On the fifth day of Christmas, the High Court gave to me…five time bars!

With Advent upon us, and Christmas on the horizon, RPC takes a musical look back at the most important English judgments of 2018. Liability for all failures of numbering, rhythm and rhyme is hereby excluded.

A defendant who can rely on a limitation defence strikes gold.  However, the extreme impact of a time bar in wiping out a claim, however meritorious, combined with the impenetrability of some parts of the Limitation Act 1980, makes limitation a fertile source of dispute, and so it proved in 2018.

The basic framework for most commercial claims is well known: contractual claims are barred six years from the date of breach and tortious claims are barred six years from the date of damage.  The battlegrounds tend to be the provisions by which the limitation period can be extended.

Defendants get coal

If there has been fraud, concealment of facts or a mistake, time will not start to run until the claimant has, or could have, discovered the fraud, concealment or mistake.^[1]  The defendant is expressly burdened with the actions of its agents.  But can time be triggered by the knowledge of the claimant's agents (but not of the claimant itself)?  No, according to the Court of Appeal.  In Riyait v Dawett,^[2] the Court held that information in documents seen by Mr Riyait's solicitors did not count as Mr Riyait's knowledge and so the receipt of those documents by his solicitors did not start the limitation period running.     

However, there is no time limit for claims against trustees for fraudulent breach of trust or to recover trust property from the trustee.^[3]  In February 2018, the Supreme Court held that this could apply to company directors (as quasi-trustees) where the directors unlawfully distributed the assets of the company to another company controlled by the directors.^[4]  This could significantly extend the period in respect of which liquidators might scrutinise the actions of former directors.

Defendants get gold

For negligence claims, there is an additional three year period from the date of knowledge (which may run concurrently with or after the primary statutory period for tortious claims).^[5]  But when is the date of knowledge?  The House of Lords in Haward v Fawcetts^[6] held that it was when a claimant knew enough to justify setting about investigating the possibility that the defendant's advice was defective.  This sets a low bar and two claimants duly stumbled over it in 2018. 

• In Davy v 01000654 Ltd,^[7] knowledge of drastic falls in the value of a pension was held sufficient to alert the claimant, Mr Davy, that the advice his IFA had given on the choice of pension might have been negligent.  Those falls had taken place well over three years before a standstill agreement was entered into and the claims were therefore time-barred. 
• In Nobu Su v Clarksons Platou Futures,^[8] the Court of Appeal had upheld a freezing injunction on the basis that there was a good arguable case that the claimant, Mr Su, was personally liable under freight forwarding agreements.  That was held to be sufficient knowledge to alert Mr Su that the broker of the freight forwarding agreements might have been negligent in making Mr Su personally liable under the agreements.  Since Mr Su had waited to make a claim against the broker until after his personal liability was confirmed by a later substantive judgment, his claim against the broker was time-barred.

So the golden rule is, if limitation is even remotely a concern, issue a claim to stop the clock (or enter into a standstill agreement).  But don't forget to serve a claim properly in time (four months from issue within England and Wales).  In Barton v Wright Hassall,^[9] no quarter was given by the Supreme Court even to a litigant in person who issued just within the limitation period, but waited until the end of the four month period to serve and then failed to do so correctly.  

For more detail on Burden v Fielding, see here; on Nobu Su v Clarksons Platou, see here  and here; and on Barton v Wright Hassall, see here.

The Twelve Judgments of Christmas (2018)

On the first day of Christmas, the High Court gave to me…. a privilege in E-N-RC. 

On the second day of Christmas, the High Court gave to me… two LIBOR reps. 

On the third day of Christmas, the High Court gave to me… three corporate crimes.

On the fourth day of Christmas, the High Court gave to me… four contracts.

On the fifth day of Christmas, the High Court gave to me…five time bars!

On the sixth day of Christmas, the High Court gave to me…[to be continued]

^Reference