Lee Witcomb v J Keith Park Solicitors
[2023] EWCA Civ 326
Stephane Etroy & Anor v Speechly Bircham LLP
23 February 2023
[2023] EWHC 386 (Ch)
High Court
Someone got bad tax advice in 2009, leading to big tax problems. They didn't realize the bad advice was to blame until 2018. The court decided it wasn't too late to sue because they only realized the connection between the bad advice and their problems in 2018.
Key Facts
- •Claimants (Stephane Etroy and RBC Trust Company (Jersey) Limited) sued Speechly Bircham LLP for negligent tax advice given in 2009, resulting in over £1 million in tax liabilities.
- •The advice involved transferring assets from an existing trust (Helios April Trust) to a new trust (Helios May Trust).
- •Speechly Bircham admitted breach of duty but argued the claim was statute-barred.
- •The preliminary issue was whether the Claimants' knowledge of the claim met the requirements of section 14A of the Limitation Act 1980.
- •PwC advised the Claimants on tax matters in 2017, raising potential inheritance tax issues.
- •The key dispute was the date when the Claimants first had sufficient knowledge to bring their claim: the Claimants argued September 28, 2018, the Defendant argued May 2, 2017.
- •The main damages claimed were an entry charge (£1,057,069.82), a principal charge (£66,460.09), legal costs and other expenses.
Legal Principles
Section 14A of the Limitation Act 1980 sets a three-year limitation period for negligence claims, starting when the claimant has the necessary knowledge.
Limitation Act 1980
The 'knowledge required' includes knowledge of material facts about the damage and that the damage was attributable to the defendant's negligence.
Limitation Act 1980, section 14A(6)(a), (6)(b), (8)
'Material facts' are those that would lead a reasonable person to consider the damage serious enough to sue.
Limitation Act 1980, section 14A(7)
Knowledge of negligence as a matter of law is irrelevant.
Limitation Act 1980, section 14A(9)
Constructive knowledge includes knowledge a person might reasonably have acquired.
Limitation Act 1980, section 14A(10)
The burden of proof lies on the claimant to prove they had the necessary knowledge within three years of issuing the claim. If the defendant argues for an earlier date, they bear the burden of proof.
Nash v Eli Lilly [1993] 1 WLR 786
Cases involving pure economic loss often require specialized knowledge, and knowledge may not be sufficient until expert advice is received.
Haward v Fawcetts [2006] UKHL 9, Barker v Baxendale-Walker [2016] EWHC 664 (Ch)
Investigation costs incurred to determine if damage occurred are generally not sufficient to trigger the limitation period.
Case law discussed in the judgment
Outcomes
The Claimants' claims were not time-barred.
The Claimants did not have the requisite knowledge before September 28, 2018. While they were aware of potential tax issues earlier, they lacked sufficient knowledge of the attributions of those issues to the Defendant's negligence until PwC's firm conclusion on that date.