Limitation Periods: s14 and ‘date of knowledge’

The fear of missing the expiry of a limitation period may strike fear in lawyers, though good practice in recording such vital deadlines should dispose of such a risk. However, in some cases - particularly where it unclear when the limitation period started to run – is not so straightforward. The Court of Appeal has now provided useful clarification on a party’s ‘knowledge’ of when a cause of action arises for the purposes of the Limitation Act 1980.

In Su v Clarksons Platou Futures Ltd ([2018] EWCA Civ 1115, a claimant appealed a summary judgment against him on the basis that his claims were time barred. His ground of appeal concerned the interpretation and application of s14A of the 1980 Act.

What’s the background?
The claimant owned shipping and related companies trading as TMT. He entered into an oral agreement with the two defendants (one being a company regulated by the FCA, the other was one of its brokers), by which it was agreed he and some of his TMT companies would sell freight forward agreements (FFA) to a shipping company in July 2008 ¬- buying them back a month later at a higher price.

The claimant and the TMT companies breached their contractual obligation to buy back the FFA position and was ordered to pay US$37.85m in damages, having been found personally liable. He brought proceedings against the defendants on the basis that they had negligently failed to ensure he would not be personally liable if the contract was not performed.

However, those proceedings were started in November 2015 - four months after the 6-year limitation period expired, and the defendants secured summary judgment against him on the basis that his claims were time barred. The defendants had also argued that to the extent the claimant was bringing a negligence claim (for which the limitation period is 3 years from the date of knowledge required to bring an action under s14a), it was out of time.

At issue for the Court of Appeal was the meaning and application of ‘date of knowledge’ under s14a.

What did the Court of Appeal decide?
The Court refused the claimant’s appeal and upheld the summary judgment. It found that:

• the latest date on which the claimant would have had ‘relevant knowledge’ would have been 18 July 2012 - the date the Court of Appeal rejected his appeal against the ruling that he was personally liable. He was found to know enough, by this date, to give rise to a real possibility that his personal liability under the contract was a direct consequence of and attributable to the defendants - because they were responsible for negotiating and agreeing the terms of that contract
• S14a requires more than a “mere suspicion of the facts about the damage, particularly if that suspicion is vague and unsupported”. However, if the claimant knew enough for it to be reasonable to begin to investigate further – that is sufficient knowledge

Where there is any doubt whether a limitation period has expired in a potential negligence claim, the Court of Appeal’s ruling on ‘sufficient knowledge’ in this ruling will prove useful.

 

 

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