Sheldon v R H. M. Outhwaite (Underwriting Agencies) Ltd
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE STAUGHTON,LORD JUSTICE KENNEDY |
| Judgment Date | 30 June 1994 |
| Judgment citation (vLex) | [1994] EWCA Civ J0630-7 |
| Docket Number | No. QBCMI 93/1711/B |
| Court | Court of Appeal (Civil Division) |
| Date | 30 June 1994 |
[1994] EWCA Civ J0630-7
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(Mr. Justice Saville)
Before: The Master of the Rolls (Sir Thomas Bingham) Lord Justice Staughton and Lord Justice Kennedy
No. QBCMI 93/1711/B
QBCMI 93/1725/B
MR. I. HUNTER Q.C. and MR. J. GRUDER (instructed by Messrs. Oswald Hickson Collier & Co, London WC2) appeared on behalf of the Defendants ("the Members' Agents").
MR. I. HUNTER Q.C. and MR. C. EDELMAN (instructed by Messrs. Denton Hall, London WC2) appeared on behalf of the Defendants ("the Managing Agents").
MISS B. DOHMANN Q.C. and MR. T. BEAZELY (instructed by Messrs. Norton Rose, London WC2) appeared on behalf of the Plaintiffs.
THE MASTER OF THE ROLLSThis appeal is against a preliminary ruling on an issue of law made by Saville J in the Commercial Court on 20th October 1993( (1994) 1 WLR 754). The issue he had to decide was whether the plaintiffs could rely on section 32 (1)(b) of the Limitation Act 1980 to overcome a statutory bar otherwise applicable to their claim where the deliberate concealment which they allege occurred after their causes of action had arisen. The judge held that they could. The defendants challenge that ruling.
The plaintiffs were all Lloyd's Names on syndicates 317/661 for the year 1982. Those syndicates were managed by the named defendant, R.H.M. Outhwaite (Underwriting Agencies) Limited. The other defendants in the action were the plaintiffs' members' agents. The plaintiffs complain of acts done or not done in or before 1982. Their writ was not issued until April 1992. Thus their claim is defeated by the six-year limitation period prescribed by the Limitation Act 1980 on which the defendants rely, unless the plaintiffs can show that the running of the limitation period has been postponed under section 32 (1)(b) of the Act.
There has been no investigation of the facts. The judge made clear that his judgment did not bear on the question whether any of the facts and matters pleaded by the plaintiffs would, if established, amount to deliberate concealment within the meaning of section 32. Like the judge, this Court must approach the legal issue without regard to that question. What matters is that the earliest acts and omissions said to constitute deliberate concealment for purposes of section 32(1)(b) occurred over a year after the breach of contract or duty on which the plaintiffs' claims are founded, and unless such deliberate concealment has the effect of preventing the limitation period beginning to run or suspending or postponing its running the plaintiffs' actions are barred by sections 2 and 5 of the Act.
As amended in 1986 and 1987, section 32 of the Act now provides :
"(1) Subject to subsections (3) and (4A) 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.
References in this subsection to the defendant include references to the defendant's agent and to any person through whom the defendant claims and his agent.
(2) For the purpose of subsection (1) above, deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty.
(3)Nothing in this section shall enable any action -
(a)to recover, or recover the value of, any property ; or
(b)to enforce any charge against, or set aside any transaction affecting, any property ;
to be brought against the purchaser of the property or any person claiming through him in any case where the property has been purchased for valuable consideration by an innocent third party since the fraud or concealment or (as the case may be) the transaction in which the mistake was made took place.
(4)A purchaser is an innocent third party for the purposes of this section -
(a)in the case of fraud or concealment of any fact relevant to the plaintiff's right of action, if he was not a party to the fraud or (as the case may be) to the concealment of that fact and did not at the time of the purchase know or have reason to believe that the fraud or concealment had taken place ; and
(b)in the case of mistake, if he did not at the time of the purchase know or have reason to believe that the mistake had been made.
(4A)Subsection (1) above shall not apply in relation to the time limit prescribed by section 11A(3) of this Act or in relation to that time limit as applied by virtue of section 12(1) of this Act.
(5)Sections 14A and 14B of this Act shall not apply to any action to which subsection (1)(b) above applies (and accordingly the period of limitation referred to in that subsection, in any case to which either of those sections would otherwise apply, is the period applicable under section 2 of this Act)."
It is subsection (1)(b) on which the plaintiffs rely. But the defendants argue that the language of subsection (1), in providing that the period of limitation shall not in the prescribed circumstances "begin to run", contradicts the plaintiffs' argument. In the case of an action based on fraud (subsection (1)(a)) or for relief from the consequences of a mistake (subsection (1)(c)) the limitation period will not begin to run at all until the fraud or mistake is or should be discovered. But in the case of a breach of contract or a damage-causing breach of duty, not accompanied by contemporaneous deliberate concealment of the cause of action from the plaintiff by the defendant, the limitation period will in the ordinary way begin to run. The defendants accordingly argue that deliberate concealment cannot, on the wording of the statute, operate to postpone the running of the limitation period in a case where it has already begun to run. Deliberate concealment will, they say, either occur at the outset, when the cause of action would otherwise accrue, in which event it will postpone the running of the limitation period until discovery (or imputed discovery) of the concealment, or it will have no effect at all, because the limitation period will already have begun to run and the subsection imports no notion of interruption or re-commencement of the limitation period which has already begun to run. The defendants point to sections 29(5) and 34(5) of the 1980 Act and to the Limitation (Enemies and War Prisoners) Act 1945 as examples of drafting techniques used where it was intended to suspend or interrupt the limitation period or cause time to start running again. No such technique, the defendants rightly contend, is to be found in section 32.
These are persuasive and compelling arguments. But the 1980 Act followed 350 years during which questions of limitation have been intermittently addressed, and I do not think one can safely construe section 32(1)(b) in isolation from the developments which preceded it.
The Limitation Act 1623 laid down limitation periods for a wide range of civil claims. It admitted no exceptions, save in the case of minors, married women, persons of unsound mind, prisoners and those beyond the seas. The common law courts applied the statute, as they were bound to do, even though it led to what might seem hard decisions : Prideaux v Webber (1661) 1 Lev 31; Rhodes v Smethurst (1838) 4 M & W 42; Homfray v Scroope (1849) 13 QB 509. In the second of these cases Alderson B expressly rejected the view (at page 63) that the limitation period, once it had begun to run, could be interrupted,
"and unless that were so, great inconvenience would follow; for it would be very difficult, in almost every case, to ascertain whether the statute had or had not run, and we should be obliged to take a great many documents and statements, a great many beginnings and endings, and should have to add up those precise periods of time, out of which the six years would have to be made out ; so that great inconvenience would result : and therefore it is better to apply the law as it at present stands ; it being far better that a particular injury should be inflicted on one individual, than that great inconvenience should be applied to all the community".
The severity and inflexibility of this statutory rule were mitigated by courts of equity to permit actions to proceed after expiry of the statutory limitation period where the plaintiffs' cause of action was founded on or concealed by the fraud of the defendant. Booth v Earl of Warrington (1714) 4 Bro. P.C. 163 is a case in which this rule was applied and it was held that the statute should not avail the dishonest defendant. It was felt to be against conscience that a defendant who had deceived the plaintiff should be able to rely on the statute to defeat the plaintiff's claim : see Hovenden v Lord Annesley (1806) 2 Sch & Lef 607 at 634 per Lord Redesdale, Lord Chancellor...
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