Nearing the limit

The Court of Appeal's decision in Susan Jacobs v Sesame [2014] should put claimant solicitors on
notice of the high burden that claimants face in seeking to rely on section 14 of the Limitation Act (LA) 1980.

Perceived unfairness

Section 14A was inserted into
the LA 1980 to correct perceived unfairness where a claimant's cause of action in negligence accrues without their knowledge. The provision allows the claimant an additional three years to bring a claim in negligence from the earliest date 'on which the plaintiff or any person… 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'.

Knowledge, in this context, 'means knowledge of both (a) the material facts about the damage in respect of which damages are claimed; and (b) the other facts relevant to the current action'.

In Haward v Fawcetts [2006],
it was said that the claimant's 'knowledge' for the purposes of section 14A must be sufficiently certain to make it 'reasonable
to embark on preliminary investigations'. However, the level of detail need only capture the defendant's act or omission
'in simple and broad terms' and
it need only be 'a real possibility' rather than a probability that
the defendant's act or omission caused the damage.

However, section 14A also provides for constructive knowledge, so that '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'.

In Gravgaard v Aldridge and Brownlee [2005], it was noted
that the constructive knowledge test was objective. Lady Justice Arden commented that section14A does not state
that knowledge includes that "which a reasonable person might be expected to acquire", but rather knowledge "which he [she] might reasonably be expected to acquire".

In his view, "the court must have regard to the characteristics of a person in the position of
the claimant, but not to characteristics peculiar to the claimant and made irrelevant
by the objective test".

Actual knowledge

The Court of Appeal in Susan Jacobs v Sesame took the view that it was unnecessary to determine the issue of actual knowledge; Lord Justice Tomlinson decided the
appeal based the claimant's constructive, rather than actual, state of knowledge. The key question was: what knowledge was it reasonable to expect that the claimant might acquire under section 14A (10) when she learned of a significant fall in her investment value (in 2009)?

Applying the test in Gravgaard v Aldridge and Brownlee, the court considered the surrounding circumstances so as to decide what a person in the position of the claimant might reasonably have been expected to do, but without regard to characteristics peculiar to the claimant. Although the claimant was particularly naïve, and even allowing for this as a surrounding circumstance and not a characteristic peculiar to her, Tomlinson LJ found that a reasonable investor would
have taken steps from 2009 onwards to investigate the possibility of a claim.

The decision underlines the high burden that the claimant faces in seeking to rely on
section 14A. Characteristics peculiar to the claimant are
made irrelevant by the objective test in determining constructive knowledge.

The reality is that the
court will consider what the claimant should have done in
the circumstances. Thus, if the claimant has not acted as a reasonable person would,
the odds will be stacked
against them.

So, while defendants and
their insurers will no doubt take comfort from the judgment, claimant solicitors should take heed of it when pursuing
claims which may appear to be viable under section 14A with reference to the claimant's subjective beliefs, since those claims may be time-barred in the objective test. SJ

Eleanor Kilner is a solicitor in the professional risk team at Weightmans