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	England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Williams & Anor v Lishman, Sidwell, Campbell & Price Ltd & Ors [2009] EWHC 1322 (QB) (12 June 2009) URL: http://www.bailii.org/ew/cases/EWHC/QB/2009/1322.html Cite as: [2009] PNLR 34, [2009] EWHC 1322 (QB)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		12 June 2009

His Honour Judge Reddihough :

1. These are applications by the First and Third Defendants under CPR Parts 3 and 24 for the claim against the First Defendants and for part of the claim against the Third Defendants to be struck out or dismissed on the ground that they are statute barred.
2. The First to Third Defendants are inter alia financial advisers and the Fourth Defendants are Solicitors. The Claimants claim damages against the First to Third Defendants in respect of losses arising from allegedly negligent advice given to them in 1997 to transfer their pension funds from an Executive Pension Plan (EPP) with the Prudential Assurance Co. Limited (Prudential) to personal Income Drawdown Plans (IDP) provided by Winterthur Life UK Limited (Winterthur). The Claimants further claim that, subsequent to the transfer, the First to Third Defendants negligently failed to advise them to take steps that would reduce their losses. If and to the extent that the Claimants' primary claims against the First to Third Defendants are statute barred, the Claimants claim damages against the Third and Fourth Defendants for the negligent handling of their primary claims.
3. It is necessary to set out some of the background to these claims. In April 1980, the First Claimant (Mr. Williams) set up the EPP with the Prudential and in April 1982 the Second Claimant (Mrs. Williams) also joined it. In May 1997, Mr. and Mrs. Williams were intending to retire and were considering whether they should change their pension plans. At that time, Mr. Williams had a number of discussions with Mr. Kilner of the First Defendants who were advisers to, and also accountants for, Mr. Williams and his company. Mr. and Mrs. Williams decided not to switch from the EPP, but when Mr. Williams contacted the First Defendants to inform them of this, he was told Mr. Kilner no longer worked for them and he was put through to Mr. McCabe, a manager of the First Defendants. Thereafter, it is alleged that Mr. McCabe advised the Claimants that they should consider transferring their funds from the EPP into a personal pension in order to facilitate an IDP. On 19^th June 1997, Mr. Williams attended a meeting with Mr. McCabe and with Mr. Simpson on behalf of the Third Defendants. It is alleged that, at that meeting, the First and Third Defendants advised that the Claimants should transfer their pension funds to the IDP provided by Winterthur. Mr. Williams stipulated that he did not want to make any change which might cause the Claimants to be worse off than if they remained with the EPP. It is alleged that the First and Third Defendants, through Messrs. McCabe and Simpson respectively, advised the Claimants that such transfer would satisfy that requirement and would provide greater financial advantages than the EPP. In particular, the Claimants were advised that the value of the IDP would increase at a rate consistently greater than the rate at which the fund would be reduced by drawdowns and, thus, that no erosion to the capital in the fund would occur.
4. In reliance upon that advice and similar advice given in November 1997, the Claimants decided to transfer their funds to the IDP provided by Winterthur. The transfers were effected, for technical reasons due to the EPP's being overfunded, in two stages: firstly by transfers from the Prudential to a GA Life Assurance Limited (GA) pension plan, and then to Winterthur on 21^st November, 1997. The transfers were as follows. In respect of Mr. Williams, £654,776.11 was transferred from the EPP in September 1997; £598,450.59 was transferred from GA on 21^st November 1997; and £562,418.57 was invested in the IDP. In the case of Mrs. Williams, £224,815.88 was transferred from the EPP in September 1997; £207,506.94 was transferred from GA on 21^st November, 1997; and £194,931.52 was invested in the IDP. It appears that the total reduction in values of £73,634.46 attributable to the transfer from the EPP to GA arose from £45,738.79 commission charges, which were reimbursed to the Claimants, and £27,895.67 related to production/administration charges and market movements (including an early surrender payment of £38,493). Of the £48,607.44 reduction in values attributable to the transfer from GA to the IDP, £40,297.70 related to commission charges, of which £16,119.08 was reimbursed to the Claimants, and £8,059.57 related to product/administration charges.
5. A pertinent matter in relation to those sums is that the Claimants assert that they were unaware that, once the funds had been in the GA pension beyond a cooling off period, which appears to have expired in early November 1997, an early surrender charge would apply upon the transfer of the funds to the IDP. Thus, it is asserted that the Claimants were unaware of the early surrender charges paid to GA of £38,493 until that was pointed out to them by their expert in the course of these proceedings.
6. Although the IDP performed reasonably at first, it subsequently performed badly and very substantial erosions to the Claimants' funds occurred. At the end of October 2003, Mr. Williams was so concerned about the state of the IDP that he carried out some calculations which demonstrated to him that the value of the Claimants' funds had reduced substantially and that they were going to be very much worse off than if they had remained with the Prudential EPP. Although prior to this time the Claimants had received regular updates and information regarding the IDP, Mr. Williams asserts that the Third Defendants kept reassuring him about the state of the fund after it began deteriorating and advised that improvement would occur.
7. The Claimants were persuaded in late October/early November 2003 by the Third Defendants to direct a claim at the First Defendants for negligent advice and the failure to warn of the risks of investing funds in the IDP, even though Mr. Williams was aware that it was the Third Defendants who had also advised the Claimants from the outset. The Claimants agreed that the Third and Fourth Defendants should represent them in relation to such claim.
8. Subsequent to the Third/Fourth Defendants acting for them in connection with their claims, the Claimants instructed further firms of Solicitors, and their present Solicitors issued the claim herein on 16^th October 2006. The detailed Particulars of Claim is dated 15^th February 2007. Paragraphs 9 and 12 of the Particulars of Claim set out the advice allegedly given to the Claimants by the First and Third Defendants in 1997 and in particular that the IDP would not leave the Claimants worse off than they would be if they remained with the EPP, that the IDP would provide significantly greater financial advantages than the EPP, and that the value of the funds in the IDP would increase at a rate consistently greater than the rate at which the fund would become reduced by way of income drawdowns every year so that no erosion to the capital would occur. It is further pleaded that the First and Third Defendants continued as joint agents/advisers to the Claimants until 7^th April 2001, and that thereafter the Third Defendants were sole agents/advisers. The alleged duties of the First Defendants and the respects in which they were negligent both in their initial advice and up to 7^th April 2001, are set out in detail in Paragraphs 31, 32 and 38 to 41 of the Particulars of Claim. These allegations are repeated against the Third Defendants in respect of their initial advice and their continuing advice up to and beyond 7^th April 2001. The loss claimed by the Claimants is the amount it would now cost to purchase annuities whereby they could enjoy an income comparable to that which would have been provided by the EPP. It appears that such cost would be in excess of £900,000.
9. By their present applications, the First Defendants assert that, in respect of the entirety of the claim against them, the claim form not having been issued until 16^th October, 2006, it is statute barred, and the Third Defendants assert that, in relation to the claim regarding the initial advice given by them to the Claimants as alleged in Paragraphs 43 and 44 of the Particulars of Claim, that claim is statute barred. The Third Defendants accept that the alleged breaches of their continuing duty to the Claimants and in particular after 16^th October, 2000, cannot be statute barred.
10. The Claimants resist the applications on the basis that the relevant claims are not statute barred and rely principally upon the provisions of Section 14A and Section 32 of the Limitation Act, 1980. Insofar as there was a breach of a continuing duty by the First Defendants between 16^th October 2000 and 7^th April 2001, the Claimants assert and the First Defendants accept that that would not be statute barred.
11. The applications are brought under Part 3.4 and/or Part 24 of CPR. It is said that under Part 3.4(2)(a), the claims in question should be struck out because the Particulars of Claim "discloses no reasonable grounds for bringing" those claims. Alternatively, it is said that under Part 24.2(a)(i) the Court should give summary judgment against the Claimants in respect of those claims because the Claimants have "no real prospect of succeeding" on those claims. In my judgment, the Court's approach should be the same under both Rules, namely to consider whether the Claimants have no real prospects of succeeding in those claims by reason of the limitation issues raised in respect of them.
12. In this regard, I bear in mind the proper approach to be applied to the question of whether a Claimant can show a real prospect of success as summarised in the Notes to Part 24.2 in Civil Procedure (The White Book). Thus, in order to defeat an application for summary judgment, it is sufficient for the Respondent to show some "prospect", i.e. some chance of success. That prospect must be "real", i.e. the Court will disregard prospects which are false, fanciful or imaginary. The inclusion of the word "real" means that the Respondent has to have a case which is better than merely arguable. He is not required to show that his case would probably succeed at trial. It also has to be remembered that the hearing of an application for summary judgment is not a summary trial. The Court at the summary judgment application will consider the merits of the Respondent's case only to the extent necessary to determine whether it has sufficient merit to proceed to trial. Proper disposal of an issue under Part 24 does not involve the Court conducting a mini trial (see Swain -v- Hillman [2001] 1 All ER 91). It also has to be remembered that, for the purposes of the present applications, the matters set out in the Particulars of Claim must be assumed to be true.
13. It is common ground that the claims in question are in negligence and thus founded on tort so that under Section 2 of the Limitation Act, 1980, the limitation period expires "six years from the date on which the cause of action accrued". It is accepted that, having regard to the decision in Shore -v- Sedgwick Financial Services Ltd. [2008] PNLR 37, the cause of action accrued when the funds were transferred into the IDP, a riskier plan than the EPP, on 21^st November 1997; alternatively a little earlier in November 1997 when the GA cooling off period expired and early surrender charges became payable upon a transfer of the funds out of GA. On either basis, the six year period had long elapsed when the claim herein was issued on 16^th October, 2006.
14. Thus, the Claimants seek to rely on Section 14A and/or Section 32 of the Limitation Act, 1980, to establish that the claims in question are not statute barred. As referred to above, the Claimants assert that they are not statute barred in relation to the continuing duty, if it existed, of the First Defendants from 16^th October 2000 to 7^th April 2001. I propose to deal firstly with the issues which arise under Section 14A, then the continuing duty point, and finally the issues under Section 32.
15. Section 14A of the Limitation Act, 1980, provides as follows:

"(1) This Section applies to any action for damages for negligence, other than one to which Section 11 of this Act applies where the starting date for reckoning the period of limitation under sub-section (4)(b) below falls after the date on which the cause of action accrues.

(2) Section 2 of this Act shall not apply to an action to which this Section applies.

(3) An action to which this Section applies shall not be brought after the expiration of the period applicable in accordance with sub-section (4) below.

(4) That period is either - (a) six years from the date on which the cause of action accrued; or (b) three years from the starting date as defined by sub-section (5) below, if that period expires later than the period mentioned in Paragraph (a) above.

(5) For the purposes of this Section, the starting date for reckoning the period of limitation under sub-section (4)(b) above is the earliest date on which the plaintiff or any person in whom the cause of action was vested before him first 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.

(6) In sub-section (5) above, "the knowledge required for bringing an action for damages in respect of the relevant damage" means knowledge both - (a) of the material facts about the damage in respect of which damages are claimed; and (b) of the other facts relevant to the current action mentioned in sub-section (8) below.(7) For the purposes of sub-section (6)(a) above, 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 and was able to satisfy a judgment.

(8) The other facts referred to in sub-section (6)(b) above are - (a) that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence; and (b) the identity of the defendant; and (c) if it is alleged that the act or omission was that of a person other than the defendant, the identity of that person and the additional facts supporting the bringing of an action against the defendant.

(9) Knowledge that any acts or omissions did or did not, as a matter of law, involve negligence is irrelevant for the purposes of sub-section (5) above.

(10) For the purposes of this Section, 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; but a person shall not be taken by virtue of this sub-section to have 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."

16. Thus, essentially the question to be considered is whether the Claimants have a real prospect of resisting the assertion that their date of knowledge under Section 14A(5) was prior to 16^th October 2003, i.e. more than three years prior to the issue of the claim herein. The First and Third Defendants maintain that it is clear from the documentation that, by the end of 2002, and certainly prior to 16^th October 2003, the Claimants had actual knowledge, alternatively constructive knowledge, of the matters set out in sub-paragraphs (7) and (8) of Section 14A. The Claimants respond that they did not have such knowledge until the end of October 2003, when Mr. Williams carried out the calculations referred to above, leading to him writing a letter of claim to the First Defendants dated 4^th November 2003. Although, over the years from the transfer of the funds into the IDP, the Claimants regularly received information about the performance of the IDP, they assert that they relied upon and were entitled to rely upon the reassurances given to them by their expert advisers, the Third Defendants.
17. Before considering the relevant documentation, it is appropriate to refer to some case law upon the issue of the degree of knowledge required to fix the starting date for the limitation period under Section 14A(5). The House of Lords considered this issue in Haward -v- Fawcetts [2006] 1 WLR 682, which concerned a claim that accountants had negligently advised the claimants in relation to investments in a company. The headnote to the law report summarised their Lordships' findings as follows. " 'Knowledge' for the purposes of Section 14A of the 1980 Act meant knowing with sufficient confidence to justify embarking on the preliminaries to the issue of a writ; that knowledge that the damage was 'attributable' in whole or in part to the acts or omissions of the defendant alleged to constitute negligence within Section 14A(8)(a) meant knowledge in broad terms of the facts on which the claimant's complaint was based, and of the defendant's acts or omissions, and knowing that there was a real possibility that those acts or omissions had been a cause of the damage.
18. At Paragraph 9 of the report, Lord Nichols stated: "Thus, as to the degree of certainty required, Lord Donaldson of Lymington, M.R. gave valuable guidance in Halford -v- Brookes [1991[ 1 WLR 428, 443. He noted that knowledge does not mean knowing for certain and beyond possibility of contradiction. It means knowing with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking advice, and collecting evidence: 'suspicion, particularly if it is vague and unsupported, will indeed not be enough, but reasonable belief will normally suffice.' In other words, the claimant must know enough for it to be reasonable to begin to investigate further." At Paragraphs 12 to 15, Lord Nichols deals with the irrelevance of knowledge that the act or omission involved negligence. At Paragraph 15 he stated: "In many cases the distinction between facts (relevant) and the legal consequences of facts (irrelevant) can readily be drawn. … There may be difficulties in cases where a claimant knows of an omission by, say, a solicitor but does not know the damage he has suffered can be attributed to that omission because he does not realise the solicitor owes him a duty." In Paragraph 16 he went on to say, "This particular difficulty does not arise in the present case. … Once Mr. H. knew enough for it to be reasonable for him to investigate whether Mr. A.'s advice was flawed, he would thereupon have known his losses might well be attributed in whole or in part to that flaw. He would have known this because he had relied upon Mr. A.'s advice when investing money in the company." In Paragraph 19 he said: "The language and intent of Section 14A(8)(a) are clear. As already noted, in addition to having knowledge of the material facts about the damage, the claimant must know there was a real possibility the damage was caused by the acts or omissions alleged to constitute negligence. The conduct alleged to constitute negligence in the present case was not the mere giving of advice. The conduct alleged to constitute negligence was the giving of flawed advice …"
19. In Paragraphs 79 to 80, Lord Walker makes the point that the knowledge in question does not involve the claimant having a detailed knowledge of how and why the defendant failed in his duty of care. At Paragraph 90, Lord Brown said: "What the claimant must know to set time running is the essence of the act or omission to which his damage is attributable, the substance of what ultimately comes to be pleaded as his case in negligence. That essence or substance here could no doubt be characterised in either of two ways: either as the act of recommending investment in the company (or omitting to caution against it …) or, with greater particularity, the act of recommending investment without first carrying out the investigations necessary to justify such positive advice. Having at first preferred the latter characterisation, I have come to prefer the former. True, under the former the claimant knows nothing beyond the fact that his advisers led him into what turned out to be a bad investment; he does not know, as under the latter characterisation he would, that he has a justifiable complaint against his advisers. But he surely knows enough (constructive knowledge aside) to realise that there is a real possibility of his damage having been caused by some flaw or inadequacy in his advisers' investment advice, and enough therefore to start an investigation into that possibility, which Section 14A then gives him three years to complete."
20. At Paragraph 118, Lord Mance states: "For present purposes, what matters is that it is, in my opinion, wrong to suggest that all the claimant needs to know is that he has received professional advice but for which he would not have acted in a particular way which has given rise to loss, or that he has not received advice when, if he had received it, he would have acted in a way which would have avoided such loss. … Mere "but for" causation is insufficient. … A claimant who has received apparently sound and reliable advice may see no reason to challenge it unless and until he discovers that it has not been preceded by or based on the investigation which he instructed or expected. A claimant who has suffered financial loss in a transaction entered into in reliance on such advice may not attribute such loss to the advice unless and until he either makes the like discovery about the inadequacy of the work done, or, at least discovers some respect in which the transaction was from the outset unsound, giving him … prima facie cause to complain. Such a scenario may well occur where there are other causes of loss which appear to him capable of explaining the whole loss." He went on to say at Paragraph 119, "On the other hand, … a claimant cannot postpone the running of time almost indefinitely by reference to detailed factual points which often only become known in the course of investigation of a possible claim, or during litigation itself."
21. The Claimants suggest that Lord Brown's speech at Paragraph 90 is inconsistent with the Paragraphs of Lord Mance's speech referred to above and that the latter should be preferred. However, I do not see that they are inconsistent: Lord Mance is merely stating that there may be some factual situations where a claimant may not attribute his loss to negligent advice until he knows of the adequacy of the work done prior to the giving of the advice. However, in other cases the claimant will know enough to realise there is a real possibility of his loss having been caused by some flaw or inadequacy in the advice.
22. In Gravgaard -v- Aldridge and Brownlee [EWCA Civ.1529] at Paragraph 9, Lady Justice Arden deals with the proper approach to constructive knowledge under Section 14A(10) in the following terms: "For the purposes of constructive knowledge only, the question arises whether the Claimant might reasonably be expected to have acquired knowledge of facts, and whether it was reasonable for him to seek advice. However, a claimant does not have constructive knowledge of facts simply because an expert, whom it was reasonable to expect the claimant to consult, could have obtained the knowledge or helped him ascertain the facts. This is because, by virtue of the tailpiece in sub-section (10), a person does not have to have constructive knowledge of matters which are ascertainable only with the help of an expert if he has taken all reasonable steps to obtain and, where appropriate, to act on that advice. If, therefore, he has timeously instructed an expert, it must be shown that he had actual knowledge of the facts specified in Section 14A(6) or constructive knowledge on some other basis. This helps to prevent the claimant who acts properly from being penalised for shortcomings on the part of his expert. In the present case, however, (the claimant) did not instruct a solicitor until May 1999, and it may be that her solicitor was not instructed to advise her on possible claims against the respondents until some time after that. Accordingly, if the Court concludes that it was reasonable to seek expert advice before that date, and that she failed to take all reasonable steps to do so, the effect of sub-section (10) is that the facts that she could have ascertained with the help of solicitors will be attributed to her as at that earlier date. On the other hand, if the Court concludes that it was not reasonable to expect her to consult solicitors before May 1999, and that the solicitors could not have assisted her to ascertain the material facts before she did in fact do so … she would not be treated as having acquired knowledge of the necessary facts until she did in fact do so."
23. I now turn to the documentation relied upon by the First and Third Defendants as showing that the Claimants had the requisite knowledge under Section 14A(5) at a time substantially before 16^th October 2003. It is said that the documentation shows that the Claimants were well aware prior to that date (i) of the substantial erosion of the capital in the fund which was occurring when they had been specifically advised at the outset that, in the IDP, such erosion would not occur, and (ii) that they were or would be worse off than if their funds had remained with the Prudential, when they had been specifically advised at the outset that that would not be the case.
24. On 17^th February 2000, the Third Defendants wrote to the Claimants enclosing a summary of the state of their funds and noting a fall in the unit price. It was then stated, "We believe that the fund price will improve during the coming year as the FTSE 100 level rises". In a letter to the Claimants dated 20^th August 2001, the Third Defendants stated: "I refer to my telephone conversations with John last week when he expressed his concerns at the reducing unit price for the protector fund and the reducing values of your respective pension funds. I have updated the schedules which summarise each of your respective positions from inception to date, and from which you will see that John's fund is worth some £489,440 compared to £564,452 at inception… Similarly Judith's fund is currently worth £167,925 compared to £195,636 at inception… Whilst obviously the intention and certainly the hope was that the withdrawals would not erode the capital value of the funds, but that these would grow to allow you to increase your annual withdrawals by 5% per annum, this has not proved to be the case. The position has worsened considerably over the last six months given the instability in equity markets…I do feel that the fund is well placed, given its equity content, for a recovery when equity markets themselves recover. … Certainly we would hope to see some marked improvement in this by the end of 2002, if not indeed by April 2002 when your next triennial review is due. During our telephone conversation John mentioned that in times like these he sometimes wished that he had purchased annuities at the outset… I trust that my comments above have somewhat eased your concerns regarding the fund. I have pension monies of my own invested in it and I personally am going to stick with it…"
25. By a letter dated 5^th November 2001, to the Claimants from the Third Defendants, an up to date valuation of the funds was given and it was stated: "Whilst each of your respective fund values have fallen by slightly in excess of 5% since I last wrote on 20^th August, 2001, I am sure you will agree that this fares very well against a 16% reduction in the FTSE 100 index over the same period which was caused by and large by the terrible events we witnessed in the States on 11^th September, 2001." In a letter dated 8^th March 2002, a further update was provided and reference was made to the under-performance of the protector fund. The Third Defendants stated: "We remain confident however of the ability of the fund to provide real growth in the event of the FTSE 100 returning to some semblance of normality … We remain fairly bullish for investment markets generally and equity markets particularly over the coming twelve months, expecting to see some return to normality around the fourth quarter of this year."
26. Further updates were provided by letters dated 9^th May 2003 and 10^th September 2003. In a letter dated 30^th September 2003, the Third Defendants mentioned to the Claimants the fact that Winterthur had closed the fund to new business. There was reference to the short term and long term performance showing signs of lagging behind the market and it was stated, "We believe that the current fund will not significantly benefit from any equity recovery."
27. In Paragraph 27 of the witness statement of Mr. Gray on behalf of the First Defendants, there is a helpful table showing the extent of the reduction in the Claimants' pension fund over the period of the letters referred to above. By 20^th August 2001, the reduction was £102,723; by 5^th November 2001, £135,965; by 8^th March 2002, £136,636; by 9^th May 2003, £180,532; and by 10^th September 2003, £196,830. The Claimants were also sent letters dated 8^th December 2000, 11^th January 2001, 30^th March 2001, 12^th April 2001, and 9^th August 2001, which made clear that, on each of those dates, if the Claimants purchased annuities they would be significantly less than the benefits that the Claimants would have had under the Prudential plan. Again, Mr. Gray has provided a helpful table in Paragraph 33 of his witness statement which shows the substantial degree to which the annuity benefits were diminishing, had the Claimants switched to annuities. In a letter dated 5^th April 2001, from the Third Defendants, significant reductions in the maximum and minimum income levels in the drawdown plan were pointed out. Again, the amounts that would be obtained by purchasing an annuity were detailed and again it would have been clear that they were less than would have been the case in the Prudential plan.
28. There is a Third Defendants' file note dated 7^th May 2003, referring to a conversation with Mr. Williams, who stated "how much he felt he had lost on drawdown. This was very old territory which we had discussed on a number of occasions beforehand."
29. After carrying out the calculations to which I have referred, at the end of October 2003, Mr. Williams sent a claim letter to the First Defendants dated 4^th November 2003. Contained within that letter was the following statement: "Mr. Simpson and Mr. McCabe came to see me at my house and ran through all the figures and assured me that by switching to the protector fund we would not only be no worse off but should be much better off. Over the past few years it has become apparent that this is not the case and our pension funds have reduced dramatically and that by the time we are 70 the fund will be virtually worthless, whereas if we had stayed with the Prudential we would have continued to have an excellent pension guaranteed for life." In his first witness statement, Mr. Williams says that by this statement in this letter he was not saying that the Claimants had been aware for a number of years that they would be worse off, but that he meant that it had become apparent that the last few years'events meant that they would not be better off.
30. The Defendants also rely upon two letters from the Claimants to their Solicitors in respect of which privilege has been waived. In a letter dated 7^th December 2005, Mr. Williams stated, "…but when I received a valuation in November 2000 showing an 18% reduction in the unit price, I started to become concerned. I was assured however that it was only a blip and there was nothing to worry about. By the end of 2001, the situation didn't seem to be improving and I became quite concerned but didn't think there was anything I could do about it." It seems that the references to 2000 and 2001 respectively should have been to 2001 and 2002. However, even then, it indicates the Claimants' state of mind as at the end of 2002. In a letter to the Solicitors dated 11^th February 2006, Mr. Williams stated: "You state that my date of knowledge was the middle of August 2001. I dispute this as I thought it was perfectly reasonable to follow the advice of the experts that the fund should improve by the end of 2002. When this did not happen I accept that, had I had any knowledge of financial law, I should have made a claim then. However, as has been stated previously, I did not realise I had a claim until the autumn of 2003 and I believe that this is the crucial date and that we are still within the three year time limit." In his second witness statement, Mr. Williams says in relation to the letter of 11^th February, 2006, that the point he was making was that, "…with hindsight, once the hoped-for recovery had not materialised at the end of 2002, I would have been well advised to start a claim. I was of course not so advised and on the contrary (a) NFML continued to reassure me and (b) I was positively advised in late 2003 to do nothing further following my first letter of complaint to LSCP."
31. In my judgment, the starting point in considering the Claimants' date of knowledge within Section 14A is the fact that the Claimants had been advised at the outset that there would be no erosion of their capital in the IDP and that they would be no worse off than if they had left their funds with the Prudential. In my judgment, it must have been abundantly clear to the Claimants by the end of 2002, and certainly by May 2003, that the state of their funds was seriously deteriorating in terms of capital erosion and that they were in a much worse position than if they had remained with the Prudential. By 8^th March 2002, there had been an erosion of their capital by £136,636, and by 9^th May 2003, by £180,532. Even ignoring the reduction in the potential annuity figures compared with staying with the Prudential, these large erosions of capital should have very much put the Claimants on notice that the situation was completely at odds with the advice which they had been given in 1997, and that such advice was flawed. In my judgment, this means that, by the end of 2002, and at the latest by mid-2003, the Claimants had knowledge that their loss was attributable in whole or in part to the acts or omissions of the First and Third Defendants alleged to constitute negligence within Section 14(8)(a) in the sense set out in Haward -v- Fawcetts (ante); namely, they had knowledge in broad terms of the facts upon which their complaints are based and of the Defendants' acts or omissions, and knew that there was a real possibility that such acts or omissions had been a cause of their loss. Thus, it means that, in the words of Lord Nichols, they had knowledge with sufficient confidence by those times to justify embarking on the preliminaries to issuing a writ such as taking advice and collecting the evidence. By reason of the fact that the Claimants relied on the express positive advice given by the First and Third Defendants, in my judgment, this is not one of those cases contemplated by Lord Mance in Haward -v- Fawcetts, where it would be necessary for the Claimants to have knowledge of specific aspects of the Defendants' negligence such as the failure to carry out full enquiries prior to giving the Claimants the advice in question. In my judgment, the First Claimant could and should have carried out at the end of 2002, or by mid-2003, the calculations he in fact carried out in late October 2003, which had led him to write the letter of claim to the First Defendants. Alternatively, in my judgment, at those times he might reasonably have been expected, within the meaning of Section 14A(10), to obtain independent expert advice as to the Defendants' acts or omissions which would have resulted in him having the knowledge stipulated in Section 14A(8)(a). In this regard, I have in mind the dicta of Lady Justice Arden in Gravgaard -v- Aldridge and Brownlee referred to above.
32. I reject the submissions made on behalf of the Claimants, that they were entitled to rely on the ongoing advice and reassurances of the Third Defendants and that that amounted within the proviso to Section 14A(10) to taking reasonable steps to obtain expert advice. In my judgment, that sub-section clearly contemplates taking advice from an expert independent of the parties whose conduct is being called or may be called into question.
33. I am reinforced in my conclusions about the Claimants' knowledge under Section 14A by the fact that Mr. Williams himself, on the face of it, in his letter of claim of 4^th November, 2003, appeared to accept it had become apparent "over the past few years" that the pension funds had reduced dramatically and that the Claimants were worse off than if they had stayed with the Prudential. Furthermore, in the letter to his Solicitors dated 7^th December, 2005, he indicated he had become quite concerned by the end of 2002, and in the letter to his Solicitors dated 11^th February, 2006, he conceded that, by the end of 2002, had he had any knowledge of financial law, he should have made a claim then. In my judgment, that is tantamount to an acceptance that the Claimants would have had the requisite knowledge under Section 14A at the end of 2002 if they had taken expert advice, which, in my judgment, it would have been reasonable for them to do and which they ought to have done. In fact, Mr. Williams could and should at that stage have carried out a calculation, which he did not do until late October 2003, to demonstrate to himself that he had a claim against the First and/or Third Defendants.
34. It is submitted on behalf of the Claimants that they should have the opportunity to give oral evidence and be cross-examined as to their state of mind/knowledge. However, I reject that submission, it being accepted on behalf of the Claimants that it is open to the Court on the material before it to conclude that, prior to 16^th October, 2003, a reasonable person would no longer have relied on any reassurances by the Third Defendants and would and should have had the state of knowledge referred to in Section 14A. I have reached the firm conclusion on that material that the Claimants had the requisite knowledge under Section 14A(5) from their actual knowledge, alternatively constructive knowledge arising under Section 14A(10), by the end of 2002 and not later than mid-2003. It must follow, therefore, that my conclusion is that the Claimants do not have a real prospect of resisting the assertion that their date of knowledge under Section 14A was prior to 16^th October 2003.
35. I next turn to the question of whether the First Defendants had a continuing duty to the Claimants in the period 16^th October 2000 to 7^th April 2001, so that they would not be time barred in respect of the alleged breaches of such duty, set out in Paragraphs 38 to 40 of the Particulars of Claim. There can be no doubt that, at the time of the giving of advice in 1997, and in setting up the transfer into the IDP, the First Defendants together with the Third Defendants were the agents and advisers of the Claimants. However, the First Defendants maintain that, after inception of the IDP, the Third Defendants took over as sole servicing agents and there were no continuing duties owed by the First Defendants to the Claimants. The Claimants argue that the First Defendants remained on the records of Winterthur as joint agents until 7^th April 2001, and that it is reasonably arguable that their retainer to act as financial adviser continued until that date, and that they regarded themselves as under a continuing duty to advise the Claimants regarding the IDP.
36. The Claimants point to various documents in support of their argument regarding the First Defendants' continuing duty. In a letter from the First Defendants to the Claimants dated 17^th November 1997, when the transfer to the IDP was about to be completed, it was stated: "Let me suggest that you and Ray and I meet again, once the dust of the transfer has settled, and we shall be delighted to go through the advantages to you both of the phased retirement scheme." In a letter from Winterthur to the Claimants dated 1^st December 1997, reference was made to referring to the First Defendants if the Claimants had any queries. In a letter to the Claimants from the First Defendants, undated but sent in late December, there was again reference to having a meeting to ensure that the Claimants were fully aware of the advantages now secured for the rest of their lives by having gone through the transfer into the IDP. There is a letter dated 2^nd June 1998, from the First Defendants to the Claimants, enclosing some policy documentation for the pension funds and stating, "We of course keep a copy and I have in addition sent a copy through to Ray for his records at Northern Financial Management." A letter from Winterthur to the Claimants dated 10^th February 1999, refers to a copy of some annual review illustrations having been sent to "your financial advisers (the First Defendants)". In the letter of 5^th April 2001, to the Claimants, the Third Defendants stated: "We did not receive from Winterthur Life a copy of the 11^th January 2001, triennial review sent to you … during December. This apparently went to (the First Defendants) who were joint agents when the arrangements were originally established. They have had absolutely nothing to do with servicing the arrangements since then and Ray suggests that these be transferred to us as sole servicing agents. I am enclosing a letter to this effect which I shall be obliged if you will simply sign where indicated and return to me." These were letters dated 7^th April 2001, which each Claimant signed, stating, "When the above arrangement was established (the First Defendants) were appointed joint servicing agents with (the Third Defendants). Since inception (the Third Defendants) have undertaken all of the servicing in connection with this arrangement. I shall be obliged therefore if you will arrange to transfer to their agency as sole servicing agents with immediate effect."
37. Thus, it is clear that the First Defendants remained on Winterthur's records as the Claimants' joint agents until 7^th April 2001, and from time to time received documentation regarding the IDP. However, it is plain that, after the inception of the IDP, the First Defendants played no part whatsoever in the servicing of it. At no time after the inception of the IDP were they asked to give, and they did not offer, any advice to the Claimants. It was the Third Defendants who continued to provide advice to the Claimants and who carried out the reviews of the drawdown scheme. The First Defendants received no ongoing commission payments from Winterthur after the inception of the IDP, whereas the Third Defendants did. In my judgment, there was no question of the First Defendants regarding themselves as advisers to the Claimants after December 1997. The mere fact that in error they had been left on Winterthur's records cannot give rise to an agency agreement, and even less to there being any duty on the First Defendants, and in particular in the period 16^th October 2000 to 7^th April 2001, to give the Claimants advice about their pension. Again, in my judgment, the mere fact that the First Defendants were sent copies of some documentation, of itself could not possibly give rise to a duty on the First Defendants to advise the Claimants about the merits or otherwise of continuing with the IDP. I therefore conclude that the Claimants do not have a real prospect of succeeding in their argument that the First Defendants owed a continuing duty to the Claimants in the period 16^th October 2000 to 7^th April 2001.
38. Finally, I turn to the issues which arise under Section 32 of the Limitation Act, 1980. So far as it is relevant, Section 32 provides as follows:

"(1) Subject to sub-sections (3) and (4A) below, where in the case of any action for which a period of limitation is prescribed by this Act … (b) any fact relevant to the plaintiff's right of action has been deliberately concealed from him by the defendant … the period of limitation shall not begin to run until the plaintiff has discovered the … concealment … or could with reasonable diligence have discovered it.

(2) For the purposes of sub-section (1) above, deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty.

…

(5) Sections 14A and 14B of this Act shall not apply to any action to which sub-section (1)(b) above applies (and accordingly the period of limitation referred to in that sub-section, in any case to which either of those Sections would otherwise apply, is the period applicable under Section 2 of this Act)."

39. Apart from their argument under Section 14A, which I have rejected, it is the Claimants' case that, in relation to the allegedly negligent advice or failure to advise on the part of the First and Third Defendants up until early November 1997, contained in Paragraphs 8, 9 and 12 of the Particulars of Claim, the Claimants are not statute barred, because these Defendants deliberately concealed from the Claimants the fact that, from early November 1997, their funds would be depleted by the early surrender charges payable to GA and that such charges of £38,493 were so deducted. The Claimants assert that this amounts to deliberate concealment of a fact relevant to their right of action within the meaning of Section 32(1)(b). It is said that the Claimants could not with reasonable diligence have discovered this concealment until late October 2003 and certainly not prior to 16^th October 2000, so that in respect of this part of their claim it was brought within the six year period that arises under Section 32. Alternatively, even if the point came when the Claimants were aware, actually or constructively, of other losses arising from the negligent advice, say at the end of 2002, the limitation clock regarding the claim would not start running until that point by reason of the alleged deliberate concealment, so that again a claim based on advice up to early November 1997 would not be statute barred.
40. I propose to assume for the purposes of this aspect of the applications that it is reasonably arguable that there was deliberate concealment in relation to the liability for and the deduction of the GA charges.
41. Before considering the parties' respective submissions on this issue, it is pertinent to refer to various authorities which were cited to me in relation to the interpretation of Section 32(1)(b).
42. In Frisby -v- Theodore Goddard (unreported, 27.2.1984), the Court of Appeal considered the provisions of Section 26 of the Limitation Act, 1939, where the wording is slightly different from that in Section 32 of the 1980 Act in that it refers to "the right of action is concealed by … fraud". At Page 2 of the transcript, Sir John Donaldson, M.R. (as he then was) stated: "However, for present purposes, I think that what is important is not so much the meaning of the word "fraud" in the Section as the phrase "the right of action is concealed"… The wording of the 1980 Act is different – 'any fact relevant to the plaintiff's right of action' - but this may not make any difference as a matter of construction. If it does make any difference, then as I say we have to apply the 1939 Act." At Page 4 he stated: "A right of action arises out of a basic set of essential facts. In the context of the present case, these essential facts were (a) a solicitor and client relationship between the plaintiff and the defendants, (b) the giving of advice by the defendants which a skilled and careful solicitor should not have given, and, possibly, (c) consequential damage. A right of action may be concealed by hiding one or more of these essential facts from the potential plaintiff. But that did not occur and the plaintiff does not suggest that it did. His complaint is that certain evidence was concealed which, he says, would have supported his right of action. This is something wholly different. Having a right of action and knowing you have it is one thing. Being able to prove it is another."
43. C -v- Mirror Group Newspapers [1997] 1 WLR 131 concerned the interpretation of Section 32A of the 1980 Act in relation to a libel claim. The Court, at Page 138, cited Frisby with approval and also cited the case of Johnson -v- Chief Constable of Surrey (unreported, 19.10.1992). Neill, L.J. at Page 137A-F stated as follows in relation to the Johnson case: "The Court construed the expression narrowly. Rose, L.J. stated, 'For my part I accept the submission that in construing the Section there is no middle ground between facts and evidence … Facts which improve prospects of success are not, as it seems to me, facts relevant to the right of action… I accept that the construction proposed … is a narrow one, but unless it is correct it is difficult to see what purpose is served by the special provisions with regard to personal injury actions which are contained in Section 33 of the Act.' It is clear that Rose, L.J. accepted what in this Court has been described as the Statement of Claim test, that is knowledge of the facts which should be pleaded in the Statement of Claim. Russell, L.J. stated: 'In order to give relief to the plaintiff any new fact must be relevant to the plaintiff's "right of action" and is to be contrasted with the facts relevant, for example, to the "plaintiff's action" or "his case" or "his right to damages". The right of action in this case was complete at the moment of arrest. No other ingredient was necessary to complete the right of action. Accordingly, whilst I acknowledge that new facts might make the plaintiff's case stronger or his right to damages more readily capable of proof, they do not in my view bite upon the right of action itself. They do not affect the right of action, which was already complete and consequently in my judgment are not relevant to it.' I stated: …' One looks at the words in Section 32(1)(b) "any facts relevant to the plaintiff's right of action". It seems to me that those words must mean any facts which the plaintiff has to prove to establish a prima facie case.' "
44. The Claimants rely on the case of AIC Limited -v- ITS Testing [2006] EWCA Civ 1601 and in particular the judgment of Rix, L.J. at Paragraphs 323 to 324, where he stated: "In this connection it is clear from authority that the statutory words 'any fact relevant to a plaintiff's right of action' are to be given a narrow rather than a wide interpretation. Thus in Johnson -v- Chief Constable of Surrey where the claim was in false imprisonment and the police had deliberately concealed facts relevant to the absence of reasonable cause, this Court accepted the defendant's submission that the 'relevant fact must be a fact without which the cause of action is incomplete', contrasting a fact relevant to an action and to a right of action." He then quotes the observations partly referred to above in the Johnson case.
45. What is immediately striking about the Claimants' argument in relation to Section 32 is that the Claimants were in fact able to serve a detailed Particulars of Claim herein without referring to the alleged concealment relating to the GA charges, and, indeed, at a time before they became aware of the position regarding those charges. On the face of it, this would seem to suggest, and I would be inclined to find, that concealment of those charges or the liability for them does not come within the Statement of Claim test regarding a fact relevant to the Claimants' right of action in Section 32, and that the liability for and deduction of the GA charges were simply facts or evidence which might improve the Claimants' prospects of success but are not relevant to the right of action.
46. However, the Claimants submit that the fact of the liability to the GA charges is a relevant fact without which the cause of action is incomplete, as opposed to a fact merely probative of the cause of action, and is therefore a fact relevant to the Claimants' right of action within Section 32(1)(b). In support of this argument, it is submitted that it is necessary to focus on the act or event which first causes the damage. If that act or event has been deliberately concealed, then the effect of the words in Section 32(1)(b) is that time does not start to run until the concealment is discovered or could with reasonable diligence have been discovered. Alternatively, time does not start to run until the Claimants learn of or could with reasonable diligence have learned of some later loss arising from the breach of duty in question.
47. As I understand it, at the heart of this argument is the assertion that, at a time in early November 1997 but prior to the transfer into the IDP on 21^st November,1997, the Claimants in any event became liable for the GA charges because the GA cooling off period had expired. Thus it is said that, at that moment, they suffered a loss in their pension fund such that they were no longer able from that point onwards to acquire the same value of pension rights with the Prudential which they could have acquired up until then by transferring back to the Prudential. Hence, it is said, the fact of the liability for the GA charges was the event which completed the Claimants' right of action for the negligent advice up to early November 1997. Because that event is what completed the cause of action, it is, on a strict interpretation of Section 32(1)(b), a fact relevant to the Claimants' right of action and it was that which was deliberately concealed. The Claimants point out that the Third Defendants' second witness statement for these applications states that the Claimants first suffered loss when they became irrevocably committed to the transfer of their pension funds out of the EPP, or alternatively when they transferred their funds into the IDP.
48. In my judgment, there is a fallacy in this argument on behalf of the Claimants regarding Section 32. It seems to me that one must concentrate on the essence of the claims against the First and Third Defendants which are the subject of these applications. The essence of those claims is that, by reason of the allegedly negligent advice in 1997 by the First and Third Defendants, the Claimants transferred their pension funds into the IDP (see Paragraph 13 of the Particulars of Claim). Thus, in the context of those claims, the loss or damage occurs at the point when the funds are transferred into the IDP (as per Shore -v- Sedgwick Financial Services Limited (ante)). The fact that an earlier loss occurred, namely the event of the inevitable liability to the GA charges, is, it seems to me, irrelevant to the completion, by the transfer to the IDP, of the cause of action in question, namely the losses arising from the negligent advice which caused that transfer into the IDP. Indeed, one can see the distinction between those two different events, that is, the liability to the GA charges and the transfer of the funds into the IDP, by considering what would have happened if, after the liability arose to the GA charges, the Claimants decided not to transfer into the IDP. They may well then have had a claim against the First and Third Defendants for the loss arising by reason of the liability to the GA charges, but that, in my judgment, is a different loss to that claimed in the present claim and which relates to the transfer into the IDP.
49. It must follow that I reject the ingenious submission on behalf of the Claimants, that they have a real prospect of successfully arguing that, by reason of deliberate concealment of the GA charges or liability to them, the Claimants can rely upon Section 32 of the Limitation Act, 1980, to stop the limitation period running.
50. The Claimants raised a subsidiary argument under Section 32 in relation to the Third Defendants. This was to the effect that, in late October 2003/early November 2003, in persuading the Claimants to claim against the First Defendants for their negligent advice and in acting for them in respect of such claim, the Third Defendants within the meaning of Section 32 concealed a fact relevant to the Claimants' right of action, namely the Third Defendants' role in giving such advice, such as to stop limitation running. It seems to me I can deal with this argument quite shortly. In my judgment, the Claimants have no real prospect of successfully arguing (i) that such persuasion amounts to concealment of a fact and (ii) that there was any such concealment because the Claimants themselves knew full well that the Third Defendants had participated in giving the advice in question to them in 1997 and had continued to advise the Claimants thereafter.
51. The clear result of the various conclusions which I have reached is that the First and Third Defendants' applications succeed and the entirety of the claim against the First Defendants must be struck out and/or summary judgment entered against the Claimants on such claim; and Paragraphs 43 and 44 of the Particulars of Claim against the Third Defendants must be struck out and/or summary judgment entered against the Claimants in respect of the claim contained in those Paragraphs.