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Coming Clean About a Bad Smell? English Court Rejects Limitation Defence




by:
Rod J. Cowper
Edwards Wildman Palmer LLP - London Office

 
August 9, 2013

Previously published on August 2013

Failure to point out, at least once proceedings commenced, that the wrong company had been sued for damages for causing an odour nuisance was fatal to the limitation defence used by the correct company when it was eventually sued: the claim could proceed.

However, this decision does not provide secure guidance for claimants or defendants where there is uncertainty on the part of a claimant about which company to sue: it is not clear at what stage the defendant’s inaction will prevent a limitation defence and the decision itself may be vulnerable on appeal and might be ignored by a subsequent first instance court.

Parkin v Alba Proteins Penrith [2013] EWCA 2038 (QB) concerns group litigation commenced by residents living close to a meat rendering site which emitted foul odours resulting from the rendering operations over a number of years. The corporate structure relevant to the operations was not wholly clear and responsibility for the operations appears to have altered between various companies within a group over time. Solicitors for the claimants asked for clarification but this was not given. Proceedings were in due course commenced against one of the companies (D1). It defended part of the claim on the basis that, at the time in question, the operations were the responsibility of another group company, D2. When D2 was joined to the proceedings it defended on the basis that the claims against it were time barred. The relevant limitation period had expired since the issue of proceedings but before D2 was joined.

The claimants argued that the limitation period should be extended because the fact that D2 was the correct company to be sued had been concealed deliberately. Section 32 (1) (b) of the Limitation Act 1980 provides that:

"Where... any fact relevant to the plaintiff's right of action has been deliberately concealed from him by the defendant ... the period limitation shall not begin to run until the plaintiff has discovered the... concealment or... could with reasonable diligence have discovered it.

References in this subsection to the defendant include references to the defendant's agent..."

D2 argued that "deliberate concealment" must involve active concealment or, if silence could ever be sufficient, it was only where there was a known duty to provide information and that as it, D1, was under no duty to provide information about D2, mere silence was insufficient to enable time to be extended.

The Judge decided that D1 had been under a duty imposed by Rules of Court to inform the Court of the identity of the correct companies at least at the stage that it participated in hearings at which the Group Litigation Order was made. Its failure to do so was therefore sufficient to amount to deliberate concealment. The Judge further decided that, in doing so, D1 was acting as agent for D2 and so its actions were attributed to D2. Accordingly, the conditions imposed by section 32 (1) (b) were satisfied and time would be extended.

This would not necessarily extend to an unhelpful response to pre-litigation enquiries. It is not clear when the duty relied upon arises. Indeed subsequent courts may reconsider whether this is a relevant type of duty.

The Judge did not explain in detail his reasoning for concluding that a duty imposed on D1 (the notional agent) in the conduct of proceedings against it was to be treated as being imposed upon D2 (the notional principal) beyond saying that its conduct benefitted D2. However, the conferment of benefit is not conventionally viewed as the essence of agency: agency arises where an action of the principal is undertaken instead by the agent. Here, defending a claim was only the action of D1, the party to the proceedings. It is possible that the wording of the final sentence of section 32 (1) contributed to that conclusion on the basis that it should be construed as an extension of the ordinary rules of agency and operates as a straightforward definition clause, reading "or the defendant's agent" wherever the word defendant was used in the section. The Judge found that D1 had acted as agent because it had been “able and willing to act on behalf of [D2]” albeit not in the actual defence of the proceedings. It is not clear from the judgment to what extent this was argued and it may yet be clarified on appeal.

Although the Judge based his decision on the existence of a duty to speak, he said that he agreed with the Claimant that mere non-disclosure in the absence of such a duty was sufficient to satisfy the conditions of section 32 (1) (b). In doing so he relied upon statements of principle made in the House of Lords decision Cave v Robinson by Lord Scott (whose decision was supported by three of the other members of the Court). However, that was a case involving a negligence claim against solicitors (who had positive duties to disclose information). Those statements were also endorsed by the Court of Appeal in Williams v Fanshaw, Porter & Hazlehurst but that, too, was a solicitors case and so would not be strictly binding where there is no duty. Where no such duty is imposed, the approach of Lord Millett in Cave, that active concealment is required, may be preferred.

Although this case appears to encourage group companies to disclose the correct group company to be sued, it is not entirely clear that a failure to respond to Claimants’ enquiries will eliminate the possibility of a limitation defence. Claimants and defendants will need to give careful consideration to the impact of this judgment and it will be unsafe to assume that any failure to respond to enquiries will necessarily have this effect.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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