Case No: B2/2013/3682
Neutral Citation Number: [2014] EWCA Civ 1410
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BATH COUNTY COURT
Deputy District Judge Webber
2YN06020
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: Thursday 30th October 2014
Before :

LORD JUSTICE SULLIVAN

LORD JUSTICE TOMLINSON
and
LORD JUSTICE LEWISON
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Between :

	Susan Jacobs	Claimant /Respondent	
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Sesame Limited	Defendant / Appellant	
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(Transcript of the Handed Down Judgment of
WordWave International Limited
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Peter Dodge (instructed by Wixted and Co Solicitors) for the Respondent
Simon Howarth (instructed by Reynolds Porter Chamberlain LLP) for the Appellant

Hearing date : 8 October 2014
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Judgment

Lord Justice Tomlinson : 
1.	This appeal raises the question whether the Respondent/Claimant, Mrs Jacobs, can take advantage of the provisions of s.14A of the Limitation Act 1980 in order to pursue a claim in negligence against the Appellant/Defendant which is otherwise time-barred.  After a trial of that preliminary issue Deputy District Judge Webber sitting in the Bath County Court determined that she could.  The Defendant appeals.
2.	The Defendant is a “network” of financial advisors.  A Mr Derek Pike was a member of the Defendant’s network.  In September 2005 Mr Pike advised Mrs Jacobs to invest in a Legal and General (L & G) Investment Bond.  She invested £65,000 on 20 September 2005.  In August 2008 Mrs Jacobs made a single withdrawal of £2,500 (inclusive of early surrender penalties totalling £180.64).  Between October 2011 and February 2012 she withdrew £1,560 by way of monthly payments.  Mrs Jacobs surrendered the Bond in February 2012.  Its value was then £53,152.32.  The loss asserted is £7,968.32, although there is also reference in the Particulars of Claim to loss of interest.  In April 2012 Mrs Jacobs consulted solicitors, apparently in response to an advertisement in the press indicating that financial advisors could be pursued for compensation on a “no win no fee basis”.  Proceedings were issued in November 2012.  Mrs Jacobs asserts that it was not until February 2012 that she knew either that she had suffered a loss or that she might have received inappropriate advice.
3.	Mrs Jacobs contends that Mr Pike’s advice was negligent and that the product was unsuitable for her requirements.  The Defendant denies negligence but relevantly for present purposes asserts that Mrs Jacobs had sufficient knowledge to bring a claim in July 2009.  By then she had received four annual statements in June 2006, 2007, 2008 and July 2009, the latter two of which showed a catastrophic fall in the value of the Bond.  The June 2008 statement showed a fall in value of the Bond of £17,264.99, i.e. 21%, over the previous twelve months.  The statement of July 2009 showed a fall in the value of the Bond of £18,052.12, i.e. 30%, over the previous twelve months.  The value of the Bond in July 2009 was £43,653. 
4.	Although nothing may here turn on it, it is as well to remember that the onus is on Mrs Jacobs to demonstrate that the starting date for reckoning the period of limitation has been postponed.  If her contention that she suffered no loss until surrender of the Bond in February 2012 is well-founded, then she would succeed in so demonstrating.  So too if she did not until then have sufficient knowledge to bring a claim.
5.	In 2005 Mrs Jacobs was a warden in a block of residential flats.  She retired in 2011.  She describes herself as an inexperienced investor.  She had never before held any form of non-deposit investment.  The £65,000 which in September 2005 she decided to invest represented 75% of the life savings of her and her husband.  She says in her witness statement that she had an extremely cautious attitude towards risk and that she could not afford to lose any part of the fund.
6.	The judge heard evidence from Mrs Jacobs and Mr Pike.
7.	After meeting Mrs Jacobs and assessing her requirements Mr Pike wrote a “Suitability Report” dated 19 September 2005.  The judge found that Mrs Jacobs never received this document notwithstanding that it was Mr Pike’s evidence that he either gave it to her or left it for her or posted it to her.  That report contains the following two paragraphs:-
“1. The area which requires addressing is investing for capital growth.  You preferred only to accept a low risk of capital loss with 100% of your savings, in return for the opportunity to earn more than from a deposit type investment[s].  You recognise that this will limit the potential for real capital growth.
2. I have recommended £65,000 into an Investment Bond because we agreed that you required a medium to long term investment with the potential for real capital.”
8.	As typed in the original document there is no full stop at the end of paragraph 2 of the Suitability Report and I suspect that the word “growth” is missing.  The judge records in his judgment that the parties before him agreed that these two paragraphs contain “a true description of the sort of investment Mrs Jacobs was seeking”.
9.	There is of course something of a tension between this assessment of Mrs Jacobs’ attitude to risk and what is said in her Witness Statement and indeed what is pleaded on her behalf in the Particulars of Claim.  That document in turn does not speak with one voice.  At one stage it is asserted that Mrs Jacobs had a cautious attitude to risk “and could not afford to invest in any product where there was a substantial risk that she could lose some or all of the amount invested”.  In at least two places it is asserted that the Defendant ought not to have recommended anything other than an interest bearing deposit.
10.	The Suitability Report also effectively records Mr Pike’s advice as to fund allocation in these words:-
“It was agreed to invest the monies into a property fund hold [sic] real assets in bricks and mortar.”
11.	Mrs Jacobs understood that the money was to be invested in commercial property.  The Bond when she received it recorded that the entire amount was invested in Property Fund (A).
12.	The Suitability Report also contained this paragraph:-
“I confirm that these funds (sc. the property fund referred to in the previous paragraph) are consistent with your attitude towards investment risk.  I also advise that you invest for a period of at least five years.”
The second sentence quoted above reflects the circumstance that surrender, in whole or in part, during the first five years after the policy date attracted a graduated early surrender charge, diminishing from 7% of “cash value” during year one to 2% for surrender after four but before five years.  The Bond had no fixed term.  It is properly described as a single premium life assurance contract.  Benefits were payable on death of the life assured or surrender.  The judge found that the understanding between Mrs Jacobs and Mr Pike was that the money would remain in the Bond for at least five years.
13.	Paragraph 3(o) of Mrs Jacobs’ Particulars of Claim asserts:-
“The Claimant was concerned about the loss of her savings and Mr Pike reassured her that this would not occur, advising her that “You’ll always get £65,000 back”.  The Claimant believed, therefore, that regardless of the performance of the Bond throughout its term, on its termination she would receive back the full invested amount at least.  Mr Pike did nothing to correct this impression when he knew, or should have known, that there was no such protection in place.  Had the Claimant known there was no such protection in place, as well as the actual level of risk to which her savings would be exposed, she would have declined the advice of Mr Pike and not have agreed to place her savings into this investment.”
14.	The judge heard evidence on this issue which he summarised as follows:-
“5. Mrs Jacobs goes further.  In her witness statement she said “Mr Pike said to me, that I always would get the £65,000 back and I accepted that advice.”  In her evidence she used the word “guarantee” a number of times.  For example, she said “I did believe that there was a guarantee that at the end of the five years Legal and General would pay me £65,000 because that is what I was told I would get”.  She also said: “I invested the money because I wanted to make money.  He told me it was going into commercial property and it would be a reasonably safe investment and the £65,000 would always remain safe, no matter what I made on top of that.”  And “I asked over and over would the £65,000 be safe.  There were several conversations.  I might have been naïve but I believed someone who knew about investments.”
6. In his statement Mr Pike says: “I did not at any stage state to the Claimant that ‘she would always get £65,000 back’ from her investment.  Her capital was not guaranteed.  In his evidence he said “there was no guarantee, although there was an expectation of a profit”.  The money was all to be invested in commercial property and “over the previous 10 years that sector had done extremely well.  In 2005 I was confident, otherwise I would not have recommended it”.  In his evidence Mr Pike said: “I may have said an adjective, such as likely or probably, that ‘you will get your money back over five years’.  In 2005 I was confident otherwise I would not have recommended it.””
15.	The judge’s findings on this aspect were as follows:-
“7. I find that Mr Pike did not give a guarantee as such.  To have done so would have been plainly inconsistent with the document, written in plain English, that was given to Mrs Jacobs at the time.  However, I do find that Mr Pike said sufficient to Mrs Jacobs that she believed that there was no chance of her receiving less than £65,000 when the investment period elapsed.”
The reference to the document given to Mrs Jacobs at the time is to a 16 page document entitled “Key Features of the Legal & General Investment Bond”.  I shall revert to this document.
16.	To be read together with the judge’s findings set out above is paragraph 16 of his judgment, which is his finding as to Mrs Jacobs’ state of mind in July 2009 after receipt of the annual statement showing a fund value of only £43,653.  £2,500 had of course been withdrawn the previous year, but it is not suggested that this detracts from the impact of the figure shown on the statement.  Paragraph 16 of the judge’s judgment reads:-
“In this case Mrs Jacobs did not believe that she had yet suffered any loss. She believed perhaps naively that she would get her basic money back after five years whatever happened.  As her counsel put it in his submission, until the five years had elapsed it was only a suspicion.  She did not know enough with sufficient knowledge to start a claim, or even take advice or collect evidence.  I therefore conclude that she did not have requisite knowledge in July 2009.”
17.	The findings in paragraphs 7 and 16 of the judgment below do not sit comfortably alongside each other.  The language of “no chance” suggests a reassurance as to past performance from which an inference was invited of virtually assured or even assured growth in the future.  Paragraph 16 however, referring to a belief that she would get her full investment back after five years “whatever happened”, is indicative of an intrinsic feature of the product that it would return the initial investment after five years irrespective of the value of the fund.  The judge was plainly aware of this distinction but in my view he did not grapple with it sufficiently in making his finding as to Mrs Jacobs’ initial belief.  He did however note, in relation to her evidence as to her state of mind in and after July 2009, that “there is some inconsistency in her thinking but I do find that she still genuinely believed that by the end of the five years she would receive at least £65,000”.  However there is no appeal against the judge’s finding as to Mrs Jacobs’ state of mind in September 2005 and we must be loyal to it.
18.	It is pleaded in the Particulars of Claim that Mr Pike provided the Key Features document to Mrs Jacobs and the judge so found.  Mrs Jacobs’ evidence was that she did not recall seeing this document.  She accepted that she was provided with L & G documentation in relation to the product.  She said that she read it but did not really understand it.  On being shown the Key Features document in cross-examination she acknowledged that it was written in plain English.  That document relevantly provides as follows:-
“Key Features of the Legal & General Investment Bond
“It is important that you understand how the bond works and what the risks are before you buy. The full Key Features comprises of this document, together with the enclosed Personal Illustration, the ‘Funds Directory’, and if you choose to invest in the Protected UK Growth Fund, the ‘Protected UK Growth Fund Guide’. Please read all these documents carefully and keep them for your records.
  ITS AIMS
•	To provide growth on your investment over the medium to long term (five years or more).
•	To provide an ‘income’ if you choose.
  Note:
‘Income’ is achieved by regular encashments from the bond and is referred to as ‘regular withdrawals’ in this document.
YOUR COMMITMENT
•	You invest a lump sum of at least £5,000.
•	There is no fixed term but you should be prepared to invest for at least five years, preferably longer.”
RISK FACTORS
•	What you get back will depend on the investment performance of the assets that make up your chosen fund (or funds). Each fund has its own degree of risk, as described in the Funds Directory.  The value of the investment and any money you take to provide you with an income may go down as well as up.  Legal & General do not guarantee the returns you receive and you could get back less than your original investment.  If you take regular withdrawals this will increase this risk.
•	You may get back less than illustrated because
-	investment growth could be lower than illustrated
-	the deductions could be more than illustrated
-	you take more money out of the bond than illustrated.
•	If you exercise your right to cancel the bond immediately after investing you may get back less than your investment.  Details are in the ‘Can I change my mind?’ section.
•	If you take cash from your bond in the first five years, other than regular withdrawals within the limits explained in the ‘How do I take money out?’ section, the amount payable will be reduced by an ‘early surrender charge’, as explained in the ‘What might I get back’ section.
•	We may need to vary the amount of the fund management charge shown in your Personal Illustration in the future.  You would be given prior notification if any change became necessary.
•	Historical performance is not necessarily a guide to future returns.
•	. . .
What is the Investment Bond?
•	It is a single premium life assurance contract used for long term investment purposes.
•	It can be held in the name of one person alone or it can include up to six people.  The sole person, or at least one if in more than one name, must be under age 90.   The person (or persons) who owns the investment must be aged 18 or over.
•	There is no fixed investment period, although the bond should be considered a medium to long term investment; at least five years, ideally longer.
What might I get back?
•	The value of your investment is not guaranteed and will fluctuate. (Note: Certain safeguards do apply to the Protected UK Growth Fund).
•	The amount you receive on cashing in your bond will depend upon:
-	the performance of the assets that make up your chosen fund (or funds)
(Please note, if you invest in any fund that includes overseas investments, the performance can also be affected by exchange rate variations)
-	the length of time you hold it
-	how much you have already taken out of it
-	our charges
-	any early surrender charge that may apply.
•	The early surrender charge applies if you need to cash in all or part of your bond at any time in the first five years. The amount, and an example of the effect of this, is shown in your Personal Illustration.
•	It is possible that you could get back less than you originally invested due to fluctuations in investment values. In addition, this can be particularly applicable if you cash in the bond during the early years, due to the effect of:
-	the early surrender charge, and
-	any age-related initial charge that may have been deducted from your investment, that is where the person (or all the people if the investment is held in more than one name) holding the bond was aged 75 or over when the investment was originally made. If the percentage shown as the ‘Allocation Rate’ on your Personal Illustration is less than 100% a charge has been made.

•	Your Personal Illustration gives examples of what might happen if the fund (or funds) you have selected achieves the investment growth rates shown throughout the period of your investment. It assumes charges remain at their current level and any regular withdrawals selected remain unchanged.”
19.	The Personal Illustration supplied to Mrs Jacobs, which she accepted she received in September 2005, contains copious reference to the projected figures therein being only examples and not guaranteed, together with the warning “What you will get back depends on how your investment grows and the tax treatment of your investment.  You could get back more or less than this.”  The Key Features document further provided:-
“The payment of any large cash withdrawals or switch to a different fund can potentially be delayed when you are invested in the Property Fund or any fund that includes commercial property.  
This is because if we need to sell any property to provide your money and balance the interests of remaining investors in the fund it may be difficult to do so immediately.  The value of property is generally a matter of a valuer’s opinion rather than fact.  Details of the underlying investment held [. . .] of all of our funds are shown in the accompanying “Funds Directory”.”
20.	As the judge records at first the investment did quite well.  In June 2006 the value of the bond was £72,428, i.e. an increase of 11.4%.  In June 2007 the value was £78,970, i.e. an increase in value over the previous twelve months of 9%.  However, as the judge records, “things then started to go wrong” and I have referred above to the values as at June 2008 and July 2009.  Although the judge does not so record the fall in value of course coincided with the global financial crisis, a crisis of which, as the evidence demonstrated, Mrs Jacobs was not unaware. 
21.	Mrs Jacobs was also aware of these fluctuations in the value of her fund as she received the annual statements and accepted in evidence that she understood them.  She accepted that she wanted a low risk of capital loss but said that she wanted to do better than a deposit type investment.  She recognised that investing in a product that had a low risk of capital loss would also limit the potential for growth.  She did not expect the value always to go up and recognised that some years might be better than others.  The movements in the fund over the first two years were of the order that she anticipated, albeit both positive.  They were in fact both of the order of 10% or thereabouts.  She agreed with the proposition that she would not expect the movements to be very large either one way or the other.  She expected them to be “relatively small either way”.
22.	When she saw the June 2008 statement Mrs Jacobs thought, in her own words in evidence, “Oh my God, [I thought] well, next year it may pick up, it may be a temporary blip and it may pick up”.
23.	When she received the July 2009 statement Mrs Jacobs was, in her own words, “horrified at the amount of money that was going out of that account”.  The loss was “massive”.  It was “haemorrhaging money”.  As Mr Pike was often absent from his office she telephoned L & G direct and spoke to a Mr Gilham.  Mr Gilham advised that it might have been better if the investment had from the start been more widely spread rather than all placed in one sector and be advised a transfer to the Distribution Fund, a balanced portfolio investing in a broad mix of equities (mainly UK), fixed interest securities, UK commercial property and cash.  Mrs Jacobs accepted that advice and the fund was switched.  Her instructions had of course to be confirmed in writing and after that telephone conversation Mrs Jacobs wrote to L & G as follows:-
“Contract umbers 3748092000 to 378092099
To Whom [it] May Concern
After a telephone conversation with Terry Gilham today with regard to my investment fund I have decided to transfer from the fund I am currently in to a Distribution fund with immediate effect.  I have concerns about the fund I am currently in and after talking to Terry Gilham have decided to make this move.  I would like 100% of my fund transferred to Distribution.
I would therefore be grateful if you could instigate this on my behalf.
As an aside, I would like to say how helpful I found Terry Gilham to be his explanations were made simplistic for me to understand.  He took the time and trouble to explain the ups and downs of each possible fund to me.  I was concerned before he telephoned that I would not understand the information but my concerns were unfounded.”
The judge’s finding as to the state of mind of Mrs Jacobs after this episode is  set out at paragraph 11 of his judgment, which reads:-
“I find that in July 2009 Mrs Jacobs knew that the investment as initially recommended by Mr Pike had a defect, in that the fund should not all have been put into commercial property.  She had some sense that Mr Pike was to blame, rather than purely market conditions, but she did not believe that she could do anything about it and that whatever else happened she would still get her £65,000 back at the end of the five years.  There is some inconsistency in her thinking but I do find that she still genuinely believed that by the end of the five years she would receive at least £65,000.”
24.	I have read and re-read the transcript of Mrs Jacobs’ evidence.  Making all due allowance for her lack of financial sophistication her evidence was quite hopelessly confused.  There are copious references to the possibility of the fund “picking up” or “building back up”.  Indeed, her evidence was that she thought, after the transfer, “well maybe it will pick back up now”.  Given that Mrs Jacobs understood the concept of the value of the fund, and understood that on surrender short of five years she would receive the value of the fund, there was plainly no rational basis for any belief that, on the fifth anniversary, she would recover £65,000 irrespective of the value of the fund.  I might add that no enquiry was made of Mrs Jacobs as to her belief as to what her recovery would be if she kept the Bond beyond the fifth anniversary.  Mrs Jacobs also acknowledged that in July 2009 she thought that “maybe this was not such a good thing from day one for me because it was, at this point siphoning money”.  Later she put it in this way, that “it was not, possibly, the best investment for [her] money”.  The judge did find that Mrs Jacobs knew that the investment as initially recommended by Mr Pike had a defect in that not all of the fund should have been put into one sector, commercial property.  The judge could also have found, as was plainly Mrs Jacobs’ evidence, that by July 2009 she realised that the fund was subject to greater volatility than either she had expected or was suitable for her needs.  Mr Peter Dodge, for Mrs Jacobs, attempted to rationalise her evidence as evincing concern only insofar as she appreciated that her return over and above £65,000 was dependent upon fund performance.  The judge made no such finding and it would for the same reason have lacked any rational foundation.
The Law
25.	Section 14A of the Limitation Act 1980 provides:-
“Special time limit for negligence actions where facts relevant to cause of action are not known at date of accrual
(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 subsection (4)(b) below falls after the date on which the cause of action accrued. 
(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 subsection (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 subsection (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 subsection (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 subsection (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 subsection (8) below. 
(7) For the purposes of subsection (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 subsection (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 subsection (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 subsection 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.”
26.	The leading authority on the application of these provisions is the decision of the House of Lords in Haward v Fawcetts [2006] 1 WLR 682, a case concerned however only with actual knowledge.  Their Lordships did not perhaps speak with entirely one voice, but such differences as there may be are of no importance here.  The most immediately relevant passages are as follows:-
“Lord Nicholls of Birkenhead
The degree of knowledge required
8. Two aspects of these ‘knowledge’ provisions are comparatively straightforward. They concern the degree of certainty required before knowledge can be said to exist, and the degree of detail required before a person can be said to have knowledge of a particular matter. On both these questions courts have had no difficulty in adopting interpretations which give effect to the underlying statutory purpose.
9. Thus, as to the degree of certainty required, Lord Donaldson of Lymington MR 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.
10. Questions about the degree of detail required have mostly arisen in the context of the need for a claimant to know ‘the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence’: section 14A(8)(a). Consistently with the underlying statutory purpose, Slade LJ observed in Wilkinson v Ancliff [1986] 1 WLR 1352, 1365, that it is not necessary for the claimant to have knowledge sufficient to enable his legal advisers to draft a fully and comprehensively particularised statement of claim. Where the complaint is that an employee was exposed to dangerous working conditions and his employer failed to take reasonable and proper steps to protect him it may well be sufficient to set time running if the claimant has ‘broad knowledge’ of these matters. In the clinical negligence case of Hendy v Milton Keynes Health Authority [1992] 3 Med LR 114, 117, Blofeld J said a plaintiff may have sufficient knowledge if she appreciates ‘in general terms’ that her problem was capable of being attributed to the operation, even where particular facts of what specifically went wrong or how or where precise error was made is not known to her. In proceedings arising out of the manufacture and sale of the drug Opren Purchas LJ said that what was required was knowledge of the ‘essence’ of the act or omission to which the injury was attributable: Nash v Eli Lilly & Co [1993] 1 WLR 782, 799. In Spargo v North Essex District Health Authority [1997] PIQR P235 Brooke LJ referred to ‘a broad knowledge of the essence’ of the relevant acts or omissions. To the same effect Hoffmann LJ said section 14(1)(b) requires that ‘one should look at the way the plaintiff puts his case, distil what he is complaining about and ask whether he had in broad terms knowledge of the facts on which that complaint is based’: Broadley v Guy Clapham & Co [1993] 4 Med LR 328, 333.
11. A similar approach is applicable to the expression ‘attributable’ in section 14A(8)(a). The statutory provisions do not require merely knowledge of the acts or omissions alleged to constitute negligence. They require knowledge that the damage was ‘attributable’ in whole or in part to those acts or omissions. Consistently with the underlying statutory purpose, ‘attributable’ has been interpreted by the courts to mean a real possibility, and not a fanciful one, a possible cause of the damage as opposed to a probable one: see Nash v Eli Lilly & Co [1993] 1 WLR 782, 797-798. Thus, paraphrasing, time does not begin to run against a claimant until he knows there is a real possibility his damage was caused by the act or omission in question.
. . .
		     Lord Walker of Gestingthorpe
57. This appeal turns largely on the interpretation, and the application to a rather confused set of facts, of section 14A (8)(a). The effect of that provision is that the claimant must know, before time starts to run, that “the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence.” It is to be noted that this provision may involve an exercise in hindsight spanning a considerable period of time. Its function is as part of the process of ascertaining the “starting date” defined in section 14A (5)—that is, the date from which the alternative limitation period in section 14A (4)(b) is to run. As numerous reported cases show, the starting date may occur at a time when a claimant’s knowledge about his claim is far from complete.  Inquiries and investigations may have to be made, and expert advice may have to be obtained as to how the claim should be pleaded, and how special damages should be quantified. A claimant may have the requisite knowledge (as Slade LJ said in Wilkinson v Ancliff (BLT) Ltd [1986] 1 WLR 1352, 1365) “even though he may not yet have the knowledge sufficient to enable him or his legal advisers to draft a fully and comprehensively particularised statement of claim.”  But by the time, often years later, that the limitation issue comes to be decided, whether as a preliminary issue or at trial, the claimant’s case will have been pleaded, and the defendant’s “act or omission which is alleged to constitute negligence” will (or at any rate should) have been clearly identified.
. . .
		     Lord Brown of Eaton-under-Heywood	
90. 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—on the particular parts of this case these are two sides of the same coin), 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 realize 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.
. . .
Lord Mance
118. For present purposes what matters is that it is, in my opinion, wrong to suggest that all a 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 avoided such loss. The defendants’ primary contention to that effect was, I think, accepted by the judge at first instance (cf paragraph 103 above), and was advanced again before the House by counsel for Fawcetts. But it is, in my view, untenable, and could lead to unjust results. Mere “but for” causation is insufficient. This was pointed out by Hoffmann LJ in Hallam-Eames v. Merrett Syndicates [2001] Ll.R. Prof. Neg. 178, 181. The decision in that case illustrates the point, since it was not the writing of the run off policies or of the reinsurances to close (“RITCs”) or the certification by the auditors of the accounts which were alone regarded as the acts or omissions alleged to constitute the negligence. Rather it was those facts plus the fact that they exposed the Names to potentially huge liabilities (and in the case of the accounts also attributed values to incurred but not reported losses - “IBNRs”) none of which were capable of reasonable quantification: see especially at p.181 (top right and the whole left column). 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 (as Hoffmann LJ said) 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.”
27.	Important guidance on the proper approach to constructive knowledge under sub-section 10 was given by Arden LJ in Gravgaard v Aldridge & Brownlee [2005] PNLR 19.  At paragraphs 20-23 or her judgment, with which Black J and May LJ agreed, Arden LJ said this:-
“20. There is, of course, an issue as to whether the court should, in determining whether it is reasonable to expect a person to seek legal advice, take into account the surrounding circumstances and any special characteristic or attribute of the claimant.  Section 14A(10)) is silent as to the matters which the court must take into account and leaves such matters to the courts to work out.  The test, however, is clearly objective.  In my judgment, the court should take into account external surrounding circumstances, such as the significance of the issues to a reasonable person in the position of the claimant.  
21. The more difficult issue is whether the court should take into account matters such as the fact Mrs Gravgaard already had her hands full because she was a working mother and wife and was struggling hard, as the Recorder put it, “to keep her financial head above water”.  These factors could make it more difficult for her to get advice (though, as regards Mrs Gravgaard’s financial position, no one has suggested that if she had sought to do so in 1988 she would not have been entitled to legal aid if she otherwise met the conditions for such assistance).  Although Mrs Gravgaard does not rely on these matters, a court could not fail to observe the difficulty of her position and to admire her success at juggling the many pressures on her.  She has survived her ordeal with her home and marriage intact, and she had gone on to further education and to hold public office in local government.  Mr Gravgaard’s business continues to trade.
22. Section 14A(10) does not state that a person’s knowledge includes knowledge “which a reasonable person might be expected to acquire” but rather that a person’s knowledge includes knowledge “which he [she] might reasonably be expected to acquire” (contrast s. 14A(7)).  In my judgment, this choice of wording is significant.  It means, in my view, that in general the court must have regard to the characteristics of a person in the position of the claimant, but not to characteristics peculiar to the claimant and made irrelevant by the objective test imposed by subsection (10).  This conclusion is consistent with the general approach of section 14A.  Section 14A attaches importance to the claimant having actual knowledge.  Constructive knowledge applies only if the conditions of section 14A(10) are fulfilled.  Moreover, as I pointed out earlier, section 14(10) does not automatically impute the knowledge of an expert instructed by a claimant to the claimant.  
23. Applying the foregoing, the court is entitled under section 14A(10) to assume that Mrs Gravgaard would have been concerned to know the reasons for her mistake as to the consequences of the Deed of Gift:  see Adams v Bracknell Forest BC [2004] 3 WLR 89 per Lord Hoffmann at [47] to [52].  In fact, Mrs Gravgaard’s outspoken reaction to the request by Lloyds to give the second charge and guarantees marks Mrs Gravgaard out as having a sharp appreciation of the situation, even in the autumn of 1988.  Her reaction supports the point that she ought reasonably then to have taken legal advice.”
28.	Gravgaard is instructive in another respect.  Mrs Gravgaard faced the loss of the family home, home to her, her husband and three small children.  Arden LJ characterised this “very serious situation” as one in which it was reasonable to expect Mrs Gravgaard to have sought legal advice on her rights, albeit her rights against a bank involved in the relevant transaction rather than her rights against solicitors against whom ultimately she sought to proceed.  Mrs Jacobs faced a serious, if not perhaps equally serious, situation in July 2009 as the fund of £65,000 represented a large proportion of the savings upon which she and her husband hoped to rely in retirement.
29.	The starting point of any enquiry whether a claimant can rely upon the special time limit made available by s.14A is to identify the damage in respect of which damages are claimed.  The “knowledge” of which 14A speaks is in the first instance knowledge of the material facts about the damage in respect of which damages are claimed.
30.	The Particulars of Claim are long and discursive.  For present purposes there seem to be two relevant allegations.  Mr Pike is alleged to have advised Mrs Jacobs that “you’ll always get £65,000 back” as a result of which she believed that regardless of the performance of the Bond throughout its term, on its termination (scilicet, but nowhere actually stated, not before its fifth anniversary) she would receive back at least the full amount invested.  Mr Pike is said to have done nothing to correct this impression.  More relevantly, in the light of the judge’s finding that Mr Pike gave no guarantee as such, is the allegation, in broad terms, that Mr Pike invested the sum in a moderate risk fund as opposed to, in the language of the Funds Directory section of the Legal & General Key Features Document, a cautious risk fund.
31.	The judge found that in July 2009 Mrs Jacobs realised that the investment product had a defect in that it was concentrated in one market sector.  As I have already observed the judge might equally have found that she also realised that it was subject to much greater volatility than she expected or was suitable.
32.	It may be that Mrs Jacobs’ irrational belief that she would recover £65,000 after five years is sufficient to demonstrate that she had not in July 2009 appreciated that she had suffered damage.  That was the judge’s approach at paragraph 16.  I am not entirely persuaded by that argument, as Mrs Jacobs by July 2009 realised that she had a flawed product and at the very least by then realised that it was an intrinsic feature of the product that she might at the end of five years recover nothing more than £65,000, whereas had she put her money on deposit she could have expected interest on top.  She also realised that the product was of greater susceptibility to market fluctuation than she had either appreciated or than was suitable for her needs, so that in the event that financial circumstances compelled her to surrender the Bond in whole or in part before the expiry of five years, she was at risk of recovering an amount reflecting market volatility much greater than in the range plus or minus 10% which she expected.  It is difficult to see why on orthodox principles Mrs Jacobs did not suffer loss from the moment she invested in a product which, in relation to her requirements, was defective.
33.	However I do not find it necessary to resolve the question of actual knowledge.  In my judgment it is beyond sensible argument that Mrs Jacobs had in July 2009 acquired relevant constructive knowledge, in the sense that she might then reasonably have been expected to learn that she had suffered damage because the return of the amount invested was not guaranteed so that the product was from her perspective defective in that regard also.  In reaching that conclusion I am prepared to assume that the court must have regard to Mrs Jacobs’ naïveté, although I think it questionable whether her degree of naïveté was not such as to constitute it a characteristic “peculiar to her”.  There were I think two things which Mrs Jacobs might reasonably have been expected to do in July 2009.  Firstly, she might have asked Mr Gilham whether, notwithstanding the catastrophic fall in value of the fund, she was nonetheless guaranteed to recover her investment once she had left it in place for five years.  All that she did apparently say to Mr Gilham in that regard was that she had invested £65,000 and that “I was told I would get it back”.  It is unsurprising that in response to so vague an assertion Mr Gilham did not spell it out that the return was not guaranteed.  He may of course have wondered how anyone provided with the particulars of the product could possibly have held the belief that it was.  Had he been asked the direct question, it is inconceivable that the evidently very clear and helpful Mr Gilham would not have explained the true position.  The second thing which Mrs Jacobs might reasonably have been expected to have done is to have looked out the documentation supplied to her at the outset in relation to this product.  It was her evidence that she retained the documents in a folder.  Had she looked at the Key Features Document which, as she acknowledged, is written in plain English, in the light of the value of the fund as it stood in July 2009, she could not have failed to comprehend that whatever assurance Mr Pike may have given her was incorrect, that there was no guarantee and that the value of her investment after five years would depend upon the performance of the fund over the next fourteen months or so.
34.	In my view the judge misdirected himself in relation to the question of constructive knowledge.  At paragraph 17 he said this:-
“The question of constructive knowledge has also been canvassed.  In his skeleton argument at para 31 counsel for the claimant says this: “To adopt the language of Chadwick LJ in Mortgage Corporation v Lambert & Co [2000] PNLR 820, the real question is whether in July 2009 a reasonable inexperienced investor with the characteristics of C would of her own volition have gone to the expense of taking professional advice to ascertain whether any loss was in fact attributable to the fact that the product sold had been unsuitable from the outset or that their attitude to risk had been mis-assessed.”  I agree that that is the proper way of approaching the issue and conclude that such an investor would not have done so. ”
35.	That was not however the proper way of approaching the issue here.  The facts were ascertainable by Mrs Jacobs either by asking Mr Gilham the direct question or by looking again at the product literature in the light of experience and her knowledge that the investment was subject to considerable volatility.  Even if advice from Mr Gilham falls under sub-section 10(b) as being “appropriate expert advice” it was advice which was both easy to obtain and free.  Furthermore Mrs Jacobs did seek advice from Mr Gilham but did not seek the simple reassurance which, in her state of mind, it would have been reasonable to have sought by saying to Mr Gilham words to the effect “I am going to get all my money back aren’t I?”
36.	I would therefore allow the appeal and set aside the judge’s order of 3 December 2013.  It was common ground that in the event that we concluded that the Appellant cannot take advantage of s.14A the entirety of her claim is time-barred and I would so declare and dismiss her action.
Lord Justice Lewison :
37.	I agree.
Lord Justice Sullivan :
38.	I also agree.