Sixteenth Ocean GmbH & Co Kg v Société Générale

For limitation purposes, a restitutionary claim accrues when the defendant has been enriched, at the claimant’s expense, and the enrichment is unjust. Receipt of money into an account owned and controlled by the defendant is an objective benefit. Placing funds in a suspense account, or delaying formal appropriation or transfer, does not postpone accrual where the defendant could apply the funds to its own debt. A contractual obligation to calculate and demand an early-termination amount at a specified point ordinarily gives rise to a single breach, not a continuing breach. The six-year period applied, and statutory postponement for fraud or deliberate concealment did not. Summary judgment is appropriate where the limitation issue is a confined legal question on evidence not requiring trial.

The claimant, a German shipping company, sought restitution and damages from the defendant bank. It alleged that a termination amount paid in December 2010 under an interest-rate swap had been demanded and appropriated unlawfully, including under economic duress.

The proceedings were issued on 10 January 2017. The defendant applied for strike-out or summary judgment, contending that the claims were barred by section 5 of the Limitation Act 1980. The claimant relied on later appropriation of the funds and on section 32(1)(a) and (b) to postpone time. The central issues were when the unjust-enrichment and contractual causes of action accrued, and whether limitation was postponed by fraud or deliberate concealment.

Disposition and summary procedure

The defendant’s application for summary judgment succeeded. The court found no real prospect of success at trial and no compelling reason for the limitation issue to proceed to trial. It had not heard submissions on whether a separate strike-out order should also be made, so consequential orders were reserved.

1. Unjust enrichment. A restitutionary cause of action accrues when enrichment, enrichment at the claimant’s expense, and unjustness are present. Enrichment is a question of fact and requires a real benefit with objective value. A corresponding liability may reduce the net gain to zero, but receipt of money ordinarily constitutes an objective and incontrovertible benefit.
2. The claimant’s payment was credited to the defendant’s own account. The subsequent transfer to a suspense account did not remove the benefit, since the account and funds remained under the defendant’s legal and beneficial ownership and control. The defendant had already obtained regulatory authorisation to receive its share. The enrichment therefore occurred on 14 December 2010. Alternatively, it occurred no later than 5 January 2011, when the defendant had decided to apply the payment in discharge of the swap liability. Actual transfer to another account, formal appropriation, or communication of the decision to the claimant was unnecessary.
3. The defendant’s capacities as agent and swap bank did not alter the analysis. It was the same legal person, and the claim was brought against it as principal. The ministerial-receipt defence was therefore irrelevant.
4. Breach of contract. The obligation under section 6 of the ISDA Master Agreement was to provide calculations and a payment statement on or soon after the Early Termination Date. Proper construction showed a one-time obligation. The alleged breach occurred when the incorrect calculation and demand were made on 9 June 2010. Any alternative continuing-obligation analysis led to the same limitation result by 5 January 2011.
5. Postponement of limitation. The court expressed the view, obiter, that section 32(1)(a) of the Limitation Act 1980 extends to common-law fraud and equitable fraud, not merely dishonest or unconscionable conduct. In any event, the claimant knew of the alleged economic duress when it paid, and no later duress or deliberate concealment was established. The later transfer date was not a fact relevant to the restitutionary right of action.

Both claims were therefore time-barred under section 5 of the Limitation Act 1980.

not stated in the judgment.