Court of Appeal rule on limitation in tort in Holt v Holley & Steer [2020] EWCA Civ 851

Yesterday the Court of Appeal handed down its decision in Holt v Holley & Steer [2020] EWCA Civ 851 setting new guidance on the identification of the date of damage for the purposes of s. 2 of the Limitation Act 1980 in the context of allegations of negligent conduct of litigation.  Benjamin Fowler acted for the Defendant/Respondent and its professional indemnity insurers who successfully resisted the Claimant’s appeal.  This is the first time that the Court of Appeal has considered limitation in the context of family proceedings – in this case, ancillary relief proceedings.

The central allegation was that the solicitors ought to have but failed to procure and/or obtain permission to rely on expert valuation evidence; by failing to do so, the claimant’s assets were overvalued and the relief granted was less valuable than it should have been.

The claim form was issued more than six years after the conclusion of the final hearing, but less than six years before the date of judgment.  The claimant argued that damage was not suffered (and time would not run) until after judgment was handed down, relying in particular on the nature of family litigation and the broad discretion afforded to the judge, such that the nature of the outcome was entirely at large until the judgment was given.  This, the claimant maintained, was a contingency and no damage was suffered until the judge made the finding he did relying on the overvaluation of the assets.

McCombe LJ – with whom King LJ and Keehan J agreed – accepted the Defendant solicitors’ submission that the claimant’s prospective result in the financial remedies hearing was diminished in quality because the baseline for distribution of the matrimonial assets would be defined by what she contended were the inflated values of an important part of her assets.   The sum that she would be likely to receive either on settlement or upon judgment would be calculated on those inflated values.

The Court also agreed that the closest analogy was the line of cases including Khan v Falvey [2003] EWCA Civ 400; Hatton v Chafes [2003] EWCA Civ 341; and Berney v Saul [2013] EWCA Civ 640, all of which were cases of negligence leading to the dismissal, or potential dismissal, of proceedings through delay.   This is the first time that this line of authority has been applied to lost litigation in the context of obtaining a less valuable outcome following at trial/final hearing – the most common context for lost litigation claims.

A key factor in those earlier decisions was that the claimants had suffered a loss in that their chose in action – the claim – had been diminished in value by the solicitors’ conduct.   The Court accepted that while a claim in ancillary relief proceedings is not a chose in action and therefore cannot be characterised as a damaged asset, the claimant’s right is essentially quantifiable and is rendered either valueless or of diminished value in a manner sensibly calculable.   The Court agreed with the Defendant that carving out a distinction between matrimonial finance proceedings and civil litigation on this basis would be a triumph of technicality over reality.

While the Court accepted that there was a theoretical possibility that the alleged breach of duty may have caused no loss, the focus had to be on the ingredients of the cause of action as set out in the Particulars of Claim.  The Claimant had alleged that she lost the opportunity to rely on expert valuation evidence which she said would have achieved a better outcome for her; loss was suffered when she lost the opportunity to adduce that evidence, such that the value of her claim was “inevitably diminished”.

The Claimant has requested permission to appeal to the Supreme Court.