When is a six-year limitation period not a six-year limitation period?

In Begum v Neejam LLP and Mallick the claimant alleged she had suffered loss (loss of chance) as a result of the defendants’ handling of the claimant’s employment claim against her former employer. The key allegations against the defendants were that their handling of the employment claim and their advice as to the value of it had been negligent, such that the claimant recovered substantially less than she was entitled to; and importantly in the context of limitation) that their negligence exacerbated her psychiatric illness and as such, had caused her a personal injury. The claimant claimed about £560,000.

While the court exonerated the defendants on every issue (scope of the duty, breach, causation and loss) and awarded indemnity costs, of particular note was the finding that the claim was statute-barred. This was because it had not been brought within the three year time-limit for personal injury claims.

The limitation issue

Section 11(1) of the Limitation Act 1980 provides that where a claim is brought in negligence, nuisance or breach of duty, and where the damages claimed consist of or include damages in respect of personal injuries, that claim must be brought within three years of the alleged negligence. This was confirmed by the Court of Appeal in Bennett v Greenland Houchen & Co. In this claim against Neejam LLP and Ms Mallick, the claimant claimed losses firstly based on the loss of the chance to recover what she alleged she would have received from the Employment Tribunal if properly advised. In addition, she claimed losses in respect of the psychiatric personal injury said to have been caused by the defendants’ negligent conduct of her employment tribunal claim.

During the course of the professional negligence claim, the claimant was given the opportunity to withdraw the claim for personal injury, in order to prevent the risk of the entire claim being held to be statute-barred. That course of action was not taken and the personal injury claim proceeded. The court then held that the entire claim was statute-barred, by virtue of section 11.

Consequences for insurers

In reality it is still relatively unusual to see a claim for professional negligence that includes a claim for personal injury, given that a professional will not ordinarily be found to have owed a duty to hold a client harmless from psychiatric injury, in terms of foreseeability (tort) or remoteness (contract).

The exceptions (generally where the contractual remedy for distress and inconvenience has been claimed, rather than personal injury) will be where the breach of the retainer related to a term which was important to the client (such as aircraft noise - see the House of Lords decision in Farley v Skinner) or distress suffered as a result of a failed holiday (where the whole purpose of the "holiday contract" is to provide entertainment and enjoyment –see the Court of Appeal’s guidance in Milner v Carnival Plc (t/a Cunard)).

It is not however difficult to envisage a claims environment in which the number of professional negligence claims with a psychiatric personal injury element might escalate. While this decision simply confirmed the position in Bennett and is not therefore new law, it is something that insurers need to be alert to when resolving claims. Tactically, it may be best to let time run on rather than proceed to settlement.

If the three-year limit has passed, the claimant will need to seek relief under section 33 (discretion in personal injury claims) or section14(a) (date of knowledge). Each case will be fact specific, but in Begum the claimant was unable to satisfy the court that either section came to her aid.