In Davy v 01000654 Ltd , in a judgment handed down on March 9, 2018, the High Court has held that a member’s claim against his financial adviser for negligence or breach of contract, or for alleged breaches of statutory duty, for losses allegedly arising from a switch of pensions, was statute-barred (brought out of time), and granted summary judgment.
The case is a useful example of how the Court will consider limitation issues in the context of professional negligence cases concerning pensions.
Summary judgment is a procedure by which the Court may decide a claim or a particular issue without a trial. Under the Civil Procedure Rules (CPR), the Court may give summary judgment against a claimant or defendant on the whole of a claim, or on a particular issue, if the party has no real prospect of succeeding on or defending the claim and there is no other compelling reason why the case or issue should be disposed of at trial.
The Court has the power to strike out the parties' statements of case (or part of a statement of case), both under its case management powers and under its inherent jurisdiction.
Facts of the case
The claimant (C) brought proceedings against the defendant financial adviser (D) in relation to allegedly negligent advice on the transfer of his pension. D applied to strike out the claim or for summary judgment.
The advice leading to the transfer of the pension was given in 2001. In 2006, C again consulted D in relation to his pension. In July 2011, he took advice from another financial adviser. On July 17, 2014, the parties entered into a standstill agreement by which they agreed to suspend the running of the limitation period in relation to the claim, which was issued in January 2015.
In addition to his claim based on the 2001 advice, C also maintained that D had failed in 2006 to advise him about the reasonableness of the earlier advice, so that he had lost the opportunity to bring a claim in respect of it.
The Court issued a direction on limitation which D successfully appealed. This arose out of the fact that the D had been dissolved and needed to be restored to the register and whether the period between March 20, 2010, and July 1, 2014, was not to count for limitation purposes. Pending that appeal, the parties agreed to a stay of proceedings.
D took the view that the claim was barred by the Limitation Act 1980 (LA 1980) on the basis that C had known before July 2011 of his potential claim; therefore, he could not argue lack of knowledge of the facts relevant to the cause of action in order to start the alternative three-year limitation period running under section 14(A) LA 1980 (lack of requisite knowledge), nor could he make out a case of deliberate concealment under section 32 LA 1980 based on the further advice of 2006.
C maintained that he had not acquired section 14A knowledge until July 2011.
HHJ Russen QC, sitting as a judge of the High Court, dismissed the claim, holding that it was statute-barred. He refused to strike out the claim but granted summary judgment.
The judge concluded that there was no real prospect of the C overcoming a limitation defence by relying on the alternative three-year period under section 14A for lack of requisite knowledge or showing deliberate concealment by the defendant (D) under section 32.
C submitted that he did not acquire the knowledge that the pension scheme he had switched to was high risk until he received independent advice about his investment. However, there was evidence that he had received advice from D about this in 2006, which was sufficient to deprive C of the benefit of section 14A. C had also had concerns about loss earlier.
Regarding section 32, the case reinforces the fact that, if a defendant's retainer to provide investment advice is a continuing one, there is generally no obligation on the adviser to exercise continuing vigilance to discover any past mistakes and to put them right.
The judge was content to rule on the summary judgment application, rather than order a preliminary issue trial, so the case is also useful for confirming that cases involving issues over section 14A LA 1980 knowledge or section 32 LA 1980 concealment are not, as a matter of principle, outside the proper remit of the summary judgment process.
The judge refused D's applications for the claim to be struck out as disclosing no reasonable cause of action or as an abuse of process. He said that there was nothing within the particulars of claim which was repugnant or deficient regarding revealing a viable cause of action and C had not, by his delay in bringing the claim, been guilty of any misuse of the court process.
The case is a good illustration of how the Court will consider limitation issues in the context of professional negligence cases relating to pension claims.
The case is also useful for confirming that cases involving issues over section 14A LA 1980 knowledge or section 32 LA 1980 concealment are not, as a matter of principle, outside the proper remit of the summary judgment procedure. As here, it may be possible to decide them on paper and there may not be a need for a trial of a preliminary issue.
The case also demonstrates that while there may be some overlap, there is a difference in the Court's approach to applications for summary judgment and strike out.