01/07/2022

Commercial court judgment on s.32 of the Limitation Act  

Mr Justice Andrew Baker has today delivered judgment in the case of Kyla Shipping v Freight Trading Ltd [2022] EWHC 1625 (Comm), dismissing the claims on the grounds of time bar.

The claims arose out of a series of forward freight agreements (FFAs) entered into in 2007 and 2008 between the first claimant and the first defendant. The claimants alleged that the FFAs had been concluded on their behalf by the third defendant, acting as agent, and that they had been concluded in fraudulent breach of fiduciary duty, causing them to suffer losses of over US$30 million. The defendants denied liability, but also contended that the claim was time barred.

Following a three week trial, it was held that the claims in fraud were in substance sound, but that the defence of time bar should succeed. In this regard, it was common ground that the claims were prima facie time barred unless the claimants could show that s.32 of the Limitation Act 1980 applied. This provides that where a claim is founded on fraud, or where facts relevant to the cause of action have been deliberately concealed by the defendant, or where the action is for relief for the consequences of a mistake, the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake or could with reasonable diligence have discovered it.

The claimants had not in fact discovered the alleged fraud, concealment or mistake until shortly before the proceedings were commenced. However, the Judge held that the claimants could with reasonable diligence have discovered it. In particular, it was held that a reasonable person in the position of the claimants should be taken to show at least a serious degree of interest in why they had suffered such huge losses, and made enquiries as to that. On the facts of the case, such enquiries would inevitably have led to the claimants discovering the facts which were ultimately relied on in support of the claim. It followed that the claim was dismissed in full.

Charles Kimmins QC and Luke Pearce appeared for the first, third and fourth defendants.

Timothy Hill QC and Alex Carless appeared for the second defendant.

Read the judgment.