BROCKLESBY V ARMITAGE AND GUEST [2001] EWCA Civ 245
FACTS:-
The Defendants were a firm of solicitors, and the Claimant and another man, Mr Tranter were their clients. Mr Tranter controlled a company named Levelaction Ltd, and Mr Brocklesby held one share in it. The company sold commercial premises to Mr Brocklesby. The solicitors acted for all three parties, the seller, the buyer and the lender, the building society.
In April 1989, Mr Brocklesby was ill and Levelaction Limited agreed with him to repurchase the property. The solicitors were instructed to act for both Mr Brocklesby and Levelaction. The sale went through but no action was taken by the solicitors to procure Mr Brocklesby’s release from his mortgage. He stopped paying the mortgage and then Levelaction took it over. In November 1990 Levelaction was put into compulsory liquidation. In mid 1992 Mr Brocklesby was notified of the default of Levelaction and at that stage it came to Mr Brocklesby’s attention that the contract of repurchase had not been completed and that he had not been released from his obligations to the building society. The building society then sued Mr Brocklesby for £212,895. That action was compromised on the basis that Mr Brocklesby pay the building society £25,000, who then sued his solicitors in professional negligence. He commenced proceedings in June 1997.
The Defendants alleged that the claim was barred by Sections 2 and 5 of the Limitation Act 1980. The Claimant claimed that the case came within Section 32(1)(b) of the Limitation Act 1980.
The Defendants applied to strike out the claim.
JUDGMENT:-
Lord Justice Morritt referred to the case of Sheldon v Outhwaite [1996] 1 AC 102 and the words of Lord Browne Wilkinson in that case. He had said that the immediate predecessor of section 32 of the Limitation Act 1980 was the Limitation Amendment Act 1980, which substituted what was now section 32(1)(b) of the 1980 Act for the old section 26 of the Limitation Act 1939. All references to fraud were deleted and there was substituted the concept of deliberate concealment of relevant facts.
Morritt LJ considered the deliberations of the Law Reform Committee and the contents of their 21st Report. The Committee had suggested a reformulation of section 26 of the 1939 Act. However Morritt LJ did not find any assistance from the provisions of that report. It was plain that Parliament did not adopt the suggested formulation proposed. When one turned to Section 32 itself, there was a clear contrast between the action based on fraud and paragraph (b) the concealment of any fact relevant to the Claimant’s right of action being
deliberate. However subsection (2) amplified what was meant by deliberate concealment and required that for the purposes of subsection (1) deliberate commission of a breach of duty, amounted to deliberate concealment of the facts involved in the breach of duty. Generally speaking, the civil law and the criminal law did not require that a person should know the legal consequences of the acts which he committed. It appeared that had Parliament intended in the case of a deliberate concealment under Section 32(1)(b) as amplified by subsection (2), then there should be both deliberate concealment of an act in the sense of knowingly and intentionally committing the act and also knowledge that such commission gave rise to a particular legal consequence, then it would have used clearer words.
Therefore it was not necessary for the purposes of extending the limitation period pursuant to Section 32(1)(b) to demonstrate that the fact relevant to the Claimant’s right of action had been deliberately concealed in any sense great than that the commission of the act was deliberate in the sense of being intentional and that that act or omission, did involve a breach of duty whether or not the actor appreciated that legal consequence.
When considering the question of deliberateness or knowledge the words “ought to have known” were not adequate because there was no indication that constructive knowledge was sufficient. The claim would not be struck out.
FACTS:-
The Defendants were a firm of solicitors, and the Claimant and another man, Mr Tranter were their clients. Mr Tranter controlled a company named Levelaction Ltd, and Mr Brocklesby held one share in it. The company sold commercial premises to Mr Brocklesby. The solicitors acted for all three parties, the seller, the buyer and the lender, the building society.
In April 1989, Mr Brocklesby was ill and Levelaction Limited agreed with him to repurchase the property. The solicitors were instructed to act for both Mr Brocklesby and Levelaction. The sale went through but no action was taken by the solicitors to procure Mr Brocklesby’s release from his mortgage. He stopped paying the mortgage and then Levelaction took it over. In November 1990 Levelaction was put into compulsory liquidation. In mid 1992 Mr Brocklesby was notified of the default of Levelaction and at that stage it came to Mr Brocklesby’s attention that the contract of repurchase had not been completed and that he had not been released from his obligations to the building society. The building society then sued Mr Brocklesby for £212,895. That action was compromised on the basis that Mr Brocklesby pay the building society £25,000, who then sued his solicitors in professional negligence. He commenced proceedings in June 1997.
The Defendants alleged that the claim was barred by Sections 2 and 5 of the Limitation Act 1980. The Claimant claimed that the case came within Section 32(1)(b) of the Limitation Act 1980.
The Defendants applied to strike out the claim.
JUDGMENT:-
Lord Justice Morritt referred to the case of Sheldon v Outhwaite [1996] 1 AC 102 and the words of Lord Browne Wilkinson in that case. He had said that the immediate predecessor of section 32 of the Limitation Act 1980 was the Limitation Amendment Act 1980, which substituted what was now section 32(1)(b) of the 1980 Act for the old section 26 of the Limitation Act 1939. All references to fraud were deleted and there was substituted the concept of deliberate concealment of relevant facts.
Morritt LJ considered the deliberations of the Law Reform Committee and the contents of their 21st Report. The Committee had suggested a reformulation of section 26 of the 1939 Act. However Morritt LJ did not find any assistance from the provisions of that report. It was plain that Parliament did not adopt the suggested formulation proposed. When one turned to Section 32 itself, there was a clear contrast between the action based on fraud and paragraph (b) the concealment of any fact relevant to the Claimant’s right of action being
deliberate. However subsection (2) amplified what was meant by deliberate concealment and required that for the purposes of subsection (1) deliberate commission of a breach of duty, amounted to deliberate concealment of the facts involved in the breach of duty. Generally speaking, the civil law and the criminal law did not require that a person should know the legal consequences of the acts which he committed. It appeared that had Parliament intended in the case of a deliberate concealment under Section 32(1)(b) as amplified by subsection (2), then there should be both deliberate concealment of an act in the sense of knowingly and intentionally committing the act and also knowledge that such commission gave rise to a particular legal consequence, then it would have used clearer words.
Therefore it was not necessary for the purposes of extending the limitation period pursuant to Section 32(1)(b) to demonstrate that the fact relevant to the Claimant’s right of action had been deliberately concealed in any sense great than that the commission of the act was deliberate in the sense of being intentional and that that act or omission, did involve a breach of duty whether or not the actor appreciated that legal consequence.
When considering the question of deliberateness or knowledge the words “ought to have known” were not adequate because there was no indication that constructive knowledge was sufficient. The claim would not be struck out.