Kays Hotels Ltd (Trading As Claydon Country House Hotel) v Barclays Bank Plc

For limitation purposes under Limitation Act 1980, the claimant’s knowledge must be assessed by identifying the essence of the negligence complaint. In a mis-selling claim, knowledge that some payments have been made under a product does not necessarily establish knowledge of the facts needed to investigate unsuitability or inadequate explanation of the product’s risks. The court must consider the complaint in its pleaded breadth, including suitability, the claimant’s sophistication and the nature of the advice given. Constructive knowledge is assessed objectively, but in the circumstances of the particular claimant. Where the relevant facts require investigation, summary judgment or strike-out is inappropriate.

The claimant, a hotel company, alleged that Barclays had negligently mis-sold it a ten-year interest-rate collar connected with a loan. The contractual and statutory-duty claims were accepted to be time-barred. The remaining claim alleged breach of a common-law duty of care and relied on section 14A of the Limitation Act 1980.

Barclays argued that payments made by the claimant when interest rates fell gave it actual or constructive knowledge of the essential facts by 8 November 2009, three years before proceedings were issued. The central issue was whether those payments meant that the claimant knew, or ought reasonably to have known, enough to investigate the alleged mis-selling and unsuitability of the product.

1. Application dismissed. The claimant had a real prospect of establishing reliance on section 14A of the Limitation Act 1980, and the limitation issue was unsuitable for summary determination.
2. The relevant approach is to identify the essence of the alleged negligence. The claimant must know enough of the factual rudiments of the claim to make it reasonable to investigate and, if appropriate, commence proceedings. Knowledge that the defendant acted negligently or breached a duty is unnecessary.
3. The pleaded complaint was one of mis-selling and unsuitability. It included alleged failures to explain the product, its risks, its operation when interest rates fell, termination liabilities, alternatives and the claimant’s lack of sophistication. It was not confined to advice that interest rates would rise or to the fact that payments might become due.
4. The fact that the claimant made interest payments for about a year did not establish, as an unanswerable matter, knowledge sufficient to investigate the wider complaint. The pleaded case concerned suitability over the product’s ten-year life, and some short-term loss did not necessarily show excessive risk or unsuitability.
5. Constructive knowledge under section 14A(10) is objective, but must be assessed in context. Relevant matters included the claimant’s sophistication, what it had been told, its state of knowledge in 2008 and 2009, and the general knowledge at that time about future interest-rate movements. Those matters required a full factual investigation and could not properly be resolved on witness statements alone.

First-instance decision. No appellate history was stated in the judgment.