Clifford Chance

In this limitation mini-series, we examine how limitation periods can be postponed, extended or interrupted in different jurisdictions in the context of group claims. First up – postponement under English law.

Whether a claim is time-barred should be one of the first questions considered by claimants and defendants alike in multi-party litigations: if the limitation period has expired, the defendant has a complete defence to the claim. Limitation is a knockout blow.

In the context of group claims, it is often unclear when a cause of action has arisen and it can take a long time for claimants to reach a critical mass (with the requisite funding, insurance and book-build), such that limitation is often one of the first issues raised in group claims.

In this first instalment of our limitation mini-series, we examine how the limitation period can be postponed under English law in cases of concealment in the context of group claims.

Limitation periods for High Court claims under English law

There are no special limitation periods for bringing a group claim in the High Court, and so the limitation periods are set out in the Limitation Act 1980 ("LA 1980"). Whilst these periods vary depending on the type of action, most are six years from the date on which the cause of action accrued.

The nature of the action is relevant to when a cause of action accrues. For example, time runs from the date of breach in a breach of contract claim, whilst for torts, time runs from the date the damage was suffered.

Postponement: Limitation in cases of concealment

Under English law, the limitation period can be postponed in cases of fraudulent concealment under section 32(1) and (2) LA 1980. In such instances, the limitation period does not run until the claimant has discovered the concealment (i.e. has actual knowledge) or could with reasonable diligence have discovered it (i.e. has constructive knowledge).

When numerous claimants are involved, as in group claims, it can be particularly complex to establish when each claimant "discovered" the concealment.

Upham v HSBC UK Bank Plc

The recent case of Upham v HSBC UK Bank Plc [2024] EWHC 849 (Comm) provides a useful reminder of the key considerations when dealing with fraudulent concealment under section 32 LA 1980, through the lens of a group claim. In this case, the claims of over 400 claimants were found to be statute-barred as the Judge found that they knew, or should have known, to investigate their claims much earlier.

The claimants were investors in a film-finance scheme known as 'Eclipse' and alleged that HSBC had, together with Future Films, deceived investors as to the tax efficacy of the scheme or, alternatively, had conspired with Future Films in seeking the investments. The claimants alleged fraudulent misrepresentation, unlawful means conspiracy and dishonest assistance in a breach of trust, among other causes of action.

Mr Justice Bright held that each claimant acquired a cause of action when they made the investment. Accordingly, time would ordinarily begin to run on the date of investment, which for the 400 claimants was between March 2006 and April 2008.

As the claims were all tortious, the limitation period under section 2 LA 1980 was 6 years. The claim form was issued on 5 June 2020, almost 12 years after the limitation period would ordinarily have expired. The claimants therefore alleged that the wrongdoing had been concealed, thereby relying on sections 32(1) and (2) LA 1980, which they said postponed the date when time began to run until 6 June 2014 or later.

The claimants' case

Once a defendant has raised a defence of limitation, the burden is on the claimant to prove that the limitation period should be postponed under s 32 LA 1980 and that they have brought their claim within the time limit.

The claimants' case in this regard was that they did not know they had a worthwhile claim against HSBC until (at the earliest) late 2018. This was based on the following arguments (amongst others):

• that the claimants' sample witnesses said that they were first aware of the fact that they had a worthwhile claim when they were informed by the solicitors retained by their action group between 2015-2016; and
• the claimants only acquired sufficient confidence in their case when they received documents (held by Future Films) in July 2018 identifying HSBC as the defendant.

Findings

Mr Justice Bright found that the claimants knew or should have known that something had gone wrong, which needed to be investigated, from mid-2012. Had investigations of any kind been commenced in mid-2012, Mr Justice Bright found that it should have been possible to discover HSBC's role in no more than two to three months (i.e. time would have started to run from late 2012 at the latest).

Mr Justice Bright therefore concluded that the claimants' claims were time-barred.

Key takeaways

Mr Justice Bright's judgment is a useful reminder that, when dealing with cases of fraudulent concealment under section 32 LA 1980, claimants need to do the running to establish that the limitation period has been postponed. This is no less the case in multi-claimant litigations, notwithstanding the added complexity of establishing when multiple claimants "discovered" the concealment.

It is not sufficient for claimants to just sidestep the issue. Mr Justice Bright found that the claimants in Upham had very little to say on limitation, telling him "almost nothing" about why no steps were taken to investigate the claim at an earlier date, or why it took so long once investigations were underway. This included the claimants expressly asserting privilege in respect of legal advice, notwithstanding that a waiver of privilege can be regarded as the "necessary price for success" (as Mr Justice Bright put it) to demonstrate that the concealment could not have been discovered sooner and that the period should be postponed.

Mr Justice Bright further noted that when relying on section 32(1) LA 1980, it was "commonplace" for claimants "not only to work out a case as to when they first “discovered” the fraud, but also to adduce documentary and witness evidence to explain the steps that they took to discover it, and why these steps took so long".

Put simply, this case is a clear reminder that claimants will only be rewarded with a postponement of the limitation period under s 32 LA 1980 if they establish a case theory in respect of limitation and provide sufficient evidence in support. Whilst overcoming that burden can be particularly complex where there are multiple claimants in a group litigation, that burden is in no way diminished in group claims, and limitation remains a powerful defence in a defendant's arsenal.

Next up, the Netherlands.