Bringing Proceedings in Time: ‘date of knowledge’ under the Limitation Act
It is vital that where a commercial dispute has arisen, particularly where several parties are involved in complex contractual arrangements, the parties do not delay in starting proceedings – otherwise they could find they are ‘time barred’. The Court of Appeal has provided important clarity on when a party’s ‘knowledge’ of a cause of action arises1.
What’s the background?
In short, the appellant owned various shipping and related companies trading under the name of TMT. Under an oral agreement with the respondents (a company regulated by the FCA, and one of its brokers), he and some of his TMT companies agreed to sell freight forward agreements (FFA) to a shipping company in July 2008 and buy them back a month later at a higher price.
The shipping company fulfilled its contractual obligations, but the appellant and his companies breached the contract by failing to buy back the FFA position. The appellant was found personally liable for the breach – to the tune of US$37.85m. He then brought an action against the respondents claiming they had negligently failed to ensure he would not be personally liable if the contract was not performed.
The respondents successfully applied for summary judgment on grounds that the claims had not been brought within 6 years and were, therefore, time barred under sections 2 and 5 of the Limitation Act 1980. He had brought his claims in November 2015 – four months after the end of that 6-year period.
The respondents also said that to the extent the appellant 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 of the 1980 Act), it was out of time. The court agreed. The question for the Court of Appeal was the meaning and application of ‘date of knowledge’ under s14a.
What guidance did the Court give?
Upholding the decision granting summary judgment, the Court of Appeal found that the latest date on which the appellant would have had ‘relevant knowledge’ would have been 18 July 2012. This was the date the Court of Appeal rejected the appellant’s appeal against the ruling that he was personally liable.
Section 14a 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. Here, the appellant knew enough, by July 2012, 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.
What does this mean?
The ruling gives a useful reminder of the importance of understanding the limitation periods, and when they expire – particularly where ‘date of knowledge’ is an issue. If in doubt, take expert legal advice.
How can we help?
If you have any concerns about a potential dispute and whether you can still bring legal proceedings, it is important to take urgent, strategic legal advice before taking any further steps. Contact the experienced commercial solicitors at Herrington Carmichael for specialist help and representation.