If a claimant does not have the necessary knowledge to bring a claim (for example, they did not know that they had suffered loss, or did not know about the negligent act or omission causing the loss, or did not know the identity of the negligent party), then the six-year rule can be extended. 

In such cases, a claimant has three years from when they knew or ought reasonably to have known that they had a claim.

So what does this all mean?

As an example, in 2006, you instruct a pensions advisor to manage your pension fund. In 2016, you are provided with a statement that shows your pensions advisor has put all of your money into high-risk investments, despite you telling them that you were a cautious investor and wanted only low-risk investments. As a direct result of the high-risk investments your fund value has reduced and you want to sue the pensions advisor for negligence. Even if all of the investments were made in 2006 (i.e. more than six years ago) you can still bring a claim against your pensions advisor for negligence, because you found out about his actions within the last three years.

Any negligence claim remains subject to a 15-year long stop from the date of the negligent act or omission. Using the example above, assuming all of the high-risk investments were made in 2006 but you did not find out about them until 2022, you would be too late to bring a negligence claim. This is irrespective of the fact that you did not know about the negligence before.

What is knowledge?

The above example is based on actual knowledge i.e. what did the claimant really know. However, the legal definition is wider than that. The Limitation Act 1980 confirms that a person’s knowledge includes knowledge which he might reasonably have been expected to acquire (a) from facts observable or ascertainable by him; or (b) from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek.

Read more about negligence:

• How your business can fight business negligence claims
• Professional negligence claims: A basic guide
• How to avoid business negligence

However, a person shall not be fixed with knowledge of a fact ascertainable only with the help of expert advice, so long as he has taken all reasonable steps to obtain and, where appropriate, to act on that advice.

The case of Capita ATL Pensions Trustees Ltd & Others v Sedgwick Financial Services Ltd & Others was heard by the High Court in November 2015. The judge gave guidance on determining the date when the claimants first had the necessary knowledge.

The claim was made by trustees of a pension scheme against their pension advisors. A key allegation was that documents drawn up by the advisors in 1994 in an attempt to equalise the benefits paid to men and women were defective. As a result, the pension scheme was subject to substantial additional liabilities. The defendants sought summary judgment on the basis that the second defendant had replaced the first defendant as pensions advisor in 1994, and secondly that the claim against the second defendant was brought too late (“statute-barred”).

This article focuses only on the second of these arguments.

It was clear that the claimants knew there was the possibility that the scheme was not properly equalised in 1994 and, if that were correct, that it would increase the liabilities of the scheme substantially; there was a letter sent to the claimants’ solicitors in June 2007 which said this. However, the claimants claimed they did not know the identity of the negligent party at this time. For time to start running under the Limitation Act, the claimant must know the identity of the defendant.

The claimants said that they relied on their solicitors to correctly identify the relevant parties to the claim and to ensure that limitation did not expire against those parties (see below for how to achieve this). The claimants argued that they had taken expert advice from the solicitors and so the exception should apply to avoid them being fixed with knowledge that they did not have.

However, the judge ruled that this exception only applied in circumstances where the relevant fact was ascertainable only with the help of expert advice. In these circumstances, the judge held that the claimants, as trustees, would have been able to establish the identity of the correct defendant without expert advice if they had carried out reasonable investigations which would be expected of trustees in the circumstances. In other words, the claimants did not need expert advice to ascertain the relevant fact.

In any event, due to the 15-year long stop set out above, the judge held that all causes of action which accrued before 23 August 1996 (15 years before the claim was issued at court) were statute-barred. This included the attempted equalisation in 1994.

This case is a salient reminder that bringing a claim within the relevant time period is key. It is imperative that claimants are conscious of when they obtained actual knowledge of a cause of action, in addition to when they could have but did not obtain that knowledge. It was the latter that doomed the Claimants in this case.

How can you stop limitation from expiring?

Once limitation has expired this cannot be undone. The claim will be statute-barred. However, if you know that limitation is approaching then there are things that you can do to protect your right to claim:

Try to agree a “standstill” with the other party. A standstill is where both parties consent to an agreement that limitation shall be paused for a period of time. Solicitors can help you to draft these agreements to ensure that your rights are properly protected.
Issue a claim at Court. Once your claim is issued, limitation cannot expire for any element of that claim. You have to be sure that the claim issued at Court protects all relevant causes of action, but so long as that is done properly, your claim will not become statute-barred.

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Rebecca Green is a solicitor in the professional negligence team with Wright Hassall.

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