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Ben Lynch wins professional negligence limitation case in the Court of Appeal
Ben Lynch successfully acted for the Defendant Solicitors in an important case on limitation in solicitors’ negligence claims: Nouri v Marvi & Others [2010] EWCA Civ 1107. The case is of particular importance for defendant solicitors, claimants and also insurers, addressing issues of (1) the meaning of “actual damage” for the purposes of s.2 Limitation Act 1980, (2) Sephton contingent loss and limitation issues and also (3) continuing duty issues.
The Claimant (“N”) brought a claim against three Defendants, including a firm of Solicitors. The allegation against the firm of Solicitors was that it conveyed N’s Property to Mr Marvi (“M”) without N’s consent. It is alleged that D3 failed to realise that the instructions in relation to the sale of N’s Property were not being provided by N but were in fact being provided fraudulently by the purchaser, M. The critical dates are that there was an exchange of contracts for the sale of N’s Property with simultaneous completion on 2nd April 2001 and a form of transfer was also dated 2nd April 2001. Thereafter, on 4th July 2001, M was registered at HM Land Registry as the proprietor of the Property. Proceedings were issued on 2nd July 2007, more than six years after the exchange of contracts, completion and transfer of the Property but less than six years after the registration of M’s interest. At first instance, Norris J held that time began to run from 2nd April 2001 (when actual damage was first sustained) and the claim was, therefore, time-barred.
N advanced two grounds of appeal: first, that the release of the forged transfer on 2nd April 2001 did not constitute an immediate loss to N and actual damage was not sustained until registration M’s title on 4th July 20007. Second, that the firm of Solicitors had a continuing duty to prevent C losing his registered title.
The Court of Appeal dismissed the first ground of appeal and upheld Norris J’s decision that the claim was out of time and therefore statue-barred (Bell v Peter Browne & Co [1990] 2 QB 495 applied). The damage attributable to the breach had to be determined on the basis that N was aware of the forged transfer and was under a corresponding duty to alert any purchaser of the flat to that problem. The flat was unsaleable without such disclosure. N therefore sustained actual damage on the 2nd April 2001 which was when the cause of action accrued. N’s argument that he had not suffered actual damage until registration of the title on 4th July 2001 was rejected, as was the argument that he had to be aware of the damage for time to start running.
The second ground of appeal was also rejected. N argued that the Solicitors’ duty subsisted until at least 4th July 2001, based on the fact that the Solicitors had obtained a copy of N’s passport subsequent to completion. The Court of Appeal held that there were no special facts to suggest that the firm of Solicitors assumed a continuing duty of care towards N, which survived beyond completion of the transfer. Although they had obtained the passport after completion, that was indicative of their general lack of care and diligence rather than of any assumption of responsibility towards N. They had done what they considered necessary to complete the sale before 2nd July 2001 and did not have to supervise the registration of M’s title or carry out any investigations once they had seen the passport. In any event, the cause of action had accrued on 2nd April 2001 and although it became necessary to rectify the register after 4th July 2001 that went to damages and did not affect the date of breach.
Ben was instructed by Davies Arnold Cooper LLP.
This summary was written by Alice Carse.