Too little too late

Is a solicitor guilty of negligence if a new judgment means old advice is now wrong? Simon Monty QC reports on how the law can change while a case is ongoing

What should a solicitor do when a new decision impinges on advice already given in litigation? What if counsel gives advice that is affected by a new case decided after the advice has been given? What if the new case was decided before the advice was given, but was only reported afterwards? In certain circumstances, it is far too easy to see how a claimant can have suffered a wrong, but may be left without a remedy.

Take as an example a negligence claim brought against a solicitor who had allowed a personal injury (PI) action to be struck out for want of prosecution. The principles on striking out prior to the Civil Procedure Rules (CPR) are familiar to practitioners and are summarised in Trill v Sacher (1993): the claim would be struck out where there had been inordinate and inexcusable delay giving rise to a substantial risk that a fair trial was no longer possible, or where serious prejudice had been caused to the defendant.

Under the CPR, the court has regard to different considerations (for example under CPR 3.1(3) and 3.3(2) and (3)), and because of the wider powers of the court in terms of its case management powers, orders striking out a claim may now be less common than before. Whether the original action was struck out under the CPR or the old rules, the professional negligence action must be commenced within six years of the date on which the damage was suffered.

The relevant chronology in the original action was as follows: the claimant was injured in an accident in March 1992; the writ was issued in February 1994 and the statement of claim was served in March 1994; the defence and a request was served in April 1994; there were no steps in the action between April 1994 and February 1995, when the defendant issued a summons seeking replies to the request; the replies were served in February 1995, but there were no further steps in the action until January 1996, when the claimant served notice of intention to proceed; there was then a further long period of delay until February 1997, when the defendant issued a strike-out application, and the action was struck out for want of prosecution on 28 April 1997; the claimant immediately instructed new solicitors, but the new firm did not start the claim against the claimant's former solicitors until August 2002; the new solicitor had been to see counsel in conference in July 2001, who advised that the limitation period commenced in April 1997, relying on the Court of Appeal's decision in Hopkins v Mackenzie (1995).

In Hopkins, the claimant had brought an action for PI against the governors of a hospital alleging negligence in relation to an operation performed on him in 1979. He retained the defendant to act as his solicitor. A writ was issued in February 1982. On 4 February 1986 the action was struck out for want of prosecution. On 27 January 1992 the claimant issued a writ against the defendant, who denied negligence and sought to rely on limitation. Allowing an appeal from the Deputy High Court Judge, the Court of Appeal held that the claimant's cause of action did not accrue until the action was struck out. The claim was for the loss of the cause of action, which did not occur until the claim was struck out, and not in respect of some earlier depreciation of the cause of action.

Back to our case, in which the claim against the negligent law firm was eventually issued on 11 August 2002. In the meantime, the Court of Appeal handed down its judgment in Khan v Falvey on 22 March 2002, although it was not reported until July 2002 in Part 4 of the 'Professional Negligence and Liability Reports' and Part 5 of the 'Lloyd's Professional Negligence Reports'; it was not reported in The Times until 4 December 2002.

With the decision in Khan came a change in the law: it was no longer permissible to wait for six years from the date of striking out. In Khan, Sir Murray Stuart-Smith held that the value of a claim in tort depends upon the prospect of success, and if it is very

likely or almost bound to fail, whether because it is liable to be struck out for want of prosecution, lack of merit or for some other reason, it will have no value or no substantial value. Once there is an inevitability, or at least a very serious risk, that a claim will be struck out, it must follow that the claimant has already suffered damage by diminution in the value of their claim well before the actual striking out of the actions.

Often the actual application to strike out may not have been made until years after it might successfully have been done. In such cases the damage has been caused at an earlier time, when there has been such inexcusable delay or non-compliance with rules that the court would have struck out the action, and pursuant to CPR Part 3.4, because the chose in action represented by the claim has so diminished in value to be of no real value.

Lord Justice Chadwick agreed, holding that as soon as it becomes possible to identify a period during which, because of delay, the value of the claim has diminished because its vulnerability to a strike-out has increased, it is impossible to say that the damage did not occur as a consequence of the previous delay, and therefore the cause of action is complete. (Khan has since been followed in March 2003 in Hatton v Chafes.)

Returning to our example, it is clear from the chronology that the original action was vulnerable to a strike-out from around mid to late 1996. In fact, a closer examination showed that the claim was at risk from April 1996. By the time of the decision in Khan, there was only a couple of weeks to go before the six-year anniversary of April 1996, and by the time it was reported, it was more than six years later.

The solicitor did not know about Khan, nor did it appreciate its impact on the negligence action until January 2003, when it instructed new counsel, who pointed it out. Counsel who advised in the summer of 2001 had not been instructed by that law firm before or since.

Therefore, the position seems to be this: counsel's advice in August 2001 was correct at the time and counsel was not negligent; when Khan was decided and reported (it was known about by professional negligence lawyers by late March 2002), it is unlikely that counsel would have been under an obligation to review all the cases in which advice had been given that might be affected by the decision; and even if such a duty existed, it might well have been too late in this particular case to issue proceedings.

The solicitors were not negligent in relying on counsel's advice prior to Khan, but by the time of the Khan decision, and certainly by the time it was reported in the summer of 2002, it was too late to start proceedings if the cause of action had accrued in April 1996. The solicitor's duty to advise its client is clear – but it would be of no help, since by that time the professional negligence action was likely to be struck out as being statute-barred.

The unfortunate claimant will have lost both the original action and the professional negligence action. There may be a claim against the law firm for its delay in commencing the professional negligence action after May 1997, when it was first instructed, but this will be tempered by the fact that until Khan the claim need not have been commenced until April 2003. There might also be a claim against the law firm (and in turn against counsel) for failing to find out about Khan in time (before the six-year anniversary of the strike-out on 28 April 2002) and to act accordingly, but common sense dictates that such a claim would be difficult.

This goes to emphasise not only the need to pursue and prosecute litigation claims promptly, and not to rely on leaving the commencement of proceedings until the last minute, but also that professional negligence litigation is a specialised field in which there are many traps for the unwary and uninformed.

Simon Monty QC is a barrister at Four New Square