High Court reviews law on s.14A limitation and continuing duties in legal advice professional negligence claim

A recent High Court judgment in a negligence claim against solicitors and counsel has provided a very helpful review and application of the law in relation to ‘secondary’ limitation pursuant to s.14A of the Limitation Act 1980 (s.14A). s.14A provides a potential claimant 3 years to bring a claim from their “date of knowledge”.

The judgment also discusses the circumstances in which legal advisors may owe a continuing duty to advise in respect of their own previous work, or that of another member of a client’s legal team.

Background

The Investcorp Claim

The Claimant, Mr Al Sadik, invested approximately US $136m with Investcorp Bank entities (Investcorp) in early 2008. Upon redemption of his investment in December 2009, following the onset of the global financial crisis, he had incurred a loss of around US $56m.

Mr Al Sadik brought proceedings against Investcorp in the Cayman Islands in December 2009 (the Investcorp Claim).

All elements of the Investcorp Claim were unsuccessful at trial, on appeal to the Court of Appeal, and on further appeal to the Privy Council. The Caymanian Court also granted an anti-suit injunction in relation to a later attempt to bring proceedings in Dubai.

The four Defendants in the present case acted for Mr Al Sadik in the Investcorp Claim: Clyde & Co LLP (C&C), leading and junior counsel, and Harney Westwood and Reigels (Harneys).

The negligence claim

The Claimant issued the present claim against his former legal team on 30 June 2021. The two main elements of the claim were that:

• All the Defendants failed to advise him, at the appropriate time, to apply to re-amend his Amended Statement of Claim. Had the reamendment application been made earlier it would have succeeded, and the Investcorp Claim (as re-amended) would also have succeeded, or would have had a substantial chance of doing so, or there would have been a reasonable prospect of settlement.
• C&C and leading counsel had failed to advise him properly as to the risk of the anti-suit injunction in relation to the Dubai proceedings and of the costs consequences of the same.

In March 2024 a 4-day hearing took place to deal with preliminary issues concerning limitation and applications by the Defendants for reverse summary judgment. The preliminary issues concerned:

• The operation of the extended limitation period in s.14A;
• The allegation that the Defendants owed continuing duties of care to advise that they, or any other member of the legal team, had or might have acted negligently. As the Claimant’s retainer with C&C was governed by UAE law limitation issues did not arise in that context and C&C were not involved in the trial of preliminary issues.

Judgment

In a 72-page judgment handed down in April 2024, Sean O’Sullivan KC sitting as a Deputy Judge of the High Court concluded that:

• the claims against both counsel and Harneys were time-barred;
• all but one of the claims had no real prospect of success, such that the Defendants were entitled to reverse summary judgment; and
• the sole remaining element of the claim, as against C&C in relation to the anti-suit injunction, was not suitable for summary disposal and should proceed to trial.

Operation of s.14A

The key question was when the Claimant had “the knowledge required for bringing an action for damages in respect of the relevant damage”, per s.14A(5).

Following a discussion of the case law, the Judge found that:

• It was clear on the evidence that the Claimant did not need to take legal advice in order to identify that the failure of the re-amendment application in December 2011 had caused an opportunity to be lost and that this was potentially attributable to the Defendants. He had been able to advance the essence of this complaint at a meeting with C&C in July 2018, before obtaining legal advice in July 2019.
• To the extent that there was any doubt about his knowledge in December 2011, it only became more pronounced following the failure of all elements of the Investcorp Claim at trial in 2012, and the unsuccessful appeals to the Cayman Court of Appeal later in 2012 (albeit judgment was not handed down until 2016), and to the Privy Council in 2018.
• While it was understandable that the Claimant would have wanted to take legal advice before starting proceedings, the 3-year period afforded by s.14A can be used for seeking such advice.

Continuing duty

Again following a discussion of the case law in this area, the Judge agreed with leading counsel for Harneys’ summary of the principles emerging, namely:

“a solicitor does not generally owe a continuing duty to advise its client as to whether it has been negligent in the performance of its own retainer; and

a solicitor may owe a duty to revisit its previous advice if:

it expressly agrees to do so for some reason; or

such a duty is a necessary incident of some other duty which the solicitor has undertaken to perform (as in Gold v Mincoff)….”

The Judge noted a continuing duty means that after any initial breach the duty arises again, and is breached again and so on, as opposed to a single breach remaining unremedied over a period of time.

It was also clear on the case law that the fact of a continuing retainer was not sufficient on its own to justify a continuing duty.

In this case, the Claimant had not given any later specific instructions to the Defendants or asked them to carry out a review which might have caused any earlier negligence to come to light. In the circumstances, there was no continuing duty and the relevant limitation periods had expired long before the claim was issued.

Comment

This case is a reminder to prospective claimants to take a cautious approach when assessing limitation, in particular when considering the earliest date on which the knowledge was acquired.

As the judgment highlighted (citing Haward), a prospective claimant does not need to know they have a “worthwhile cause of action”, nor do they need to have sought legal advice on the issue, before time may be said to start running. Prospective claimants should be cautious not to fall into the trap of assuming their advisors owe, or owed, a continuing duty to review their earlier work and point out any potential negligence, even where there is a long-standing retainer.

Where there are material doubts about the advice received and/or a clearly disadvantageous outcome is obtained, it is worth specifically requesting that the advisors revisit the relevant advice or seek independent legal advice.

If you have any concerns over a limitation issue on a potential claim, please do contact us to discuss further.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at May 2024. Specific advice should be sought for specific cases. For more information see our terms and conditions.