Woodeson & Anor v Credit Suisse (UK) Ltd

A claimant cannot avoid an accrued limitation defence by seeking a declaration instead of damages. Where the substantive claim is founded on tort or breach of statutory duty, the same limitation period applies to declaratory relief.

Under Limitation Act 1980, section 32, concealed facts must be necessary to establish the cause of action. Facts which merely strengthen a claim do not postpone time.

An unliquidated damages cross-claim, even one capable of equitable set-off, does not discharge a mortgage debt or prevent a mortgagee from enforcing its security and applying sale proceeds. A personal claim by the mortgagee may instead permit set-off. The notice rule in Interfoto has no, or very limited, application to signed mortgage documents.

The claimants borrowed in Swiss francs from the defendant bank under a mortgage facility. They alleged that the facility had been mis-sold and brought claims for negligence, breach of statutory duty and deceit. They also sought declarations that their damages claims could be set off against the mortgage debt.

The High Court gave the bank summary judgment on all claims except the deceit claim. It held that the later disclosure of the bank's internal documents arguably postponed limitation for deceit, but not for negligence or breach of statutory duty, under section 32 of the Limitation Act 1980. It also held that the contractual no-set-off clauses might be unreasonable: [2016] EWHC 2775 (QB).

The claimants appealed, challenging the limitation ruling, the finding on concealment, and the enforceability of the no-set-off clauses. They also sought a stay pending a proposed appeal in separate possession proceedings.

1. Appeal dismissed; stay refused. The court upheld the order below. The only potentially maintainable claim was a freestanding damages claim for mis-selling, to the extent that it was not time-barred.

2. A declaration that a defendant is liable for a debt or damages cannot be obtained after the underlying claim is statute-barred. The claimants' causes of action for negligence and breach of statutory duty were their substantive basis for relief. Styling their claims as declarations did not avoid the six-year limitation period.

3. Section 32 of the Limitation Act 1980 did not postpone time for those claims. The relevant facts were the alleged unsuitable advice, inadequate risk warning, and the loss caused by the currency movement. They were apparent by February 2010. The bank's internal documents disclosed in 2014 might strengthen the claims, but were not facts required to establish a prima facie negligence or statutory-duty claim. The different requirements of deceit meant that the earlier ruling preserving the arguability of that claim was not disturbed.

4. The court applied the established mortgage authorities. A mortgagor cannot unilaterally appropriate an unliquidated damages claim in reduction or discharge of the mortgage debt. Equitable set-off may prevent ordinary enforcement between the parties, but it neither extinguishes nor reduces either claim without agreement or judgment. It does not prevent a mortgagee from taking possession, selling the charged property, and applying the proceeds to the mortgage debt without crediting the cross-claim.

5. Equitable set-off could arise if the bank made a personal claim under the loan agreement, subject to the contractual terms. No such claim had been made or threatened. The first and third declarations therefore had no reasonable basis.

6. The Interfoto argument also failed. The no-set-off clauses were contained in documents signed by Mr Woodeson and were not shown to be particularly onerous or unusual in the relevant sense. A no-set-off clause does not clog the equity of redemption because it does not prevent redemption; it requires the mortgagor to pursue a timely independent claim.

• Court of Appeal (Civil Division): Dismissed the claimants' appeal, upheld the order below, refused a stay, and refused permission to appeal to the Supreme Court: [2018] EWCA Civ 1103.
• High Court (Queen's Bench Division, Mercantile Court): Granted summary judgment against the negligence and statutory-duty claims, while leaving the deceit claim arguable subject to limitation and contractual issues: [2016] EWHC 2775 (QB).