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Cite as: [2012] PNLR 9, [2011] WLR(D) 335, [2012] 2 WLR 510, [2011] WLR (D) 335, [2011] EWHC B24 (Ch), [2012] Ch 363

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		BAILII Citation Number: [2011] EWHC B24 (Ch)
		Case No: HC 09C03083

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Date: 18 November 2011

B e f o r e :

Mr Mark Cawson QC,
sitting as a Judge of the High Court
____________________

Between:

	NICOLE MICHELLE GREEN	Claimant
	- and -
	(1) SHEILA AGNES EADIE (2) SHEILA AGNES EADIE (as personal representative of ROBERT WILLIAM STARK EADIE, deceased) (3) KHILKOFF-BOULDING & CO	Defendants

____________________

William Moffett (instructed by Martin Tolhurst & Co, Gravesend) for the First and Second Defendants
Carl Troman (instructed by Bond Pearce, Southampton), for the Third Defendant

Hearing Date: 10 November 2011
____________________

HTML VERSION OF JUDGMENT
____________________

Introduction

In this action the Claimant, Nicole Michelle Green ("Mrs Green") claims against:

1.1. The First and Second Defendants, Sheila Agnes Eadie ("Mrs Eadie") in her own capacity, and Mrs Eadie as personal representative of her late husband, Robert William Eadie ("Mr Eadie"), damages for misrepresentation pursuant to Section 2(1) of the Misrepresentation Act 1967, further or in the alternative at common law for negligent misrepresentation; and

1.2. The Third Defendant, Khilkoff-Boulding & Co ("KBC"), a firm of solicitors, damages for professional negligence pleaded as breach of the implied terms of KBC's retainer, and as breach of a co-extensive common law duty of care.

The claim comes before me on the trial of a preliminary issue, ordered by Deputy Master Arkush on 11 April 2011, namely:

"Is the claim against the First and Second Defendants and/or the claim against the Third Defendant statute barred (i) in the event that there was a misrepresentation by the First Defendant and/or her husband in relation to the property as pleaded in paragraph 5(i) and/or 5(ii) and/or 5(iii) of the Particulars of Claim, and (ii) in the event that there was no such misrepresentation?"

Mr Nathan Wells, Counsel for Mrs Green, recognised in opening that Mrs Green's only case as against Mrs Eadie is in misrepresentation, either under Section 2(1) of the 1967 Act or at common law, and so the event of there being "no such misrepresentation " is, for the purposes of the present hearing, only relevant to the position of KBC.

Background

Mrs Green is the registered freehold owner of the property known as "Rainbows End", Sundridge Hill, Cuxton, Rochester, Kent, ME12 1LF, title number K438522, ("the Property"), having acquired the same from Mr and Mrs Eadie pursuant to a Transfer dated 29 August 2003 that completed a contract exchanged on 1 August 2003 ("the Contract").

Mr and Mrs Eadie had, themselves, purchased the Property from a Mr and Mrs MacDonald in December 1986. In early 2003 Mr and Mrs Eadie put the Property on the market for sale, and, thereafter, Mrs Green and her husband viewed the Property in the presence of Mrs Eadie.

At the time Mrs Green and her husband visited the Property there were some wooden fences to the north-east of the Property in the positions shown marked "A - B" and "B - C" on the plan attached to the Particulars of Claim. It is Mrs Green's case that, as alleged in paragraph 5(i) of the Particulars of Claim, Mr and Mrs Eadie represented to her and her husband that these fences marked the North Easterly boundary of the Property.

In fact, there is a strip of land ("the Strip") lying between the fences and the boundary of the Property as shown on the filed plan with the registered title. I note that in paragraph 8.2 of Mrs Eadie's Defence, she alleges that she informed Mrs Green prior to the purchase that the Property did not include the Strip, that the fences did not mark the boundary and had only been erected to keep horses out, and that the fences would have to be moved if the neighbour so required. There is therefore a fundamental dispute of evidence as to whether the representation referred to in paragraph 6 above was made as alleged, but for the purposes of the present trial, and subject to considering the alternative position against KBC in the event that there was no misrepresentation, I proceed on the basis that Mrs Green's version of events is correct, and that it was represented to her that the fences marked the boundary.

On 14 April 2003, Mrs Green first retained KBC to act for her on the purchase of the Property from Mr and Mrs Eadie.

On 21 April 2003, Mr and Mrs Eadie completed a "Sellers Property Information Form ". Two questions answered therein are relevant for present purposes because they provide the basis for the further misrepresentations alleged at paragraphs 5(ii) and 5 (iii) of the Particulars of Claim:

"1.3 Do you know of any boundary being moved in the last 20 years? No

2.1 Do you know of any disputes or anything which might lead to a dispute about this or any neighbouring property? No."

The Sellers Property Information Form was sent to KBC on 23 April 2003. KBC picked up on an issue relating to a strip of land between the front boundary of the Property and a roadway that was resolved post completion by the purchase of a strip of land from Medway Council. However, the fact that the title did not include the Strip was not picked up before exchange of Contracts or the later completion.

On 15 June 2003, Mrs Green paid to Mr and Mrs Eadie a non-binding deposit of £1,000 and, as referred to above, contracts were formally exchanged on 1 August 2003, and a further deposit of £31,500 was paid roughly contemporaneously therewith. As further referred to above, completion took place on 29 August 2003 when the balance of the purchase price of £325,000 was paid with the assistance of a mortgage advance from IGroup Mortgages Limited. Registration of Mrs Green as registered proprietor of the Property was completed on 5 March 2004.

On 9 September 2005 the registered title to the land lying to the North East of the Property (title number K524029), being land which included the Strip, was acquired by Mr Balvinder Singh Gill ("Mr Gill"). On 26 February 2006 Mr Gill issued proceedings ("Gill v. Green") against Mrs Green and her husband in the Medway County Court, seeking an injunction to "restore the true boundary" between the Property and the Strip, and an injunction restraining trespass on the Strip.

On 22 June 2006, Mrs Green served her Defence and Counterclaim in Gill v. Green, Mrs Green by her Counterclaim alleging that she had acquired a possessory title to the Strip by adverse possession. Gill v. Green came on for trial before Her Honour Judge Cameron at Canterbury County Court on 29 - 30 October 2007. On 29 January 2008, the Judge handed down Judgment dismissing Mrs Green's claim to a possessory title, awarding Mr Gill damages and costs, but declining to determine the precise position of the boundary on the basis that there was insufficient evidence before her to make the required determination.

Mrs Green then applied to the Court of Appeal for permission to appeal. On 22 July 2008, Lloyd LJ granted Mr Green permission to appeal on each of the grounds sought to be pursued. However, before the full appeal was heard by the Court of Appeal, the parties agreed to a consent order providing for Mr Gill to retain the damages and costs paid to him, an agreed line of the boundary, and for the parties to bear their own costs of the appeal.

The present claim was issued on 28 August 2009. The significance of this date is that it is more than 6 years after exchange of contracts (1 August 2003), but less (just) than 6 years from completion (29 August 2003).

The Claim

Mrs Green's case against Mrs Eadie is based upon the representations referred to in paragraphs 6 and 9 above, which are alleged to have been false, and which are alleged to have induced Mrs Green to enter into the Contract, and subsequently complete. As already referred to the case is pleaded under Section 2(1) of the 1967 Act, placing the burden on Mrs Eadie to show that she had reasonable grounds to believe in the truth of the representations, alleged, alternatively at common law for negligent misrepresentation, where the burden is on Mrs Green to prove negligence.

The claim against KBC is set out in paragraph 17 of the Particulars of Claim as follows:

"17. In breach of contract and/or negligently the Third Defendant failed to exercise all proper care, skill, diligence, and competence in and about the purchase and/or conveyancing of the Property.

PARTICULARS OF NEGLIGENCE/BREACH OF CONTRACT

(i) The Third Defendant failed to discover that all the boundaries of the Property were not clearly and properly defined;

(ii) The Third Defendant failed to advise the Claimant to compare the existing boundary features with the Land Registry Filed Plan and to report and discrepancies to it;

(iii) The Third Defendant failed to advise the Claimant to instruct a surveyor to compare the existing boundary features with the Land Registry Filed Plan and to report any discrepancies to the Third Defendant;

(iv) The Third Defendant failed itself to compare the existing boundary features with the Land Registry Filed Plan;

(v) The Third Defendant failed to make any or any adequate inquiries as to the position and ownership of the boundaries of the Property;

(vi) The Third Defendant failed to advise the Claimant that some of the boundaries of the Property were not properly and clearly defined and that the lack of clarity could subsequently cause problems, including costly boundary disputes with neighbouring landowners;

(vii) The Third Defendant permitted the Claimant to proceed with the purchase of the Property without giving any or any adequate advice as to the potential problems of the Property's boundaries;

(viii) In all the circumstances, the Third Defendant failed to advise the Claimant on all matters relevant to the purchase of the Property."

The essence of the case against KBC is that they should have checked the boundaries as shown on the filed plan of the Property, initially at least by asking Mrs Green to check the boundaries by a site inspection, if necessary with the assistance of a surveyor, and possibly even by KBC carrying out their own site inspection. It is said had this been done, then it would have been discovered that the Strip was not included in the title, or at least that there were uncertainties connected therewith, and Mrs Green would not have become embroiled in Green v. Gill thereby incurring the losses that she now seeks to recover.

The same "Particulars of Loss and Damage", as set out in paragraph 18 of the Particulars of Claim, are alleged as against KBC and Mrs Eadie. In essence, Mrs Green seeks to recover her own costs of Gill v. Green of £55,794.55, 50% of Mr Gill's costs that Mrs Green was ordered to pay (£2,350.57), £8,600 representing the sum paid for damages for trespass etc, and Mrs Green's costs of the appeal to the Court of Appeal (£17,018.27), total £98,823.19. KBC's Defence challenges whether such losses would be recoverable in respect of the breaches alleged against KBC, but those are not issues that I need to go into for present purposes.

Limitation

The Defendants allege that all of the claims pursued against them are statute barred by application of Sections 2, 5 and/or 9(1) of the Limitation Act 1980, which provide as follows:

"2. An action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued."

"5. An action from simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued."

"9(1) An action to recover any sum recoverable by virtue of any enactment shall not be brought after the expiration of six years from the date on which the cause of action accrued".

It is trite law that a claim in common law negligence (including negligent misrepresentation) and common law breach of duty of care will accrue when damage is first suffered as damage is an essential ingredient of the cause of action. Further, it is trite law that a claim for breach of contract will accrue when the breach occurs.

In the present case, Mrs Eadie and KBC both say that in respect of the common law negligence/breach of duty claims, damage was first suffered on the entry into the Contract on 1 August 2003 whether or not the representations were made as alleged, and KBC says that so far as the breach of contract claim is concerned the relevant breach had already occurred prior to the entry into the Contract on 1 August 2003, and that, properly analysed, there was no continuing breach of contract giving rise to any new cause of action.

In response, the essence of Mrs Green's case in respect of the common law negligence/breach of duty claims is that as a result of the representations that are taken to have been made, she had a right to rescind the Contract by simple notice to Mr and Mrs Eadie, and that as she was not therefore, at least prior to completion, irrevocably bound by the Contract. Consequently, so it is argued, she cannot be said to have suffered loss by reason of entry into the Contract, and so no loss was suffered prior to completion, or more pertinently more than six years prior to the commencement of the present claim. Mr Wells realistically recognised on behalf of Mrs Green that if the representations were not made, then on any view this cause of action against KBC would have accrued on the entry into the Contract.

As to the breach of contract claim against KBC, Mr Wells submits that either (i) there was a single and once for all breach of the contractual duty at completion (rather than exchange) or (ii) there was a fresh breach of a continuing duty, day after day, up to and including completion. Consequently, Mr Wells submits that the cause of action did not accrue more than six years prior to the commencement of the claim, and therefore that this claim is not statute barred.

The position in respect of Section 2(1) of the Misrepresentation Act 1967 is more complicated.

Section 2(1) of the Misrepresentation Act provides as follows:

"2(1) Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable ground to believe and did believe up to the time the contract was made that the facts represented were true."

Mrs Green relies upon Section 8(1) of the Limitation Act 1980, which provides that "An action on a specialty shall not be brought after the expiration of 12 years from the date on which the cause of action accrued". She says that the 12 year limitation period under Section 8(1) applies because the statutory claim under Section 8(1) is an action on a speciality.

Mrs Green accepts that Section 8(2) provides that Section 8(1) "shall not affect any action for which a shorter period of limitation is prescribed by any other provision of this Act", but she argues that:

28.1. Section 2 does not apply to a claim under Section 2(1) of the Misrepresentation Act 1967 as it is not "founded on tort", but is a hybrid form of claim that lies in neither tort nor contract; and

28.2. Section 9(1) does not apply because the present action, being a claim for unliquidated damages, is not an action to "recover any sum recoverable by virtue of any enactment".

It is Mrs Eadie's case, as advanced by Mr William Moffett on her behalf, that a claim under Section 2(1) is not an action on a speciality, but that even if it is, Sections 2 and 9(1) of the Limitation Act 1980 both apply and prevail by virtue of Section 8(2) of the latter.

It is convenient for me to first consider the discrete issues that in relation to Section 2(1) of the Misrepresentation Act 1967, before turning to the common law negligence/breach of duty and breach of contract claims. Of course, if I conclude that a six year limitation period applies to the Section 2(1) claim, then it falls to be dealt with in the same way as the common law negligence claims because it is clear from the wording of Section 2(1) that the cause of action will accrued upon suffering loss having been induced to enter into a contract.

Section 2(1) of the Misrepresentation Act 1967

There is no authority on the specific point as to whether or not the 12 year limitation period under Section 8(1) of the Limitation Act 1980 applies to a claim under Section 2(1), or whether Sections 2 or 9(1) apply, whether by virtue of Section 8(2) or otherwise. In Hartley v. BRB (unreported, 25 June 1999), the Court of Appeal, on a successful appeal against a decision to strike out a misrepresentation claim on the basis that it was time-barred, merely observed that the rival arguments (that a claim for damages under Section 2(1) fell under Section 2 or 9 and that it fell within Section 8(1)) may raise difficult questions of law and deserved to be considered at trial. Further, in Laws v. The Society of Lloyds [2003] EWCA 1887, the Court of Appeal considered it unnecessary to "express a view on the question whether an action for damages of this kind [ie. under Section 2(1)] is an action founded on a tort within Section 2 of the 1980 Act or an action to recover a sum recoverable under an enactment within Section 9 or even an action on a speciality within Section 8" - Waller LJ at paragraph 92. However Waller LJ, giving the judgment of the Court (Waller, Chadwick and Clarke LJJ), went on to say that "It does not seem to us to be an action on a speciality. It does not perhaps matter whether it is an action within Section 2 or 9 but our present view is that it is an action founded on a tort, albeit a statutory tort, and thus within Section 2 ".

The obiter view of the Court of Appeal that Section 2 of the Limitation Act 1980 would apply accords with the view expressed in the Law Commission's Consultation Paper No. 151, Limitation of Actions, (1998) at para 7.90 that whilst there was no authority on the application of the Limitation Act 1980 to actions founded on the Misrepresentation Act 1967: " ... it would seem that such actions should be classified as actions founded on tort for Limitation purposes ".

Mr Wells relies on a passage in the Judgment of Oliver LJ in Collin v. Duke of Westminster [1995] QB 581 at 601H to 602E as authority for the proposition that the "speciality " extends not only to contract under seal, but also to claims brought under the terms of a statute, in that case to enfranchise a lease under the Leasehold Reform Act 1967. However, in this passage Oliver LJ draws a distinction between claims where the cause of action is derived from statute and from statute alone and those from which it is not, eg. where the effect of the statute is to make binding a contract which would not otherwise be binding or to vary a contract, which would not be regarded as a speciality. In view of the conclusion that I reach as to the application of Section 2 and 9(1) of the Limitation Act 1980 as taking a claim under Section 2(1) outside the ambit of Section 8(1) even if it would otherwise have fallen within it, I do not need to decide the point, but I incline to the view that a claim under Section 2(1) is not a claim on a speciality because it is in the nature of a claim that is not derived from statute alone, but is a claim that applies a form of statutory veneer to the preexisting law of deceit and innocent misrepresentation.

However, irrespective of whether a claim under Section 2(1) is strictly to be regarded as a claim on a speciality, I consider that the present claim under Section 2(1) falls within both Sections 2 and 9(1) of the Limitation Act 1980, in which case Section 8(2) of the latter would apply in any event to take the case outside Section 8(1).

As to Section 2 of the Limitation Act 1980, I consider that, as a matter of principle, the obiter view of the Court of Appeal in Laws v. The Society of Lloyds and the view expressed by the Law Commission to be right. A claim under Section 2(1) of the Misrepresentation Act 1980 is "founded on" tort in that it can properly be regarded as a statutory extension of the law of deceit. Hence Bridge LJ in Howard Marine Dredging Co Ltd v. A Ogden & Sons (Excavations) Ltd [1978] QB 574 at 595 felt a able to refer to a claim under Section 2(1) as a "liability in tort", and this is why the appropriate measure of damages under Section 2(1) has been held to be the tortious measure with a remoteness test the same as that applicable in the tort of deceit - see Royscot Trust v. Rogerson [1991] 2 QB 297.

A tort is, in essence, a civil wrong, and not necessarily dependent upon proof of wrongful intention to be actionable, eg. a claim in trespass. By Section 2(1) Parliament has clearly intended that those who induce others to enter into contracts on the basis of representations that prove to be false should be liable to compensate the other party if they are unable to show that they had reasonable grounds to believe in the truth of what they said. A claim in such circumstances can, as I see it, properly be described as the remedying of a civil wrong properly described as a statutory tort.

Even if I am wrong as to the application of Section 2, the present claim falls fairly and squarely, in my judgement, within Section 9(1) of the Limitation Act 1980.

Mr Wells submits that Section 9(1) is confined to the circumstances where what is sought is the recovery of a specific sum, rather than a claim for liquidated damages. He refers to the shorter OED definition of "sum" as being a "quantity of money of a specified amount", and to an authority to the effect that a claim for a liquidated damages is not a "sum due" within the meaning of Section 8(1) of the Distribution of German Enemy Property Act 1949 (Re Collbran Dec'd [1956] Ch 250 per Upjohn J at 255). He also prays in aid the fact that the Limitation Act 1980 does use the word "sum" elsewhere to refer to specific sums of money (see eg. Section 20(1 )(a)), and, in contrast, uses the word "damages" in other provisions. Consequently, Mr Wells submits that where the 1980 Act refers to "sum", it is referring to a liquidated or fixed amount thereby excluding unliquidated claims.

Even apart from authority I am not persuaded that the expression "any sum recoverable" in Section 9(1) is, or is intended to be limited to liquidated claims:

39.1. Firstly, no matter of principle has been suggested as to why it should be, and none is apparent.

39.2. Secondly, as a matter of the ordinary meaning of the words used, it can fairly be said in an action involving a claim for unliquidated damages such as the present, that if there is merit in the clai, then a "sum " will be "recoverable" at the end of the day, albeit that a litigation process may have to be gone through in order to establish what the sum is.

39.3. Thirdly, the expression "sum due" in Re Collbran Dec'd was used in a very different context, and the addition of the word "due" does, as I see it, point more firmly to a requirement for a liquidated sum to be claimed.

39.4. Fourthly, it is understandable why the word "damages" in not used in Section 9(1), because that would serve unduly to restrict the types of claim comprehended thereby.

However, the point is not without authority, albeit that there is no authority directly relating to an unliquidated claim under Section 2(1) of the Misrepresentation Act 1967. In Rowan Companies Inc v. Lambert Eggink Offshore Transport Consultants V.O.F. [1999] 2 Lloyd's Rep 443, David Steel J held that an unliquidated statutory claim under the Dutch Commercial Code, although a speciality, fell within Section 9(1). At page 447 he said this:

"As a matter of first impression:-

1. The word "sum" in its ordinary and natural meaning means any sum of money;

2. There is no express restriction of the scope of the section to claims for liquidated sums of money ie. debts;

3. The relevant distinction would seem to be between claims under an enactment for non- monetary relief and those claims under an enactment for monetary relief whether in a form of debt, damages, compensation or otherwise.

This first impression is fortified, in my judgment, by the authorities;

1. It is clear that actions on a speciality are not confined to claims for liquidated sums; Pratt -v- Cook Son & Co [1940] AC 437 (quantum meruit), Lievers -v- Barton Walker & Co [1943] 1 KB 385 (workmen's compensation), Aiken -v- Stewart Wrightson Member's Agency Ltd [1995] 1 WLR 1281 (damages).

2. The scheme of the Act is to impose a six year limitation period on claims for money under an enactment thus constituting an exception to the general rule as regards specialities; West Riding County Council -v- Huddersfield Corporation [1957] 1 QB 540, Central Electricity Board -v- Halifax Corporation [1963] AC 785, re Farmizer (Products) Ltd [1997] BCC 655."

I see no reason to depart from this approach which is supported by the authorities that David Steel J referred to, including in particular Re Farmizer [1997] BCC 655, a claim under Section 214 of the Insolvency Act 1986 under which the Court has a wide power to declare that a director falling within the provisions thereof "is liable to make such contribution (if any) to the company's assets as the court thinks proper", and where Section 9(1) was held by the Court of appeal to apply.

I therefore hold that the appropriate time period for a claim for damages under Section 2(1) of the Misrepresentation Act 1967 to become statute barred is six years from the accrual of the cause of action and not 12 years.

Accrual of Cause of Action in respect of Section 2(1). Negligent Misrepresentation and Breach of Duty Claims

As referred to above the issue here is as to when damage was first suffered, and whether, on the assumption that representations were made and Mrs Green had a right to rescind, that was on exchange of contracts on 1 August 2003 or completion or later.

Mr Wells points out that the question of when loss was first suffered is a question of fact in each case, and each case is capable of being fact sensitive - see D W Moore & Co v. Ferrier [1988] 1 WLR 267 at 278 per Neill LJ, Havenledge Ltd v. Graeme John [2001] PNLR 17 at para 50 per Pill LJ, and Edehomo v. Edehomo [2011] 1 WLR 2217 at 2225D - E per Roth J.

Mr Wells recognised that where there is a flawed purchase, ie. where the buyer becomes committed to buying something of a lesser quality than it should be or subject to something that it ought not to be subject, then loss will generally first be first suffered when the buyer becomes committed to buy on entering into the contract. However he submits that the authorities recognise an exception where the relevant contract does not irrevocably bind the purchaser, as in a situation such as at present where the purchaser has, I am to assume, a right to rescind. He referred me to the following by way of authority:

45.1. Byrne v. Paine & Foster [1999] 1 WLR 1849, where at 1857B - C, Simon Brown LJ stressed that the "actual" loss had resulted when the plaintiffs had on exchange, become irrevocably committed to a lease. Reliance is also placed on Otton LJ's observations at 1859B about completion being "only a formality" in the absence of any claim for rescission.

45.2. Haveledge v. Graeme John & Ptnrs (supra) at paragraph 41 where Buxton LJ stressed the fact of the plaintiff becoming irrevocably committed to the property; and

45.3. Daniels v. Thompson [2004] PNLR 37 at paragraph 24, where Dyson LJ, having referred to a number of cases, commented that in each of these cases "... the claimant was held to have suffered damage as soon as he was committed to the inadequate transaction ".

Mr Wells correctly points out that if a right to rescind exists, it can be exercised simply by notice and not by action, and submits that Mrs Green cannot be said to have suffered loss at any time before contract and completion because she had a right to get out of the flawed contract which did not provide as she thought in respect of boundaries. Consequently, so it is argued, no loss can have been suffered prior to completion.

I am not persuaded that there is any general principle that a party to a flawed transaction will only suffer loss when and if the relevant transaction unconditionally binds that party. In the cases referred to in paragraph 45 above, the contracts in question were in fact irrevocable, and so it could be said that loss had been suffered on the entry into the same. These cases did not, however, specifically consider the effect of entering into a flawed transaction that might have been capable of being remedied by rescission.

I was addressed on these issues on behalf of KBC by Mr Carl Troman, who also put the relevant arguments on behalf of Mrs Eadie, Mr Moffett, having broadly limited his submissions to the discrete Section 2(1) of the Misrepresentation Act 1967 issues by way of agreed division of labour. The thrust of Mr Troman's submissions was that the very entry into a flawed transaction was, of itself, an event causing loss even if capable of remedy.

In particular, Mr Troman relies upon two passages from the judgments of the majority of the Court of Appeal (Lloyd LJ having dissented) in Axa Insurance Ltd v. Arthur Derby [2010] 1 WLR 1662:

49.1. At 1667F H, Arden LJ said this:

"7 The judge held in favour of the panel solicitors. He held that, in the case of vetting breaches, damage occurred when each ATE policy incepted and not when each insured claim ultimately failed. In a thorough and lucid judgment, he held that there was nothing in the House of Lords' decision in the Sephton case [2006] 2 AC 543 that precluded the conclusion that damage occurred when the policy incepted. He therefore rejected Axa's argument that this was a case of "purely contingent liabilities standing alone", as had been the case in the Sephton case. The panel solicitors were under a tortious duty to bring about a transaction with a particular feature. This feature was that the prospects of success in a particular were assessed by a competent lawyer as being greater than 50%. As such, this case fell within the line of Court of Appeal decisions running from Forster v Outred & Co [1982] 1 WLR 86 to Shore v Sedgwick Financial Services Ltd [2009] Bus LR 42. When the professional's duty is to procure that a transaction has a particular characteristic or feature and the professional breaches that duty, the cause of action accrues on entering the flawed transaction."

At 1668A - C, Longman LJ said this:

"73 It is not, however, possible to say that the entering into of a flawed transaction constitutes damage when it is in one category of case but not when it is in another. The fact that the flawed transaction has been entered into will usually be damage from the claimant's point of view. The fact that the recipient of the advice might have hoped for a better transaction or might have hoped to avoid any transaction makes no difference to the fact that he has entered into a flawed transaction which he would not have done if he had been competently advised. If such a flawed transaction has come into existence that will, in my view, usually be the damage which the recipient of the advice has suffered and that is more than the existence of a mere contingent liability."

These passages and in particular the comments of Arden LJ, support the proposition that the very fact of the flawed transaction, however it might ultimately turn out and whether or not capable of remedy, amounts to sufficient by way of loss to constitute the cause of action.

Further support for this approach can be found in the judgment of Nicholls LJ in Bell v. Peter Browne [1990] 2 QB 495. In that case a husband on the break-up of the marriage agreed to transfer the jointly owned matrimonial home into the sole name of the wife in return for her agreeing that he should receive a l/6^th share of the gross proceeds of sale. This latter interest was to be protected by a trust deed or mortgage which the defendant's solicitor failed to execute, allowing the wife to dispose of the house without accounting to the husband. The issue that arose was whether damage was sufficient prior to the disposal by the wife bearing in mind that the position remained capable of remedy by the simple expedient of lodging a caution. The Court of Appeal held that, notwithstanding that the transaction was capable of remedy by this simple expedient; loss had been suffered when the house was transferred to the wife without protecting the husband's interest. At page 502D - 503F Nicholls LJ said this:

"So when did the plaintiff first sustain damage by reason of his solicitors' negligence? On this it is necessary to distinguish between (a) the solicitors' failure to see that the parties' agreement was recorded formally in a suitable declaration of trust or other instrument and (b) their failure to protect the plaintiffs interest in the house or the proceeds of sale by lodging a caution. As to failure (a), clearly the damage, such as it may have been, was sustained when the transfer was executed and handed over. At that point the plaintiff parted with title to the house, and he became subject to the practical inconveniences which might flow from his not having his wife's signature on a formal document. If the wife thereafter chose to deny his entitlement to one-sixth of the proceeds of sale, the plaintiff would have to rely on the correspondence between the solicitors coupled with part performance. To the extent that this was less satisfactory than a formal document recording the deal, the plaintiff suffered prejudice. He suffered that prejudice when the transaction was implemented without his having the protection of a formal document.

...................................

Failure (b) comprised the solicitors' omission to protect the plaintiffs interest by making an appropriate entry in the land register. This failure stands on a different footing from failure (a) in that it was within the plaintiffs own power to remedy failure (b) so long as the house continued to belong to his former wife. So long as she did not sell or mortgage the property, he could protect his interest by taking the simple step of lodging a caution. To do so he did not need her consent or co-operation.

Is this difference material? On the one hand the plaintiff, in the case of failure (b) as much as in the case of failure (a), did not receive the protection he ought to have received when he executed the transfer and parted with his title to the house. He was at risk, from the outset. His interest was vulnerable. On the other hand, so long as the plaintiffs wife did not deal with the property, failure (b) could easily be put right and at little expense and, had it been remedied, the failure to lodge a caution promptly in 1978 would have caused no financial loss to the plaintiff

I am unable to accept that remediability puts failure (b) on the other side of the line from failure (a). The solicitors' breach of duty in 1978 was remediable by the plaintiff, but that was only possible after he became aware that there had been a breach of duty. Apart from any other consideration, to treat the plaintiffs ability to remedy the breach himself without the concurrence of his former wife as a ground of distinction between this case and cases such as Baker v. Ollard & Bentley, Court of Appeal (Civil Division) Transcript No. 155 of 1982 would be to disregard the unlikelihood in practice of the plaintiff ever being in a position to remedy the breach. Once the solicitors closed their file, it was unlikely that failure (b) would come to the notice of the plaintiff or the defendants, until the house was sold and it was too late. That, on the pleaded facts, is exactly what happened. The first the plaintiff knew that his one-sixth share was not properly protected was after it had gone beyond recall. So his ability to remedy the breach before the house was sold was a matter of more theoretical interest than practical importance."

This to my mind explains why as a matter of logic the very entry into a flawed transaction should be seen to give rise to damage, even if capable of remedy. Firstly there is the practical inconvenience of having to rectify the position; secondly, there is the practical point that until the breach of duty is discovered (here the fact that false representations had been made, and that the solicitors had failed to ensure that the filed plan represented what were understood to be the physical boundaries) the flawed transaction would not be remedied, but rather the contract would be completed.

As to the latter point, reliance is placed by Mr Wells on Nouri v. Marvi [2011] PNLR 7, at paras 32 - 33 as authority for the proposition that time will run under Section 2 of the Limitation Act 1980 even if the Claimant is unaware as to the circumstances that has led to it, and thus that the existence of actual damage does not depend on the Claimant's state of knowledge, and the Court's task is simply to ask whether the Claimant could have maintained an action for damages at the relevant time. Thus it is said that I must act on the hypothesis that Mrs Green was suing the Defendants between contract and completion, the point being that at the time, because Mrs Green could get out of the contract by recession, she had not then, so it is said, suffered any loss.

I do not consider that Nouri v. Mavri assists Mr Wells, because that case is, as I see it, simply addressing the question as to whether loss had actually been suffered, that being the key question, the point being that it did not matter that the claimant was not aware at the time that loss had been suffered. In the present case a flawed transaction had been entered into and Nicholls LJ's logic in Bell v Peter Browne at 502D to 503F does, in my judgment, apply to show that despite the availability of rescission, loss had in fact been suffered.

In any event, even if Mr Wells is right and the correct question is to ask hypothetically what would have happened had Mr Green sued the Defendants between contract and completion, the position would have been that she would have been able to recover damages from both Mrs Eadie and KBC whether or not she had elected to rescind. Importantly, bearing in mind that this is said by Mrs Green to be the option that would have avoided loss, Mrs Green would have had a good claim in damages against:

56.1. Mrs Eadie for, if nothing else, the wasted costs of the transaction, which would have been more than trivial; and

56.2. Against KBC, the wasted costs of the transaction, and the irrecoverable costs involved in seeking the recovery of the deposit from Mrs Eadie.

However the facts are analysed, I cannot escape the conclusion that Mrs Green suffered more than trivial loss at the time that she entered into the Contract, and that is when, in my judgment the causes of action under Section 2(1) of the Misrepresentation Act 1967, and those in respect of the common law misrepresentation and breach of duty claims accrued. Consequently these causes of action are, in my judgment, statute barred.

Claim in Contract against KBC

I was referred by Mr Troman to The Law Society's Conveyancing Handbook, 10^th edition, paragraph 26.1.1 in support of the proposition that the relevant checks that a solicitor should carry out in respect of boundaries should be carried out before the client is committed to buy the property by the entry into a contract. That makes absolute sense and to me and must be right. Although the Particulars of Claim do not specify when KBC is alleged to have been in breach of contract, it seems to me to be plain that KBC, if ever in breach of contract as alleged, was in breach of contract in the material respects in allowing Mrs Green to enter into the Contract without protecting her interests in the way that it is alleged that they should have done. That it may have been possible to remedy the position prior to completion is, in my judgment, beside the point, and I do not accept Mr Well's submission that there was a single once and for all breach at the time of completion.

Plainly the retainer continued after the entry into the Contract, and indeed beyond completion, and the implied contractual duty of care will have been continuous throughout the retainer, but can it properly be said that there was a continuing duty, in effect, to correct what ought to have been done prior to exchange, or to advise Mrs Green of matters that ought to have been dealt with prior to completion?

In my judgement the point is answered by Nicholls LJ's treatment of the contractual claim in Bell v. Peter Browne & Co (supra), where at paragraph 500F - 501C he said this:

"Clearly, all those steps needed to be taken at the time of the transfer or, in the case of lodging a caution, as soon as reasonably practicable thereafter. When the solicitor failed to take those steps in 1978 he was, thereupon, in breach of contract. This was so even though the breach, so far as it related to lodging a caution, remained remediable for many years. Indeed, it remained remediable until the plaintiff's former wife sold the house. Thus the six-year limitation period began to run from the date of the breach, in September 1978, and it expired long before the writ was issued nearly nine years later, in August 1987. Accordingly, in my view, Auld J. was correct in holding that the claim based on breach of contract is statute-barred.

It is, of course, true that the solicitor's breach of contract in 1978 did not discharge his obligations. Had the plaintiff learned, a year or two later, of what had happened, he would still have been entitled to go back to his former solicitor and require him to carry out, belatedly, his contractual obligations so far as they could still be performed. For example, lodging a caution. Despite this, it was in 1978 that the breach occurred. Failure thereafter to make good the omission did not constitute a further breach. The position after 1978 was simply that, in breach of contract, the solicitor had failed to do what he ought to have done in 1978 and, year after year, that breach remained unremedied. Nor would the position have been different if in, say, 1980 the plaintiff's solicitor had been asked to remedy his breach of contract and he had failed to do so. His failure to make good his existing breach of contract on request would not have constituted a further breach of contract: it would not have set a new six-year limitation period running. Once again, the position would have been simply that the solicitor remained in breach. Nor, finally, is the position any different because, in respect of lodging a caution, the breach remained remediable until 1986 when the house was sold. A remediable breach is just as much a breach of contract when it occurs as an irremediable breach, although the practical consequences are likely to be less serious if the breach comes to light in time to take remedial action. Were the law otherwise, in any of these instances, the effect would be to frustrate the purpose of the statutes of limitation, for it would mean that breaches of contract would never become statute-barred unless the innocent party chose to accept the defaulting party's conduct as a repudiation or, perhaps, performance ceased to be possible."

Of crucial importance in this passage is the reference to the fact that even if in 1980 the solicitor had been asked to remedy the breach and had failed to do so, that would have made no difference on the basis that a failure to make good a breach of contract on request would not have constituted a new breach of contract to start a new six year limitation period. The same reasoning must, as I see it, apply to any failure of any continuing duty to remedy the breach between contract and completion. The cause of action had already accrued, and there was no question of any new cause of action arising despite the continuing duty.

At page 512 in Bell v. Peter Browne & Co Mustill J refers to there being retainers which require the solicitor to be constantly on watch for new sources of potential danger, but here we are not concerned with a new source of potential danger.

Consequently, I do not consider that I am assisted by authorities such as Hondon Developments v. Powerise Investments Ltd [2006] PNLR 1, which might be taken to suggest that a solicitor's duties in respect of conveyance plans continues up to completion. This is not the point. Here breach occurred more than six years prior to the commencement of proceedings, and any failure to rectify that breach did not amount to a new breach giving rise to a new cause of action within the limitation period.

Conclusion

Each of the causes of action against each of the Defendants is statute barred whether or not the relevant representations were made, and I so decide the preliminary issue.