Giles v Rhind

For section 32(2) of the Limitation Act 1980, a “breach of duty” has a wider meaning than a contractual, tortious or fiduciary duty. It includes justiciable legal wrongdoing and can include a transaction actionable under section 423 of the Insolvency Act 1986. The provision may therefore postpone time where the deliberate wrongdoing was unlikely to be discovered, even without active concealment.

A new claim cannot be introduced under section 35 where its proof requires material new facts. A different alleged date for a transaction may constitute a new claim where it changes the nature and purpose of the transaction.

Mr Giles was a judgment creditor of Mr Rhind. He sought to challenge a deed allocating the beneficial interests in Mr and Mrs Rhind’s home, alleging that it was a transaction defrauding creditors under section 423 of the Insolvency Act 1986.

At the start of trial, Mr Giles applied to amend his case. Instead of alleging that the deed had been executed in 1998, he wished to allege alternative execution dates in 1992 or 1994. Mrs Rhind contended that the new claim was time-barred. David Richards J permitted the amendment: [2007] EWHC 687 (Ch); [2007] 2 BCLC 531.

The appeal concerned whether section 32(2) of the Limitation Act 1980 applied to a section 423 claim, whether Mr Giles had become a victim at an earlier date, and whether section 35 permitted the amendment.

1. Appeal dismissed unanimously; respondent’s notice dismissed. Arden LJ’s judgment was agreed by Sedley and Buxton LJJ. The judge had been entitled to permit the amendment.

2. The expression “breach of duty” in section 32(2) of the Limitation Act 1980 is not confined to duties owed in contract, tort, equity or fiduciary law. It includes justiciable legal wrongdoing capable of founding an action to which section 32 applies. A transaction actionable under section 423 of the Insolvency Act 1986 therefore falls within the wider meaning.

   This construction was supported by the ordinary meaning of duty, the legislative history of section 32(2), and the structure of the 1980 Act. It gave effect to the statutory purpose of preventing a deliberate wrongdoer from relying on limitation where the wrongdoing was unlikely to be discovered. The deliberate breach requirement remained subject to the requirement, stated in Cave v Robinson Jarvis & Rolf [2003] 1 AC 384, that the defendant knew of the wrongdoing.

3. Arden LJ expressed a provisional view that, once section 32(2) is engaged, it is unnecessary for the action itself to be one for breach of duty. It is sufficient that the facts relevant to the right of action involve a qualifying deliberate breach of duty.

4. Section 35 of the Limitation Act 1980 did not assist Mr Giles. A new claim does not arise out of the same facts where material new facts must be added to prove it. The alternative execution dates changed the nature and alleged purpose of the transaction. The proposed 1992 and 1994 cases were therefore new claims.

5. The judge had considered the delay, costs, credibility issues and apparent weakness of the proposed case. His discretionary decision was not perverse. In light of the conclusion on section 32, the court did not decide when Mr Giles became a “victim” for section 423 purposes.

• Court of Appeal (Civil Division): dismissed Mrs Rhind’s appeal and Mr Giles’s respondent’s notice.
• High Court of Justice, Chancery Division: David Richards J granted Mr Giles permission to amend his particulars of claim: [2007] EWHC 687 (Ch); [2007] 2 BCLC 531.