The High Court has granted applications by two banks to strike out claims brought against them after the primary limitation period for the claims had expired. This decision provides a helpful summary of the case law surrounding the operation of section 32(1)(b) Limitation Act 1980 (LA 1980), a provision that we are increasingly seeing claimants seek to rely on in order extend the life of financial services disputes that have their factual roots in the global financial crisis of 2008: Dixon v Santander Asset Finance plc & Anor [2021] EWHC 1044 (Ch).

Section 32(1)(b) LA 1980 provides that, where a fact relevant to the claimant’s claim has been deliberately concealed, the limitation period will not begin to run until the claimant has discovered, or could with reasonable diligence have discovered, the concealment.

In this decision the court highlighted certain challenges claimants will face when seeking to rely upon section 32(1)(b) LA 1980. In particular, the facts that are alleged to have been concealed from the claimant must be those that are essential for the claimant to prove in order to establish its prima facie case.

In reaching its decision, the court was careful to distinguish between concealed evidence on the one hand (which will not be sufficient to trigger section 32(1)(b) LA 1980) and concealed facts without which the claim is incomplete on the other (which will be).

Background

The claims were brought by Mr Richard Dixon, the sole director and shareholder of a vehicle purchase/hire company, Just Vans Self Drive Ltd (Just Vans). Just Vans’ activities were financed by Santander Asset Finance plc (Santander) and Handelsbanken plc (Handelsbanken).

In 2008 both banks demanded repayment of all outstanding liabilities. Neither Just Vans nor Mr Dixon discharged the liabilities. Just Vans was subsequently placed into administration by Handelsbanken on 25 September 2008, and was ultimately liquidated on 22 September 2009.

Mr Dixon claimed that Santander had: (a) breached its contract with Just Vans, on the basis that Santander had terminated its contract with Just Vans during an agreed moratorium; and (b) provided Handelsbanken with a spreadsheet containing negligently inaccurate information about Just Vans (the Spreadsheet) shortly before Handelsbanken demanded repayment of outstanding liabilities by Just Vans, which amounted to a negligent misstatement.

Mr Dixon also brought a claim in contract against Handelsbanken, claiming that it was not open to Handelsbanken to call in its loans and appoint an administrator when it did so. In particular, Mr Dixon alleged that Handelsbanken had represented to Just Vans that it would not take steps to put the company into administration until it had received a report from an accountant on the company’s viability (the Report), but that Just Vans was placed into administration prior to receipt of the Report.

Santander and Handelsbanken denied the claims brought against them, and sought to strike out the claims on the basis that they were time-barred and had no real prospects of success.

Decision

There was no dispute that the primary limitation period had expired prior to the date on which the proceedings were brought. However, Mr Dixon argued that the limitation period had been extended by virtue of the operation of section 32(1)(b) LA 1980.

As set out above, section 32(1)(b) LA 1980 holds that, where a fact relevant to the claimant’s claim has been deliberately concealed, the limitation period will not begin to run until the claimant has discovered, or could with reasonable diligence have discovered, the concealment. Mr Dixon claimed that three relevant facts had been deliberately concealed, and that he had brought his action within six years of his discovery of those facts (which he could not, with reasonable diligence, have discovered any earlier).

The three relevant facts alleged by Mr Dixon were, in summary:

  1. Mr Dixon gained possession of a letter which allegedly documented the moratorium agreed with Santander (the Moratorium Letter).
  2. Mr Dixon gained possession of the Spreadsheet.
  3. Mr Dixon was notified that Handelsbanken had placed Just Vans into administration prior to receipt of the Report, and was provided with the true reasons why Handelsbanken had placed Just Vans into administration (at least one of which, Mr Dixon alleged, was the provision to Handelsbanken by Santander of negligently inaccurate information).

In order to successfully defend the banks’ strike out application, Mr Dixon had to demonstrate that his claims regarding the concealed facts, and the operation of section 32(1)(b) LA 1980, were more than merely arguable.

The banks contended both that: (a) there was no real prospect of Mr Dixon establishing that any of the allegedly concealed facts were relevant to his cause of action; and (b) even if the facts were relevant, there was no real prospect of Mr Dixon successfully establishing they were not discovered or reasonably discoverable until the date on which Mr Dixon alleges the six-year limitation period began to run.

Relevance

In answering the first question, as to the relevance of the allegedly concealed facts, the court reiterated the well-established position that, in order to fall within section 32(1)(b) LA 1980, the facts that have been concealed must be “those which are essential for a claimant to prove in order to establish a prima facie case”. The test will not be met if the facts only make the claimant’s case stronger. The court emphasised the need to distinguish between concealed evidence on the one hand and concealed facts without which the claim is incomplete, on the other (as per Kimathi v FCO [2018] EWHC 1169 (QB)).

Discovery

In relation to the second question, regarding what is meant by “discovery” of the facts, the court relied upon the recent judgment in In Granville Technology Group Ltd v Infineon Technologies AG [2020] EWHC 415, which held that “a claimant can be said to have discovered a fact when the claimant is aware of sufficient material to be able to properly plead that fact”.

Application to the facts

In relation to the breach of contract and negligent misstatement claims brought against Santander, the court held that Mr Dixon had the facts that were essential for the claims to be brought more than six years before the claims were in fact brought, even if he lacked the evidence itself:

  • Even though Mr Dixon did not have the moratorium letter, the moratorium had been referred to by Mr Dixon in a witness statement in earlier proceedings and the fact of it was something he had always “asserted vigorously”.
  • Mr Dixon’s own evidence established that he was aware of the Spreadsheet since 2009, and both (a) the existence of the Spreadsheet; and (b) the effect the Spreadsheet had on the thinking of Handelsbanken, have been consistently asserted by Mr Dixon. It was immaterial therefore that Mr Dixon received the evidence in support of the allegation (i.e. the Spreadsheet itself) subsequently.

In relation to the claim against Handelsbanken, the court found that Mr Dixon’s claim for breach of contract was pleadable absent knowledge of the allegedly concealed fact. Indeed, Mr Dixon had in fact pleaded his claim against Handelsbanken in these proceedings without reference to that fact.

Ultimately, the court therefore held that there was no real prospect that Mr Dixon could establish that the allegedly concealed facts were essential to his claim (and therefore “relevant” for the purposes of section 32(1)(b) LA 1980). Accordingly, the claims were time-barred.