In June 2014 Rhys Taylor and I published an article on the Family Law Week website examining the potential liability of lawyers who draft pre-nuptial agreements. In that article we pointed out that the extent of future liability for negligence was difficult to estimate in many cases at the time the agreement was drafted. Furthermore, we noted that s.14A of the Limitation Act 1980 (added to the Act by the Latent Damages Act 1986 extended the period within which an action for negligence could be brought to 3 years after the date when all the material facts about the damage which is the subject of the claim became known or should reasonably have become known. The backstop for bringing an action was extended to a maximum of 15 years after the date of the negligent act or omission.
We noted that it might not always be able to identify the point at which the damage caused by negligent drafting of a pre-nuptial agreement would become apparent. It was, however, reasonable to assume that the point of damage might only arise at the stage when the marriage breaks down and the agreement is sought to be put into effect.
The recent case of Blakemores LLP v Scott and others [2015] EWCA Civ 999 provides useful reading in this context. It was not a case concerning a pre-nuptial agreement but the situation in that case can reasonably be compared to the effects of the negligent drafting of a pre-nuptial agreement. In the Blakemores LLP case the solicitors acted for a number of individuals in a dispute over land. The solicitors failed to lodge objections to the land being registered in the names of a couple for whom they did not act. That left their clients needing to apply to have the Land Register altered by the court. They were not advised that the failure to lodge the objections meant that the court had a discretion to refuse to alter the register. In December 2010 the court refused to correct the registration of one of the plots of land. The issue was whether the time for limitation arose when they learned of the negligent act in failing to lodge the objection and the scope for the court to refuse to permit the alteration of the register, or only once the court refused to alter the registration. The solicitors argued that the knowledge of the negligent act was clear to the claimants by April 2009 when they were informed of the potential for the court to exercise its discretion against them by reason of the failure to register their objection prior to the titles to the land being registered.. The claimants argued that it would only by at the point in December 2010 when they learned that the court had refused their application in relation to one of the plots.
The Court of Appeal agreed with the claimants. The court held that s.14A of the 1980 Act ‘requires that the starting date is the earliest date on which 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’. The court could not see that as at 2009 the claimants had such knowledge about the consequences of the negligent act as would justify a reasonable person to consider the ‘damage’ to be sufficiently serious to justify issuing a claim in damages against the firm. The time for bringing an action in negligence only arose at the time when they learned of the adjudicator’s decision arose.
If we compare the situation with a pre-nuptial agreement, it is easy to see how a party to the marriage is unlikely to consider any of the detailed contents of the agreement after the marriage until the point when the marriage falters and advice is sought on the remedies which might be available upon divorce. It may be that advice is then given which provides sufficient knowledge of the negligence and the damage flowing from it so as to start the clock ticking on the 3 years allowed to institute proceedings under s.14A. However, akin to the Blakemores LLP case, it is also possible to conceive of the ‘damage’ only becoming apparent at the point when a court rules upon pre-nuptial agreement within the financial remedy proceedings.
15 years is a long time over which to be accumulating liability for potentially negligent acts. The use of limitation of liability clauses remains something lawyers need to seriously consider in this context.
We noted that it might not always be able to identify the point at which the damage caused by negligent drafting of a pre-nuptial agreement would become apparent. It was, however, reasonable to assume that the point of damage might only arise at the stage when the marriage breaks down and the agreement is sought to be put into effect.
The recent case of Blakemores LLP v Scott and others [2015] EWCA Civ 999 provides useful reading in this context. It was not a case concerning a pre-nuptial agreement but the situation in that case can reasonably be compared to the effects of the negligent drafting of a pre-nuptial agreement. In the Blakemores LLP case the solicitors acted for a number of individuals in a dispute over land. The solicitors failed to lodge objections to the land being registered in the names of a couple for whom they did not act. That left their clients needing to apply to have the Land Register altered by the court. They were not advised that the failure to lodge the objections meant that the court had a discretion to refuse to alter the register. In December 2010 the court refused to correct the registration of one of the plots of land. The issue was whether the time for limitation arose when they learned of the negligent act in failing to lodge the objection and the scope for the court to refuse to permit the alteration of the register, or only once the court refused to alter the registration. The solicitors argued that the knowledge of the negligent act was clear to the claimants by April 2009 when they were informed of the potential for the court to exercise its discretion against them by reason of the failure to register their objection prior to the titles to the land being registered.. The claimants argued that it would only by at the point in December 2010 when they learned that the court had refused their application in relation to one of the plots.
The Court of Appeal agreed with the claimants. The court held that s.14A of the 1980 Act ‘requires that the starting date is the earliest date on which 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’. The court could not see that as at 2009 the claimants had such knowledge about the consequences of the negligent act as would justify a reasonable person to consider the ‘damage’ to be sufficiently serious to justify issuing a claim in damages against the firm. The time for bringing an action in negligence only arose at the time when they learned of the adjudicator’s decision arose.
If we compare the situation with a pre-nuptial agreement, it is easy to see how a party to the marriage is unlikely to consider any of the detailed contents of the agreement after the marriage until the point when the marriage falters and advice is sought on the remedies which might be available upon divorce. It may be that advice is then given which provides sufficient knowledge of the negligence and the damage flowing from it so as to start the clock ticking on the 3 years allowed to institute proceedings under s.14A. However, akin to the Blakemores LLP case, it is also possible to conceive of the ‘damage’ only becoming apparent at the point when a court rules upon pre-nuptial agreement within the financial remedy proceedings.
15 years is a long time over which to be accumulating liability for potentially negligent acts. The use of limitation of liability clauses remains something lawyers need to seriously consider in this context.
RSS Feed