Last week I reviewed Goldtrail Travel v Grumbridge. Unusually in a short period of time, this is another case touching upon section 32 of the Limitation Act 1980. Loches Capital v Goldman Sachs  EWHC 2327 (Comm) concerns a pre-action disclosure application in a commercial dispute.
Though, there were a number of issues between the parties, one was that the claim was out of time. It was common ground that the claimant required use of section 32 in order to be able to bring the case.
Section 32 of the Limitation Act 1980:
The section sets out:
“Postponement of limitation period in case of fraud, concealment or mistake.
(1) Subject to subsection (3) below, where in the case of any action for which a period of limitation is prescribed by this Act, either—
(a) the action is based upon the fraud of the defendant; or
(b) any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant; or
(c) the action is for relief from the consequences of a mistake;
the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it.“
In this case the claimant relied upon both section 32 (1)(a) and 32 (1)(b). The action was said to based upon a fraud and also that there was deliberate concealment of facts.
The case contains a useful run-through of salient points and relevant caselaw. This can be something of a checklist for any practitioner when considering section 32. In brief, features which were considered important were:
- That the phrase “the plaintive has discovered the fraud” refers to knowledge of the precise fraud which the claimant alleges has been perpetrated on it.
- The claimant will not have discovered the fraud on which it alleges has been perpetrated on it until it has knowledge of the critical allegations on which the claim is based.
- It can not be said that it could have been discovered with reasonable diligence unless with reasonable diligence would have led the claimant to discover the fraud. That is acquire knowledge of the critical allegations on which the fraud is based.
- It is not necessarily that the claimant knows or could have discovered each and every piece of evidence which it later decides to plead.
- A fact relevant to a claimant’s cause of action within section 32 (1)(b) is a fact without which the cause of action is incomplete.
- Facts which merely improve prospects of success are not facts relevant to the claimant’s right of action.
- Facts bearing on a matter which is not a necessary ingredient of a cause of action but which may provide a defence are not facts relevant to the claimant’s right of action.
- The court must “look for the gist of the cause of action” that is asserted. The court should see if that was available to a claimant without knowledge of the concealed material.
- At the point at which the claimant can plead the cause of action, however weak or strong, time starts to run.
- Not every detail needs to be known and a realistic view must be taken by the court.
- There needs to be something which objectively puts the claimant on notice as to the need to investigate to which the statutory reasonable diligent requirement then attaches.
- Reasonable diligence means not the doing of everything possible, not even necessarily the doing of anything at all, but it means doing that which an ordinary, prudent person would do having regard to all the circumstances.
- The question is not whether the claimants should have discovered the fraud sooner; but whether they could with reasonable diligence have done so. The burden of proof is upon them.
- They must establish that they could not have discovered the fraud without exceptional measures which they could not reasonably have been expected to take.
- The concept of reasonable diligence carries with it the notion of a desire to know and indeed to investigate.
The Court’s Approach
The court also set out the way at which a court should approach the same.
- A court must identify the relevant facts necessary for an applicant properly to plead its claim. A claimant cannot reply upon a lack of knowledge or facts on the strength of its claim or its confidence in it.
- There must be sufficient material objectively to put the applicant on notice of something which merited investigation – sometimes referred to as a trigger. It will be sufficient as objectively apparent when something “has gone wrong”. For example, where a claimant has lost property, failure to receive something that is expected to be received or suffered an injury of some kind. Such an event ought itself to prompt the claimant to ask why and investigate accordingly.
- The question is then whether the applicant could, exercising reasonable diligence, have discover the facts necessary to plead the claim.
Considering Reasonable Diligence
In relation to the third element it was said:
- There must be an assumption that the claimant desires to discover whether or not a fraud has been committed.
- The court should consider what steps were required to be taken in order to exercise reasonable diligence.
- There is then the question of fact in each case. Could the claimant with reasonable diligence have discovered the relevant fraud or concealment.
As to this case, the court found that the claimant’s argument on section 32 point was at least arguable. As it was a pre-action disclosure application, the court did not go beyond that or seek to determine it one way or the other. It simply chose to see limitation as a neutral point neither in favour of the application nor against it.
As per Goldtrail Travel, section 32 is not a well-trodden area for Industrial Disease practitioners. However, there may be cases which either fraud or deliberate concealment is raised by a claimant. This is another useful case which sets out relevant caselaw. The case runs through the considerations for a court in such circumstances.
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