England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		12 May 2005

Mr Justice Tugendhat:

1. This is a claim for professional negligence. This claim was commenced on 21 November 2002. It arises out of the retainer by the Claimant and her husband of Mr Osborn of the Defendants (KN) in the period December 1995 to a date after 21 November 1996. That date is six years before the start of these proceedings. Central to the issues I have to decide is the submission of KN that if any relevant damage was suffered before that date, the whole claim is statute barred.
2. That retainer in turn related to proceedings in which a firm of architects referred to as KNM had sued for their fees. The defendants were Mr Cohen, together with a firm of accountants of which he had been senior partner and a company called Ryhald in which Mr Cohen had been interested. Mr Cohen had counter-claimed against KNM. KNM had started that action in February 1992, and the counterclaim was served on 16 April 1992. KNM had been retained to carry out work on two projects. These were referred to respectively as the St John's Wood project and the French project. KNM had ceased work in 1991.
3. KN deny that they have been negligent, but the issues before me relate not to that, but to whether these proceedings are statute barred. That issue in turn depends on whether the counterclaim against KNM had any prospect of success by the time KN were acting in the period December 1995 to 21 November 1996.
4. The Claimant sues on her own behalf and as assignee of her husband. He was bankrupt. His trustee in bankruptcy has been joined but has taken no part in the matters to which this judgment relates.
5. There are three matters before the Court: the application of KN for the striking out of the claim on the ground that the Claimant's Particulars of Claim disclose no reasonable grounds for bringing the claim, or summary judgment under Part 24 on the ground that the Claimant has no real prospect of succeeding on her Claim; the application of the Claimant for permission to amend the Particulars of Claim dated 19 April 2005; and the adjourned Case Management Conference, if the matter proceeds. It is also accepted by both parties that KN apply to strike out those paragraphs of the Reply alleging deliberate concealment on the part of Mr Osborn. The issue in this application covers substantially the same ground as the Claimant's application for permission to amend the Particulars of Claim.

THE PROCEEDINGS BY KNM AGAINST Mr COHEN

6. The relevant history of the action brought by KNM is as follows. On 9 September 1992 the Defendants in that action had consented to orders to serve particulars, and a Scott Schedule and to give discovery by 31 October 1992. They did not comply with this order in so far as it related to the Scott Schedule. They served Further Particulars and a list of documents on 14 May 1993. At that time, and until 30 June 1997 the solicitors on the record for the Defendants were Israel Strange and Conlon ("ISC"). Ryhald was dissolved on 20 December 1993. On 23 February 1994 the action was transferred from the County Court to the High Court as Official Referee's Business. On 9 March 1993 Mr Cohen obtained legal aid.
7. On 31 March 1994 ISC wrote to KNM giving notice of an assignment, said to be dated 17 June 1991 ("the 1991 assignment"), whereby all claims of Ryhald were assigned to them. The authenticity of this assignment was in issue in the KNM action, and is in issue in the present action against KN. HH Judge Lloyd stated in his judgment (p4 line 18) that a letter written to the Legal Aid Board on 15 February 1994 was not consistent with the existence of the assignment. In a letter dated 11 April 1994 ISC wrote what HH Judge Lloyd described (at p4 line 25) as a disingenuous answer to KNM's question why the assignment had not been disclosed in the defendant's list of document. The letter dated 11 April 1994 is cited in the judgment as follows:

"We are instructed that the original assignment was lost when the St John's Wood property went into the hands of the Bank's receivers. For this reason Mr Cohen took the view that it was not a matter which he could pursue and it did [not] therefore figure in our List of Documents, from which it follows that it was not available for inspection".

8. On 7 July 1994 Mr Cohen's legal aid certificate was discharged. An appeal was dismissed on 12 January 1995, and on 7 March 1995 Mr Cohen entered into an Individual Voluntary Arrangement. No further steps were taken in the KNM proceedings for some time.
9. By November 1994 there had also emerged the possibility of Mr and Mrs Cohen advancing new claims against KNM. One of these was a claim for breach of the duty of care alleged to be owed by KNM to Mr Cohen personally and the other was a claim arising out of the flooding of the basement of the St John's Wood premises. This is referred to as "the basement claim". HH Judge Lloyd records in his judgment (p6 line 8) that KNM came to learn of this because these claims were the subject of an opinion dated 17 November 1994 from Mr Tager QC. This was subsequently provided to KNM as creditors under Mr Cohen's IVA.
10. The effect of the disputed 1991 assignment on the KNM proceedings is significant. So too is the emergence of new claims. As explained in the Particulars of Claim in the present action it is as follows:

"The original counterclaim should have been brought by Mr and Mrs Cohen as assignees of Ryhald; accordingly it was necessary for Mr and Mrs Cohen to apply under RSC Order 15 rule 7(2) to be substituted for Ryhald as the plaintiffs in the original counterclaim. Mr and Mrs Cohen were the proper plaintiffs in the basement counterclaim".

11. On 24 October 1995 Mr Cohen sent a letter to Mr Osborn of KN enclosing some documents. Mr Cohen was not happy with the way in which ISC was handling the litigation, and wished KN to take over.
12. On 15 November 1995 the Court Registry wrote a standard letter to KNM's solicitors stating that, unless informed that a settlement has been reached 30 November 1995, the action would be listed to show cause why it should not be struck out. KNM's solicitors replied on 24 November as follows:

"The reason why progress has been slow and, in particular the matter has not been set down for trial, relates to the financial position of the Defendants. Mr Cohen … appears to have no funds at present. Accordingly there has been no good reason for KNM to pursue their claim and incur further costs while it remains uncertain as to whether Mr Cohen will be able to fund any Judgment sum awarded against him, or the costs of his own Counterclaim. We … look forward to confirmation that the matter will not be struck out".

13. In December 1995 Mr and Mrs Cohen retained KN. The terms of the retainer are in issue, as explained below.
14. On 22 January 1996 Mr Cohen wrote to KN. In the Particulars of Claim in the present action it is pleaded that by that letter he:

"… instructed [KN] to 'consider the matters I have raised with particular regard for anything which may protect the Defence and Counterclaims'. In the context of their previous discussions Mr Osborn understood (or a reasonably competent solicitor would have understood) that Mr Cohen was referring in this letter to: (a) the effect of the 1991 assignment, (b) Mr Cohen's counterclaim and (c) the basement counterclaim. Moreover, a reasonably competent solicitor in Mr Osborn's position would have understood from the 22 January 1996 letter and/or the passage of time since KNM had been working on the St John's Wood project and the French project that the relevant limitation periods would shortly expire and that Mr and Mrs Cohen needed to be advised about such expiry and its effect in relation both to the leave application and to the risk of the original counterclaim being struck out for want of prosecution and/or as an abuse of the Court's process".

15. Following their retainer and that letter, KN did submit applications for legal aid for Mr and Mrs Cohen to be reinstated. The applications were rejected twice, and it was not until an appeal on 27 May 1997 that legal aid was granted. On 30 June 1997 ISC went off the record and KN went on it as solicitors for Mr and Mrs Cohen.
16. On 30 June 1997 KN wrote to KNM's solicitors. They gave notice of the issue of the legal aid certificate to Mr Cohen. They notified them of the intention to apply for Mrs Cohen to be joined as plaintiff in the counterclaim. They gave notice of intention to proceed on behalf of the existing defendants. On 4 July 1997 solicitors for KNM expressed surprise at the proposed joinder of Mrs Cohen, stating that the limitation period had expired and that they were "at a loss to understand why Ryhald … have been pursuing a counterclaim which they have no right to do (those rights having been assigned)…" A copy of the disputed deed was provided on 10 July 1997.
17. Nothing further happened in the action until 6 November 1997. On that date KN wrote to KNM's solicitors requesting particulars of the statement of claim, and explaining that, in addition to the other proposed amendments necessary for Mrs Cohen to be joined as an assignee, it was proposed to make a personal claim in the name of Mr Cohen.
18. On 14th January 1998 KN wrote enclosing a draft Amended Defence and Counterclaim. A form of summons was sent to KNM's solicitors on 19 January, to be sealed when an appointment had been fixed.
19. On 26 February 1998 KNM served a summons by which they applied for an order dismissing the counterclaim made in their action against Mr Cohen and Ryhald. They regarded the counterclaim as the effective proceedings in the case and undertook to drop their claim and agreed to their action being dismissed if the application were successful, as it was. The grounds for the application were for want of prosecution. It was said that there had been a failure to pursue the counterclaim which was "intentional and/or contumelious and/or an abuse of the process" and the delay had been inordinate and inexcusable and had created a substantial risk that a fair trial would not be possible.
20. On 8 July 1998 HH Judge Lloyd QC gave his judgment striking out the counterclaim. He set out the contentions of the parties, and the authorities cited to him. He then gave his reasons as follows:

"… the defendants' failures to issue a summons for directions or, if one were to treat the summons issued in 1997 as tantamount to such a summons (since as a matter of practice all appropriate directions would have been given on it, whether or not specifically sought), the failure to do so promptly after 30 July constitute, both individually and collectively, a contumelious disregard of the rules such as to amount to an affront to the court and to its rules. In my judgment the conduct of defendants' case has from 1991 been carried on with the intention that the interests of Mr Cohen should take precedence over compliance with the rules of court and thus with a calculated disregard for them: see, for example, the early failure to comply with the court's order of 9 September and Mr Cohen's deliberate failure to disclose in the list of documents served in June 1993 the existence of the assignment executed in 1991 as admitted in his solicitor's letter of 11 April 1994, as well as the key failures. A person in the position of the third defendant in mounting and to maintaining a claim for the furtherance of his own commercial interests may do so only within the rules of court. Whatever misfortunes Mr Cohen may have suffered, e.g. with Legal Aid Board, they do not excuse the failures relied on by the plaintiff. There was no reason why a summons for directions should not have been issued in 1994. Mr Cohen's difficulties in funding the action would have been heard sympathetically and probably directions would then have been given permitting the suspension of the prosecution of the counterclaim for a little while. There was certainly no reason why a summons for directions (or even a summons for only specific orders) should not have been issued immediately after 30th July 1997, as contemplated by the notice of intention to proceed.

For these reasons, on the plaintiff's consent to the dismissal of its action, the counterclaim of all the defendants will be dismissed."

21. On 22 November 1999, Mrs Cohen claims, Mr Cohen assigned the benefit of his claims against KN to her. On 6 December 2001 Mr Cohen was adjudicated bankrupt.

THE EXISTING CLAIM IN THE PRESENT PROCEEDINGS

22. On 21 November 2002 Mrs Cohen issued the Claim Form in this action.
23. The breaches of duty alleged against KN are failure to warn of the strike out of their counterclaim if they did not issue a summons for directions (including for leave to amend the counterclaim) which would come on for hearing before the expiry of the relevant limitation periods. Alternatively it is said that they should have advised the issue of a protective writ to include the claims in the counterclaim and the new claims.
24. On 5 March 2004 KN served their Defence. They do not admit the validity of the assignments, whether of Mr Cohen's rights to Mrs Cohen in 1999, or of Ryhald's rights to either of them in 1991. They say the action is bound to fail for reasons to which I refer in more detail below. KN dispute the ambit of their retainer in December 1995, alleging that it was limited to taking such steps as were necessary to obtain legal aid, and did not extend to considering the merits of the claims. They also say that the letter of 22 January 1996 "unilaterally purported to, but did not, broaden the limited ambit of KN's retainer". These pleas have given rise to an allegation, now the subject of an application for permission to amend the Particulars of Claim, that the failure to inform Mr Cohen that this was their view of the retainer is itself a breach of duty, and one that is not time barred, because it was deliberately concealed (ss14A and 32 of the Limitation Act 1980 are relied on). I will consider that point separately below.
25. Apart from the point as to the scope of the retainer, KN plead (at paras 32(c) and 35(d)) that "It is denied that Mr Osborn (and/or a notional reasonably competent solicitor) would have understood there to have been a need to advise as to the risk of the action being struck out as an abuse of the Court's process…. The notional reasonably competent solicitor would not have apprehended that there was a risk of the Defence and Counterclaim being struck out as an abuse of process". Nevertheless, KN plead that they did give appropriate warnings of the risks on 19 April and 5 June 1996 as well as on 8 January 1997.
26. In addition there is a plea of contributory negligence based on alleged delays caused by Mr Cohen in responding to requests for information from KN and other matters. Further it is said that there was little chance of recovery against KNM in any event.
27. KN submit (in reliance upon Khan v Falvey [2002] PNLR 28) that the existing claim should be struck out, or that summary judgment should be entered. They submit

i) That no loss can be shown, because by the time they were instructed in December 1995 the counterclaim against KNM had no value because both the claim that was in fact brought in the counterclaim against KNM and any protective writ that might have been issued were liable to be struck out (as in fact the counterclaim was in 1998) for abuse of process or want of prosecution or, in the alternative,

ii) If the counterclaim still had a value as at December 1995, then (on the assumption, which is denied, that they were negligent) damage resulting from negligence would have been suffered in the period between December 1995 up to the last date up to six years before the start of these proceedings. It is submitted that any causes of action would have accrued before 21 November 1996, and that any post 21 November 1996 negligence would not have caused any loss, because at least by that date the counterclaims against KNM had no value, being liable to be struck out.

28. In this action it is Mrs Cohen's case that the basement claim did not become statute barred before May 1998, but all other claims became statute barred in March 1997 or sooner. She accepts that the French project claim and one part of the St John's Wood claim became statute barred before November 1996 (including the claim relating to the budget). The balance of the claim in respect of St John's Wood was not barred, so it is contended. But whatever is accepted to be the position now, Mr Tager QC for Mrs Cohen submits that that is not how KNM saw things at the time. He submits that it is clear from the evidence submitted in 1998 that they regarded the claims as being statute barred in March 1997, and that it is on that understanding that they would have acted.
29. There is an issue of law between the parties as to how I should approach the matter. For the Claimant Mr Tager QC submits that I should look at the law as it was understood to be in the period in question, December 1995 to 21 November 1996, and that I should look at what the contemporary evidence shows KNM were likely to have done. The latter is an exercise in finding facts. It follows that I should not dismiss the claim if there is a real prospect of satisfying a trial judge that if a protective writ had been issued by Mr and Mrs Cohen prior to 21 March 1997 KNM would not have relied on a limitation defence to any of their claims. He points to their response to the Court's letter in November 1995 as showing that they were concerned to keep their own claim for fees alive. Similarly, I should not dismiss the claim if, assuming a summons for directions had been issued between November 1996 and 21 March 1997, there is a real prospect that KNM would not have issued their cross application to strike out for want of prosecution. He submits that there is such a real prospect, given KNM's misconception as to the relevant limitation period. The same point is made in relation to any amendments to the Defence and Counterclaim to substitute Mr and Mrs Cohen as assignees of Ryhald.
30. So far as the law is concerned, Mr Tager QC points to the fact that HH Judge Lloyd QC directed himself in accordance with a number of authorities which had not been decided in 1996 such as Grovit v Doctor [1997] 1 WLR 640 and Arbuthnot vLatham v Trafalgar Holdings [1998] 2 All ER 182. He notes that it is pleaded in the Defence that no reasonably competent solicitor in 1996 would have understood the risk of the action being struck out as an abuse of the Court's process. He notes that in his reasons (cited above) the judge specifically refers to the issue of a summons in 1997, which he could not have done had he or another judge been considering the matter in 1996. Finally he submits that none of this applies to the basement claim in any event, because a protective writ could have been issued up to May 1998.
31. For KN, Mr Gatt QC submits that I should look at the case law as it has been found to be. He submits that a trial judge would not attempt to make findings as to what KNM would have done in 1996 if Mr and Mrs Cohen had issued a summons for directions before 21 November 1996, or a protective writ. The common law proceeds on the basis that new cases do not change the law but declare what it has always been. There is thus no inconsistency in KN saying that it was not negligent to have failed in 1966 to have advised on the risk of a strike out for abuse of process, while at the same time submitting that, with hindsight (based on subsequent decision such as Grovit) the counterclaim had no value in 1996 and any protective writ was also vulnerable to a strike out.
32. On this issue of principle I accept the submissions of Mr Gatt QC as to the case law. However, it is not in dispute that this action must be judged in the light of the Rules of the Supreme Court as they stood in 1997, since they were statutory, and not by reference to the Civil Procedure Rules, which were also introduced by statute. Statutory provisions are not retrospective, unlike the common law and case law on the interpretation of the statutory provisions. Cases on the interpretation of the Rules of the Supreme Court must be followed, whether or not they had been decided in 1997.
33. It would be wrong to assess the value of the claim by reference to what, with hindsight, can be seen to be a wrong view of the law. It would also be wrong to investigate what KNM might have done as a matter of fact, because that was influenced by the prevailing view of the law. In any event, a claim should not be valued on the footing that a defendant might mistakenly think it had a value when as a matter of law it did not. However, if the facts would have been materially different had an application to strike out the counterclaim come before the court just before 21 November 1996, then it is those facts which are relevant in determining the value of the claim.
34. As far as any change in the case law may be considered, there is nothing in the disputed point in any event. The law in early 1997 was understood to be substantially as it was understood to be when the HH Judge Lloyd QC gave his judgment in 1998. The hearings in Grovit v Doctor [1997] 1 WLR 640 were in March 1997 in the House of Lords, and had been in October 1993 in the Court of Appeal. In Arbuthnot the hearing in the Court of Appeal was in November 1997 and the hearing at first instance was on 31 July 1996: [1998] 1 WLR at p1428D. In any event Culbert v Stephen Westwell & Co [1993] PIQR 54, cited from in Arbuthnot at p1433 (and in p12 of the judgment of HH Judge Lloyd QC), had already established that a series of separate inordinate and inexcusable delays in complete disregard of the rules of the court and with full awareness of the consequences can also properly be regarded as contumelious conduct or, if not that, an abuse of the process of the court.
35. The reasons for the strike out are set out above. The application to strike out was in fact issued on 26 February 1998. For the purpose of assessing the value of the claim just before 21 November 1996 it is to be assumed that a notice of intention to proceed would have been issued at about that time, and that the application to strike out would have been issued shortly after, say December 1996 or January 1997. So the only factual difference that there would have been at that time, compared to the factual situation when the Judge did consider the matter in 1998, is that the delay would have been about 13 months less in relation to a summons issued in early 1997 than it was in relation to a summons issued in February 1998. The starting point for measuring the period of delay taken by the Judge is to be derived from his statement that "there was no reason why a summons for directions should not have been issued in 1994". The last event that is referred to in the judgment in 1994 is the letter of 11 April 1994 written by ISC, which preceded the discharge of Mr Cohen's legal aid certificate in July 1994.
36. As already noted, in a letter dated 15th November 1995 the Court raised the question of a hearing to show cause why the action should not be struck out. By 21 November 1996 some two and half years had passed since April 1994. And on the view of limitation which Mrs Cohen now accepts to be correct, the pleaded claims were in part already statute barred, and as to the remainder would become statute barred in March 1997 at latest.
37. It was in the light of the law as it had already developed, or was developing in 1996 to 1997, that the judge concluded that the failure to issue a summons for directions in 1994 was "individually" a contumelious disregard of the rules of the court, and that the conduct of the case from 1991 had been a calculated disregard of the rules of court.
38. On these facts there is no arguable basis for saying that the claims would not have been struck out if the summons to strike out had been heard in early 1997. And for the same reasons, any protective writ issued in respect of the pleaded claims would also have been struck out. That is clear from Janov v Morris [1981] 1 WLR 1389, 1394-5, which is also cited in Arbuthnot at p1436. No explanation has been put forward to me which was not put forward in 1998 and which would have led to a protective writ surviving the judgment of 1998. Mrs Cohen could not have been in a better position than Mr Cohen or for that matter Ryhald. Her rights derived from theirs in the 1991 and 1999 assignments. And Mrs Cohen alleges that it was in 1991 that Ryhald assigned its claims. So Mr and Mrs Cohen must take responsibility for the manner in which the action was conducted in the name of Ryhald following that date.
39. I find that the claims pleaded in the counterclaim against KNM had no value by 21 November 1996. It is therefore irrelevant whether they had any value in December 1995, one year earlier. Either way, no loss can be shown to have resulted from any breach of duty by KN between December 1995 and 21 November 1996.
40. The position with regard to the claim which had not arisen when the counterclaim was served, namely the basement claim, requires separate consideration. For KN it is submitted that an application to amend to include this, or a fresh writ in respect of it, would each have been struck out on the basis of the rule in Henderson v Henderson. That contention received very little development in the submissions for KN.
41. The Particulars of Claim against KN read as follows in relation to the basement counterclaim:

"Subsequently [to the service of the counterclaim] Ryhald and/or Mr Cohen and/or Mrs Cohen wanted to amend the original counterclaim by adding two substantial new claims against KNM (a) for breach of the personal duty of care ("Mr Cohen's counterclaim"), and (b) for the serious consequences of the inadequate design of the waterproofing and tanking of the basement, which led to the flooding of the basement in June 1992 ("the basement counterclaim")".

42. The personal duty of care is explained in the pleading as follows:

"Although Mr Cohen has always contended that the contract of retainer between KNM and Ryhald, the nature of his personal relationship with KNM was such as to give rise to a personal duty of care which KNM owed to him in tort".

43. The Counterclaim at para 30 already includes:

"Further or alternatively, [KNM] owed a duty of care to the First and/or the Second and/or [Mr Cohen]".

44. Since Mr Cohen was in fact the third defendant to the action and did advance a counterclaim in tort, it is plain that the personal duty of care could have been pleaded originally, assuming it adds anything to what is already pleaded. The period of limitation in respect of that claim would not have differed from the one applicable to the claim in tort by Ryhald of which Mr Cohen claimed to be the assignee.
45. But there is a case for saying that the basement counterclaim could not have been pleaded in the original counterclaim, since the flooding had not yet occurred. And there may well have been good reason to wait for some time after the flooding before issuing proceedings in respect of it.
46. I am not persuaded that the basement counterclaim suffers the same fate as the other claims. It still would have had a value on 21 November 1996. There is nothing to suggest to me that, if a writ had been issued in 1996, it was at any risk of being struck out before 21 November 1996, or that its value had been diminished by any such risk.
47. I conclude that the claim in its present form can survive only in so far as it relates to the basement counterclaim. Subject to the possible amendment discussed below, the claim must be struck out save in so far as it relates to the basement counterclaim.

THE PROPOSED AMENDMENT TO THE PARTICULARS OF CLAIM

48. The Defence in this action was served on 5 March 2004, and an amended Defence was served on 16 September 2004.
49. In the original Defence KN included a number of pleas which have since given rise to contentious responses, first in the Reply served (out of time) on 1st December 2004 and now in a draft Amended Particulars of Claim, the subject of an application for permission made by notice dated 19 April 2005. KN oppose the late allegations in the Reply and the application for permission to amend the Particulars of Claim.
50. The pleas in the Defence of KN which have had this effect are:

i) At paras 30(b) and (c) and 35(b), to the effect that the retainer in December 1995 was initially to be limited to KN taking such steps a were necessary to obtain legal aid for Mr and Mrs Cohen, with the result that KN's retainer did not extent to considering, prior to the grant of legal aid, the merits of the defences to KNM's claims or any counterclaims;

ii) At paras 31 and 36(c), to the effect that Mr Osborn was not confident legal aid would be granted and did not regard Mr and Mrs Cohen as enjoying a good prospect of recovering a large award of damages against KNM, notwithstanding that in the applications for legal aid Mr Osborn had described the prospects of success as very good (which KN plead was written on the basis of the opinions written by Mr Tager QC in 1994, and not on any independent view formed by Mr Osborn);

iii) At para 32(b) to the effect that Mr Cohen's letter of 22 January 1996 unilaterally purported to, but did not, broaden the limited ambit of KN's retainer.

51. In the Reply it was pleaded that, in respect of each of these matters, KN had a duty to inform Mr and Mrs Cohen that that was their position, and that KN deliberately withheld and concealed this information.
52. If there had been omitted from the draft Amended Particulars of Claim the allegation that the information was deliberately concealed, these allegations could nevertheless have been framed as additional or alternative allegations of breach of duty. The allegation that what was done was done deliberately adds nothing to a cause of action in contract or for the tort of negligence in respect of any concealment. The sole significance of the allegation that it was deliberate is said to be that it brings the case within s32 of the Limitation Act 1980. That provides:

"32 Postponement of limitation period in case of fraud, concealment or mistake

(1) Subject to subsections (3) and (4A) below, where in the case of any action for which a period of limitation is prescribed by this Act, either—

(a) …. ; or

(b) any fact relevant to the plaintiff's right of action has been deliberately concealed from him by the defendant; or

(c) … ;

the period of limitation shall not begin to run until the plaintiff has discovered the …, concealment … or could with reasonable diligence have discovered it…

(2) For the purposes of subsection (1) above, deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty. ...

(5) Sections 14A and 14B of this Act shall not apply to any action to which subsection (1)(b) above applies (and accordingly the period of limitation referred to in that subsection, in any case to which either of those sections would otherwise apply, is the period applicable under section 2 of this Act)."

53. S.14A of the Act provides:

"14A Special time limit for negligence actions where facts relevant to cause of action are not known at date of accrual

(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) below falls after the date on which the cause of action accrued.

(2) Section 2 of this Act shall not apply to an action to which this section applies.

(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 or any person in whom the cause of action was vested before him first had both the knowledge required for bringing an action for damages in respect of the relevant damage and a right to bring such an action.

(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 who had suffered such damage 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) if it is alleged that the act or omission was that of a person other than the defendant, the identity of that person and the additional facts supporting the bringing of an action against the defendant.

(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 a fact 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."

54. Deliberate concealment for the purposes of s.32(1)(b) and (2) does not include failure to disclose a negligent breach of duty that the actor was not aware of committing: see Cave v Robinson [2002] UKHL 18; [2002] 2 WLR 1107.
55. It is now accepted by Mr Tager QC that, even if sound, these pleas cannot remain in the Reply unless they can also be included by amendment in the Particulars of Claim. The reason is that what was allegedly concealed is not a "fact relevant to the plaintiff's right of action" pleaded in the original Particulars of Claim (within the meaning of s32 of the 1980 Act). In the words of Neill LJ in C v Mirror Group Newspapers [1997] 1 WLR 131, 138G "The relevant facts are those which the plaintiff has to prove to establish a prima facie case". A cause of action in contract or the tort of negligence is complete whether or not the omission complained of is deliberate. And see Cottrell v Lock [1997] EWCA Civ 1787 p14-15.
56. So first there must be a plea of the breach of duty, and only then a plea of deliberate concealment. If the deliberate quality of the concealment is included in the Particulars of Claim it will not be because deliberation is part of the cause of action, but in anticipation of a limitation defence.
57. There has not yet been produced any draft of a plea based on s14A of the 1980 Act, but similar considerations apply: see s.14A(7)-(9).
58. Accordingly, the Reply can be ignored for present purposes, and attention focussed on the application for permission to add the pleas to the Particulars of Claim by amendment.
59. This gives rise to some observations as to the state of the papers before the Court. In the light of Mr Tager QC's acceptance that the issue turns on his application for permission to amend the Particulars of Claim, it can be seen that KN's application to strike out claim on the grounds that it is statute barred (and that their opposition to the inclusion of the paragraphs in the Reply objected to) would have succeeded, but for the late application to amend on 19 April 2005.
60. That application for permission to amend is based on no more evidence than one short paragraph in the Application Notice:

"Permission is requested to amend the Particulars of Claim so that the Claimant … can properly plead in the Particulars of Claim rather than in the Reply … the allegations of deliberate and/or misleading concealment relied upon in the context of s32 …"

61. This evidence does not address the question whether the allegation of deliberate concealment should be permitted to be in the Reply in the first place. That question is addressed in the witness statement of Mr Hughes dated 18th February 2005 in opposition to KN's application. That refers to the allegation of deliberate concealment in paras 30 to 38. But these contain no more by way of detail than the draft Amended Particulars of Claim. For example it is simply stated in para 31 "Mr and Mrs Cohen now realise that they were deliberately misled at the time by Mr Osborn…"
62. Mr Tager QC relies on the fact that there is no witness statement from Mr Osborn on the question whether he acted deliberately. He submits that an inference can be drawn from that unfavourable to KN and supporting the Claimant's allegation. It is the case that there is no witness statement from Mr Osborn in the present proceedings (and his 1998 affidavit in the KNM proceedings does not address this point). But on the state of these proceedings up to 19 April there did not need to be, for reasons already given. As I understand it, it is the late application of 19 April that has led to there being placed before me the documents in Bundle 2. When Mr Tager QC objected that they were not evidence, Mr Gatt QC submitted that that could be remedied by formally exhibiting the bundle to a witness statement. On that basis Mr Tager QC did not object to my reading them.
63. Mr Gatt QC makes submissions on the lateness of this allegation. He submits that there are no details of the facts on which Mrs Cohen relies to show that the concealment was deliberate rather than inadvertent or careless: it is simply asserted that Mr Osborn acted deliberately. Mr Gatt QC also submits (by reference to s.32) that the Claimant could with reasonable diligence have discovered the facts that she now says amount to deliberate concealment before December 2004.
64. Mr Gatt QC notes that by his order sealed on 25 February 2005 Master Tennant ordered that the question whether these allegations should be struck out of the Reply be the subject of an Application Notice (which KN issued in the form I have described) and that there be disclosure by each of Mrs Cohen and KN of any hearing bundles before HH Judge Lloyd QC. There was in fact put before me in Bundle 2 the extensive bundle of documents from KN including attendance notes. Mr Tager QC does not accept that these have any evidential status in this application. However, having read them himself, he does not point to anything in them which he submits supports the allegation that Mr Osborn acted deliberately. Mr Gatt QC invited me to read documents in Bundle 2 which he submitted supported the case of KN. While I have read those documents, I do not find them to be of assistance to me in the way Mr Gatt QC submits. It is not for me in the present proceedings to attempt to reach conclusions on the facts.
65. There are two competing considerations, as it seems to me. On the one hand, there is the principle referred to in various cases, including Three Rivers DC v Bank of England (No 3) [2001] UKHL 16; [2003] 2 AC 1 at para [87]-[93], that the court on an application under Part 24 should not conduct a mini trial, that a trial takes place after the normal processes of disclosure and not summarily, and that the court should determine whether to give summary judgment by giving effect to the overriding objective. The same principle must apply on an application for permission to amend. This approach tends towards allowing a plea of deliberate concealment to go forward at least until after disclosure and exchange of witness statements, even if it is lacking in particularity.
66. The other relevant principle is that which led the House of Lords in Cave v Robinson [2002] UKHL 18; [2002] 2 WLR 1107 to overrule Brocklesby v Armitage [2002] 1 WLR 598 and to hold that "deliberate concealment" in s32 did not include a failure by a solicitor to disclose a negligent breach of duty which he was not aware of committing. The reason for that decision included the following, in the words of Lord Millett (with whom Lords Mackay and Hobhouse agreed) at para 15:

"The effect of Brocklesby v Armitage & Guest is to deprive a professional man, charged with having given negligent advice and who denies that his advice was wrong let alone negligent, of any effective limitation defence. However stale the claim, he must defend the action on the merits, for he will not have the benefit of a limitation defence unless he can show that his advice was not negligent. This subverts the whole purpose of the Limitation Acts. The harshness of the rule is evident. In the absence of any intentional wrongdoing on his part, it is neither just nor consistent with the policy of the Limitation Acts to expose a professional man to a claim for negligence long after he has retired from practice and has ceased to be covered by indemnity insurance."

67. If it is permissible to commence an action outside the primary limitation period in reliance on s32 simply be asserting a deliberate concealment, but without giving any grounds for suggesting that it was deliberate other than the mere fact that there was concealment, then that policy underlying the decision in Cave will be defeated. Having to defend an unmeritorious claim can itself amount to substantial unfairness, even if the outcome is ultimately favourable to the defendant. And there are risks that a defendant will not recover costs, particularly in a case such as the present, where the Claimant has given notice that she is funded by a conditional fee agreement (dated 14 March 2003).
68. It is to be noted that in Cave the House of Lords referred to the point which I have referred to by reference to Three Rivers. Lord Scott thought Brockelsby was rightly decided for an alternative reason noted in Cave at paras 52 and 62. Lord Scott said the following:

"52. It is worth noting, however, that [Morritt LJ] then went on to give an alternative, uncontroversial and, if I may respectfully say so, plainly sound reason for coming to the same conclusion. He said, at p 606: 'in addition . . .I am concerned that the judge imposed too high a standard of particularity for the reply to be served at the stage which the action had reached. Discovery of documents has not yet taken place. Most of the relevant facts were inevitably in the knowledge of the solicitors rather than Mr Brocklesby. There was no imminent trial such that an insufficiently particularised pleading might be embarrassing . . . .It may be that in the light of what is disclosed on discovery he will be able to supplement the particulars already given but without such supplementation I do not consider that his case as pleaded is so thin that the court is justified in, in effect, striking it out'".

69. Bundle 2 contains about 500 pages of material disclosed by KN. Mr Tager QC made no specific point as to why he submits it is incomplete or why there may be grounds to believe that further information may become available if this claim is allowed to proceed. Mr Tager QC does not submit that Mrs Cohen's case finds any support in the documents in Bundle 2. Deliberate concealment by a solicitor of the matters alleged in the Reply and the draft Amended Particulars of Claim is a serious allegation. If true, those allegations would involve unconscionable conduct on the part of Mr Osborn (even thought it was established in Cave at para 65 that unconscionable conduct is not itself necessary for the application of s.32). Such allegations should be pleaded with particularity, as is stated in Three Rivers at para 51
70. The allegation is advanced at a very late stage, and without any reason given for suggesting that the alleged omission was deliberate rather than careless or inadvertent. A considerable share of the parties' and the court's resources has already been devoted to this issue. The disclosure that has already taken place has put the parties substantially on an equal footing so far as information is concerned, and the possibility of further disclosure or information becoming available to support the Claimant's case is at best speculative. The matters to which the case relates go back to 1996 and 1997, some eight years ago. The action itself was brought in 2002. The Defence was served in March 2004, and includes all the matters upon which the Claimant relies. It was not until December 2004 that the allegation of deliberate concealment was raised for the first time in the Reply.
71. I conclude that in these circumstances, dealing with this case justly, as defined in the overriding objective (CPR Part 1.1) means that the application for permission to amend should be refused, and the paragraphs in the Reply alleging deliberate concealment should be struck out as having no real prospect of success. The result is that the claim can go forward only in respect of the basement claim.