Evans v Santander UK Plc [2013] EW Misc B55 (14 November 2014) [2013] EW Misc B55

EWMISC
Evans v Santander UK Plc [2013] EW Misc B55 (14 November 2014)
[2013] EW Misc B55 · 2014-11-14
[1]THE DEPUTY DISTRICT JUDGE: This judgment arises from an application and proceedings brought by Mr and Mrs Evans against Santander Bank. Their claim concerns investment advice given to them in November/December 2004 and April 2007. This application is made by the defendant bank and relates to a preliminary issue as to whether that part of the claim which arose from the investment advice given in November/December 2004 is statute barred pursuant to the Limitation Act 1980.[2]The claimants’ amended particulars of claim dated 8 th August 2013 allege three causes of action in relation to the 2004 investment; firstly, a breach of statutory duty under section 150 of the Financial Services and Marketing Act 2000, secondly, a tortious duty to exercise reasonable care and skill in advising the claimants, and, thirdly, a fiduciary duty to act in the best interests of the claimants. It is accepted by both parties that the claims for breaches of statutory and fiduciary duty are statute barred. However, the tortious element of the claim, i.e. negligence, is asserted by the claimants to fall within section 14A of the Limitation Act, effectively relying on three years from the date of knowledge rather than from six years of the cause. Such reliance may be put on the basis of a date of actual knowledge or a date of constructive knowledge, and I refer specifically to the Limitation Act section 14 which makes it clear that the section applies to any damages for negligence and that the starting date for reckoning is either six years from the date on which the cause of action accrued, or three years from the starting date as set out in subsection (5), and the starting date is the earliest date on which the, what we now call the claimant, 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, and the knowledge required for bringing an action for damages means knowledge both of the material facts and of other facts which are outlined in more detail in section 8.[3]Section 7 states:
“The material facts about the damage are such facts about the damage as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability [that, obviously, is not the position here] and was able to satisfy a judgment.”
Other facts under section 8:
“The damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence, and the identity of the defendant.”
Subsection (10) says:
“A person’s knowledge includes knowledge which he might reasonably have been expected to acquire from facts observable or ascertainable by him, or from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek.”
[4]In considering this matter I have read the witness statements of Russell Kelsall and Leanna Geary, who are for the defendant, and Mr and Mrs Evans and Mr Hampson for the claimants. The defendant’s application is for judgment in favour of the defendant under CPR 3.1(2)(i) on the claimants’ claim on the grounds that the claim in respect of the 2004 investments is statute barred. The ground for this is that the claimants had constructive knowledge within the limitation period and failed to act upon it. On the basis that the test is an objective test under subsection (10) as such it can be determined as a preliminary issue without a trial. The claimants’ position, however, is that the case raises substantial issues of fact which should be determined at a trial and after full disclosure.[5]I have seen the documentation which was provided to Mr and Mrs Evans by the bank, both at the time of the 2004 investment and the subsequent further investment in 2007. In particular I have seen a letter dated 2 nd December 2004 which was sent to Mr and Mrs Evans by the bank after two meetings with the financial adviser, Mrs Hartnell, on 15 th November and 30 th November 2004. I have also during the course of submissions been referred to a number of decisions made by the Court of Appeal and other tribunals dealing some in part with actual knowledge, some with constructive knowledge but I will refer to those later on.[6]Firstly, I need to determine whether this is a preliminary issue which could be dealt with without a full trial. The overriding factor in deciding whether an issue should be treated as a preliminary issue is whether it will save costs. That is the principle set out in Ajinomoto Sweeteners –v- Asda Stores [2009] , and following the decision in Page –v-Hewetts Solicitors [2009] limitation can be the subject of such a preliminary issue. The same point was considered in Jacobs –v- Sesame [2014] . It seems to me that making a decision today would result in significant savings in terms of costs and efficiency for all parties. I am also mindful of the principle behind section 14A, that the defendant should not be required to defend stale claims.[7]Having heard detailed submissions on both sides I am satisfied that it is appropriate to deal with the limitation issue today. I accept the defendant’s view that under section 14A the relevant knowledge need not be actual and I have quoted from subsection (10). The claimants state that the investment in 2004 was not suitable because, as they have put it in their particulars of claim, their main aim was the preservation and protection of their capital as their top priority. In both their witness statements they make reference to not wanting to enter into risky investments and that they were effectively risk-averse. The documentation received by them in December 2004 makes it abundantly clear that a small proportion of their investment (about 14,000) would be put into ISAs, half of the balance of their investment (100,000) would go into a low risk distribution bond, and 100,000 into a medium risk bond investing primarily in commercial property. That letter sets out, in my view, in laymen’s terms full details of the risks and likely returns. Indeed the returns are stated to be between four to eight per cent and not the eleven to twelve per cent that the claimants refer to in their statements. If they were as risk-averse as they now state, a letter clearly setting out details of a medium risk investment should surely have rung alarm bells. Whether or not they actually read the letter matters not; the test is knowledge a person might reasonably have expected to acquire as referred to in Gravgaard –v- Aldridge [2004] which held that in general the court must have regard to the characteristics of a person in the position of the claimant, but not the characteristics peculiar to the claimant.[8]Using that objective test it is my view that the claimants would have been reasonably expected to have acquired that knowledge upon receipt of the letter. Further, in April 2007 they return to the bank and they see the same financial adviser and agree to a further medium risk investment and receive similar documentation when the same risks were pointed out to them and they still took no action. Finally, in 2008 their investment lost over £73,000 and that was before the main banking crash. What greater degree of knowledge should a claimant have before investigating the matter further and seeking advice?[9]The guidance in the case law to which I have been referred makes it clear that in considering the date of relevant knowledge under section 14A the court should identify the essence of the act or omission from which the damage arises and consider the point in time at which the claimant should reasonably ask questions about the advice given, and that principle is set out in Kays Hotels –v- Barclays [2014] , and in Spencer-Ward – v- Humberts [1986] it is stated that a broad commonsense approach should be adopted. I have also been referred to the case of Haward –v- Fawcetts which sets out principles relating to actual knowledge rather than constructive knowledge and so has been of less assistance to me in considering this point.[10]In summary, therefore, it seems to me that there were various points during the standard period of limitation, the six years, when, if the claimants were truly risk-averse as they state, alarm bells would have rung and they could have made enquiries. I am assisted in that by the documentation which was produced to them by the bank which, as I have already said, seems to me to set out in abundantly clear terms exactly what they were letting themselves in for and in short I have come to the conclusion that I find for the defendant bank on the issue of limitation and hold that that part of the claim relating to the 2004 investments is time barred and judgment should be given in favour of the defendant on that point. (End of Judgment) (Further discussions/proceedings follow)