Iron Trade Mutual Insurance Co Ltd and others v JK Buckenham Ltd Queen's Bench Division (Commercial Court) [1990] 1 All ER 808 HEARING-DATES: 22, 27 February 1989 27 February 1989 CATCHWORDS: Limitation of action — Accrual of cause of action — Negligence — Brokers — Reinsurance — Plaintiffs engaging brokers to place marine quota share reinsurance in respect of underwriting accounts — Brokers negligently placing reinsurance — Reinsurers electing to avoid reinsurance contracts on discovery of material facts — Whether plaintiffs' cause of action against brokers accruing when contracts executed or when reinsurers electing to avoid contracts — Whether plaintiffs' cause of action time-barred. Limitation of action — Latent damage — Three-year limitation period — Three-year limitation period for negligence actions where facts relevant to cause of action not known at date of accrual — Time limit applying to 'any action for damages for neligence' — Whether 'any action for damages for neligence' including action for damages for breach of contractual duty founded on allegation of negligent conduct — Whether three-year limitation period for latent damage applying to cause of action in contract as well as in tort — Limitation Act 1980, s 14A. Limitation of action — Latent damage — Three-year limitation period — Three-year limitation period for negligence actions where facts relevant to cause of action not known at date of accrual — Plaintiff seeking to rely on three-year limitation period in negligence action in respect of latent damage — Defendant applying to strike out action — Whether plaintiff's cause of action prima facie time-barred — Whether appropriate to decide question of when plaintiff possessed sufficient relevant knowledge to commence proceedings on application to strike out — Limitation Act 1980, s 14A. HEADNOTE: The plaintiff insurers either directly or through the plaintiff underwriting agents engaged the defendant brokers to place marine quota share reinsurance in respect of their underwriting accounts for the years 1976 to 1981. The quota share reinsurance was placed with Portuguese reinsurers in Lisbon. From about late 1981 the reinsurers failed to pay claims made against them under the reinsurance contracts, with the result that early in 1984 the plaintiffs commenced proceedings against the reinsurers to recover sums which they alleged were due under the contracts of reinsurance. On 16 October 1984 the reinsurers purported to avoid the reinsurance contracts and subsequently pleaded the defences of non-disclosure, misrepresentation and breach of warranty, alleging in particular that they had been misled or not given full and accurate information in relation to the plaintiffs' retention of risk, the existence of other quota share reinsurance through brokers other than the defendants and the true extent of the reinsurance which they were said to have written. On 24 February 1987 the plaintiffs brought an action against the defendants, alleging breach of the contractual duty of care which they claimed the defendants owed them as brokers and breach of the general duty of care owed to them by the brokers as a matter of law. The plaintiffs alleged that the defendants were aware of all the relevant facts and that they were liable for any misrepresentation, non-disclosure or breach of warranty in relation to the reinsurances. The defendants applied to strike out the plaintiffs' claim in contract on the ground that it was time-barred under s 5 of the Limitation Act 1980 because all the relevant acts and omissions in placing or renewing the reinsurances had taken place prior to 11 February 1981, which was the date of the last amendment to the reinsurance contracts for the 1981 underwriting year, and therefore the cause of the action had accrued more than six years before the writ was issued. The defendants also applied to strike out the plaintiffs' claim in tort contending, inter alia, that the plaintiffs had suffered actual damage when the contracts of reinsurance, which were voidable, were concluded, and therefore their claim was time-barred under s 2 of the 1980 Act for the same reasons as the plaintiffs' claim in contract. The plaintiffs contended that their claim in tort was commenced within time since they had not suffered actual damage until the reinsurers purported to avoid the reinsurance contracts on 16 October 1984 and therefore their cause of action was not complete and for limitation purposes time did not start to run until that point. Alternatively, the plaintiffs contended that s 14A of the 1980 Act, as inserted by s 1 of the Latent Damage Act 1986, which provided a three-year limitation period for 'any action for damages for negligence' where facts relevant to the cause of action were not known at the date of accrual, applied to their cause of action in contract as well as in tort, and that, since they did not have sufficient knowledge of the material facts concerning the voidability of the reinsurance contracts to enable them to commence proceedings until the reinsurers elected to avoid the contracts, their claims would not have been time-barred until three years after that date and, consequently, their action had been commenced within time. However, the plaintiffs acknowledged that s 14A would only apply to the 1981 reinsurance contract because s 4(1)(a) of the 1986 Act provided that no action could be brought under s 1 which would have been barred under the law existing on the date when the Act came into force, ie on 18 September 1986. Held — (1) Where an insurer entered into a contract of reinsurance as a result of some misrepresentation or non-disclosure by a reinsurance broker, the insurer suffered damage at the time when the contract was executed and not when the reinsurer later discovered the full extent of the risk which it had accepted, since at the time of execution the insurer only obtained a voidable contract and not the valid and effective reinsurance cover which he had engaged the broker to procure. Accordingly, if the allegations raised by the plaintiffs were sustained, then they suffered actual damage when the voidable reinsurances were procured and, therefore, any cause of action against the defendants in tort would have been complete at the latest in 1981 and, subject to s 14A of the 1980 Act, would have been time-barred before the proceedings were commenced (see p 820 h j and p 821 b to d, post); Forster v Outred & Co (a firm) [1982] 2 All ER 753 and dictum of Bingham LJ in DW Moore & Co Ltd v Ferrier [1988] 1 All ER 400 at 410-411 applied. (2) On its true construction, s 14A of the 1980 Act did not apply to claims framed in contract because 'any action for damages for negligence' in s 14A meant any action for damages for the tort of negligence and could not be construed as meaning any action for damages, including an action for breach of contractual duty, founded on an allegation of negligent or carelesss conduct, since the 1980 Act expressly preserved the distinction between actions in tort and actions in contract and provided that the different forms of action were to be treated separately even though the time limits specified might be the same. Accordingly, since the plaintiffs' claim in contract did not fall within the scope of s 14A it would be struck out on the ground that it was time-barred (see p 821 f g, p 823 g h and p 825 a b, post); dictum of Adam J in Kruber v Grzesiak [1963] VLR 621 at 623 distinguished; Letang v Cooper [1964] 2 All ER 929 considered. (3) Where a plaintiff sought to rely on the three-year limitation period in s 14A of the 1980 Act in bringing an action for damages for neligence he had to show that he did not possess before the three-year period prior to the date on which the proceedings were commenced sufficient knowledge of the material facts to enable him to commence proceedings. The question of fact which therefore fell to be decided was when was the earliest date on which the plaintiff possessed sufficient relevant knowledge of such material facts about the damage as would lead a reasonable person to consider that damage sufficiently serious to justify instituting proceedings. That was a question which had to be investigated at trial or by way of a preliminary issue and was not an appropriate matter to be decided on an application to strike out. Accordingly, since the plaintiffs' claim in tort was not prima facie time-barred under s 14A in respect of the reinsurance contract for the 1981 underwriting year and since the question whether the plaintiffs were able to establish the necessary facts to bring themselves within s 14A was not an appropriate matter for decision on an application to strike out, the plaintiffs' claim in tort would be struck out only in relation to the underwriting accounts for the years prior to 1981, with respect to which it was clear that their cause of action was time-barred (see p 824 a d h to p 825 c, post). NOTES: For the limitation period for actions in contract and tort, see 28 Halsbury's Laws (4th edn) para 657, for when time begins to run where damage is the gist of the action, see ibid paras 685, 690, and for cases on the subject, see 32 Digest (Reissue) 503-111, 3842-3888. For the Limitation Act 1980, ss 2, 5, 14A, see 24 Halsbury's Statutes (4th edn) (1989 reissue) 650, 653, 662. For the Latent Damage Act 1986, s 4, see ibid 708. CASES-REF-TO: Aikman v Hallett & Co (20 March 1987, unreported), QBD. Baker v Ollard & Bentley (1982) 126 SJ 593, CA. Dove v Banhams Patent Locks Ltd [1983] 2 All ER 833, [1983] 1 WLR 1346. Everett v Hogg Robinson & Gardner Mountain (Insurance) Ltd [1973] 2 Lloyd's Rep 217. Forsikringsaktieselskapet Vesta v Butcher [1988] 2 All ER 43, [1988] 3 WLR 565, CA; affd [1989] 1 All ER 402, [1989] 2 WLR 290, HL. Forster v Outred & Co (a firm) [1982] 2 All ER 753, [1982] 1 WLR 86, CA. Howell v Young (1826) 5 B&C 259, [1824-34] All ER Rep 377, 108 ER 97. Kruber v Grzesiak [1963] VLR 621, Vict SC. Letang v Cooper [1964] 2 All ER 929, [1965] 1 QB 232, [1964] 3 WLR 573, CA. Melton v Walker & Stanger (1981) 125 SJ 861. Moore (DW) & Co Ltd v Ferrier [1988] 1 All ER 400, [1988] 1 WLR 267, CA. Nocton v Lord Ashburton [1914] AC 932, [1914-15] All ER Rep 45, HL. Pirelli General Cable Works Ltd v Oscar Faber & Partners (a firm) [1983] 1 All ER 65, [1983] 2 AC 1, [1983] 2 WLR 6 HL. Simple Simon Catering Ltd v Binstock Miller & Co (1973) 228 EG 527, CA. UBAF Ltd v European American Banking Corp [1984] 2 All ER 226, [1984] QB 713, [1984] 2 WLR 508, CA. INTRODUCTION: Application. By a writ issued on 24 February 1987 the plaintiffs, Iron Trade Mutual Insurance Co Ltd, Koa Insurance Co (UK) Ltd, Chiyoda Fire and Marine Insurance Co (UK) Ltd, Community Reinsurance Corp Ltd, Solar Underwriting Agencies Ltd and Sphere Drake Underwriting Management Ltd, brought an action against the defendants, JK Buckenham Ltd, claiming damages for breach of contractual duty and/or breach of duty of care in respect of the placement of marine quota share reinsurance for the years 1976 to 1981. On 8 August 1988 the defendants applied by summons under RSC Ord 18, r 9 to strike out the plaintiffs' claims on the ground that they were time-barred by virtue of ss 2 and 5 of the Limitation Act 1980, because at the date on which the action was commenced by issue of the writ more than six years had elapsed after the date on which the cause of action accrued. The application was heard in chambers but judgment was given by Kenneth Rokison QC in open court. The facts are set in the judgment. COUNSEL: Jeremy Cooke for the defendants; CN Edelman for the plaintiffs. JUDGMENT-READ: Cur adv vult 27 February. The following judgment was delivered. PANEL: Kenneth Rokison QC sitting as a Deputy Judge of the High Court JUDGMENTBY-1: KENNETH ROKISON QC. JUDGMENT-1: KENNETH ROKISON QC. This is an application by the defendants under RSC Ord 18, r 9 to strike out the plaintiffs' claim on the basis that it discloses no reasonable cause of action or is otherwise frivolous, vexatious, or an abuse of the process of the court. The sole ground on which the application is based is that at the date when the proceedings were commenced by the issue of the writ, namely 24 February 1987, the plaintiffs' claim was time-barred. Although the application was heard by summons in chambers, I have been asked to give my judgment in open court. The first to fourth named plaintiffs are insurers, the fifth and sixth named plaintiffs are underwriting agents. The defendants are insurance and reinsurance brokers. According to the points of claim the first plaintiffs, through the fifth plaintiffs, engaged the defendants to place quota share reinsurance in respect of their underwriting accounts for the years 1976 and 1977; in respect of the years 1978 to 1981 inclusive the first to the fourth plaintiffs, through the fourth and/or fifth plaintiffs, engaged the defendants to place similar quota share reinsurance. The quota share reinsurance in question was placed with a company called Cia de Seguros Imperio, who I shall refer to in this judgment as they were referred to in argument as 'Imperio'. They are from Lisbon, Portugal. From about late 1981 Imperio failed to pay claims made against them under the reinsurance contracts and on 16 October 1984 Imperio purported to avoid the reinsurances on the grounds of non-disclosure, misrepresentation or breach of warranty. The plaintiffs had instituted proceedings against Imperio in (and this is not quite clear from the documents) February or March 1984 claiming sums which they said were due to them under the contracts of reinsurance. By their points of defence and counterclaim served on 23 January 1985 Imperio raised the defences of non-disclosure, misrepresentation and breach of warranty. A number of points were relied on, but in particular Imperio alleged that they had been misled or not given full and accurate information in relation to the plaintiffs' retention of risk, the existence of other quota share reinsurance through brokers other than the defendants and the true extent of the quota share reinsurance which they were said to have written. Accordingly, the plaintiffs commenced these proceedings against the defendants. By their points of claim the plaintiffs contended that the defendants were aware of all the relevant facts and matters and that any misrepresentation or non-disclosure or any breach of warranty vis-a-vis the reinsurers must be laid at the defendants' door. They alleged a breach of the contractual duty of care which they say the defendants owed them as brokers as well as a general duty of care owed as a matter of law. Their claim was thus framed in contract and in tort. It is common ground that all the activities of the defendants in placing or renewing the reinsurances and therefore all the relevant acts or omissions forming the basis of the plaintiffs' claims against them took place prior to 11 February 1981, being the date of the last amendment to the reinsurance contract for the 1981 underwriting year. It is, therefore, also common ground that any cause of action in contract accrued more than six years before the writ was issued. Accordingly, the defendants contend that, in accordance with s 5 of the Limitation Act 1980, the plaintiffs' claim in contract is time-barred. In relation to the plaintiffs' claim in tort, the defendants contend that is not open to the plaintiffs to advance their claim on this alternative basis, in circumstances where the proximity of the relationship necessary to establish a common law duty of care arises only by reason of the contract between the parties. However, although this argument figures prominently in the written skeleton argument on behalf of the defendants which was provided in advance of the hearing, counsel on their behalf acknowledged at the hearing that this was a difficult point. Indeed, he described it as a potential 'House of Lords point' and therefore not one on which an application to strike out under Ord 18, r 9 could properly be based. However, the defendants do contend that the position in relation to the plaintiffs' claim in tort was no different from their position in relation to their claim in contract. They acknowledge that the tort of negligence would not be established and therefore no cause of action would have accrued unless and until damage had been suffered by the plaintiffs as a consequence of the defendants' breach of duty. But they contend that the plaintiffs did suffer actual damage when voidable contracts (as opposed to the valid contracts which the defendants were engaged to procure) were concluded. The plaintiffs raise three arguments in resisting the defendants' application. First, in relation to the claim in contract they rely on the provisions of s 14A of the 1980 Act, which was introduced by s 1 of the Latent Damage Act 1986, which provides in sub-ss (1) to (5): '(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 accured. (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 paragraphs (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.' The plaintiffs contend that the provisions of this section apply to their cause of action in contract as well as that in tort, and that they did not have the relevant knowledge for the purposes of sub-s (5) until Imperio purported to avoid the contracts in October 1984. Accordingly, they contend that to the extent to which the provisions of the 1986 Act apply their claim would not have been time-barred until three years after that date, namely 16 October 1987, and proceedings were, therefore, commenced well within time. However, they acknowledge, as they must, that even if they are right in these contentions the 1986 Act and the amendment to the 1980 Act which it introduced can only be of limited assistance to them. It can only apply to the reinsurance contract in respect of the 1981 underwriting year, since the 1986 Act expressly provided by s 4(1)(a) that s 1 should not enable any action to be brought which was barred under the relevant provisions of the existing law on the date when the Act came into force, which was 18 September 1986. Second, in relation to their claim in tort, the plaintiffs contend that they did not suffer actual damage and therefore their cause of action was not complete and time for limitation purposes therefore did not start to run against them until Imperio elected to avoid the contracts of reinsurance in October 1984. Third, if this last contention, which went to the whole of their claim, be wrong, the plaintiffs nevertheless purport to rely on s 14A of the 1980 Act in relation to their claim in tort to which it undoubtedly applies in respect of the 1981 year. The defendants, in response challenge the contention that s 14A of the 1980 Act has any application to claims founded in contract, even where the breach alleged is the breach of an implied duty of care; and, in relation to its possible application to the alternative claim framed in the tort of negligence, they contend that the defendants did have sufficient relevant knowledge at least by some time in 1982 or 1983, so that the Act does not assist them. This is because a period of three years from either 1982 or 1983 would have expired before what one might call the normal period of six years from 1981, and long before the writ in this case was issued. There are thus three points which fall to be decided on this application: (1) does s 14A of the 1980 Act which it introduces apply to an action framed as a breach of contract where the breach alleged is simply the breach of an implied duty of care?; (2) when did the plaintiffs suffer damage so that their cause of action in tort became complete? and (3) did the plaintiffs have sufficient knowledge to trigger the alternative three-year period under s 14A of the 1980 Act before 24 February 1984, that is, three years before the writ was issued? I shall leave for the moment the two points which arise under s 14A of the 1980 Act, and deal first with the second point, which was put in the forefront of the submissions of both counsel and certainly occupied the greater part of the time spent in argument. (1) When did the plaintiffs suffer damage? Counsel for the defendants submits that it is clear from a number of modern authorities concerning cases of negligence by solicitors, starting with the decision of the Court of Appeal in Forster v Outred & Co (a firm) [1982] 2 All ER 753, [1982] 1 WLR 86 and culminating in the recent decision of the Court of Appeal in DW Moore & Co Ltd v Ferrier [1988] 1 All ER 400, [1988] 1 WLR 267, that in cases where the damage alleged to have been sustained is financial loss, such loss, and therefore damage for the purposes of establishing this necessary ingredient of the tort of negligence, is established where as a result of the negligence of the defendant a contract is entered into by a plaintiff which affords the plaintiff lesser contractual rights, or exposes the plaintiff to a contingent loss or liability, the extent of which may well not materialise until a later date and may depend on subsequent events, such as the exercise of rights or options by a third party over which neither the plaintiff nor the defendant has any control. In such cases damage is established at the date when the contract is entered into, even though its quantification may depend on such subsequent events. In Forster v Outred & Co the plaintiff's solicitors permitted her to execute a mortgage over her freehold property as security for a loan made to her son. It was held that she had suffered actual damage rather than prospective damage on execution of the mortgage deed in so far as her property was encumbered and she incurred a contingent contractual liability, even though that contingent liability had not yet matured into a quantified financial loss. Stephenson LJ, after referring to Howell v Young (1826) 5 B&C 259, [1924-34] All ER Rep 377, Nocton v Lord Ashburton [1914] AC 932, [1914-15] All ER Rep 45 and Simple Simon Catering Ltd v Binstock Miller & Co (1973) 228 EG 527, said ([1982] 2 All ER 753 at 764, [1982] 1 WLR 86 at 98): 'I would . . . conclude that, on the facts of this case, the plaintiff has suffered actual damage through the negligence of her solicitors by entering into the mortgage deed, the effect of which has been to encumber her interest in her freehold estate with this legal charge and subject her to a liability which may, according to matters completely outside her control, mature into financial loss, as indeed it did. It seems to me that the plaintiff did suffer actual damage in those ways, and subject to that liability and with that incumbrance on the mortgage property was then entitled to claim damages (not, I would think, an indemnity and probably not a declaration) for the alleged negligence of the solicitor which she alleges caused her that damage.' Dunn LJ said ([1982] 2 All ER 753 at 765, [1982] 1 WLR 86 at 99-100): 'I approach this case on the basis that it is sufficient that it is financial loss that should be foreseen, and I would hold that in cases of financial or economic loss the damage crystallises and the cause of action is complete at the date when the plaintiff, in reliance on negligent advice, acts to his detriment . . . In this case, as soon as she executed the mortgage the plaintiff not only became laible under its express terms but also, and more importantly, the value of the equity of redemption of her property was reduced. Before she executed the mortgage deed she owned the property free from encumbrance; thereafter she became the owner of a property subject to a mortgage. That, in my view, was a quantifiable loss and as from that date her cause of action against her solicitor was complete, because at that date she had suffered damage. The actual quantum of damages would, of course, depend on events between that date and that date when the damages had finally to be assessed, but the cause of action was complete when she executed the mortgage, without proof of special damage.' Sir David Cairns in a short judgment, in which he agreed with the other two judgments which had been given, said ([1982] 2 All ER 753 at 765-766, [1982] 1 WLR 86 at 100): ' . . . I am satisfied that the considerations which apply in the case of economic loss, as in the present proceedings, are different from those which fall to be taken into account where the negligence relied on is negligence in relation to the building of a house and the damage which is concerned is damage arising because of defects in the house.' Indeed, Dunn LJ had said in relation to the argument that had been advanced in relation to the so-called building cases: 'Speaking for myself I do not find the cases on physical and material damage very helpful' (see [1982] 2 All ER 753 at 764, [1982] 1 WLR 86 at 99). Counsel for the defendants next relied on three cases, Melton v Walker & Stanger (1981) 125 SJ 861, Baker v Ollard & Bentley (1982) 126 SJ 593 and Aikman v Hallett & Co (20 March 1987, unreported). In Melton v Walker & Stanger, which was a decision of Nourse J on 1 July 1981, the plaintiff's claim asserted that she, together with her uncle, Mr Ayres, had instructed the defendant firm of solicitors to prepare all necessary documents and to advise in relation to a series of transactions concerning a farm in Norfolk, which Mr Ayres wished to give to the plaintiff and to his nephew, a Mr Woods. The plaintiff was to be entitled to a two-thirds beneficial interest and Mr Woods to a one-third interest, but in the event of the sale of the farm the costs and any capital gains tax arising were to be shared between the two beneficiaries equally. The defendant solicitors prepared an agreement which did not give effect to their instructions, with the result that the plaintiff became liable to pay two-thirds and not one half of the capital gains tax payable on subsequent resale of the farm. The agreement was entered into on 7 April 1967, but the effect of the solicitors' negligence did not become manifest until the contract was construed by the court on 25 June 1980, and no sale or assessment for capital gains tax had yet taken place. The writ was issued in 1981, but the defendants claimed that the plaintiff's claim was time-barred as her cause of action had arisen in 1968, 14 years before. They succeeded in having her claim struck out on this ground. The plaintiff sought to distinguish Forster v Outred & Co on the basis that in that case the plaintiff had contracted into immediate liability which was quantifiable directly a demand was made on her, but the judge expressed himself unable to see any real distinction between the two cases. As he put it in his judgment: 'If Miss Melton had shortly after the date of the agreement shown a copy of it to someone who knew about these things who told her that it did not appear to implement the agreement in respect of which she and her uncle had given the defendants instructions, and if Miss Melton had issued a writ against the defendants at that stage, I think the court would have been bound to entertain that action. I think that however difficult, even speculative, the process might have been it would certainly have been well within the court's power to make an award of damages at that stage and that an award would certainly have been made. The court would certainly not have listened to any arguments by the defendants to the effect that Miss Melton's claim should be in some way suspended, far less disposed of by dismissal, until a sale had taken place. If one looks at it in that way it seems to me to be quite clear that actual damage was suffered and that the cause of action was complete on 7 April 1967.' He further rejected the argument that the case should be decided on the basis of the principles stated in what are generally known as the building cases. Having referred to the relevant passages in the judgments of Dunn and Stephenson LJJ in Forster v Outred & Co [1982] 2 All ER 753 at 764-766, [1982] 1 WLR 86 at 98-100, to which I have referred, he said: 'It seems to me that this, like that case, is a case of economic loss. It seems to me that the Court of Appeal have said quite clearly that cases of economic loss depend on principles different from those on which the building cases depend. I think that the true view may well be that the building cases have come to be recongised as exceptions to the normal rule that actual damage is suffered for the purposes of an action in negligence at the date when the negligent act is committted, but that the normal rule has not been displaced in cases of economic loss such as Forster v Outred & Co and the present.' In Baker v Ollard & Bentley, which was a decision of the Court of Appeal, the facts were somewhat complex, but again the plaintiff was suing her former solicitors in negligence, and the defendants sought to strike out the action on the ground that the claim was time-barred. The defendants had acted for the plaintiff and two others, a Mr and Mrs Bodman, together with whom she had agreed in April 1973 to purchase a house. The plaintiff wished to occupy the first floor, and it was alleged that it was the duty of the defendants to ensure, as it was common ground they could have done by drafting documents in an appropriate form, that she had security of tenure of the first floor and could freely dispose of her interest independently of her co-purchasers. The defendants failed to achieve this. They procured a conveyance to the plaintiff and to the Bodmans on a trust for sale with the result that when, in December 1973, the Bodmans began proceedings for an order for the sale of the house, the plaintiff had to enter into a compromise agreement with them in October 1975, whereby she obtained security of tenure, but only by a route which was the division of the fee simple of the house which rendered her interest less saleable than it would otherwise have been. The writ was issued in April 1981, and the question for decision was whether her cause of action in negligence was complete in 1973 or not until October 1975. Templeman LJ, delivering the judgment of the court, concluded that she had suffered actual damage so that her cause of action was complete, in April 1973. He said: 'The plaintiff did not receive that which the solicitors ought to have obtained for her. She received something different. Therefore she suffered damage. The quantum of damage depends, and would in any event depend, on the attitude of the Bodmans . . . Whenever the plaintiff brought her action against the solicitors, whether immediately after the conveyance dated 12 April 1973, or before or after the Bodmans sought an order for vacant possession, evidence could have been adduced of the attitude and intentions of the Bodmans to enable the judge to perform the task of assessing the quantum of damages . . . But the fact that the quantum of damages suffered by the plaintiff on 12 April 1973 could immediately thereafter, or at any time thereafter, only be established by ascertaining the attitude and intentions of the Bodmans only goes to quantum of damages and does not affect that fact that damages were suffered on 12 April 1973. Damages were suffered on that date becasue the plaintiff did not receive the long lease and joint tenancy which the solicitors should have secured for her. She secured instead some other and different interest. She suffered damage becasue she did not get what she should have got.' Later, after referring to Forster v Outred & Co, Templeman LJ said: 'The difference between the property which she ought to have received and the property which she did in fact receive was, in my judgment, a quantifiable loss and, as from the date of the conveyance, her cause of action against the solicitors was complete because, on that date, she suffered damage.' Finally, near the end of his judgment he said: 'The only person who sustained damage from the negligence of the solicitors was the plaintiff and that damage was sustained at the date of the conveyance, when she received a precarious interest in the first floor different in nature from the interest which, according to the allegations in the statement of claim, she ought to have received.' The third case was the decision of Steyn J in Aikman v Hallett & Co. Although another solicitor's negligence case, it is perhaps a little closer on its facts to the present case. There the plaintiff was again suing his former solicitors in relation to the acquisition of an interest in real property. In short, his allegation against them was that they negligently advised him to surrender a perfectly valid head tenancy of a farm, in return for a subtenancy which was less secure, inasmuch as his tenure was not thereafter protected by the provisions of the Agricultural Holdings Act 1948. The new agreement was entered into in March 1971. The plaintiff enjoyed quiet possession until November 1980 when, on the death of the head tenant, notice to quit was served on him. Proceedings for possession were contested, but they were compromised in May 1984 by the plaintiff purchasing the freehold of the farm. The writ was issued in May 1984, and the question for decision was therefore whether the plaintiff's cause of action was complete before October 1978, that is to say six years earlier. This in turn depended on whether, by that date, the plaintiff had sustained actual damage as a result of the negligence alleged. The judge concluded that the plaintiff had suffered actual damage in so far as the interest he acquired gave him less protection, that is to say was the more easily subject to termination than the interest which he surrendered. The judge said: 'The question before the court can be distilled further by asking whether it would have been possible for the plaintiff, in the light of his pleaded case, to issue a writ immediately after entering into the substituted tenancy agreement, claiming that due to his solicitors' negligence he lost valuable rights of head tenancy in exchange for inferior rights of subtenancy. If the matter were one of first impression, to be judged in the light of principle and common sense, my reaction would have been that there was no bar to such an immediate action. The plaintiff's claim in tort would have been for financial loss, measuring what he surrendered against what he received in substitution. No doubt expert evidence would be required, and subsequent events could be relevant, but such matters go to the quantum of damages and not to the question of whether a cause of action had accrued. In principle there is no reason why the plaintiff should not have recovered substantial damges.' He referred to the decision of the Court of Appeal in Forster v Outred & Co and the subsequent decision in Baker v Ollard & Bentley, to which I have referred, and he said: 'Prima facie these two decisions appear to reinforce the view suggested by general principles and common sense, namely that the plaintiff sustained actual damage, quantifiable in monetary terms, on 9 March 1971 when on his solicitors' advice the plaintiff surrendered what I must assume to be a relatively secure head tenancy for a subtenancy with less security.' He concluded: ' . . . the gist of the plaintiff's case is that he suffered loss by reason of the surrender of the original tenancy in exchange for the less secure substituted tenancy. On that assumption the plaintiff suffered an immediate quantifiable financial loss.' In the course of his judgment Steyn J dealt with the argument which had been advanced on behalf of the plaintiff to the effect that the Court of Appeal cases to which he had been referred must be re-examined in the light of the decision of the House of Lords in Pirelli General Cable Works Ltd v Oscar Faber & Partners (a firm) [1983] 1 All ER 65, [1983] 2 AC 1. The effect of that decision was summarised by Steyn J in his judgment as follows: 'The effect of the Pirelli case appears to be that the cause of an action in tort for negligence in the design or workmanship of a building, whether by an architect, engineer or builder, accrues at the date when physical damage occurs in the building, eg by cracks emerging (rather than when the defect is built into it).' In response to this argument, the judge said: 'This argument is not without plausibiliity. But in Forster v Outred & Co the analogy of decisions dealing with physical damages was regarded as unhelpful . . . Moreover, in Pirelli . . . Forster v Outred & Co was cited and not overruled or criticised . . . In so far as counsel submits that the Pirelli decision "altered the law", I cannot accept that Forster v Outred & Co was impliedly overruled or that it cannot stand with the Pirelli decision. Where the Court of Appeal and the House of Lords flinched from seeking to harmonise the law, as affecting physical and economic loss, if that be necessary, I do not propose to embark on an investigation of the merits or demerits of the distinction between the rules pertaining to physical damage and economic loss . . . I bear in mind that pragmatism and not the attainment of logical symmetry has been the guiding force of the common law. So the Pirelli decision does not deflect me from my view that I ought to regard Forster v Outred & Co and Baker v Ollard & Bentley as decisions of high authority and directly in point.' Counsel for the defendants finally referred to the recent decision of the Court of Appeal in DW Moore & Co Ltd v Ferrier [1988] 1 All ER 400, [1988] 1 WLR 267, another solicitor's negligence case, in which the authorities to which I have already referred were discussed, approved and applied. This case was not concerned with the conveyance of real property, but with a restrictive covenant in a contract between the plaintiff company and an employee/director/shareholder. The agreement was drafted by the defendants, the plaintiffs' solicitors, and the covenant on its true construction was not effective, because it only bit in the event of the employee ceasing to become a member, that is to say a shareholder, of the company and not on his ceasing to be an employee/director. The covenant in the contract was drafted in 1971. The employee in question left the plaintiffs' employment in 1980, and immediately expressed the intention of setting up a rival business, as a result of which the plaintiffs had to reach a compromise agreement with him, which they did in early 1981. They issued their writ against the defendants in 1985. Again the question on which the defendants' application to strike out depended was whether actual damage had been suffered by the plaintiffs when the agreement was drafted. The Court of Appeal held that the plaintiffs had suffered actual damage inasmuch as they had obtained a covenant which was of less value than that which they ought to have obtained. Counsel particularly relied on a number of passages in the leading judgment of Neill LJ, who said ([1988] 1 All ER 400 at 408-410, [1982] 1 WLR 267 at 277-278): 'It is necessary to remember what it was that the plaintiffs in the instant case were seeking to obtain. A valid restrictive covenant, if it is not personal solely to the covenantee, can be assigned to a purchaser of the goodwill of a business. To my mind, it does not require evidence to establish that such a covenant has some value, particularly when it is given in the context of a broking business where personal contracts may be of particular importance . . . In the present case, if an action had been brought in, say, 1976, the actual assessment of damages would have depended on the evidence as to the likely future attitude of Mr Fenton [he was the director/employee]. But the imponderables which future behaviour presented relates to the quantification of damages and not to the existence of a cause of action. In the present case the judge rightly rejected the notion that where a solicitor gives negligent advice, damage is presumed to occur at the time when the advice is acted on. I am satisfied that there is no such presumption. It is a question of fact in each case whether actual damage has been established. In the present case, to use the language of Templeman LJ in Baker v Ollard & Bentley the plaintiffs suffered damage "because [they] did not get what [they] should have got". The plaintiffs' rights under the two agreements were demonstrably less valuable than they would have been had adequate restrictive covenants been included.' Counsel also relied on some passages in the judgment of Bingham LJ. He said ([1988] 1 All ER 400 at 410-411, [1988] 1 WLR 267 at 279-280): 'It seems to me clear beyond argument that from the moment of executing each agreement the plaintiffs suffered damage because instead of receiving a potentially valuable chose in action they received one that was valueless. Indeed, the invalidity of the covenants against competition rendered the rights which Mr and Mrs Moore [the second and third plaintiffs] did obtain, to Mr Fenton's undivided services, a somewhat double-edged benefit . . . The matter may be tested. It is common ground, on the assumption that the plaintiffs' pleaded case is correct, that the defendants were in breach of contract when they negligently advised and settled documents in 1971 and 1975. A cause of action then arose. Suppose, per impossible, that the plaintiffs had sued at once and before the later difficulties with Mr Fenton arose. They would have been bound to succeed. If of opinion that the plaintiffs had suffered no damage, the judge would have awarded them nominal damages. But it seems to me plain that the judge would not have done that on these facts. He would have assessed as best he could on the available evidence the loss fairly and reasonably flowing in the normal course of things from the defendants' breach of contract, reaching a figure that might have been large or small but would not have been nominal. I think that the plaintiffs were in argument inclined to accept that. If, in a contractual claim for negligence, the court would have awarded other than nominal damages, I do not see how it can be said that an action in tort based on the same negligence would have been bound to fail for want of any damage as an essential ingredient of the cause of action.' Again in the course of their judgments the Court of Appeal rejected the submission that the principles stated in Forster v Outred & Co had been altered by the decision of the House of Lords in the Pirelli case. In particular, Neill LJ said ([1988] 1 All ER 400 at 409, [1988] 1 WLR 267 at 277-278): ' . . . I can see nothing in the passage in Lord Fraser's speech in the Pirelli case which throws any doubt on the validity of the decisions in Forster and Baker . . . care must be exercised in using the building cases as though they provide a precise analogy.' Bingham LJ referred to the Pirelli case as well as to Dove v Banhams Patent Locks Ltd [1983] 2 All ER 833, [1983] 1 WLR 1436, which the plaintiffs in that case had relied on. He said ([1988] 1 All ER 400 at 411, [1988] 1 WLR 267 at 280): 'As I understand them, those cases turn on special principles related to their own peculiar subject matter. If so, they do not help to resolve this appeal. But if in truth all negligence claims in tort (excluding personal injuries) are governed by the same principles, then those cases do not compel and cannot justify a conclusion that the plaintiffs suffered no damage in 1971 and 1975.' Counsel for the defendants submitted that, although the present case is not a solicitor's negligence case, the same principles apply and that the cases to which I have referred are not distinguishable. He referred me to the particulars of the implied contractual duties alleged by the plaintiffs to have been owed to them by the defendants and broken, which can be summarised as follows: to exercise reasonable care and skill in and about the placement, renewal, operation and administration of the reinsurances; to seek and obtain such information from the plaintiffs as was necessary to be disclosed to Imperio; to disclose the material information to Imperio; and (I quote) 'To ensure that such reinsurances as they placed or renewed for the plaintiffs were valid and effective reinsurances'. As I say, it is these implied obligations which it is alleged were broken. Counsel for the defendants submits that it is clear that on the assumption that the matters alleged by the plaintiffs are accepted, and they must be for these purposes, their case is in effect that by reason of the negligence of the defendants they did not obtain what they ought to have obtained, namely valid and effective reinsurances, but only obtained reinsurances which were subject to avoidance at the option of Imperio when they discovered the relevant non-disclosures, misrepresentation or breaches of warranty alleged. It is obvious, says counsel, that voidable reinsurances are less valuable than valid and effective reinsurances. The plaintiffs were not protected as they ought to have been (just like the plaintiff's agricultural tenancy in Aikman v Hallett & Co); had the plaintiffs wished to assign the reinsurance policies they would have been worth less, as would the value of the plaintiffs' business had they wished to dispose of it. True the extent to which the plaintiffs suffered actual damage at that stage would depend on an assessment of the likelihood of Imperio opting to avoid, but this was not a matter which went to the establishment of damage but only to its quantification. In this context he also relied on a judgment of Kerr J in Everett v Hogg Robinson & Gardner Mountain (Insurance) Ltd [1973] 2 Lloyd's Rep 217, a case in which, in the context of an action against brokers for having misrepresented the risk to would-be insurers, the court had to consider what if any deduction from the damages prima facie payable should be made for the fact that the insurance contract in question would, in any event, have been voidable by underwriters on different grounds. The judge did not suggest that this task was impossible, or that the deduction must be nil, on the basis that underwriters had not in fact purported to avoid on such other grounds. He did his best, and assessed the likelihood. Counsel for the plaintiffs submitted that the plaintiffs had not sustained any actual damage when the reinsurance contracts were concluded, and that any financial loss which they might suffer was contingent on what happened thereafter. He submitted that in all the solicitor's negligence cases relied on by counsel for the defendants the immediate loss to the plaintiff was patent and obvious, and he seeks to contrast the present case. He relied on the decision of the Court of Appeal in UBAF Ltd v European American Banking Corp [1984] 2 All ER 226, [1984] QB 713 as an illustration of his submission that the fact that a misrepresentation has induced a contract will not necessarily mean that the party so induced will have suffered damage in consequence. But in my view his reliance on the UBAF case was misconceived. In that case, the question was whether the plaintiffs had established a sufficiently good arguable case on which to base an application for service of the notice of the writ out of the jurisdiction. One ground on which it was argued that the plaintiffs' case was insufficient was that it was time-barred. This depended in turn on when the cause of action arose and, in particular, whether the plaintiffs had suffered any detriment as a result of their having been induced to enter into the contract by a misrepresentation of the creditworthiness of the other party to the contract. Ackner LJ said ([1984] 2 aLL er 226 AT 234-235, [1984] QB 713 at 725): 'The mere fact that the innocent but negligent misrepresentations caused the plaintiffs to enter into a contract which it otherwise would not have entered into, does not inevitably mean that it had suffered damage by merely entering into the contract.' But it does not follow from that decision (which was essentially a decision on the facts) that a plaintiff will have suffered no damage when, as a result of some misrepresentation or non-disclosure by his brokers or agents, a contract of insurance or reinsurance entered into for his protection and benefit turns out to be voidable. Cousnel for the plaintiffs also relied on the physical damage cases culminating in the decision of the House of Lords in Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 1 All ER 65, [1983] 2 AC 1. He submitted that far from that case producing a divergence between the law relating to building contracts and the law relating to economic loss, it had brought the principles applicable to the two lines of cases into line. I do not agree with this analysis, but in any event counsel for the plaintiffs did not suggest that the decision in Forster v Outred & Co or any of the other decisions relied on by counsel for the defendants had been overruled and therefore should no longer be applied. Despite the gallant attempts of counsel for the plaintiffs to distinguish them, I consider that the line of cases relied on by the defendants cannot be distinguished from the present case. They constitute a formidable body of modern authority. Applying the test propounded by Bingham LJ in DW Moore & Co Ltd v Ferrier [1988] 1 All ER 400 at 411, [1988] 1 WLR 267 at 280, if one asks the question, 'Suppose the plaintiffs had sued the defendants for breach of contract immediately after the voidable reinsurance contracts had been concluded, would they have been entitled only to nominal damages?' the answer in the present case must surely be No. Counsel for the plaintiffs submitted, in relation to what I call the 'Bingham tst', that if one were to consider the position immediately after the voidable contracts of reinsurance had been concluded, no actual damage would have been suffered as a result of the non-disclosures or misrepresentations relied on. He says that this is so because if, say, the day after the contract had been concluded, underwriters had been told the full and accurate story they would have been bound to do one of two things, either avoid the contract or affirm it. If they would have affirmed, no damage would have suffered. If they would have avoided, similarly, counsel submits, no damage, because this shows that if full disclosure had been made initially no contract at all would have been concluded. But this argument, to my mind, ignores the basic fact that the defendants here were not engaged simply to procure a valid contract of reinsurance with Imperio. They were engaged to procure valid and effective reinsurance cover, as their pleading asserts. The assertion of counsel for the plaintiffs in argument that they acquired all the legal and contractual rights they desired to obtain would seem to me to run contrary to the plaintiffs' pleaded case and, in my view, that does not accord with the facts. The plaintiffs desired to obtain valid and effective contracts of reinsurance. They only obtained voidable contracts. If, in the event, the defendants had made full and accurate disclosures to Imperio, and if Imperio in these circumstances would have decided not to accept the risk, then that would not have been the end of the matter. The defendants would have been under no obligation to seek to procure valid and effective reinsurance from some other reinsurer, and they have not sought to prove that it would have been impossible for them to do so. Counsel for the plaintiffs, also relied on the arguments that the plaintiffs' contractual rights could not have been worth less as a result of any non-disclosure or misrepresentation because the plaintiffs were not aware of any such problem and could, therefore, have assigned their rights for full value and could even, if required, have given a warranty as to the efficacy of those rights. But, as counsel for the defendants pointed out, this argument confuses damage with knowledge of damage. For the purposes of considering whether the plaintiffs sustained actual damage one must have regard to the true position, namely that the reinsurance contracts had been entered into on the basis of some non-disclosure or misrepresentation and were therefore voidable at the option of Imperio, whether the plaintiffs were aware of these facts or not. I consider this to be a clear case. It seems to me to be obvious, as counsel for the defendants contends, that if the allegations raised by the plaintiffs in their points of claim are sustained, then they suffered actual damage when the voidable reinsurances were procured, and, accordingly, any cause of action against the defendants in tort will have been perfected at the latest in 1981, and, subject to the further points raised in relation to s 14A of the 1980 Act, will have been time-barred before the present proceedings were commenced. (2) Does s 14A of the Limitation Act 1980 apply to claims framed in contract where the breach alleged is a breach of an implied duty of care? This is a pure question of construction and depends on whether the words 'any action for damages for negligence' in s 14A(1) means any action for damages for the tort of negligence or any action for damages, including an action for breach of contract, founded on an allegation of negligent or careless conduct? Counsel for the defendants contends for the former meaning. Counsel for the plaintiffs contends for the latter. Most questions of construction are essentially matters of first impression. My first impression, on reading the relevant provisions of the statute, was that this was a reference to the tort of negligence. After the full and helpful argument addressed by counsel on behalf of both parties, that impression has been confirmed. It was accepted by both sides that one cannot construe this section of the 1980 Act in isolation. It must be construed in its context, not only within the 1986 Act but within the 1980 Act into which s 14A is to be inserted. If one compares s 14A with its heading 'Actions in respect of latent damage not involving personal injuries', with s 11 of the 1980 Act headed 'Actions in respect of wrongs causing personal injuries or death', one is immediately struck by the fact that s 11(1) provides: 'This section applies to any action for damages for negligence, nuisance or breach of duty (whether the duty exists by virtue of a contract or of provision made by or under a statute or independently of any contract or any such provision . . . ' whereas s 14A provides: 'This section applies to any actions in damages for negligence other than one to which section 11 applies . . . ' The clear express reference in s 11, which is also found in s 14(1) of the 1980 Act, to an action for breach of duty owed by contract or otherwise, is notable for its absence from s 14A(1). Furthermore, s 11(2) provides: 'None of the time limits given in the preceding provisions of this Act shall apply to an action to which this section applies.' This would appear to be a clear reference to s 2, which provides that 'An action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued', and s 5, which provides in identical terms in respect of an action founded on simple contract; and there are other provisions relating to other causes of action. This subsection was no doubt considered by the draftsman of the 1980 Act to be necessary in order to avoid what would otherwise have been an apparent conflict between different sections of the Act. However, s 14A(2) simply provides that s 2 of this Act shall not apply to any action to which this section applies. Section 2, as we have just seen, deals only with actions founded on tort. There is no reference to s 5, where the prima facie time limit for actions founded on simple contract is to be found. Counsel for the plaintiffs was driven to concede that this would appear to have been an error on the part of the draftsman. Indeed, in the course of his submission he said that the reference to s 2 in s 14A(2) indicates that the draftsman thought he was dealing only with tort. This is not a very promising concession, from his point of view, when admittedly the exercise on which the court is embarking is to find the presumed intention of the draftsman (acting for the legislature). Counsel for the defendants also relied on the 'mischief' to which the 1986 Act must be presumed to have been directed, namely cases where the completion of the cause of action, and therefore the running of time for the purposes of limitation, depended on the occurrence of damage, but where the potential plaintiff did not know that he had any cause of action because the damage was latent. Prima facie, submitted counsel, the question whether damage was latent or patent should make no difference where the cause of action was founded in contract and damage was not a necessary ingredient. Counsel for the plaintiffs submitted that the word 'negligence' in the 1980 Act did not bear a consistent meaning. In particular, he relied on the phrase in s 14(1)(b) of the 1980 Act which referred to knowledge 'that the injury was attributable in whole or in part to the act or omission which is alleged to constitute negligence, nuisance or breach of duty'. An act or omission might, he argued, constitute careless conduct; it could not of itself constitute the tort of negligence. He conceded, however, that later in the same subsection, in the reference to knowledge that the acts or omissions did or did not, as a matter of law, involve negligence, nuisance or breach of duty, this did refer to the tort of negligence and not merely to careless conduct. He further submitted that in s 11(1) of the 1980 Act the word was used as meaning simply 'careless conduct', and that in s 14A, which follows much the same style as s 11(1), it should be construed as having the same meaning. It was in relation to this last submission that he relied on two authorities, one English and one Australian. The English authority is Letang v Cooper [1964] 2 All ER 929, [1965] 1 QB 232. The plaintiff, who was injured by a car while engaging in the rather dangerous occupation of sunbathing in a car park, sued in the tort of negligence and for trespass to the person. Her claim in negligence was held to be statute-barred under the relevant statute, then being the Law Reform (Limitation of Actions etc) Act 1954. A majority in the Court of Appeal, Lord Denning MR and Danckwerts LJ, held that where the act complained of was negligent, and not intentional, no action in trespass to the person could lie. The plaintiff's only cause of action was in negligence, and that was time-barred. Diplock LJ reached the same conclusion via a somewhat different route. He held that a cause of action was simply a factual situation, as he called it, the existence of which entitles one person to obtain from the court a remedy against another, and that in so far as the factual situation relied on by the plaintiff could be described as an action for negligence it was time-barred, and she could not escape from that consequence by invoking the same factual situation under the label of a different tort. Thus far, it seems to me, Diplock LJ's judgment does not assist the plaintiffs. But counsel for the plaintiffs relied on the fact that Diplock LJ and indeed Lord Denning MR (with whose judgment Danckwerts LJ agreed) referred with approval to the judgment of Adam J in the Australian case of Kruber v Grzesiak [1963] VLR 621, which gave rise to similar issues (see [1964] 2 All ER 929 at 934, 936, [1965] 1 QB 232 at 241, 245). In the Kruber case Adam J said (at 623)P: 'The question which arises is whether, for the purposes of s 5(6) [which was the relevant provision of the Victorian statute], an action for damages for tespass to the person in which proof of negligence is an essential ingredient is an action for damages for negligence and if not, whether it is an action for breach of duty. The conclusion I have reached is that s 5(6) should be given a liberal rather than a narrow or technical construction and that the expression "actions for damages for negligence" — should be construed to include not only actions on the case for negligence, but also actions of trespass to the person in which, because the trespass is not intentional, proof of negligence is an essential ingredient . . . An action claiming damages for personal injuries resulting from the negligent driving of a motor car is in substance an action for damages for negligence in respect of such injuries, whether framed in the form of an action on the case for negligence or in the form of an action for trespass to the person . . . In modern legislation it is not to be expected that the legislature should provide differing periods of limitation for causes of actions claiming the same relief upon the same set of facts according to the choice of the pleader in the framing of his pleading. But even if, to those familiar with the history of traditional forms of action, it may seem an undue straining of language to treat as covered by the expression "action for damages for negligence" (itself incidentally a non-technical expression) a cause of action for trespass to the person in which proof of negligence is an essential ingredient, I would see no sufficient reason for excluding such an action from the description of an action for damages for breach of duty, especially when it is provided that the duty may be one existing independently of any contract or any provision made by or under a statute.' But it seems to me that to hold that an action for damages for trespass (when negligence is a necessary ingredient of the cause of action) falls within the words 'action for damages for negligence', where there is no reference in the relevant statute for actions in trespass, is a very different thing from holding that an action for damages for breach of a duty of care owed in contract falls within the same phrase, where the statute specifically refers to actions for damages for breach of contractual duty in terms. In the case of s 11(1) of the 1980 Act, it seems to me that the draftsman was drawing a contrast between actions for damages for negligence and actions for damages for breach of contractual duty. They are treated differently, just as actions in tort and actions in simple contract are treated differently in earlier sections of the Act, even though the time limit provided is the same. It follows that for counsel for the plaintiffs to contend that the phrase 'any action for damages for negligence' in s 14A bears the same meaning as it bears in s 11(1) of the 1980 Act does not assist his case. While it may be that Diplock LJ deprecated the drawing of distinctions based on the differences between the old forms of action, it is clear that the 1980 Act expressly preserves the distinction between actions in tort and actions in contract. It seems to me clear that s 14A was not intended to apply to actions framed in contract. Furthermore, it seems to me from the language used by Diplock LJ in Letang v Cooper [1964] 2 All ER 929 at 937, [1965] 1 QB 232 at 247, that he regarded the words 'negligence' and 'nuisance' in the 1954 Act as referring to causes of action and not categories of conduct. If 'negligence' in s 14A refers to the tort of negligence, the plaintiffs' arguments must fail as, in my view, it clearly does. Counsel for the plaintiffs also relied on the recent decision of the Court of Appeal in Forsikringsaktieselskapet Vesta v Butcher [1988] 2 All ER 43, [1988] 3 WLR 565, in which the court construed s 4 of the Law Reform (Contributory Negligence) Act 1945. The court held that where the word 'fault' was defined as meaning 'negligence, breach of statutory duty or other act or omission which gives rise to a liability in tort' where the defendant's conduct met the criterion, the Act could apply even if the action were brought in contract. But, as counsel for the defendant observed, these were different words in a different statute, and I do not find the case of assistance. Certainly, it did not persuade me to alter the firm view that I had formed as to the clear meaning of the words used in s 14A of the 1980 Act. (3) Did the plaintiffs have sufficient knowledge to trigger the alternative three-year period under s 14A of the 1980 Act before 24 February 1984? This is essentially a question of fact, but before considering the facts it is necessary to establish what degree of knowledge is required. For this purpose one must refer to s 14A(3) to (7) of the 1980 Act. I have already read sub-s (3), (4) and (5). Subsections (6) and (7) provide: '(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 damge in respect of which damages are claimed; and (b) 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.' Thus, the question of fact which falls to be answered is: when was the earliest date on which the plaintiffs had knowledge of 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? As counsel for the defendants contends, the 'damage' for these purposes must be the fact that the reinsurance contracts were voidable. When did the plaintiffs have sufficient knowledge of the facts concerning the voidability of the contract as would lead a reasonable person to consider it sufficiently serious to justify the taking of proceedings? Counsel for the defendants say 1982 or 1983. Counsel for the plaintiffs says not until October 1984. Counsel for the defendants relied on a number of documents exhibited to the second affidavit of Mr Brown, of his instructing solicitors, mostly passing between Imperio and the defendants, from which counsel contended that it appears quite clear that from the summer of 1982 onwards the plaintiffs were aware that Imperio were expressing their deep concern that the quota shares which had been represented and broked to them at the time when the reinsurances were entered into, as well as the plaintiffs' retentions, were very different from those now stated. Furthermore, he says, the documents show that a meeting between Imperio, the defendants, and the fifth plaintiffs, acting as underwriting agents on behalf of other plaintiffs, was arranged for 9 December 1982, at which it appears the various participations were discussed. On the other hand, Mr Viney, of the plaintiffs' solicitors, deposes to the fact that, to the best of his information and belief, the plaintiffs were not made aware until May 1984 that Imperio's failure to pay was related to the allegations of non-disclosure, misrepresentation and breach of warranty later raised in the points of defence. There was no more detailed affidavit evidence, in particular, concerning what was discussed at the December 1982 meeting. Counsel for the defendants submits, quite rightly in my view, that the burden is on the plaintiffs to establish the necessary facts to bring themselves within s 14A(4)(b). They have to show that they did not possess relevant knowledge at the material date, and he contends that they have made no real effort to satisfy the necessary burden. Indeed, as he pointed out, it was not until they received his skeleton argument that they were stung into action at all on this point. But counsel for the plaintiffs emphasises that this is an application to strike out the plaintiffs' cause of action. It is well established that one should only do so on the ground that the cause of action is time-barred if it is a clear case. He submits that the question when the plaintiffs possessed sufficient relevant knowledge is a question of fact which is not appropriate to be decided at this state. I agree. In my view this is a matter which must be investigated at trial. Whether it is done by way of a preliminary issue is a matter which may be decided hereafter. So, for these reasons (and I hope that the consequences which I now state do flow from the reasons of my judgment) I order that para 4 of the points of claim, that is the part of the points of claim which pleads the contractual duty and that part of para 7 of the points of claim which alleges the breaches of the duties pleaded in para 4, should be struck out. That, effectively, means that the case in contract is struck out. The remaining plea relying on the alleged breach of a duty of care owed as a matter of law, that is the claim in tort, should also be struck out save in so far as it relates to the 1981 underwriting year of account. It is only in respect of that period that s 14A of the 1980 Act can be of assistance to the plaintiffs. I say in closing that in view of the fact that I have, on request, given my judgment in open court I was asked by counsel for the plaintiffs to record the fact that the solicitors instructing him did issue a writ in this case immediately following their receipt and initial perusal of the documents from the plaintiffs' former solicitors. DISPOSITION: Order accordingly. SOLICITORS: Hewitt Woollacott & Chown; Davies Arnold Cooper.