …. where the starting date for reckoning the period of limitation under subsection (4)(b) falls after the date on which the cause of action accrued.

….

(3) An action to which this section applies shall not be brought after the expiration of the period applicable in accordance with subsection (4) below.

(4) That period is either –

(a) six years from the date on which the cause of action accrued; or

(b) three years from the starting date as defined by subsection (5) below, if that period expires later than the period mentioned in paragraph (a) above.

(5) For the purposes of this section, the starting date for reckoning the period of limitation under subsection (4)(b) above is the earliest date on which the plaintiff …. had both the knowledge required for bringing an action for damages in respect of the relevant damage and a right to bring such action.

(6) In subsection (5) above the knowledge required for bringing an action for damages in respect of the relevant damage means knowledge both –

(a) of the material facts about the damage in respect of which damages are claimed; and

(b) of the other facts relevant to the current action mentioned in subsection (8) below.

(7) For the purposes of subsection (6)(a) above, the material facts about the damage are such facts about the damage as would lead a reasonable person to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment.

(8) The other facts referred to in subsection (6)(b) above are:

(a) that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence; and

(b) the identity of the defendant; and

(c) ….

(9) Knowledge that any acts or omissions did or did not, as a matter of law, involve negligence is irrelevant for the purposes of subsection (5) above.

(10) For the purposes of this section a person's knowledge includes knowledge which he might reasonably have been expected to acquire –

(a) from facts observable or ascertainable by him; or

(b) from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek;

but a person shall not be taken by virtue of this subsection to have knowledge of facts ascertainable only with the help of expert advice so long as he has taken all reasonable steps to obtain (and, where appropriate, to act on) that advice."

THE ISSUES ON THIS APPEAL

11. The issue raised by Fawcetts' limitation defence is whether, in relation to the claim against Fawcetts, the appellants had the knowledge required by section 14A(5) prior to 6 December 1998 (that it to say, more than three years before the action was commenced). It is common ground that in resolving that issue the relevant knowledge is that of Mr Haward himself.
12. By a Respondent's Notice, Fawcetts invites this court to uphold the judge's decision on the alternative or additional ground that if (contrary to its primary case) Mr Haward did not have actual knowledge of the matters specified in section 14A(5), then he had constructive knowledge of such matters pursuant to section 14A(10).
13. Hence the issues on this appeal are:

1. whether, on the evidence before him, the judge was right to determine the preliminary issue in Fawcetts' favour on the basis that he was not satisfied that Mr Haward did not have actual knowledge of the matters specified in section 14A(5) prior to 9 December 1998; and if not

2. whether this court should determine the preliminary issue in the appellants' favour, on the basis that the evidence before the judge establishes that Mr Haward – and hence the other two appellants – had neither actual nor constructive knowledge of the relevant matters prior to 6 December 1998.
14. These issues raise mixed questions of fact and law.

THE EVIDENCE BEFORE THE JUDGE

15. The judge heard oral evidence from Mr Haward and from two witnesses called on his behalf, namely Mr Anthony Taylor (Mr Haward's in-house solicitor) and Mr Nigel Quinney (a partner in Messrs W. H. Matthews & Co, solicitors). Each gave evidence based on his witness statement; each was cross-examined. Fawcetts called no evidence.
16. The judge did not reject any of the oral evidence; nor, beyond commenting that Mr Haward's recollection of certain matters was "not good" (a fact which Mr Haward had frankly acknowledged when giving his evidence), did he express any doubts as to its reliability. Nor, for that matter, did the judge suggest that Mr Haward's recollection of such matters as he could recollect was faulty in any respect.
17. Accordingly in the next section of this judgment I summarise the primary facts relevant to the preliminary issue by reference to the facts as they appear from the oral evidence and from the undisputed contemporary documentation.

THE PRIMARY FACTS RELEVANT TO THE PRELIMINARY ISSUE

18. The Haward family has at all material times been a wealthy family, owning a large number of freehold properties, mostly in the Hertfordshire area. It has also at all material times owned and operated a business of retail ironmongers, a nursery garden and various other commercial enterprises including WJH Ltd. WJH Ltd (which was founded in 1902) is a building company, with a substantial land bank.
19. From about 1958 onwards, Fawcetts acted as accountants to the Haward family and as auditors of the various family companies. This state of affairs continued after the death of Mr Haward's father on 14 May 1992. Initially, the partner who dealt with Mr Haward was Mr John Davis, but on his retirement through illness another partner in Fawcetts, Mr Trevor Austreng, took over from him.
20. The estate of Mr Haward's father was administered by Whiteheads, assisted by Fawcetts. The executors and trustees of his Will were Mr Haward and Mr Davis.
21. On Mr Davis' retirement, he was replaced as a trustee of the Will by Mr Austreng. Mr Austreng also replaced Mr Davis as a trustee of the Trust. At all material times, Mr Haward and Mr Austreng were co-trustees of the Will and of the Trust.
22. Following his father's death, Mr Haward became the Chairman and controlling shareholder of WJH Ltd.
23. Mr Haward, on his own evidence, at all times relied heavily on Mr Austreng's advice.
24. In about October 1994 Mr Haward was approached by a Mr Brunt (with whom he had had previous business dealings). Mr Brunt had been negotiating with a Mr and Mrs Rose, the owners of the Company, for the acquisition of a controlling interest in the Company. Mr Brunt considered that although the Company was not trading profitably, with some further investment it could be made profitable. He proposed that Mr Haward join him in investing in the Company.
25. Mr Haward agreed to Mr Brunt's proposal, and he accordingly entered into negotiations with Mr and Mrs Rose. Mr Austreng took part in those negotiations on Mr Haward's behalf. A Business Plan for the Company during 1995 was prepared by the vendors. Mr Austreng.saw this Business Plan prior to the acquisition.
26. On 9 December 1994 Mr Haward acquired a controlling interest in the Company by subscribing for 60,000 newly issued £1 shares in the Company at par. Mr Brunt subscribed for 10,000 shares at par, and a Mr Coleman subscribed for a further 3,000 shares at par. Mr Haward, Mr Brunt and Mr Coleman were thereupon appointed directors of the Company in addition to Mr and Mrs Rose. On 31 May 1995 Mr and Mrs Rose resigned as directors, and on 31 July 1995 Mr Coleman also resigned as a director. That left Mr Haward and Mr Brunt as the only directors of the Company.
27. The Company carried on business from leasehold premises at Rolls Mills, Sturminster Newton. At about the same time as the acquisition of shares in the Company by Mr Haward, WJH Ltd bought the freehold of those premises for £100,000. Hence the total investment by Mr Haward and WJH Ltd at this stage amounted to £160,000, of which £60,000 was a direct investment in the Company by Mr Haward.
28. Shortly after Mr Haward's acquisition of a controlling interest in the Company, Fawcetts were appointed as its auditors.
29. At some date in 1995 the name of the Company was changed to Haward Agriculture Ltd.
30. During 1995 further substantial investments in the Company were made by the appellants, or one or other of them. The figure taken by the judge for the total of such investments is £431,284, but the precise amount of the investment is not material for present purposes.
31. On 18 October 1995 the Company's accounts for the year to 31 December 1994 were signed off by Mr Haward. The auditors' report is by Fawcetts. The accounts show a trading loss for the year of £46,049, and the net worth of the company as at 31 December 1994 as £34,806 after taking into account the £93,000 proceeds of the increase in share capital. The directors' report, which was drafted by Mr Austreng, includes the following:

"The trading result for the year to 31 December 1994 was a loss of £46,049 which will be carried forward and offset against future profits. However, it is envisaged that profits may not be achieved until 1996 as the company needs to undergo significant improvements in administration, which will be costly in the short term, and also needs to seek a greater market share in machinery sales than it has previously enjoyed. Finance for the proposed expansion is to be provided by [WJH Ltd], on normal commercial terms, and will be secured by the company's assets."

32. During 1996 the appellants invested (on the judge's figure) a further £102,985 in the Company.
33. On 29 October 1996 the Company's accounts for 1995 were signed off by Mr Haward. The 1995 accounts show a trading loss of £266,340, and the net worth of the company as a negative figure of £231,534 after taking into account the investment made by the appellants during that year. The directors' report, once again drafted by Mr Austreng, includes the following:

"Following the re-structuring at the end of 1994 – and throughout 1995 – significant investment has been undertaken in order to put the company in a position from which it can expect to benefit from anticipated increases in turnover. This has resulted in a large trading loss in 1995 but profits are anticipated to be earned from the middle of 1996 and onwards."

34. During 1997 the appellants invested (on the judge's figure) a further £509,525 in the Company.
35. On 20 October 1997 the Company's accounts for 1996 were signed off by Mr Haward. The 1996 accounts show a trading loss for the year of £27,276, and the net worth of the Company at a negative figure of £258,810, after taking into account the further investment made by the appellants during that year. The report of the directors, drafted once again by Mr Austreng, includes the following:

"The re-structuring of the company, mentioned in last year's financial statements, has continued during 1996. Losses continued until mid 1996 at which time the directors were pleased to report that monthly profits were achieved, albeit not sufficient to cover the previous losses. Trading conditions remain difficult and further losses are now anticipated throughout much of 1997. However, the company has adequate resources to continue trading and the longer term outlook remains optimistic."

36. Early in 1998 Mr Haward retained Mr Peter Hughes, a business adviser specialising in corporate rescues, to assist him initially in the matter of a dispute with an insurance company concerning a claim in respect of a missing tractor. Shortly thereafter, Mr Haward asked Mr Hughes to look into the matter of the Company's continuing losses. Mr Haward's evidence was that Mr Hughes wanted to take full control of his affairs.
37. Shortly after his arrival on the scene, Mr Hughes introduced Mr Haward to Mr Taylor. On Mr Hughes' recommendation, Mr Haward retained Mr Taylor as an in-house solicitor representing the interests of the Haward family. At about the same time, Mr Hughes asked an accountant, Mr Ray Jordan, to look into the Company's figures. At meetings which took place at the Company's premises on 17 and 18 February 1998, Mr Jordan reported on the results of his investigations. He identified various problems with the Company, but did not suggest that Fawcetts might be responsible for such problems. Nor did he make such a suggestion in subsequent discussion with Mr Taylor about his report.
38. In March 1998 a meeting took place at the Company's premises, attended by (among others) Mr Haward, Mr Hughes, Mr Taylor and Mr Austreng. According to instructions to counsel drafted by Mr Hughes in January 2001, in the course of the meeting Mr Austreng commented that the Company was "a nice little business, and it should continue". The instructions to counsel go on to state that in the course of the meeting Mr Austreng admitted that he had at no time carried out a full and proper audit of either the Company's stock or its overall financial position.
39. In cross-examination by Mr Moody (representing Fawcetts), Mr Taylor confirmed that he was present at that meeting. However, his evidence was that at that meeting no criticism was made of Mr Austreng's conduct; nor did Mr Austreng make the "nice little business" comment which the instructions to counsel attributed to him. Mr Taylor went on to say that he had heard of a meeting some time in 1997 at which it was said that Mr Austreng had made some such comment.
40. Mr Haward was also asked, in cross-examination, about this meeting. His evidence was that whilst he recalled the meeting taking place, he could not recall whether any criticism was made of Mr Austreng in the course of the meeting. Mr Haward agreed with Mr Moody that there was no reason why Mr Hughes could not have been called to give evidence.
41. In or about May 1998, Mr Hughes introduced Mr Haward to a new accountant, a Mr Jitou Patel. Mr Hughes told Mr Taylor that Mr Patel was a tax specialist. At about the same time, Mr Patel was appointed as accountant, tax adviser and auditor of the various Haward family companies and trusts, including the Company, in place of Fawcetts (effectively, in place of Mr Austreng). Mr Taylor's evidence was that at no time did Mr Hughes suggest that the change of accountants was being made because he thought Mr Austreng's work had been in any way unsatisfactory; and that his (Mr Taylor's) belief was that the change had been made because (as he put it in paragraph 9 of his witness statement), Mr Hughes liked "to have his own team on board". Mr Haward's evidence was that Mr Austreng had been sacked on the strong advice of Mr Hughes that Mr Patel would give better tax advice than Mr Austreng. Mr Haward went on to say that had Mr Hughes not given this advice, Fawcetts would probably have continued to act.
42. Mr Taylor's evidence was that he shared a room with Mr Hughes, with the result that he knew "a bit of what was going on". His evidence was that Mr Hughes was keen that Mr Haward should move from Fawcetts to Mr Patel because Mr Patel had been head of the tax department at Stoy Hayward and had a particular expertise in tax.
43. By June 1998, a dispute had arisen between Mr Haward and Mr Brunt, initially about the tractor which had been the subject of the insurance claim mentioned in paragraph 36 above. On 24 June 1998, Mr Brunt was removed as a director. The grounds for his removal were alleged theft of equipment and cash from the Company and alleged negligence in the performance of his duties as a director.
44. From about June 1998 onwards Mr Taylor acted as in-house solicitor to Mr Haward in connection with a claim by the Company against Mr Brunt. The claim was handled by outside solicitors; initially Herbert Smith, but from September 1999 onwards by W. H. Matthews & Co (Mr Quinney's firm).
45. On 1 July 1998 Mr Taylor wrote to Herbert Smith, at Mr Hughes' request, giving Herbert Smith background information about the proposed claims against Mr Brunt, and enclosing relevant documentation. In the course of the letter, Mr Taylor said this:

"W.J.Haward Ltd is an old established and profitable company which has supported HAL [i.e. the Company] through several years trading at a substantial loss. By the end of 1996 the Company had incurred trading losses of £352,00-00 [sic] and during 1997 sustained a further loss of £226,00-00 [sic]. Turnover in 1996 was about 2 million £s and in 1997 1.65 million. ….

Mr Brunt as Sales Director has been responsible for the sales of tractors & equipment, the main area of the Company's activities. The decline in sales was thought to have resulted from a number of factors including the present uncertainties over the future of farm income, the effect of BSE, and the strong pound. Recently a further reason has come to light, namely the activities of Mr Brunt.

By clause 3(2) of his Service Contract, Mr Brunt is expressly permitted to carry on his existing Plant hire business known as RSI. It now appears that he has been referring the Company's customers to RSI for the hire of equipment and that the Company has suffered serious financial losses as a result. In addition he has over the last 18 months neglected his duties at HAL and concentrated on the interest of RSI, again to the serious detriment of HAL sales."

46. Mr Taylor was not cross-examined about this letter.
47. In the Summer of 1998 Mr Hughes introduced Mr Haward to Mr Quinney. The first meeting between Mr Haward and Mr Quinney took place on 11 September 1998. Mr Hughes was also present. Mr Quinney's evidence was that there was a general discussion about the Haward family's affairs, in the course of which a suggestion was made that Mr Austreng be removed as a trustee of the family trusts, so that the family could control matters. In paragraph 4 of his witness statement, Mr Quinney said this:

"From my meeting with John Haward it was clear to me that he relied on Trevor Austreng to sort out all his financial affairs. …. I gained the impression that John Haward was relatively unsophisticated in matters of tax and trusts and indeed in respect of his family's financial affairs generally."

48. On 5 November 1998 a further meeting took place between Mr Haward, Mr Quinney and Mr Hughes. This time, Mr Patel was also present. The purpose of the meeting was to identify the assets subject to the Trust. Following the meeting, Mr Quinney wrote to Whiteheads and to Fawcetts asking for the papers relating to the administration of the estate of Mr Haward's father and to the administration of the Trust. In paragraph 7 of his witness statement Mr Quinney said this:

"There had never been any suggestion up to this point by anyone that Fawcetts or [Whiteheads] may have been negligent in their dealings with the administration of the late Mr Haward's estate."

49. 6 December 1998 marks the beginning of the period of three years immediately preceding the commencement of the action.
50. On 8 December 1998 Mr Hughes drafted letters in identical terms addressed to Whiteheads and to Fawcetts. In the event, the letter to Fawcetts was not sent. The heading in each of the letters is "Re: Mr John Haward – W. J. Haward Limited [i.e. WJH Ltd] – the Haward Trusts and Haward Agriculture Ltd [i.e. the Company]". The draft letter reads as follows:

"I refer to the above matters.

After careful consideration and reference to solicitors and counsel I would advise you that I am authorised by Mr John Haward on behalf of his companies, the family trusts and himself that he proposes to make very substantial claims against your firm in respect of gross professional negligence.

A fully quantified statement of claim in each of the above matters and any other matters that subsequently come to light will be forwarded to you for your consideration in the near future. In the meantime, you may wish to mitigate your potential losses by handing over with immediate effect all documents and other matters relating to the affairs of the above that you may have in your possession.

….

I look forward to hearing from you as a matter of urgency."

51. In paragraph 10 of his witness statement, Mr Quinney said this:

"On the 9^th December 1998, I received a telephone call from Peter Hughes stating that following a conversation he had had with the Capital Taxes Office he had prepared a draft letter to be sent to Fawcetts and [Whiteheads] indicating an intention to bring a claim for substantial damages in respect of the professional administration of the affairs of the late Mr Haward. Mr Hughes intended that this letter be sent by my firm. I told Mr Hughes that I would not be happy for my firm to send out such a letter as we did not have sufficient information to justify such a claim. …. It seemed to me that we should make further enquiries, receive the relevant documentation and then if necessary seek Counsel's Opinion as to the merits of such a claim. I also advised that it would be impossible to take over the administration file without an interim estate account." (Emphasis supplied)

52. In an attendance note dated 9 December 1998 relating to this telephone call Mr Quinney said this (so far as material):

"Attending Peter Hughes, he had prepared a letter he was proposing to send to Fawcetts and [Whiteheads] indicating they are intending to bring a claim for substantial damages in respect of the professional administration of the affairs of Mr Haward and that all papers should be handed over forthwith. …. He said he wanted Trevor Austreng out of the way immediately and didn't care how much it costs, I said in that case we would have to have some money on account and would need costs as well." (Emphasis supplied)

53. On the same day (9 December 1998) Mr Quinney delivered instructions to counsel. His evidence was that the instructions to counsel did not mention any possible claim against Fawcetts or Whiteheads.
54. In cross-examination, Mr Quinney portrayed Mr Hughes as having a somewhat bombastic and impetuous nature, describing him as "an enthusiastic litigant".
55. Asked in cross-examination whether Mr Hughes' statement (recorded in Mr Quinney's attendance note quoted above) that he "wanted Trevor Austreng out of the way" indicated that Mr Hughes had formed the view that Mr Austreng was under-performing, Mr Quinney said this:

"Well, I don't think we had the information at that stage. I think that really Mr Hughes was a very pro-active individual and I think he felt that we should (when I say 'we', [I mean] Mr Haward and Mr Hughes), should obtain control over exactly what was going on. Mr Austreng was obviously the executor of Mr Haward's father's estate and a trustee of the family trust, and as a result he basically (I think) had all the information at that stage."

56. Asked by the judge whether he was aware of people querying at that stage whether Mr Austreng was "up to snuff in regard to the purchase of the company or the way in which it was managed", Mr Quinney replied:

"No, my Lord. No. At this stage we were dealing with the administration of the estate, and as Mr Austreng was the co-executor of the estate I think that the query was really principally regarding the delay in completing the administration of the estate and the concern regarding whether there was any further tax to pay on the estate. Obviously Mr Haward senior [had] died, I think, in 1992, and here we were six years later and the administration of the estate hadn't been completed, and I think that was really the principal concern at the time."

57. When it was pointed out to him by Mr Moody that the heading in Mr Hughes' draft letter to Fawcetts dated 8 December 1998 included a reference to the Company, Mr Quinney accepted that the Company had nothing to do with the administration of Mr Haward senior's estate.
58. On 11 December 1998 Mr Quinney attended a conference with counsel at which the possibility of removing Mr Austreng as a trustee of the Trust was discussed.
59. In December 1998 the Company commenced an action against Mr Brunt. As foreshadowed in Mr Taylor's letter dated 1 July 1998 (see paragraph 45 above) the claim was based on a number of allegations of impropriety including diverting business away from the Company to his own business RSI, and misappropriation of the Company's funds.
60. On 4 May 1999 Mr Taylor received from Whiteheads the papers which had been requested. Delivery of the papers by Whiteheads had been delayed by their insistence on payment of their outstanding fees. Mr Taylor went through the documents carefully and prepared a schedule of them. He did this because the Company's list of documents in the action against Mr Brunt had to be served by 11 May 1999, and he thought the documents might contain material relevant to that action, and in particular to Mr Brunt's counterclaim based on his service contract. In paragraph 18 of his witness statement, Mr Taylor said this:

"When going through the papers I was struck by the almost complete absence of any reporting by [Whiteheads] to their clients, [WJH Ltd] and [Mr Haward]. …. It was then that I first thought that there might be a claim in negligence against either [Whiteheads] or Fawcetts arising out of the acquisition of [the Company] in 1994. I mentioned this at once to Mr Hughes, who I believe told Mr Haward, but at this time no work was done by me, or, so far as I know, anyone else in the further investigation of whether there in fact existed such a claim. The reality is that at this time everyone was preoccupied by the Brunt action and matters relevant to Part 2 of this claim."

61. In paragraph 21 of his witness statement, Mr Taylor said this:

"…. Such a claim [i.e. a claim against Fawcetts] was simply not contemplated until May 1999, in even a limited sense, and the possibility of the current proceedings were [sic] not envisaged until early 2001."

62. Mr Haward gave similar evidence in paragraph 31 of his witness statement, where he said this:

"It was Hughes, in or about May 1999, who first suggested to me that a claim might lie against Fawcetts for negligence. I believe he had been told by Mr Anthony Taylor, who had received the papers relating to the acquisition of the Company from [Whiteheads] in May 1999, …. that the papers disclosed a surprising absence of reporting to me as Client, and that Mr Taylor had suggested to Mr Hughes that Fawcetts' role should be investigated."

63. On 4 February 1999 counsel instructed by Mr Quinney, acting on behalf of Mr Haward, settled an originating summons seeking the removal of Mr Austreng as a trustee of the Trust. An originating summons in that form was in due course issued and served, and on 16 August 1999 an order was made in the terms sought.
64. On 17 December 1999 Mr Haward wrote a letter before action to Fawcetts. The letter, which was drafted by Mr Hughes, reads as follows (so far as material):

"I write this letter to inform you that having taken advice relating to the conduct of your firm regarding the professional duties owed to me by you and also as laid down by the Institute of Chartered Accountants. I believe your firm is guilty of having failed in their professional duty of care to me resulting in my suffering very substantial financial loss and damages. I am in the process of formulating a claim against your firm and in due course this will be forwarded to you by my legal advisers. I write now so that you may inform your insurers of my intentions.

In regard to the statements made above I shall also be forwarding claims relating to the following:

Haward family matters in general, [WJH Ltd] and its Associated Companies and [the Company]. You will be aware that the accumulated losses exceed £1,200,000."

65. On 1 February 2000 the Company sold its business to an outside purchaser. The Company remains in existence, but is not actively trading.
66. In January 2001 Mr Hughes drafted the instructions to counsel mentioned earlier, whereby counsel was instructed to advise as to possible claims in negligence against Fawcetts and Whiteheads.
67. In April 2001 the action against Mr Brunt was settled.
68. On 6 December 2001 the present action was commenced.

THE PLEADED CLAIM

69. In paragraph 7 of their Amended Particulars of Claim the appellants plead Fawcetts' retainer in the matter of Mr Haward's acquisition of a controlling interest in the Company as follows (the reference to "Kings" is a reference to the Company):

"Fawcetts, in or about September 1994, were retained by the Claimants:-

(i) to investigate and advise upon the possibility of acquiring a controlling interest in Kings and investment thereafter;

(ii) to carry out due diligence in respect of Kings which included:-

(a) carrying out a stock take on acquisition;

(b) considering the 1995 Business Plan prepared by the Vendors, upon instruction by Fawcetts and advising the Claimants in respect of the content thereof;

(c) considering the 1995 Business Plan and advising the Vendors as to whether, amongst other matters, the Profit & Loss and Balance Sheet Forecasts gave an accurate picture for 1995;

(d) examining stock in the management accounts for accuracy;

(e) advising the Claimants in respect of financial and other information considered by Fawcetts including:-

(1) the Company's accounts for the years ended 31.12.1992 and 31.12.1993;

(2) the Company's monthly management accounts up to and including September 1994;

(3) financial information in respect of the Company, including details of the Company's banking arrangements, loans and overdrafts;

(4) details of all other loans made to the Company;

(5) details of the charge over the Company's registered office, being Rolls Mill, Surminster Newton, Dorset; and

(6) the Reply to the Memorandum of Information prepared by Whitehead Vizard.

(iii) to negotiate with the Vendors of the controlling interest in Kings as to a purchase price for the same;

(iv) to liaise with Mr Haward's Solicitors, Whitehead Vizard and with other prospective or actual investors in Kings in relation to the acquisition of a controlling interest in Kings;

(v) to advise and assist the Claimants in all respects and generally with regard to the prospective acquisition, which in turn included obligations to advise upon:-

(a) the financial state of Kings;

(b) the risks associated with the purchase of Kings;

(c) the prudence of financial investment by any of the Claimants in Kings or Kings business;

(d) how to maximise the Claimant's tax exposure and maximise the Claimants' tax advantages in relation to an acquisition of Kings; and

(vi) the advise upon the proper price to pay for a 60% shareholding or any other controlling interest in Kings; and

(vii) to advise as to the corporate structure of Kings in the event of the acquisition of a controlling interest in Kings;"

70. Paragraph 8 of the Amended Particulars of Claim pleads a duty of care in contract and tort in relation to Mr Haward's acquisition of a controlling interest in the Company. Paragraphs 18 to 22 contain allegations that Fawcetts failed to advise adequately or at all in relation to that matter.
71. Paragraphs 23 and 24 plead Fawcetts' retainer from 9 December 1994 onwards, as follows:

"23. From 9 December 1994 Fawcetts were retained to assess the Company's trading performance and to advise the Claimants in respect of the same – in the words of Trevor Austreng in the Draft Proposals prepared by him and dated 14 October 1994 at Point 10 to "keep an eye on the Company trading performance……." and to advise the Claimants in respect of the same.

24. Fawcetts were retained (and by their invoice dated 28 September 1995 invoiced) – to review all monthly accounting information provided to them by Kings from 9 December 1994 "in order to try to ensure that the Company's drive towards expansion continued in an orderly and controlled manner" and to advise the Claimants in respect of the same."

72. Paragraphs 29 to 33 are in the following terms:

"29. Fawcetts failed to advise the Claimants in any Board Meeting or on any other occasion that:-

(1) that there were fundamental errors in the accounting procedures utilised by the Company in the production of the Management Accounts;

(2) that the monthly Management Accounts showed considerable and unacceptable swings in direct cost percentages;

(3) that the Company was not expanding as anticipated/in an "orderly and controlled manner"/at all; or

(4) that the Company was running at a loss not anticipated upon 9 December 1994 or in the 1995 Business Plan.

30. As a result of Fawcetts' failure to advise and breaches of Fawcetts' contract of retainer and their duty at common law to exercise reasonable care and skill the Claimants incurred loss and damage by acquiring a controlling interest in Kings and subsequently investing in Kings.

31. On 31 July 1995 Kings changed its name to Haward Agriculture Limited.

32. The 1995 Business Plan anticipated Agriculture making a profit to the year ended 31.12.1995 of £5,520, whereas in fact Agriculture made a loss of £268,072 for that period.

33. The 1995 Business Plan anticipated loans by WJH Ltd to Kings in the sum of £106,754, for the period ended 31.12.1995 whereas, in fact the Claimants made loans to/investments in Agriculture in the sums set out in the Schedule annexed to these Particulars of Claim."

73. Further allegations follow, relating to the period after 6 December 1995 (that is to say, the period of six years preceding the commencement of the action). For present purposes, it is unnecessary to refer to these allegations.
74. Under paragraph 43, particulars are given of the alleged breaches of Fawcetts' retainer and of Fawcetts' common law duty of care, as follows:

"43. Agriculture [i.e. the Company, under its new name] was sold to Renault Agriculture on 1^st February 2000 when Renault Agriculture acquired all of the trading stock and assets of Agriculture.

PARTICULARS OF BREACH OF CONTRACT

OF RETAINER AND/OR NEGLIGENCE

(a) failing to determine and to advise as to the proper value of the Company and the proper price to pay for a 60% shareholding in the Company;

(b) failing to carry out due diligence to a reasonable and requisite standard;

(c) failing to carry out a stock-take on 9 December 1994;

(d) failing properly to consider the 1995 Business Plan and to advise as to the accuracy thereof and feasibility thereof;

(e) failing to advise as to the true financial state of the Company and its financial prospects for the future in light of the true financial position of the Company;

(f) failing to advise as to the prudence of acquiring a controlling interest in the Company;

(g) failing to advise as to the extent of investment that it would be necessary to make to keep the Company trading;

(h) failing to advise that the Company should be incorporated within the Haward corporate structure and to advise as to the tax benefits thereof;

(i) failing properly/at all to review the monthly management accounts;

(j) failing properly to advise as to the monthly management accounts;

(k) failing to ensure that the Company expanded in an orderly or controlled manner or at all;

(l) failing properly to advise as to the losses being incurred by the Company in 1995 and the consequences of the same;

(m) failing to carry out a stock-take on 31 December 1995;

(n) failing to carry out an adequate and proper stock-take on 10 January 1996;

(o) failing to carry out a stock-take on 31 December 1996;

(p) failing to carry out a stock-take on 31 December 1997;

(q) generally failing properly to advise as to the true financial state of the Company."

THE LIMITATION ISSUE AS PLEADED

75. Paragraph 2 of Fawcetts' Amended Defence is in the following terms (so far as material):

"Limitation

This Statement of Case is served without prejudice to the First Defendant's primary contention that the majority of these claims are statute-barred on the following grounds.

(1) These proceedings were issued on 6^th December 2001.

(2) Part I of the proceedings: so far as the contractual claims are concerned, the claims in respect of breaches prior to 6^th December 1995 are statute barred. As to the claim in negligence, claims for losses accruing prior to 6^th December 1995 are likewise statute barred. Accordingly all claims in respect of the Claimants' original investment in the Company are statute barred in both contract and tort.

…………."

76. In their Reply to the limitation defence, the appellants plead as follows (so far as material):

"1. In the course of litigation between the First Claimant and Mr Ray Blunt, a number of documents were received on 4 May 1999 by the First Claimant's legal advisers from the Second Defendant

2. As a result of inspection of these documents the First Claimant was advised by Mr Peter Hughes, a financial consultant retained by the First Claimant, that there were concerns as to the First Defendant's role in the acquisition of King's Stag Engineering Ltd. as it then was, and their role subsequent to acquisition. As a result of such advice the First Claimant gave Mr Hughes authority to obtain from the First Defendant all the documents and records in the First Defendant's possession relating to Haward Agriculture Limited, W.J. Haward Limited, himself and other Haward interests.

3. On 9 September 1999 the First Claimant signed a letter drafted for him by Mr Hughes and addressed to the First Defendant notifying the First Defendant that Mr Hughes had the First Claimant's authority to obtain from the First Defendant any documents or records they held relating to Haward Agriculture Ltd, W.J.Haward Limited, John Hedley Haward and any other matters relating to the Haward family.

4. In the event no documents were received from the First Defendant.

5. On 17 December 1999 the First Claimant wrote a letter drafted for him by Mr Hughes to the First Defendant stating his belief that the First Defendant had failed in their professional duty of care towards himself and other Claimants.

6. In the premises, the earliest date on which the First Claimant had the knowledge referred to in sub-section (5) of Section 14A of the Limitation Act 1980 was 17 December 1999."

THE JUDGMENT

77. The first section of the judge's judgment, headed 'Background' and comprising paragraphs 1 to 8, contains a short summary of the background facts. The judge incorporated in this summary a finding that (as Mr Haward accepted, indeed asserted, in evidence) he relied heavily on Fawcetts, and in particular on Mr Austreng, who was a friend as well as an adviser. The judge also incorporated in his summary the allegations pleaded by Mr Haward as to Fawcetts' retainer, treating those allegations as admitted facts for the purposes of the preliminary issue. In paragraph 7 the judge records that:

"[i]t was not until May 1999 that Mr Hughes first suggested to Mr Haward that a claim might lie against Fawcetts for negligence and this led eventually to the letter of the 17^th December 1999 ….".

78. In the next section of his judgment, the judge turned to the law. After setting out the relevant provisions of section 14A, he continued as follows:

"12. In this case, therefore, the onus is on the claimants to establish that it was after the 6^th December 1998 that they first had the knowledge required for bringing an action for damages against Fawcetts in respect of damage occurring before the 6^th December 1995. As already noted, the pleaded contention is that the earliest date on which they first had the requisite knowledge was when Mr Haward wrote the letter of the 17^th December 1999 drafted for him by Mr Hughes. The position was somewhat modified by Mr Black QC [appearing for the claimants] in his skeleton argument, in which he submitted that it was not until May 1999 that the claimants' solicitors began to consider a potential claim against Fawcetts in respect of relevant matters; the 17^th December 1999 became not the earliest date but the terminal date for knowledge. At some imprecise time between May 1999 and the 17^th December 1999 it is said that Mr Haward first became aware of the facts to which Mr Black refers.

13. The witness statements appear to reflect the approach of Counsel. Thus, Mr Haward at paragraph 4 …. purports to explain how he "first became aware of the fact that I might have a claim for damages in negligence against the defendants …..". Mr Taylor in paragraph 21 …. is at pains to point out that no claim was contemplated until May 1999 and "the possibility of the current proceedings [was] not envisaged until early 2001".

14. In the end, the area of debate narrowed so far as to focus on section 14A(8)(a). Mr Black in his subsequent letter of the 11^th April …. reiterated the need for investigation "to isolate the causal link between the acts and omissions alleged against Fawcetts and the losses". That investigation did not even commence until May 1999 – apparently as a consequence of Mr Hughes' involvement, which initially was concerned with the dispute with Mr Brunt and then progressed to a general involvement in Mr Haward's affairs, including problems with the administration of his father's estate."

79. In the next and final section of his judgment, headed 'Conclusions', the judge said this (in paragraphs 16 to 19):

"16. There is no dispute under section 14A(6)(a) and (7). Prior to the 6^th December 1998 the claimants clearly had knowledge of the material facts about the damage, that is to say that very substantial payments had been made. It seems to me that the "damage" referred to in subsections (6)(a) and (7) must be the same "damage" as that required to start running the primary limitation period in tort, as established by the Court of Appeal in Forster v. Oughtred …. I will return to this point and merely note at this stage that in any event it was known by 6^th December 1995 that the payments made had already gone in the sense that the damage had become a loss.

17. So, too, there is no dispute in regard to subsections (6)(b) and (8)(b). The identity of the first defendants has always been known.

18. In regard to subsections (6)(a) and (8)(a), the starting point is to extract "the essence of the act or omission to which the [damage] is attributable": see Nash v. Eli Lilly & Co [1993] 1 WLR 782 at page 799. Doing that, it is my view that the essence of the claim here is that Fawcetts gave advice that led to damage, alternatively failed to give advice when advice was needed, in consequence of which damage resulted. That advice or absence of advice is the act or omission which is alleged to constitute negligence.

19. So, the claimant has to show that it was only after the 6th December 1998 that he first acquired knowledge that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence, that is to say the advice given or not given by Fawcetts."

80. At this point in the judgment the judge returned to the facts of the instant case, saying this (in paragraph 20):

"20. In my judgment, Mr Haward clearly knew all the material facts and events as they occurred. Thus, he knew of the terms of Fawcetts' retainer and he knew what he expected of them; that emerges from his witness statement and I have already noted how he relied on them. He obviously knew that money was paid – indeed he did the paying. He knew, as he appeared to accept in evidence, that he relied on Fawcetts' advice when he acquired the Company and committed himself and the other claimants to a substantial investment. He read the Reports of the Directors and could see the encouraging views expressed by Fawcetts in regard to the need for investment. Although he had a distinctly poor recollection of advice given by Fawcetts, it is the basis of the claim that they advised ongoing investment and it is hard to see how he could have failed to appreciate that he was spending money either on their advice or without their advice. So far as he was concerned, there was nothing of a factual nature that was latent; all was patent. The only thing that he did not know was that Fawcetts had been, as he now alleges, negligent or that he had a claim against them but such matters are irrelevant. For my part I have difficulty in seeing any material distinction in principle between this case and the case of HF Pension Trustees Ltd …."

81. After noting that it was not necessary for a claimant to know every particular relating to the act or omission in question, the judge continued as follows (in paragraphs 22 and 23 of the judgement):

"22. I do, of course, understand that Mr Haward may not have appreciated that the known facts might give rise to a claim. But whether he had a claim or a worthwhile claim against Fawcetts is essentially a matter of law involving a question of negligence. This is specifically declared by section 14A(9) to be irrelevant. I cannot help feeling that the whole approach to the issue of limitation, as demonstrated particularly in the Reply and the witness statements, confuses the question of causation, which section 14A(8)(a) is addressing, with the question of negligence.

23. I understand, also, that at the time the payments were made they would not have been seen as "damage". As in the case of any investment, they would not be seen as "damage" until they were perceived to be unprofitable. The reasoning in the case of Forster v. Oughtred may well not be known to the average investor. I can see an argument, by comparison with Pirelli, that justice requires that the word "damage" where it occurs in section 14A should be construed to mean "loss". But such considerations are in my view irrelevant. It would, I think, be entirely contrary to principle to construe the word "damage" as meaning "loss" and that such a construction may on the facts of this case make no difference is beside the point."

82. In paragraph 24 of his judgment the judge observed (plainly correctly, on the authorities) that section 14A(8)(a) requires knowledge that the damage is "capable of being attributed to the act or omission". He continued:

"But the causal connection between the advice or non-advice and the damage in this case is patent and obvious, especially to a mature businessman and company director. There is no need to have recourse to section 14A(10)(a), let alone (b)"

83. Later in the same paragraph (paragraph 24) the judge said this:

"Clearly, if a claimant does not without advice know that the damage was attributable to the act or omission, time does not run until he does know or sections 14(3)(b) or 14A(10)(b) fix him with constructive knowledge. But Mr Haward did not need advice to have knowledge of the relevant facts, even without reference to subsection (10)(a); the only advice he needed was advice whether he had a claim, which is irrelevant."

84. The judgment continues as follows:

"25. The following matters were canvassed at the hearing and I dealt with them for the sake of completeness only. On the claimants' case, no clear date can be identified when they acquired the knowledge that they had a claim against Fawcetts. It certainly cannot be later than the 17^th December 1999 when the claim actually was formulated. Equally it cannot on the claimants' argument be before February 1998, when Mr Hughes, from whom the alleged knowledge was acquired, first became involved with Mr Haward. I have the evidence of Mr Haward, Mr Taylor and Mr Quinney that no thought was given to the issues raised in Part 1 of the claim until 1999. On the other hand, there is the letter of 8^th December 1998 …., drafted for Mr Haward by Mr Hughes but not sent, which, when viewed in conjunction with the attendance note of the 9^th December 1998 …. shows that active thought was being given to a substantial claim of some kind against Fawcetts. The extract from Instructions to Counsel …. – apparently also drafted by Mr Hughes – appears to show, too, that in March 1998 serious concerns about Mr Austreng's conduct were in the mind of Mr Hughes. Given what I have been told of Mr Hughes, it is hard to resist the conclusion that he would not have left unmentioned to Mr Haward whatever concerns he may have had about the existing team of advisers, including Fawcetts, and it is, of course, the case that the latter were dismissed in May 1998. Mr Taylor was at the meeting in March 1998 and he says that Mr Hughes is wrong in what he says was said then. It seems that there was another meeting in 1997, undocumented, at which no criticism of Fawcetts was made.

26. In the absence of Mr Hughes or of any relevant documents from him, I am not prepared to hold that the claimants have established a date of knowledge after the 6^th December 1998 that they had a claim against Fawcetts. In the light of the documents to which I have referred, I am not willing to accept the assertion, based on recollection alone, that the question of a clam against Fawcetts for the huge losses sustained never surfaced until 1999. In truth, Mr Haward's recollection is not good and without Mr Hughes' input, preferably supported by contemporaneous documents, the date on which knowledge, as defined by the claimants, was acquired cannot be identified with the necessary precision. Weeks or months either way could make a crucial difference and, if the claimants choose without explanation not to call Mr Hughes, they cannot complain if I find that they have not discharged the burden on them. That something so important and necessarily precise as the date on which time starts running should be incapable of identification and should be so incapable of objective determination, seems to me to militate strongly against the approach advocated by the claimants, which in my view is misconceived.

27. In any event, even if, contrary to my view, the date on which the claimants first knew they had a claim or a worthwhile claim against Fawcetts is irrelevant, it would remain to consider section 14A(10)(b). The question of constructive knowledge has not been argued before me and I merely observe that even if, which is not in my view the case, Mr Haward needed advice before his knowledge was complete, it should not be assumed that I would regard it as reasonable for him, having suffered a very substantial loss by December 1995, to wait until 1998 or 1999 before seeking whatever advice might seem appropriate – not, of course, that he did seek such advice then or at all. The relevant advice was, so it seems, volunteered by Mr Hughes, who was introduced to Mr Haward's affairs for quite different purposes. In fact, I have no evidence that Mr Haward took any active steps to seek expert advice about the possibility of a claim against Fawcetts; if he had not had a problem with Mr Brunt concerning a tractor, I have no reason to suppose that this claim would even yet have been commenced.

28. In my judgment, therefore, the claimants fail to establish that they first acquired the relevant knowledge after the 6^th December 1998. It accordingly follows that Part 1 of this claim, in so far as it relates to damage prior to the 6^th December 1995, …. is statute-barred. The provisions of section 14A do not assist the claimants."

THE GROUNDS OF APPEAL

85. By their grounds of appeal, the appellants contend that the judge should have held that the 'starting date' for the purpose of section 14A was no earlier than May 1999; that is to say, less than three years before the issue of these proceedings on 6 December 2001.

THE RESPONDENT'S NOTICE

86. By Fawcetts' Respondent's Notice the court is invited to uphold the judge's decision on the different or additional ground that the judge ought to have found that even if Mr Hayward did not have actual knowledge of the fact that the damage suffered by the appellants was attributable in whole or in part to the acts or omissions which are alleged to constitute negligence on the part of Fawcetts until some date within three years of the commencement of the action, he ought to have acquired such knowledge prior to the commencement of that three-year period from facts observable or ascertainable by him. In other words, it is contended that Mr Haward had constructive knowledge for the purposes of section 14A(10) more than three years before the commencement of the action. In particular, it is contended by Fawcetts that the judge ought to have found that it was reasonable to expect the appellants to have sought appropriate expert help from Mr Hughes or another expert before the beginning of 1998 in investigating the cause of the damage suffered by the appellants; and that had the appellants sought such help Mr Haward would have acquired knowledge that the damage suffered by the appellants (up to 6 December 1995) was attributable in whole or in part to the advice or other acts or omissions which are alleged to constitute negligence on the part of Fawcetts.

THE AUTHORITIES

87. In the course of argument, we were referred to a number of authorities as to the requirement of (actual) 'knowledge' in section 14A, not all of which were cited to the judge. At this stage in the judgment I shall not attempt any analysis of the authorities since, as will appear, the parties differ as to the principles which are to be derived from them and as to the approach which, consistently with them, the court should adopt in applying section 14A to the facts of the instant case. I take the authorities in chronological order.
88. The earliest authority cited to us was Nash v. Eli Lilly [1993] 1 WLR 782 CA. In that case, a limitation issue arose under section 14(1) of the Limitation Act 1980 in the context of claims for damages for negligence brought against a pharmaceutical company by individuals who claimed to have suffered personal injury, mainly in the form of photosensitivity and onycholysis, by reason of their having taken the drug Opren. The judge at first instance held, on a preliminary issue, that all but two of the claims were statute-barred. He did so on the basis that the three-year limitation period prescribed by section 14(1) for personal injury actions commenced when each plaintiff had, or might reasonably have been expected to acquire, knowledge that a possible cause of the injury was exposure to an unsafe drug; and that constructive knowledge under section 14(3) would be acquired if the claimant's medical practitioner had been aware, and would have told him if asked, that the symptoms were due to the taking of the drug. Allowing the appeals of some of the claimants, the Court of Appeal held that 'knowledge', for the purposes of section 14(1) arose when the injured person's state of mind was sufficiently certain, or would have been had he acted reasonably to acquire knowledge from facts ascertainable by him or by means of expert advice, that he was justified in taking preliminary steps for the institution of legal proceedings against the person whose act or omission had caused the significant injury concerned; and that the extent of the knowledge required by section 14(1) was no more than knowledge of the essence of the act or omission to which the injury was attributable.
89. Purchas LJ, giving the judgment of the court, distinguished knowledge from mere suspicion. In the course of the judgment (at p.791G) Purchas LJ cited the following passage from the judgment of Lord Donaldson of Lymington in Halford v. Brookes [1991] 1 WLR 428 at 443:

"The word ['knowledge'] has to be construed in the context of the purpose of the section, which is to determine a period of time within which a plaintiff can be required to start any proceedings. In this context 'knowledge' clearly does not mean 'know for certain and beyond possibility of contradiction'. It does, however, mean 'know with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking legal and other advice and collecting evidence.'"

90. Adopting Lord Donaldson's approach, Purchas LJ said (at p.792C-D):

"We do not, of course, intend to lay down a definition of the word 'knowledge' for the purposes of a statute in which Parliament left the word to speak for itself. In applying the section to the facts of these cases, we shall proceed on the basis that knowledge is a condition of mind which imports a degree of certainty and that the degree of certainty which is appropriate for this purpose is that which, for the particular plaintiff, may reasonably be regarded as sufficient to justify embarking upon the preliminaries to the making of a claim for compensation such as the taking of legal or other advice."

91. Later in his judgment, when setting out his general approach to the limitation issue, Purchas LJ said this (at p.796H) as to the burden of proof under section 14(1):

"…. it is important to remember where the onus of proof lies. If the writ is not issued within three years of the date when the cause of action arose (section 11(4)(a)), the onus is on the plaintiff to plead and prove a date within the three years preceding the date of issue of the writ (section 11(4)(b)). If the defendant wishes to rely on a date prior to the three-year period immediately preceding the issue of the writ, the onus is on the defendant to prove that the plaintiff had or ought to have had knowledge by that date."

92. Under the heading 'Attributability', Purchas LJ (at p.797E), after noting that the correlation between the alleged injury and the ingestion of Opren had never been in doubt, cited the following passage from the judgment of Sir David Croom-Johnson (with which Slade and Mann LJJ agreed) in Guidera v. NEI Projects (India) Ltd (an unreported decision of the Court of Appeal):

"In my view, the judge should not have introduced the word 'reasonably' when it is not there. Interpreting the word 'attributable' as meaning 'capable of being attributed' (as one must on authority and as a matter of common sense) that phrase means that attribution is merely possible, a real possibility and not a fanciful one. The act or omission of the defendant must be a possible cause as opposed to a probable cause of the injury …"

93. At p.799B-C Purchas LJ said this:

"It was not, in our judgment, the intention of Parliament to require for the purposes of section 11 and section 14 of the Act proof of knowledge of the terms in which it will be alleged that the act or omission of the defendants constituted negligence or breach of duty. What is required is knowledge of the essence of the act or omission to which the injury is attributable."

94. In Broadley v. Guy Clapham & Co [1993] 4 Med LR 328 the plaintiff had an operation on her knee. In the course of the operation damage was caused to the nerve passing through the knee to the foot. On discharge from hospital, the plaintiff found she could not flex her foot. The issue was whether that was enough to satisfy section 14(1)(b), or whether the plaintiff only acquired the necessary knowledge when a specialist instructed by her solicitors advised her that the operation may have been negligent. The Court of Appeal (Balcombe, Leggatt and Hoffmann LJJ) upheld the judge's decision that the earlier knowledge was enough. Rejecting a submission on behalf of the plaintiff that she did not acquire the necessary knowledge until she knew how the nerve was damaged in sufficient detail to be able to say that it pointed to the surgeon being in some way at fault, Hoffmann LJ said this (at p.333):

"I think [counsel] was right when he said that the words 'which is alleged to constitute the negligence, nuisance or breach of duty' serve to identify the facts of which the plaintiff must have knowledge without implying that he should know that they constitute a breach of a rule, whether of law or some other code of behaviour. Section 14(1)(b) requires that one should look at the way the plaintiff puts his case, distil what he is complaining about and ask whether he had in broad terms knowledge of the facts on which that complaint is based."

95. In Dobbie v. Medway Health Authority [1994] 1 WLR 1234 CA the plaintiff was admitted to a hospital administered by the defendant health authority for the removal of a lump from her breast. The surgeon considered the lump to be cancerous and, without recourse to microscopic examination, removed the breast. In fact, the lump was benign. As the result of the removal of her breast, the plaintiff suffered severe psychological illness. Some fifteen years after the operation the plaintiff first became aware that her breast need not have been removed, i.e. that it was a healthy breast. She accordingly issued proceedings against the health authority. In reply to the health authority's plea of limitation, she relied on section 14(1). The judge at first instance held that the claim was statute-barred, and declined to exercise his discretion under section 33 of the Act (a discretion which does not arise in the instant case). The Court of Appeal (Sir Thomas Bingham MR, Beldam and Steyn LJJ) dismissed her appeal, holding that on its plain words section 14 did not require a plaintiff to know that the act or omission on which he founded his cause of action was arguably actionable or tortious, and that a claimant's date of knowledge, as defined by section 14, occurred when he knew that the injury in question was significant and capable of being attributed to something done or not done by the proposed defendant.
96. In the course of his judgment, with which Beldam and Steyn LJJ agreed, Sir Thomas Bingham said this (at p.1240E):

"The effect of sections 11(4)(b) and 14(1)(b) is to postpone the running of time until the claimant has knowledge that the personal injury on which he founds his claim was wholly or partly attributable to the act or omission of the defendant on which the claim in negligence is founded. 'Attributable to' was construed by May LJ in [Davis v. Ministry of Defence (an unreported decision of the Court of Appeal in 1985)] to mean 'capable of being attributed to', and not 'caused by', and I see no reason to question that conclusion. It cannot plausibly be suggested that the words 'act or omission' import any requirement that such act or omission should be actionable or tortious, since that would stultify the closing words of section 14(1) …. Time starts to run against the claimant when he knows that the personal injury on which he founds his claim is capable of being attributed to something done or not done by the defendant whom he wishes to sue. This condition is not satisfied where a man knows that he has a disabling cough or shortness of breath but does not know that his injured condition has anything to do with his working conditions. It is satisfied when he knows that his injured condition is capable of being attributed to his working conditions, even though he has no inkling that his employer may have been at fault."

97. At p.1242E Sir Thomas Bingham MR emphasised that:

"…. knowledge of fault or negligence is not needed to start time running."

98. Turning to the particular facts of the case, Sir Thomas Bingham MR said this (at p.1243D):

"…. I am in complete agreement with the judge's conclusion. The personal injury on which the plaintiff seeks to found her claim is the removal of her breast and the psychological and physical harm which followed. She knew of this injury within hours, days or months of the operation and she at all times reasonably considered it to be significant. She knew from the beginning that this personal injury was capable of being attributed to, or more bluntly was the clear and direct result of, an act or omission of the health authority. What she did not appreciate until later was that the health authority's act or omission was (arguably) negligent or blameworthy. But her want of that knowledge did not stop time beginning to run."

99. Steyn LJ, in the course of his judgment, addressed directly a submission by counsel for the plaintiff that the injured party must know that 'something had gone wrong', and that accordingly time did not start to run against the plaintiff until she knew that the removal of the breast was unnecessary. At p.1248A Steyn LJ said this:

"The simple answer to this construction is to be found in the ordinary meaning of the words of section 14(1). The contextual meaning of 'injury' in section 14(1) is a personal injury without any further gloss other than the express definition of 'significant' in section 14(2). The word 'act' does not by itself describe something which ought not to have been done. And it would be impossible to attach such a qualitative element to 'omission' and not to 'act'. Stripped to its essentials counsel's argument is simply an attempt to argue that the injured party must know that he has a possible cause of action. That is not a requirement of section 14(1)."

100. Next in chronological sequence is the Court of Appeal decision in Hallam-Eames & ors. v. Merrett Syndicates & ors, in which claims were brought by Lloyds' Names against the active underwriter, the managing agents and the members' agents. Judgments in Hallam-Eames were delivered in January 1995, some seven months after the judgments in Dobbie, but the case did not find its way into the Lloyds Law Reports until some five years later (it is reported at [2001] Lloyds LR 178). It is, however, reported in the Medical Law Reports for 1995 (at 7 Med LR 122).
101. The court in Hallam-Eames consisted of Sir Thomas Bingham MR (who had delivered the leading judgment in Dobbie) and Hoffmann and Saville LJJ. The judgment of the court was delivered by Hoffmann LJ. In its judgment, the court analysed and interpreted its previous decision in Dobbie.
102. In Hallam-Eames the plaintiffs sought to recover in respect of losses which they had suffered as a result of claims arising out of industrial pollution and the use of asbestos in the USA. The defendants pleaded a limitation defence and applied for summary judgment. The issue before the court was what knowledge would suffice to start time running under section 14A. The judge at first instance allowed the defendants' application and granted summary judgment in their favour. He found that the documents supplied to the claimants would have told them that they had suffered sufficiently serious losses to justify instituting proceedings, and that the 'knowledge' requirement of section 14A was accordingly satisfied. The Court of Appeal allowed the claimants' appeal.
103. After referring to the decisions of the Court of Appeal in Broadley and Dobbie, Hoffmann LJ (giving the judgment of the court) continued (at p.180 at the foot of the right-hand column):

"Gatehouse J interpreted these cases to mean that a plaintiff need only have known that his damage had been caused by an act or omission of the defendant. He held that the reports, accounts and letters which the Names had received informed them that they had suffered substantial losses in consequence of the run-off contracts entered into by the managing agents. Likewise he held that the Names had knowledge that they had suffered losses in consequence of the liabilities incurred on the RITC's being substantially greater than the premiums fixed by the managing agents and that the RITC's were based upon the accounts certified by the auditors. Knowledge of these facts was, he said, sufficient to satisfy section 14A(8)(a).

In our judgment this is an over-simplification of the reasoning in Broadley and Dobbie. If all that was necessary was that a plaintiff should have known that the damage was attributable to an act or omission of the defendant, the statute would have said so. Instead, it speaks of the damage being attributable to the act or omission which is alleged to constitute negligence. In other words, the act or omission of which the plaintiff must have knowledge must be that which is causally relevant for the purposes of an allegation of negligence. There may be many acts, omissions or states which can be said to have a causal connection with a given occurrence, but when we make causal statements in ordinary speech, we select on common sense principle the one which is relevant for our purpose. In a different context, it could be said that a Name suffered losses because some member's agent took him to lunch and persuaded him to join Lloyd's. But this is not causally relevant in the context of an allegation of negligence.

It is this idea of causal relevance which various judges of this court have tried to express by saying the plaintiff must know the "essence of the act or omission to which the injury is attributable" (Purchas LJ in Nash v Eli Lilly …. at 789) or "the essential thrust of the case" (Sir Thomas Bingham MR in Dobbie….) or that "One should look at the way the plaintiff puts his case, distil what he is complaining about and ask whether he had in broad terms knowledge of the facts on which the complaint is based." (Hoffmann LJ in Broadley …. at 332.)

If one asks on common sense principles what Mrs Dobbie was complaining about, the answer is that the surgeon had removed a healthy breast. It would in our view be a seriously incomplete statement of her case to say that it was simply that the surgeon had removed her breast. This is not a matter of elaborating the detail by requiring knowledge of precisely how he had come to do the act complained of, such as this court rejected in Broadley. It was part of the essence of her complaint. Nor is it requiring knowledge of fault or negligence. The court's emphatic rejection of such a requirement is entirely consistent with characterising the act complained of (and of which knowledge was therefore required) as the removal of a healthy breast. But the judge, as it seems to us, has read Dobbie to mean that knowledge that the surgeon had removed her breast would have been enough.

If one asks what is the principle of common sense on which one would identify Mrs Dobbie's complaint as the removal of a healthy breast rather than simply the removal of a breast, it is that the additional fact is necessary to make the act something of which she would be prima facie entitled to complain. She was suspected of having a cancerous lump and if this had been the case, the removal of her breast would not have been a matter for complaint. Likewise, Mrs Broadley's complaint was [that] the surgeon had caused damage to her foot when he was supposed to be mending her knee. Mr Clarke QC, for the auditors, and Mr Toulson QC, for the members' agents, protested that such a principle was a backdoor way of introducing a requirement that the plaintiff must have known that the defendant had been negligent (which section 14A(9) expressly declares to be irrelevant) or was by some other criterion at fault (which this court rejected in Broadley v Dobbie.) We do not agree. The plaintiff does not have to know that he has a cause of action or that the defendant's acts can be characterised in law as negligent or as falling short of some standard of professional or other behaviour. But, as Hoffmann LJ said in Broadley, the words "which is alleged to constitute negligence" serve to identify the facts of which the plaintiff must have knowledge. He must have known the facts which can fairly be described as constituting the negligence of which he complains. It may be that knowledge of such facts will also serve to bring home to him the fact that the defendant has been negligent or at fault. But this is not in itself a reason for saying that he need not have known them."

104. Hoffmann LJ then turned to the facts of the case, saying this (at p.181 right-hand column):

"What, on these principles, are the facts which constitute the negligence of which the Names complain? It would in our view be incomplete to say that it was the writing of the run off reinsurance policies or the RITCs or the certification of the syndicate accounts. These facts in themselves do not amount to acts of which the Names would even prima facie be entitled to complain. It is necessary to add the allegation that the run off policies and RITCs exposed the names to potentially huge liabilities and that the certified accounts attributed values to IBNRs, none of which were in fact capable of reasonable qualification."

105. Allowing the appeal, the court concluded that there was not sufficient evidence to justify a summary finding that the claimants had the knowledge required by section 14A, whether actual knowledge or constructive knowledge. Reviewing the evidence as to constructive knowledge, Hoffmann LJ referred to a letter from the defendants which he described as coming close to a confession of negligence. He continued (at p.182, right-hand column):

"We think it is well arguable that it should have prompted Names to inquire into the precise circumstances in which the policies were written. In the end, however, we are unwilling to hold on the strength of the letter alone that it amounted to constructive knowledge that the risks reinsured were not reasonably quantifiable. We think that the Names are entitled to an investigation of the circumstances surrounding the writing of the letter and the other information which they were being given before it can be said that the letter made the relevant facts ascertainable.

Thus in our view Gatehouse J unduly restricted the facts which section 14A(8)(a) requires to be known and the material before him did not enable him or this court to decide …. as a preliminary issue that the plaintiffs' claims were statute-barred."

106. In Bradstock Trustee Services Ltd and anor. v. Nabarro Nathanson [1995] 4 All ER 888, a decision of Judge Paul Baker QC, sitting as a judge of the Chancery Division, the trustees of a pension fund, after taking advice from the defendant solicitors, made payments to the employer company by way of repayment of surplus and by way of loan. It was subsequently discovered by independent trustees that the value of the pension fund was insufficient to fund pensions currently in payment. The independent trustees claimed damages against the defendant solicitors, alleging that their advice had been negligent. The defendants pleaded a limitation defence. The plaintiffs relied on section 14A, contending that they did not know that damage had occurred until they obtained the relevant file from the defendants. Hallam-Eames was not cited. The judge concluded that the plaintiffs' contention was misconceived. At p.898c he said this:

"The damage occurred, if it occurred at all, when the funds were paid over pursuant to the advice of the defendants. All knew what had happened. The damage was patent. What was not known was whether the advice of the defendant was negligent."

107. In Spargo v. North Essex District Health Authority [1997] PIQR P235 Brooke LJ (with whose judgment Nourse and Waller LJJ agreed) reviewed the authorities and deduced a number of principles from them. At p.242, Brooke LJ said this:

"This branch of law is already so grossly over-loaded with reported cases, a great many of which have been shown to us or cited by counsel, that I see no reason to add to the overload by citation from earlier decisions. I have considered the judgments of this court in Halford v Brooks ….; Nash v Eli Lilly ….; Broadley ….; Dobbie ….; Smith v Lancashire Health Authority [1995] P.I.Q.R. 514; and Forbes v. Wandsworth Health Authority [1996] 7 Med.L.R.175. From these decisions I draw the following principles.

(1) The knowledge required to satisfy section 14(1)(b) is a broad knowledge of the essence of the causally relevant act or omission to which the injury is attributable;

(2) "Attributable" in this context means "capable of being attributed to" in the sense of being a real possibility;

(3) A plaintiff has the requisite knowledge when she knows enough to make it reasonable for her to begin to investigate whether or not she has a case against the defendant. Another way of putting this is to say that she will have such knowledge if she so firmly believes that her condition is capable of being attributable to an act or omission which she can identify (in broad terms) that she goes to a solicitor to seek advice about making a case for compensation.

(4) On the other hand she will not have the requisite knowledge if she thinks she knows the acts or omissions she should investigate but in fact is barking up the wrong tree: or if her knowledge of what the defendant did or did not do is so vague or general that she cannot fairly be expected to know what she should investigate; or if her state of mind is such that she thinks her condition is capable of being attributed to the act or omission alleged to constitute negligence, but she is not sure about this, and would need to check with an expert before she could be properly said to know that it was."

108. Referring to Nash, and in particular to Purchas LJ's quotation of extracts from the judgment of Hidden J at first instance, Brooke LJ said this (at p.244):

"A little earlier the judge had spoken of the solicitor's perception that he needed confirmation that there was the relevant causal connection, and a little later he added that the question will, in certain circumstances, be whether a particular injury was caused by an operation or was caused by something else. In my judgment, in all these passages the judge is substituting the much tougher test of proof of causation for the much less rigorous test of attributability, in the sense that the identified injury was capable of being attributed to the identified omission. The test is a subjective one: what did the plaintiff herself know? It is not an objective one: what would have been the reasonable layman's state of mind in the absence of expert confirmation? After all, the policy of Parliament, in these cases which would otherwise be statute-barred, is to give a plaintiff who has the requisite low level of knowledge, three years in which to establish by enquiry whether the identified injury was indeed probably caused by the identified omission and whether the omission (identified initially in broad terms) amounted to actionable negligence. The judge's approach would be to stop the three years from even starting to run until a much more advanced stage of the investigation had been completed."

109. There is no indication in the report of Spargo that Hallam-Eames was one of the "great many" other decisions referred to by Brooke LJ as having been cited to the court in that case. Had it been cited, I have no doubt that Brooke LJ would have referred specifically to it.
110. HF Pension Trustees v. Ellison [1999] Lloyds Rep PN 489, a decision of mine, was a case on very similar facts to those of Bradstock. Once again, Hallam-Eames was not cited. I concluded that the case was on all fours with Bradstock, and that the claim was statute-barred for essentially the reasons given by Judge Paul Baker QC in that case. In reaching that conclusion, I rejected a submission by counsel for the claimant (see p.494 at the foot of the right-hand column) that the claimant did not acquire the requisite knowledge until it knew that the payment in issue was unlawful, and (in consequence) that the defendant's advice to the contrary was wrong. I expressed my conclusions as follows (at p.495, right-hand column):

"The case is, in my judgment, on all fours with the Bradstock case (above). All the material facts were known to the plaintiff at the time. What it did not know and could not have known was that at some time in the future a court would hold that the transfer was unlawful; but although the making of a decision is undoubtedly a fact, the unlawfulness of the transfer is a matter of law. What the plaintiff's argument boils down to is that although it knew all the material facts, it did not know until later that those facts gave rise to a claim in negligence. In my judgment, however, in cases under section 14A as in personal injury cases, mere ignorance that the known facts may give rise to a claim in law cannot postpone the running of time under the 1980 Act. As I read the sections and the authorities, both section 14 and section 14A are concerned exclusively with matters of fact provable by evidence, as opposed to matters of (English) law, in respect of which evidence is not admissible."

111. In Irshad Ali v. Courtaulds Textiles Ltd. [1999] Lloyds Rep Medical 301 CA the claimant had worked in the defendant's cotton mill for some twenty years, up to 1988. In September 1990 he complained to his doctor that he was experiencing deafness. In November 1991 he was told by a community worker that his deafness could have been caused by working in a cotton mill, and that he should consult a solicitor. He duly instructed solicitors, who in turn instructed a consultant ENT surgeon to examine him. The consultant surgeon reported in August 1992 that the claimant's deafness had probably been caused by exposure to industrial noise. In May 1995 the claimant brought an action for damages against the defendant, alleging that his deafness was caused by exposure to excessive noise, and that the defendant had failed to take reasonable steps to protect him from such noise. The defendant raised a limitation defence. The limitation issue was tried as a preliminary issue.
112. The judge held that the claim was statute-barred. He concluded that the claimant had constructive knowledge that his deafness was capable of being attributed to industrial noise when he was told as much by the community worker in 1991.
113. The Court of Appeal (Henry LJ and Holman J) allowed the claimant's appeal. There is no reference to Hallam-Eames in the judgment of Henry LJ (who gave the leading judgment), and I accordingly infer that it was not cited. In the course of his judgment, Henry LJ (with whom Holman J agreed) said this (at p.304 left-hand column):

"I set out below what I consider, as a matter of construction, to be the scheme of the Act as it applies to this case.

The claimant knew he was deaf. The claimant knew, once Mr Maqsood Ali [a community worker] had told him, that exposure to noise could cause deafness. Equally, he would know that the ageing process could cause deafness. But he did not and could not know whether his deafness had been caused by ageing or noise. Nor could Mr Maqsood Ali, nor his solicitor, nor any other layman. He could only find that out with the help of expert advice.

But he could not obtain a limitations advantage by claiming that his experts kept him in the dark - thus his constructive knowledge is extended by section 14(3) to "knowledge which he might reasonably have been expected to acquire" from his medical expert advice. We know he did not get that medical expert advice until his solicitor reported that advice to him in September 1992. He had sought that advice by going to his solicitor, but the judge found that the mere fact of seeking that advice (which necessarily had to be medical) fixed him with knowledge. That conclusion flies in the face of the proviso to subsection (3), which applies because:

knowledge as to whether deafness was noise-induced or age-induced was ascertainable only with the help of medical expert advice;

he had not had any such advice when the judge had found constructive knowledge against him;

he had taken all reasonable steps to get that advice the moment Mr Maqsood Ali had alerted him to the possibility. The appointment with the specialist was eight months on, but no one suggests that that was caused by the failure of either the claimant or his solicitor to take all reasonable steps. Appointments with busy specialists were subject to such delays at this time, as Access to Justice research revealed.

So the proviso to section 14(3) applied; he should not be fixed with knowledge that his deafness was noise-induced because that question was only ascertainable by him with expert advice, which it was not only reasonable, but essential he obtained before he did anything else. Here the limitation on his legal aid certificate reflected what a solicitor dealing with a privately funded case would have told him: "I cannot tell you whether your deafness is age-induced or noise-induced. But I can tell you that there is no point in your spending any money until you have ensured that you can call expert medical evidence to show that it is noise-induced. Without that evidence you will have no case."

In the analysis above I have used the plain words of the statute. When properly analysed the authorities, as one would expect, show the same pattern whenever one is dealing with a situation where expert medical knowledge beyond the scope of even an informed and intelligent layman is necessary to establish the cause of the personal injury which founds the action. Clearly what has to be "known" on the facts of each individual case will determine where the division between knowledge, belief and suspicion are drawn."

114. In Oakes v. Hopcroft [2000] Lloyds Rep PN 394 CA the facts were, in summary, as follows. In 1980 the claimant had an accident at work, in respect of which she commenced an action against her employer. She was represented in the action by counsel and solicitors. In addition, the defendant, an orthopaedic surgeon, examined her and provided expert medical reports for the purposes of the action. In 1983 the action was settled for £2,000 and costs. Following the settlement the claimant continued to suffer the consequences of the accident, and in 1991 she commenced an action against the defendant alleging negligent misdiagnosis of her injury. On a preliminary issue as to limitation the claimant contended that she did not have the requisite knowledge for the purposes of section 14(1) until she received an expert report in 1990 which alerted her to the fact that the accident had caused injuries significantly more serious than the defendant had reported, and that had the injuries been reported accurately her claim would have been worth more than £2000.
115. The judge held that the claim was statute-barred. He concluded that at the time of the settlement of her claim she knew that her injuries and their consequences were more serious than the defendant had reported, and that in consequence she had actual knowledge for the purposes of section 14(1) in 1983. The Court of Appeal (Lord Woolf CJ, Waller and Clarke LJJ) held that it was appropriate to go behind the judge's apparent findings of fact, and allowed the claimant's appeal. It held that the claimant was entitled to assume that advice given to her by her counsel and solicitors was correct until such time as someone or some incident challenged it; that the knowledge required in that case was not knowledge of her physical symptoms and their cause (as the judge had found) but knowledge of the low settlement and its cause; that a distinction had to be made between knowing that something had been missed and knowing that the missing of it might be negligent; and that the claimant did not know that the settlement was too low due to a misdiagnosis until she received the expert report in 1990.
116. Hallam-Eames was cited in Oakes v. Hopcroft, where it was considered and followed.
117. In paragraph 16 of his judgment, Lord Woolf CJ referred to the guidance given by Brooke LJ, in Spargo, as follows:

"In applying section [14A] it is of the greatest of importance to identify, precisely, the nature of the damage, which coupled with the negligent act or omission is alleged to constitute the cause of action. Subject to bearing this in mind, it is perfectly in order to refer, as the judge did, to the judgment of Brooke LJ in …. Spargo …. at p129/130 for guidance, although that judgment related to section 14."

118. After quoting the guidance in full, Lord Woolf CJ continued:

"17. This approach was echoed by Hoffmann LJ in Hallam-Eames …. Hoffmann LJ said [at p.181 left-hand column]:

…. the act or omission of which the plaintiff must have knowledge must be that which is causally relevant for the purposes of an allegation of negligence ......... It is this idea of causal relevance which various judges of this court have tried to express by saying that the plaintiff must know 'the essence of the act or omission to which the injury is attributable'.

18. The nature of Mrs Oakes' cause of action is correctly summarised by the judge in his judgment when he says:

Her present claim is against the orthopaedic surgeon who, she alleges, negligently misdiagnosed her injury and reported on the basis that she was effectively recovered and fit for work and that as a result of that negligence her action was settled for far less than in truth it was worth.

19. The negligence was the misdiagnosing and the reporting incorrectly Mrs Oakes' condition. Her "damage" for section 14A(6) was settling her action for far less than in truth it was worth."

119. Later in his judgment, after quoting extracts from the judgment at first instance in which the judge made findings of fact, Lord Woolf CJ continued:

"28. Mr Graham Platts on behalf of the claimant does not seek to go behind those very strong findings of fact. None the less, I do not regard this as being as conclusive against the claimant as Miss Fiona Neale submits on behalf of the defendant. Although those findings can be supported by reference to the transcript of Mrs Oakes' evidence, they ignore any direct reference to the advice Mrs Oakes actually received at the time when she agreed the settlement. The terms of the advice appears from documents contained in the agreed bundle. They include advice of counsel. Counsel refers to the fact that she is unable to obtain employment because of the condition of her hand but he regards it as highly debatable whether "the medical evidence would support a claim for loss of earnings continuing". Counsel thought the sum of £1,500 "marginally low" but £2,000 acceptable. His bracket was £1,750 - £2,250. The advice was sent to Mrs Oakes together with a letter from her solicitors dated 10 January 1983 which indicates that the solicitors considered £2,000 "a reasonable settlement". Mrs Oakes replied accepting the offer, thanking her solicitors for their diligence in pursuing her case.

29. When that advice is take into account, the position is significantly altered. I remind myself of the knowledge which Mrs Oakes has to have if time is to commence running. She must not only know that her injuries were more serious that those described by Mr Hopcroft, she has to know also that her damage, which is the settlement of her case, was at too low a figure due to Mr Hopcroft's default. The advice of counsel alters the position. Mrs Oakes could properly be regarded by the judge as being aware that Mr Hopcroft had significantly under-reported her injuries but I see no justification for not regarding her as acting on her counsel's and solicitors' advice in accepting the settlement. The judge did not consider, in the manner he should have done, the effect of Mrs Oakes' state of mind of the advice she received. If he had done so, he could not have concluded that when she accepted the settlement she had the necessary knowledge. She had taken all reasonable steps to take and act on advice as required by section 14A(10). She was not in a position to challenge Mr Hopcroft's opinion or advice she received and it would be unreasonable to expect her to do so."

120. Lord Woolf MR expressed his conclusions in paragraph 33 of his judgment, as follows:

"33. The judge's approach having been flawed by his failure to have regard to the advice that Mrs Oakes received, it is necessary for us to re-evaluate the evidence and reassess the reasonableness of Mrs Oakes' conduct. It all turns on section 14A. Was she unreasonable in not taking advice earlier. I have found this critical question more difficult than Lords Justices Waller and Clarke. However, I have ultimately come to the same conclusion as they have. When she commenced her action Mrs Oakes is not to be treated as having acquired the necessary knowledge over three years earlier because of the provisions of section 14A(10). What I have found tips the balance in her favour is the fact that once you have acted on advice the passage of time means that advice recedes to the background of your mind, so it is less readily open to question. The result is that until someone or some incident directly challenges the advice you continue reasonably to assume it was correct. The fact that Mrs Oakes knew her condition was not improving as she had hoped it would, and the fact that she was aware of her condition was at least in part permanent did not mean she was not reasonable in continuing to rely on the advice she received. It would involve placing an excessive burden upon her to expect her to question the advice her counsel and solicitors had give her to settle based on Mr Hopcroft's report."

121. Waller LJ, agreeing with Lord Woolf CJ that the 'damage' in that case was settling the action for less than it was worth, continued:

"36. However my understanding of Hoffmann LJ's judgment in Hallam-Eames …. is that what he intended by referring to the acts of negligence of which the plaintiff must have known as "the act or omission … which is causally relevant" (in the passage quoted by my Lord) was to some act or omission of which "she would prima facie be entitled to complain". He rejected the argument addressed to us in this case by Miss Neale, that by introducing a requirement that the plaintiff must have known of some act or omission of which she could complain, that was introducing by the back door that the plaintiff must have known that the defendant was negligent contrary to section 14A(9). There is an important distinction between knowing that something has been missed and knowing whether the missing of that something is negligent.

37. The question in my view to be posed is this. Did Mrs Oakes know "the essence of the act or omission to which (the damage) was attributable" - to adapt Purchas LJ in Nash v. Eli Lilly ….? In the instant case that is not simply that Mr Hopcroft had "under-reported her injuries". Those words seem to me to confuse symptoms with the physical causes of the symptoms, and fail to keep clear the distinction between her injuries, and their cause, and the low settlement, and its cause.

38. It seems to me that in making the findings of fact quoted by my Lord in paragraphs 24, 25 and 26 of his judgment, the judge is concentrating on Mrs Oakes' knowledge of her physical symptoms, and the perception which she undoubtedly had, that she was obtaining too little in the settlement. The question that the judge should have been addressing was when did Mrs Oakes know that the damage, i.e. too low a settlement, was caused by a misdiagnosis.

39. Even absent counsel's advice it seems to me that as at the date of settlement Mrs Oakes simply did not know that there had been a misdiagnosis, and that her discomfort was due to injuries undetected. She trusted Mr Hopcroft, and it is understandable that she should not appreciate that he had failed to detect injuries.

40. Thus it would not simply be on the basis of counsel's advice that I would hold that as at that date Mrs Oakes did not have the requisite knowledge to start the three-year period of limitation running.

41. Clearly by March 1988 Mrs Oakes knew something more because things had not got better as on Mr Hopcroft's advice they should have. By January 1988 she knew her radial pulse was absent. In January 1988 she was told by Dr Moore that she had in 1981 sustained a crush injury to her right arm with arterial damage. By 5 February 1988 she had been told by Mr Mosley that her injury had not been a ganglion but an aneurysm which had been excised during the operation, and this was a permanent problem. She knew that if her problem was permanent the value of her loss of earnings claim (if she had one) was at the rate of about £30 a week. But the question is whether she was aware of the essence of the omission which had caused the original settlement to be too low, i.e. that there had been a misdiagnosis; not, it should be noted, whether the misdiagnosis had been negligent but simply whether there had been a misdiagnosis.

42. It seems to me that the evidence does not go that far. It demonstrates that she was taking expert opinion at the beginning of 1998, and it further demonstrates that the conclusion that was drawn from it, with the assistance of the experts, was that she might have a cause of action in negligence resulting from the operation performed after her accident. No-one suggested to her that there might have been a misdiagnosis by Mr Hopcroft of the injury she suffered as a result of the accident.

43. It would not be fair to say, for example, that if she had taken advice in January 1988, it would have been inevitable that she would have learned of the inadequacies of the original medical report. The evidence demonstrates the contrary.

44. The position in reality was that she simply did not know of any misdiagnosis, ie the essence of her complaint against Mr Hopcroft, until she received the report of Professor O'Connor."

122. Clarke LJ, agreeing with Lord Woolf CJ and Waller LJ, quoted extensively from the judgment of the Court of Appeal in Hallam-Eames. He continued (in paragraph 52):

"…… If one asks what is it that the claimant is essentially complaining about, it is that the defendant failed to diagnose her condition correctly and to advise her that the accident had caused a severe traction injury to the brachial plexus and damage to the radial artery and that her condition would not improve. It was only when she knew both what injuries had been caused by the accident and, importantly, that they would not improve so that she would not (as it were) get better, that to my mind it can fairly be held that she knew that the omission of the defendant to give her that advice caused the damage. The damage was the loss she sustained because she settled for too little. The claimant could not know that she had settled for too little as a result of any failure on the part of the defendant until she knew she would not get better because it was that fact, namely that her condition would not improve, which essentially caused the settlement to be too low. That is because the essential reason that the settlement is said to have been too low is that it did not include anything to compensate her for not being able to work in the future as a result of the accident."

123. Clarke LJ concluded his judgment as follows:

"I agree with Waller LJ that the position in reality was that the claimant did not know of any misdiagnosis which caused the settlement at too low a figure, which is the essence of her claim against Mr Hopcroft, until she received the report of Professor O'Connor. I also agree with the Lord Chief Justice that it was reasonable for Mrs Oakes to continue to rely upon the advice she received and not consult Professor O'Connor until after 8 March 1988, which was three years before the writ was issued on 8 March 1991. It follows that she did not have the necessary knowledge or constructive knowledge for the purposes of section 14A until after 8 March 1988 and that her action is not time barred. For these reasons I too would allow the appeal."

124. In Fennon v. Anthony Hodari & Co [2001] Lloyds Rep PN 183 CA the claimant and her husband signed a guarantee of the indebtedness of the husband's company to the bank. The claimant, who had been misled by her husband as to the nature of the document which she had signed, did not become aware of its true effect until some time later. In 1987, some two years after the signing of the guarantee, the claimant was told by her husband that they both had to go and see a solicitor to sign some more documentation about the business. They made an appointment with a solicitor in the defendant firm, which they both attended. The solicitor produced a document and asked them to sign it, which they did. It was in fact a legal charge over their home to secure present and future liabilities to the bank. The claimant did not read the document, neither did the solicitor explain its nature and effect to her. Subsequently, the business of the company failed and the claimant began divorce proceedings. From 1992 onwards a different firm of solicitors acted for her. In early 1993 the bank was pressing for payment and threatened to enforce the charge. On 8 December 1993 a solicitor in the firm then acting for the claimant advised her that the defendant should have advised her about the nature of the charge and of the consequences of signing it, and that she might have a claim against the defendant. The action was commenced on 5 December 1996. A preliminary issue arose as to when the claimant had the required 'knowledge' for the purposes of section 14A. The judge held that the claim was statute-barred.
125. Dismissing the claimant's appeal, the Court of Appeal (Otton and Keene LJJ) held that the she knew by early 1993 at the latest that her damage was attributable, at least in part, to her not having been advised by the defendant of the nature and effect of the document which she had signed (the legal charge); all that she did not know until 8 December 1993 was that it was the defendant's legal duty to have done so. Accordingly, the claimant knew more than three years before the commencement of the action that there was a causal connection between not being told by the defendant about the document she had signed and the damage which she had suffered in the form of a liability to the bank; and that was enough in the circumstances of the case to amount to requisite knowledge under section 14A(8)(a).
126. Giving the leading judgment, Keene LJ, after setting out the facts, summarised the submissions of counsel for the appellant as follows:

"15. On behalf of the appellant Mr Foster emphasises that the claim against the respondent is founded upon an omission, what he calls a "pure omission", rather than upon the positive giving of negligent advice. It is submitted that the appellant could not possibly know that the damage in respect of which she makes her claim was "attributable in whole or in part to the omission which is alleged to constitute negligence" (that, of course, being a reference to section 14A(8)(a)) unless and until she knew that the purpose of her being required to attend upon Mr Hellier was to receive advice about the charge which she executed on that occasion. In fact she was not aware of that being the purpose of the meeting until she was told that it was the case on 8 December 1993. Up until then the appellant had not known why she had been required to attend upon Mr Hellier and had thought that all he had been required to do was to witness her signature. It is said that it is not enough for the respondent to demonstrate that the appellant knew by late 1992 about the charge and knew that she had not been advised about it. That knowledge was of no causal relevance to someone who did not know that advice should have been given by the solicitor. That last aspect, says Mr Foster, is a fact material to causation.

16. Reliance is placed on Hallam-Eames …. where at page 126, Hoffmann LJ, as he then was, referred to the knowledge which a claimant had to possess. He referred to it in the following terms:

'He must have known the facts which can fairly be described as constituting the negligence of which he complains. It may be that knowledge of such facts will also serve to bring home to him the fact that the defendant has been negligent or at fault. But that is not in itself a reason for saying that he need not have known them.'

17. Here, says Mr Foster, one of the things which the appellant needed to know was the purpose of her attendance upon Mr Hellier in August 1987, that is to say that he was meant to give her advice. Where the negligence is alleged to consist of an omission, the claimant needs to know that it was an omission, and for that she needed advice. As was said by Russell LJ in Smith v. West Lancashire Health Authority [1995] PIQR 514 at 517:

'One cannot know of an omission without knowing what it is that is omitted.'

127. In paragraph 20 of his judgment, Keene LJ summarised the respondent's submissions as follows:

"For the respondent Mr Fenwick QC submits that the question of actual knowledge is at the heart of this case. He contends that by late 1992, or certainly by early 1993, the appellant knew that she had suffered serious damage because of the document she had signed, which she knew by then was a legal charge on the house. She knew also that Mr Hellier had not explained what it was that she was signing or the consequences thereof, and that she would not have signed it if he had he explained it. In essence, therefore, she knew of the omission which was causally relevant."

128. Keene LJ continued as follows:

"22. The appellant is right that one is, in the present case, concerned with an alleged omission by Mr Hellier. But it is in my view important to identify what that omission was, namely that he did not advise the appellant about the nature of the document she was signing and the legal consequences of signing it. The question therefore becomes: Did she know before the three-year period started to run, in December 1993, that the damage she had suffered by way of liability under the legal charge was attributable in whole or in part to that omission?

23. By late 1992 and certainly early 1993 it was clear that the appellant knew that there was a charge on her home and that she had suffered damage under it. She knew that the charge had arisen because she had signed a legal document at the meeting with Mr Hellier, a solicitor, on 21 August 1987 and that he had, allegedly, not told her what it was that she was signing or the potentially very damaging consequences of signing it. She also knew by then that the liability had arisen under the charge was the result of her signing that document whose nature and effect she had not understood and about which she had been told nothing by Mr Hellier. In addition she was of the view that, if she had had the document explained, she would not have signed it. Her whole case of negligence is based upon that alleged fact.

24. It follows that she knew by early 1993 at the latest that her damage was attributable, at least in part, to her not having been told the nature and effect of the document which she had signed; in other words, to the omission on the part of Mr Hellier to tell her. All that she did not know until 8 December 1993 was that he should, as a matter of law, have advised her of those things, or putting it another way, that it was his legal duty to have done so, with the result that his alleged failure to do so was allegedly negligent. In effect she knew of Mr Hellier's omission. What she did not know was that it amounted to a breach of duty of care towards her. The fact that it amounted to a breach of his duty of care is the very matter which is rendered irrelevant for the present purposes by section 14A(9).

25. Mr Foster seeks to overcome this problem by arguing that the appellant was ignorant of a fact until December 1993, the fact being that the purpose of the meeting with Mr Hellier was to receive advice about the legal charge. The evidence does not in any event support that submission, which I have to say can only be seen as an unrealistic characterisation of what happened. The purpose of the meeting was to execute a legal document. It was that which, by operation of law, may have given rise to a duty on the part of the respondent to advise the appellant. That legal duty is not itself to be seen as a fact for present purposes. In Broadley …. the Court of Appeal was addressing the similar issue which arose under section 14 of the Act in a personal injury case. Hoffmann LJ, as he then was, said this at page 333:

'I think Mr Fenwick was right when he said that the words "which is alleged to constitute negligence, nuisance or breach of duty" serve to identify the facts of which the plaintiff must have knowledge without implying that he should know that they constitute a breach of a rule, whether of law or some other code of behaviour.

Section 14(1)(b) requires that one should look at the way the plaintiff puts his case, distil what he is complaining about and ask whether he had in broad terms knowledge of the facts on which that complaint is based.'

26. I agree with that statement which is of relevance under section 14A also. There is no requirement that a claimant must know that the act or omission complained of constituted a breach of a legal rule such as a duty of care. In the present case Mrs Fennon knew by early 1993 in broad terms the facts on which her complaint was based. She simply did not know that those facts meant that the respondent was, arguably at least, in breach of its duty towards her, a duty imposed by the law."

129. Agreeing with Keene LJ, Otton LJ said this in the course of his judgment:

"33. In the instant case once the claimant knew that a document she had signed enabled the bank to take and sell the matrimonial home in order to pay off her estranged husband's debts to the bank, she knew all she needed to know. When she consulted her solicitors in August 1992 in regard to her matrimonial affairs, she would obviously have been intent on establishing where she stood financially on the dissolution of her marriage. It is highly probable, if not a certainty, that this would have been explained to her by the solicitors then acting on her behalf because by then they were in direct contact with the bank which was seeking to enforce its security.

34. From then on she knew that there was a causal connection between the absence of advice from the solicitors and the effect of the bank documents she had signed. In other words, as is provided under subsection (8)(a), she knew that the damage she had suffered was attributable to an omission which is alleged to constitute negligence. This knowledge was acquired within the six-year period of limitation, and in any event the writ was not issued within the three-year period allowed by extension. Thus, she knew with sufficient confidence to justify embarking on the preliminaries to the issue of the writ such as submitting a claim to the proposed defendant, taking legal and other advice, and collecting evidence.

35. In order to mount the action she did not need to be advised that the failure to advise amounted to professional negligence. This is an irrelevant act for the purposes of subsection (5) and the start date for reckoning the limitation period."

130. Lastly, so far as the authorities are concerned, I note that in Babicki v. Rowlands [2002] Lloyds Rep PN 121, Lord Woolf CJ, referring to the guidance given by Brooke LJ in Spargo, said this (in paragraph 21 of his judgment):

"21. [Counsel for the defendants] relies on the judgment of Brooke LJ in …. Spargo …., in which Lord Justice Brooke gave some very helpful guidance; not as to section 14A with which we are concerned, but section 14. That guidance may be of value in some cases in resolving issues of the sort which are before this Court. However, in the present case I consider the better approach rather than seeking to place a gloss on the language of the section is to turn to the language of the section itself and in particular subsection (7) which I have read. On the language of that subsection it seems to me that the judge has to reach a factual conclusion as to the reaction of a reasonable person to instituting proceedings."

THE ARGUMENTS ON THIS APPEAL

131. For the appellants, Mr Michael Pooles QC, leading Mr Christopher McCourt, submits that the instant case is on all fours with Ali v. Courtaulds in the sense that in the instant case there is a multiplicity of possible causes of the loss which the appellants have suffered, just as in Ali v. Courtaulds the claimant's deafness might have been caused by ageing or by noise.
132. Relying on Hallam-Eames and Oakes v. Hopcroft, Mr Pooles submits that it must be apparent that something has gone wrong with the advice tendered by Fawcetts which has led to all or part of the damage sought to be recovered. He seeks to distinguish HF Pension Trustees on the basis that in that case an immediate loss was suffered when the payment was made, whereas in the instant case it only became apparent some time after the payments in question were made that the investment was irrecoverable. Mr Pooles submits that the making of a bad investment in the instant case is the equivalent of the removal of the healthy breast in Dobbie (as explained by Hoffmann LJ in Hallam-Eames).
133. Mr Pooles submits that the judge's finding (in paragraph 16 of the judgment) that it was known by 6 December 1995 that "the payments already made had gone in the sense that the damage had become a loss" marked the start of what was a flawed approach to the attribution of loss. He submits that the fact that substantial payments had been made did not mean that the appellants were aware that they had suffered any loss at all. To pay money to acquire a company is not necessarily to suffer a loss at all, let alone damage.
134. He submits that the judge, having (in paragraph 19 of the judgment) correctly directed himself as to the statutory test, failed to consider when the appellants (in effect, Mr Haward) had first appreciated that the payments were "damage", that is to say payments with no hope of return. He submits that (as Fawcetts' counsel had accepted in argument before the judge) the damage could not be appreciated until there was no realistic prospect of the money coming back. He points out that many businesses require a period of what he describes as inward investment before a return is realised.
135. In the instant case, he submits, it was not until 1999 that the appellants had any reason to consider that Fawcetts' (that is to say, Mr Austreng's) conduct required investigation or that the losses were capable of being attributed to their advice or lack of it. Mr Pooles points out that Mr Austreng continued to act as trustee of the Trust until August 1999, which suggests that Fawcetts themselves were not conscious of any possible conflict of interest.
136. Mr Pooles reminds us that the evidence of all three witnesses called by the appellants (Mr Haward, Mr Taylor and Mr Quinney) was to the effect that the possibility that Fawcetts' conduct in relation to the Company might require investigation arose only after May 1999; and that the judge did not reject any part of their evidence. In these circumstances Mr Pooles submits that in deciding the preliminary issue against the appellants the judge placed excessive weight on the fact that they had not called Mr Hughes as a witness. He submits that it was inappropriate and unjust for the judge to, in effect, penalise the appellants for not having called Mr Hughes. He points out that Fawcetts could have called Mr Hughes had they so wished.
137. Mr Pooles submits that the judge's finding (in paragraph 20 of the judgment) that the appellants knew that they were making payments "either on [Fawcetts'] advice or without it" provided no answer to questions of appreciation of damage or its attribution. The evidence before the judge was that the appellants became concerned in 1998 that they had suffered loss by reason of the misfeasance of Mr Brunt in his capacity as a director of the Company.
138. As to the Respondent's Notice, Mr Pooles points out that (as the judge observed in paragraph 27 of the judgment) Fawcetts did not advance a case based on constructive notice before the judge, and the judge made no finding as to that. Moreover, there was no suggestion that anyone was at any stage retained to advise in relation to any issue concerning the Company other than issues which arose from Mr Brunt's alleged conduct. Mr Pooles submits that, there having been no factual investigation into the issue of constructive notice below, there is no reasonable prospect of this court being in a position to resolve that issue on appeal.
139. For Fawcetts, Mr Howard Palmer QC, leading Mr Neil Moody, reminds us that it is for the appellants to plead and prove a date of knowledge within three years prior to the commencement of proceedings: see Nash v. Eli Lilly. He submits that the judge's conclusion (in paragraphs 25 and 26 of his judgment) that the appellants had failed to discharge this burden of proof, was based on a finding that the appellants had already been advised by Mr Hughes of serious concerns about Fawcetts' conduct and that the question of a claim for substantial losses had arisen prior to 6 December 1998. He submits that that finding is unassailable on appeal.
140. Mr Palmer submits that the judge's analysis of the relevant law was correct. He submits that the essence of the act or omission in question was correctly identified by the judge as the advice to invest, or (as the case may be) the failure to advise not to invest in the Company at the times when the various payments were made. He submits that the damage was the investment, pointing out that it is not in dispute that the investment was made in reliance on Mr Austreng's advice. He submits that the instant case is, for present purposes, indistinguishable from Bradstock and HF Pension Trustees. He also draws an analogy with Fennon, in so far as in Fennon the complaint was of lack of advice. He refers us to paragraph 14 of Keene LJ's judgment in that case, where Keene LJ notes that "the only new fact which came to the knowledge of Mrs Fennon [within the three-year period] was that the omission by [the defendant] was negligent".
141. Mr Palmer submits that it is irrelevant that there may be other possible causes of the loss apart from Fawcetts' advice (or lack of it). He submits that the payment of the money, on advice, comprises the damage. The fact that other events, such as market conditions or defalcations by Mr Brunt, may have supervened does not alter the fact that the loss of the money can only have been attributable to reliance on the advice (or lack of it). Such other possible causes, he submits, can only be relevant to the question of negligence, which in turn is irrelevant for the purposes of section 14A.
142. He submits that the evidence before the judge establishes that the only fact which the appellants did not know until after 6 December 1998 was the fact (on their case) that Fawcetts was negligent.
143. As to the Respondent's Notice, Mr Palmer submits that it is clear from paragraph 27 of the judgment that sufficient constructive knowledge had been acquired by Mr Haward by December 1998, either because he should by then have come to the conclusion without assistance from elsewhere that the damage was attributable to Fawcetts' advice, or lack of it, or because he should have asked Mr Hughes for assistance when he first retained him in February 1998.
144. He submits that neither the judge nor Fawcetts can be criticised for failing to come fully to grips with the question of constructive knowledge when it was a purely hypothetical question, which became more so once Mr Haward had given evidence of his reliance on Fawcetts' advice. In the circumstances (he submits) this court is in a sufficiently good position to make the necessary finding that, whatever may have been the position in relation to actual knowledge, the appellants had by December 1998 acquired sufficient constructive knowledge to bar the claim under section 14A(10). He submits that this court should find that it was reasonable for Mr Haward to seek expert advice about the losses prior to the beginning of 1998, and that had he asked Mr Hughes for such advice in early 1998 he would have acquired the necessary knowledge well before 6 December 1998.

CONCLUSIONS

145. In the instant case the judge found:

1. that "it was known by 6 December 1998 [the judgment gives the date as 6 December 1995, but that would appear to be an error] that the payments already made had gone in the sense that the damage had become a loss" (paragraph 16 of the judgment);

2. that when the payments were made Mr Haward appreciated "that he was spending money either on [Fawcetts'] advice or without their advice" (paragraph 20 of the judgment);

3. that Mr Haward relied throughout on Fawcetts' advice (paragraph 20 of the judgment);

4. that so far as Mr Haward was concerned "there was nothing of a factual nature that was latent; all was patent" (paragraph 20 of the judgment), although Mr Haward "may not have appreciated that the known facts gave rise to a claim" (paragraph 22 of the judgment);

5. that "it was not until May 1999 that Mr Hughes first suggested to Mr Haward that a claim might lie against Fawcetts" (paragraph 7 of the judgment); and

6. that "the causal connection between the advice or non-advice and the damage in this case is patent and obvious" (paragraph 24 of the judgment).

146. In paragraph 14 of his judgment the judge states that the investigation into what Mr Black had described in his written closing submissions as "the causal link between the acts and omissions alleged against Fawcetts and the losses" did not commence until May 1999. Mr Palmer suggested that that was not a finding of fact by the judge but merely a recital of Mr Black's submission. For my part, I read it as a finding of fact. In the course of his written closing submissions Mr Black had certainly invited the judge to make such a finding, but the fact that, having made the statement in question, the judge goes on, in the same sentence, to add observations of his own which do not appear in Mr Black's written closing submissions seems to me to confirm the initial impression that the judge is making a finding of fact.
147. In any event, even if it be the case that the judge was intending to do no more than recite Mr Black's submission that the investigation as to a possible causal link between Fawcetts' advice (or lack of it) and the losses did not commence until May 1999, the evidence before him was consistent only with a finding to that effect. Accordingly if the judge did not make such a finding, in my judgment he ought to have done so.
148. At the heart of this case, as it seems to me, is the issue of 'attributability' (to use the word which appears in the authorities): that is to say the issue whether by 6 December 1998 Mr Haward had actual or constructive knowledge that the damage (of which, on the judge's finding, he was by then aware) was 'attributable in whole or in part to the act or omission which is alleged to constitute the negligence' (see section 14A(8)(a)). The focus, therefore, is on the judge's finding (number 6 in the list in paragraph 146 above) that "the causal connection between the advice or non-advice and the damage …. is patent and obvious".
149. Before turning to the specific issue of attributability, however, I shall first consider the terms of section 14A as a whole, without at this stage having regard to the authorities.
150. The 'starting date' for the three-year limitation period prescribed by subsection (4)(b) is, for present purposes, the earliest date on which Mr Haward had 'the knowledge required for bringing an action for damages in respect of the relevant damage' (I will refer to such knowledge as "the requisite actual knowledge").
151. The requisite actual knowledge is defined in subsection (6) as meaning knowledge of (a) 'the material facts about the damage in respect of which damages are claimed' (an expression which is in turn defined in subsection (7)), and (b) the 'other facts' relevant to the action as mentioned in subsection (8).
152. Subsection (7) identifies 'the material facts about the damage in respect of which damages are claimed' as being 'such facts about the damage as would lead a reasonable person to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment'.
153. Subsection (8) identifies the 'other facts' mentioned in subsection (6)(b). For present purposes, the only relevant fact is the fact 'that the damage was attributable in whole or in part to the act or omission which is alleged to constitute the negligence'.
154. Subsection (9) provides that the requisite actual knowledge does not include '[k]nowledge that any acts or omissions did or did not, as a matter of law, involve negligence'.
155. Subsection (10) deals with constructive knowledge, and I shall return to it later in this judgment.
156. It is clear from the words of the section itself (looking no further for the moment) that it is concerned with knowledge of facts, as opposed to knowledge of matters of law. In particular, subsection (9) specifically excludes knowledge that the defendant acted negligently. At the same time, subsection (7) prescribes a test of factual materiality by reference to the bringing of an action for damages (i.e. damages for negligence), and, more significantly for present purposes, subsection (8)(a) refers to 'the act or omission which is alleged to constitute negligence'. So whilst the liability or otherwise of the defendant in negligence is not a relevant fact for the purposes of section 14A, the allegations of negligence are nevertheless relevant for the purposes of subsection (8)(a) as identifying the acts or omissions which are claimed to have caused the loss or damage in respect of which damages are sought.
157. In so far as the concept of attributability of damage relates back to the allegations of negligence, it plainly has similarities with the concept of causation. On the other hand, the concept of attributability of damage cannot be synonymous with causation. Had that been the draftsman's intention, he would have used the word 'causation' in subsection (8)(a). The fact that he did not do so seems to me to reflect the fact that, by virtue of subsection (9), knowledge that the defendant was negligent is irrelevant for section 14A purposes.
158. With those general observations as to the terms of section 14A, I can now turn to the authorities.
159. It is now well-settled that for the purposes of section 14A:
• 'knowledge' means 'know with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking legal and other advice and collecting evidence' (see the passage from the judgment of the Court of Appeal in Nash v. Eli Lilly quoted in paragraph 89 above); and
• 'attributable ... to' means 'capable of being attributed to' (see, e.g., the passage from the judgment of Sir Thomas Bingham MR in Dobbie quoted in paragraph 96 above).
160. On the other hand, the authorities, as I read them, also demonstrate that 'attributable … to' does not necessarily embrace any factor which might be said to have played some part in the events which are alleged to have led to 'the relevant damage'. Thus, in the example given by Hoffmann LJ in Hallam-Eames (in the passage from his judgment quoted in paragraph 103 above), the fact that it could be said that a Lloyd's Name suffered losses because some members' agent took him to lunch and persuaded him to join Lloyd's would not be sufficient. As Hoffmann LJ says in that passage:

"…. the act or omission of which the plaintiff must have knowledge must be that which is causally relevant for the purposes of an allegation of negligence".

161. In both Broadley and Dobbie there was only one possible cause of the injury of which complaint was made (the damage to the plaintiff's foot in Broadley, and the removal of the plaintiff's healthy breast in Dobbie), and that was the carrying out of the operation. Accordingly, in Broadley and Dobbie the question of causal relevance to the allegations of negligence answered itself. There were no other possible competing causes. The same can also be said, in my judgment, of Bradstock and HF Pension Trustees. In each of those cases the unlawful payment was made on the advice of the defendant: there were no other possible competing causes of the loss.
162. Although the requirement of causal relevance was not in issue in Dobbie, it is instructive to note that in the course of his judgment in that case Sir Thomas Bingham MR referred to it when he said (in the passage from his judgment quoted in paragraph 96 above):

"Time starts to run against the claimant when he knows that the personal injury on which founds his claim is capable of being attributed to something done or not done by the defendant whom he wishes to sue. This condition is not satisfied where a man knows that he has a disabling cough or shortness of breath but does not know that his injured condition has anything to do with his working conditions. It is satisfied when he knows that his injured condition is capable of being attributed to his working conditions, even though he has no inkling that his employer may have been at fault." (Emphasis supplied)

163. In Hallam-Eames the defendants contended that it was sufficient for the purposes of section 14A that the claimants had knowledge of the fact that contracts of reinsurance written by the defendants had resulted in substantial losses. The judge at first instance upheld that contention, relying on Broadley and Dobbie. In so doing, he failed to have regard to the requirement of causal relevance (a requirement which, as I have already noted, was not in issue in either of those cases). It was for that reason (as I see it) that Hoffmann LJ revisited those cases, in order to demonstrate that they are not authority for the proposition that 'attributable … to' does not include any element of causal relevance.
164. In Ali v. Courtaulds the requirement of causal relevance was indirectly in issue, in that before he was in a position to start proceedings the claimant had to know whether his deafness was caused by ageing or by noise. As Henry LJ put it (in the passage in his judgment quoted in paragraph 113 above):

"But he did not and could not know whether his deafness had been caused by ageing or by noise. …. He could only find that out with the help of expert advice."

165. In Oakes v. Hopcroft the requirement of causal relevance was reflected indirectly in the fact that it was not until the claimant became aware of the causal connection between the low settlement and the misdiagnosis that time began to run against her. As Clarke LJ put it (in the passage in his judgment quoted in paragraph 122 above):

"The claimant could not know that she had settled for too little as a result of any failure on the part of the defendant until she knew she would not get better because it was that fact …. which essentially caused the settlement to be too low. That is because the essential reason that the settlement is said to have been too low is that it did not include anything to compensate her for not being able to work in the future as a result of the accident."

166. Finally, so far as the authorities are concerned, in Fennon v. Hodari the fact that had the solicitor explained the legal charge to the claimant she would not have signed it effectively ruled out any other possible competing causes of the claimant's loss. So the requirement of causal relevance was not directly in issue in that case.
167. With that, I return to the facts of the instant case, and in particular to the judge's finding that the causal connection between the Fawcetts' advice (or lack of it) and the damage was "patent and obvious".
168. In the instant case there were, on the evidence, a number of possible causes for the failure of the Company apart from Fawcetts' advice (or lack of it). Those possible causes are set out in Mr Taylor's letter dated 1 July 1998, in the passage quoted in paragraph 45 above. Of particular significance in this connection, as it seems to me, are the claims made against Mr Brunt. In my judgment, Mr Haward was at that stage (July 1998) in the same position as the man with the disabling cough (in the example given by Sir Thomas Bingham MR in Dobbie) or as the claimant in Ali v. Courtaulds. He did not know at that stage that all or part of the damage was capable of being attributed to Fawcetts' advice (or lack of it).
169. In my judgment, in finding that the causal connection in the instant case was "patent and obvious" the judge fell into the same error as the judge at first instance in Hallam-Eames, in that he failed to recognise that subsection (8)(a) requires that (as Hoffmann LJ put it in the passage from the judgment in Hallam-Eames quoted in paragraph 103 above) "the act or omission of which the plaintiff must have knowledge must be that which is causally relevant for the purposes of an allegation of negligence". I would only say that if I am right in concluding that the judge fell into error in this respect he can hardly be blamed for having done so, since it appears that Hallam-Eames was not cited to him.
170. As I have already concluded, the evidence in the instant case admits of no other finding than that it was not until May 1999 that Mr Haward acquired knowledge of acts or omissions by Fawcetts which were causally relevant for the purposes of the allegations of negligence which he makes. It follows that he (and hence the other appellants) did not acquire the requisite actual knowledge prior to 6 December 1998. In my judgment, therefore, and subject only to the issue of constructive notice raised by Fawcetts' Respondent's Notice, the claims against Fawcetts are not statute-barred.
171. I turn, then, to section 14A(10) and to the issue of constructive notice. As noted earlier, this issue was not raised or argued before the judge, and he made no findings in relation to it beyond indicating (in paragraph 27 of his judgment) that, to put it no higher, he was not unsympathetic towards Fawcetts in this respect.
172. In my judgment the issue of constructive notice required a full investigation before the judge. In the event, it was not investigated at all, and no cross-examination was directed to it. In the circumstances, I do not find it possible for this court to attempt to make findings or reach conclusions in relation to it.
173. I accordingly conclude that the preliminary issue should be determined in favour of the appellants.

RESULT

174. I would allow this appeal.

Mr Justice Charles :

175. I agree.
176. It seems to me that in the light of the authorities discussed by Lord Justice Jonathan Parker tensions arise in the application of s. 14A (4) to (9) to the claims of negligence in a given case from (i) the breadth of meaning of the word attributable at the beginning of ss. 8(a), (ii) the effect of the phrase which is alleged to constitute negligence at the end of ss. 8(a) and (iii) the effect of ss. (9). Such tensions are resolved by reference to the circumstances of the individual case.
177. Applying the approach described by Hoffmann LJ in Hallam-Eames and cited in paragraphs 103 and 104 of the judgment of Jonathan Parker LJ, in my view the "act or omission of Fawcetts which is alleged to constitute negligence" is not simply that Fawcetts advised the claimants. Rather it is necessary to add that there were causes of the continuing losses and increasing deficit, which the appellants did not become aware of until May 1999 but which existed and should have been identified by Fawcetts at the times that the relevant purchase and investments were made.
178. As Waller LJ pointed out in paragraph 36 of his judgment in Oakes v Hopcroft (cited in paragraph 121 of the judgment of Jonathan Parker LJ) there is an important distinction between knowing that something has been missed and knowing whether the missing of that something is negligent. In my view in the circumstances of this case the addition of the facts described in paragraph 178 hereof to the act or omission is not an addition of knowledge that the advice was negligent (although it points to that conclusion). Rather it identifies additional facts (i.e. the causes of the losses and continuing deficit) on which the claims are based, or by analogy with Oakes v Hopcroft facts that indicate that Fawcetts had, or may have, misdiagnosed the financial position and prospects of the company.

Lord Justice Potter:

179. I am indebted to Jonathan Parker LJ for his analysis of the relevant authorities, with which I am in entire agreement. I too would allow the appeal.
Order: Appeal allowed with costs to be assessed on standard basis; costs below to be costs in action; sum paid into court by appellants to be returned with interest; sum of £15,000 to be paid by respondents on account of their costs; leave to appeal refused. (Order does not form part of the approved judgment)