Barnstaple Boat Company Ltd v Jones

For a deceit claim, time under section 32(1)(a) of the Limitation Act 1980 begins when the claimant discovers, or could with reasonable diligence discover, the fraud alleged. General knowledge or suspicion that the defendant acted dishonestly and caused loss does not suffice. The claimant must know the essential facts of the deceit, including that the representation was false and made without belief in its truth.

Reasonable diligence concerns whether the fraud could have been discovered, not whether it should have been discovered sooner. Bringing a claim separately from earlier litigation is not necessarily an abuse merely because it could have been advanced earlier. Abuse requires a broad, merits-based assessment of whether the court’s process is being misused.

The claimant boat company brought three claims in deceit arising from dealings with the defendant and his company. The defendant obtained summary judgment on limitation grounds. On appeal, the county court reinstated the third claim, concerning a boat’s concealed condition, but held that the first two claims were time-barred.

The claimant pursued a second appeal concerning the first claim, alleging that £13,500 had been obtained through a fictitious boat purchase. The defendant cross-appealed against the reinstatement of the third claim and contended that the proceedings were an abuse of process because the claims could have been brought in earlier actions.

The central questions were when the claimant discovered, or could with reasonable diligence have discovered, the particular deceit alleged, and whether bringing the claims separately amounted to an abuse of process.

1. Appeal allowed on the first claim; cross-appeal dismissed. Waller LJ, with whom Moore-Bick and Moses LJJ agreed, held that the claimant had an arguable case that the first claim was not barred under section 32(1)(a) of the Limitation Act 1980.

2. A deceit claim depends upon the particular fraud pleaded. Knowledge that the defendant had acted dishonestly and caused the loss of £13,500 did not itself establish knowledge of the alleged deceit. The material allegations were that the defendant represented that he intended to buy a boat, that the representation was false, and that he knew it was false because he never intended to make the purchase. On the claimant’s evidence, it did not discover those matters until it inspected the company’s papers in 2005. That evidence presented a sufficiently arguable case to prevent summary disposal.

3. The claimant also had an arguable case that the fraud could not have been discovered earlier with reasonable diligence. Its managing director had unsuccessfully sought the documents from the police and the liquidator. The defendant had opposed an application for third-party disclosure in 2004. Proceedings for an account were not a reasonable answer because the defendant was not an accounting party, while the relevant company was in liquidation with no realistic prospect of recovery.

4. The third claim was likewise within section 32(1). Knowledge that the boat’s engine was defective, actual or reasonably discoverable, was distinct from knowledge that the defendant knew before the sale that the boat had been submerged and the engine was inoperative. There was no basis for finding that reasonable diligence would have produced that knowledge before the claimant’s chance conversation with an engineer in 1999.

5. The claims were not an abuse of process. Applying Johnson v Gore Wood [2002] 2 AC 1, the fact that a claim could have been brought earlier does not make later proceedings necessarily abusive. The third claim concerned a different boat and a different cause of action. The first claim was understandably commenced separately if, as alleged, its factual basis had only recently been discovered.

6. The application for security for costs was referred back to the district judge for determination on current evidence.

1. Court of Appeal (Civil Division): The claimant’s appeal concerning the first claim was allowed. The defendant’s cross-appeals concerning the third claim and abuse of process were dismissed: [2007] EWCA Civ 727.

2. Poole County Court, His Honour Judge Hughes QC: The claimant’s appeal was allowed in relation to the third claim but dismissed in relation to the first two claims.

3. Poole County Court, District Judge Freeman: Summary judgment was entered for the defendant on the basis that all three deceit claims were barred by the Limitation Act 1980.