Su (aka Hsin Chi Su, Su Hsin Chi And Nobu Morimoto) v Clarksons Platou Futures Ltd & Anor

For limitation purposes, a contractual cause of action accrues when the contract is breached. A negligence cause of action accrues when actionable damage is suffered. Where a claimant is made personally liable by a transaction which should not have imposed that liability, the liability itself may constitute immediate damage, even if its quantification or legal enforceability depends on later events. A later judgment confirming the claimant’s liability does not cause the damage.

Under section 14A of the Limitation Act 1980, knowledge is assessed objectively. Knowledge that the conduct was legally negligent is unnecessary. It is sufficient that the claimant knows the material facts about the damage, its attribution to the alleged act or omission, and the defendant’s identity, at a level warranting further investigation.

The defendants applied for summary judgment on one of Mr Su’s claims. He alleged that the defendants, who brokered a freight forward agreement, had either warranted authority or owed him a duty of care but wrongly committed him personally to the transaction rather than binding companies under his control.

The defendants argued that the claims were time barred. The alleged contractual breach occurred in July 2008, and the alleged negligence damage was suffered when Mr Su became personally liable. They also argued that any extended limitation period under section 14A of the Limitation Act 1980 had expired because Mr Su had the necessary knowledge by July 2012. The central issues were when the causes of action accrued and when Mr Su acquired the knowledge required by section 14A.

1. Contract claim. The claim for breach of warranty of authority was treated as contractual. A cause of action for breach of contract requires a valid contract and breach. The alleged breach occurred when Mr Su was personally bound to the freight forward agreement on 7 July 2008. The later judgment determining that he was personally bound merely declared the legal position existing in 2008; it did not constitute the breach. The contractual claim was therefore time barred under section 5 of the Limitation Act 1980.
2. Negligence claim. The relevant damage was the personal liability imposed on Mr Su by the transaction. The distinction between a flawed transaction entered into by the right party and the right transaction entered into by the wrong party was immaterial. In either case, the claimant was subjected to a liability which the defendant’s alleged performance of duty would have avoided. The damage was suffered in July 2008 and was not contingent upon a later judgment, although its quantification might have been. The negligence claim was therefore prima facie barred by section 2 of the Limitation Act 1980.
3. Section 14A. The extended period depended on when Mr Su acquired the knowledge required to bring proceedings. That knowledge included facts about the damage which would lead a reasonable person to regard it as sufficiently serious to justify proceedings, together with knowledge that the damage was attributable to the alleged negligence and knowledge of the defendants’ identity. Knowledge that the conduct legally amounted to negligence was irrelevant.
4. By July 2012 Mr Su knew that the Commercial Court and Court of Appeal considered there to be a good arguable case that he was personally liable, and that substantial damages were sought. That information would have led a reasonable person to institute proceedings or at least investigate further. Subjective financial concerns, anticipated resistance to a claim, and legal advice allegedly expressing confidence in the outcome did not prevent the statutory knowledge from arising. The defendants were therefore entitled to summary judgment.