Haward and others v Fawcetts (a firm) [2006] UKHL 9

Citation

• Full case name: Haward and others (Respondents) v Fawcetts (a firm) and another (Appellants)
• Neutral citation: [2006] UKHL 9
• Court: House of Lords
• Judgment date: 1 March 2006
• Subject: limitation; section 14A of the Limitation Act 1980; latent damage; professional negligence

Facts

In 1994 and 1995 Mr Haward and his co-claimants invested in the acquisition of a company and its business premises, relying on financial advice from the defendant accountants. The company then made substantial losses over successive years.

The claimants sued the accountants, alleging that the advice was negligent and that the firm had failed properly to assess the company’s true financial condition and prospects. Proceedings were issued more than six years after the advice was given, so the claim depended on the extended period in section 14A of the Limitation Act 1980, which allows three years from the date on which the claimant had the knowledge required for bringing an action.

Issue

What must a claimant know before the three-year period begins? In particular, must the claimant know that the advice received was flawed, or is it enough to know that the investment has gone badly and that the defendant advised on it?

Decision

The House of Lords allowed the appeal and restored the order of the trial judge: the claim was statute-barred.

The knowledge required by section 14A is knowledge of the material facts about the damage, and knowledge that the damage was attributable in whole or in part to the act or omission alleged to constitute negligence. A claimant does not need to know that the conduct was actionable as a matter of law — section 14A(9) says so expressly — but knowing simply that money has been lost is not enough either.

What is required is knowledge of the essence of the act or omission to which the damage is attributable: enough for the claimant to realise that there is a real possibility that the damage was caused by something the defendant did or failed to do, so that it is reasonable to begin to investigate. On the facts, the House held that by the critical date the claimants had that knowledge, and the three-year period had already expired when proceedings were begun.

Why it matters for insurance

Limitation is one of the most valuable defences on a professional indemnity book, and section 14A is where most of the argument happens, because professional negligence claims frequently surface long after the advice was given. Haward is the case that tells insurers and defence teams what to look for in the claimant’s own documents: the point at which they first realised something had gone wrong and why.

There is a second consequence for insured firms. Professional indemnity is written on a claims-made basis, so the policy that answers a claim is the one in force when the claim is first made or the circumstance first notified — not the policy in force when the work was done. A firm carrying long-tail exposure needs continuity of cover and, when it stops trading, run-off cover for a realistic number of years. Limitation periods are the reason those years matter.

For brokers, the practical point at renewal is to ask about old files as well as current work. A firm that has changed insurer several times, or that has let cover lapse between placements, may have exposures that no policy answers.

See also

• BPE Solicitors v Hughes-Holland — the scope of a professional’s duty
• SAAMCo — how much of the client’s loss is recoverable
• Pirelli General v Oscar Faber — when the cause of action accrues in building cases
• Kajima v Underwriters at Lloyd’s — the validity of a notification of circumstances

References

• Haward and others v Fawcetts (a firm) [2006] UKHL 9 (House of Lords, 1 March 2006)
• Limitation Act 1980, sections 2, 14A and 14B
• Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 2 AC 1

Frequently asked questions

What knowledge starts time running under section 14A?

Knowledge of the material facts about the damage, and knowledge that the damage was attributable in whole or in part to the act or omission alleged to constitute negligence. The claimant does not need to know that the conduct was legally actionable, but must know enough of the essence of what the defendant did or failed to do to appreciate that it may have caused the damage.

Is knowing that an investment lost money enough?

No. Knowing that money has been lost does not by itself start the clock. The claimant must know enough to realise there is a real possibility that the loss is attributable to something the professional did or failed to do.

Why does limitation matter for professional indemnity cover?

Because PI is claims-made. The policy that answers a claim is the one in force when the claim is made or the circumstance notified, not the one in force when the work was done. Long limitation periods are why continuity of cover and adequate run-off matter so much.

This page is insurance information for UK businesses, not legal advice. It summarises a reported judgment and explains why insurance buyers and brokers refer to it; it is not a substitute for reading the judgment or taking advice on your own facts. Case summaries are necessarily short and omit detail. Position stated as at August 2026.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.