A recent case in the High Court has reaffirmed the critical importance of time limits in litigation, with a claim against Royal Bank of Scotland (“RBS”) being deemed time-barred and struck out in its entirety.
It is an important tenet of English Law that claims are subject to a limitation period after which parties cannot bring a claim, usually for a contract claim this is 6 years after the relevant breach. The intention of this is to add both fairness and finality to litigation and to prevent parties continually arguing over events long ago that cannot be remembered accurately.
Boyse (International) Ltd (“Boyse”) is a trust company registered in Gibraltar, holding commercial property investments for its beneficiaries. In 2007 and 2008 it purchased two LIBOR-referenced interest rate hedging products from RBS in relation to two of its London properties (the “IRHPs”). However, Boyse claimed that owing to the cost of the IRHPs and their impact on cash flow, it was forced to sell the properties in 2012, in both cases at a significant undervalue.
In 2013 RBS was one of the banks implicated in the LIBOR rate-fixing scandal. Following a Final Notice issued by the Financial Conduct Authority on 6 February 2013 (the “Final Notice”), RBS was fined by both the UK and US authorities for almost £300 million. After a review of their IRHPs, RBS offered Boyse the sum of £1,482,462.55 without any admission of liability, constituting a refund of the payments Boyse had made for the IRHPs but excluding any other consequential losses.
Boyse accepted this offer in 2014, but subsequently went on to issue a claim against RBS on 19 February 2019, inter alia, for deceit, claiming that various representations in relation to LIBOR had induced the trust into entering into the IRHPs which had caused it considerable losses.
Boyse’s claim, however, had a flaw that ultimately proved fatal. Under section 32 of the Limitation Act 1980, where a claim concerns allegations of fraud, the limitation period of six years does not begin to run until the claimant has either (i) discovered the fraud; or (ii) “could with reasonable diligence have discovered it”.
RBS argued that the limitation period ran from the issuing of the Final Notice on 6 February 2013, meaning Boyse’s claim was 13 days’ outside the six-year limitation period. Conversely, Boyse claimed that it could not with reasonable diligence have discovered the alleged fraud for a reasonable period after 21 October 2013 at the earliest.
The Court disagreed with Boyse’s argument and held that “a reasonably diligent person in Boyse’s shoes would have been alert to the widespread publicity about LIBOR even before 6 February 2013”. The Final Notice was deemed to be the trigger from which the limitation period started running, meaning that Boyse’s claim was time-barred.
This case serves as a stark reminder for businesses to establish at the outset of any litigation the applicable limitation period and when it has started running. This can be a much more complicated issue than it at first appears, particularly in cases involving reasonable diligence as seen here. We expect COVID-19 to spark a new wave of litigation in its wake and potential claimants should be aware that no matter what the merits of their claim may be, time stops for no one.