Etroy and RBC Trust Company (Jersey) Limited v Speechly Bircham LLP [2023] EWHC 386 (Ch)
Background
Mr Etroy and RBC’s claim for damages against Charles Russell Speechlys LLP (Speechlys) is to go ahead after the High Court ruled it is not time-barred.
The UK law firm, Speechlys advised Etroy in 2009 and is accused of giving negligent tax advice. Etroy sought advice from Speechlys about a trust he had set up in 2002, to hold interests from his work. After advice from the UK law firm, Etroy transferred the assets from that trust to a new trust in 2010 – in which RBC was the trustee. In September 2018, his accountants PwC raised some inheritance tax issues with the trust following an investigation.
Speechlys argued that the claim was time-barred as the allegedly negligent advice occurred more than 6 years prior. However, the claimants – Etroy and RBC assert that the knowledge required to bring a negligence claim was only gained in September 2018. The claimants relied upon section 14A of the Limitation Act 1980, which allows them an additional 3 years to issue proceedings from the date they acquired the required knowledge to bring action against Speechlys.
A deputy High Court judge, Ms Clare Ambrose held, that knowledge was only gained after PwC’s advice. She said it was only on 28 September 2018 that PwC:
“first gave Mr Etroy actual knowledge that liability for the entry charge was a real possibility whereas previously PwC had been tentative and maintaining that further information was required”.
In other words, although PwC had raised the inheritance tax issues before September 2018; it was only then that the claimants were able to link the tax issues to Speechlys’ advice. It was also when PwC advised Etroy to register a disclosure covering his liabilities to HM Revenue & Customs.
The case is allowed to progress after Judge Ambrose ruled in favour of the claimants and decided that the claim was commenced within the time permitted by section 14A of the Limitation Act 1980.
Comment
A Professional Negligence claim must be brought within the primary limitation period to avoid being time-barred.
The primary limitation period runs for 6 years from the date of loss in tort claims, and 6 years from the date of a breach in contract claims. In this case, it would be from the date of Speechlys’ advice that led to the transfer of assets into the 2010 trust.
In usual circumstances, the claimants would have been time-barred as proceedings began after the limitation period. Nevertheless, Etroy and RBC were able to depend on section 14A of the Limitation Act 1980, which gave rise to a secondary limitation period. The secondary limitation period runs 3 years from when the claimants knew of or ought to have known about the negligence.
Etroy is allowed to rely on the secondary limitation period and progress in their claim against Speechlys because the law recognises that negligence is not always apparent until some years later.
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Muhammed N’dow is a Trainee Solicitor at Nelsons
For advice on or further information in relation to the subjects discussed in this article, please contact Muhammed or another member of the Professional Negligence team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.
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