Boyse (International) Ltd v Natwest Markets Plc & Anor

On an application under CPR 3.4(2)(a), a claim may be struck out where, assuming the pleaded facts to be true, it is bound to fail. A limitation issue will normally be better dealt with by summary judgment under CPR 24.2, particularly where evidence about actual or deemed discovery is relevant.

For section 32(1)(a) of the Limitation Act 1980, discovery requires knowledge of the essential facts constituting the alleged fraud. A claimant need not know how to formulate or plead the fraud. Reasonable diligence is assessed objectively, by reference to what a person carrying on the relevant business would do with adequate but limited resources and reasonable urgency. A series of events may objectively put a claimant on notice that something has gone wrong.

A fraud claim must plead primary facts supporting each element and facts which tilt the inference towards fraud rather than negligence.

Boyse claimed damages from NatWest Markets Plc and The Royal Bank of Scotland Plc concerning an interest rate swap and collar. It alleged that the products had been induced by fraudulent misrepresentations concerning suitability and LIBOR, and also pursued contractual LIBOR implied-term claims.

The Bank applied to strike out the claim under CPR 3.4(2)(a), (b) and (c), and sought to amend its application to include summary judgment under CPR 24.2. Boyse sought permission to amend its particulars of claim.

The central issues were whether the deceit claims were barred by limitation, whether the fraud allegations were adequately particularised, and whether the contractual LIBOR claims could proceed.

1. The Bank was permitted to amend its application to seek summary judgment. Although there is overlap between CPR 3.4(2)(a) and CPR 24.2, their tests differ. Strike out requires the claim to be bound to fail. Summary judgment is generally the preferable procedure for limitation issues because the court may need to assess evidence concerning knowledge and reasonable diligence.

2. For section 32(1)(a) of the Limitation Act 1980, the relevant discovery is knowledge of the essential facts constituting the alleged fraud, or of the precise deceit alleged. General awareness of fraud is insufficient. The claimant need not have developed its legal case, obtained advice, or known how to plead express or implied representations.

3. Reasonable diligence is objective. The court assumes a desire to discover whether fraud has occurred, but there must objectively be something which puts the claimant on notice of the need to investigate. The trigger may be the culmination of a series of events, rather than one isolated event. The claimant’s alleged naivety or inexperience is irrelevant.

4. Applying those principles, the FSA Final Notice and widespread publicity about LIBOR manipulation constituted a trigger. The pleaded case itself identified the relevant LIBOR features, and a reasonably diligent person in Boyse’s position would have understood that something had gone wrong. The LIBOR deceit claim was therefore issued out of time.

5. The IRHP deceit claim was inadequately pleaded. The allegation that the Bank knew, ought to have known, or was reckless was rolled up with negligence, failed to identify the relevant individuals, and supplied no distinct primary facts from which fraud could be inferred. The defects were not capable of being cured by a further amendment.

6. The contractual LIBOR implied-term claim was also time-barred. A declaration did not avoid limitation and served no useful purpose. The particulars of claim and claim form were struck out, judgment was entered for the Bank under CPR 24.2, and permission to amend was refused.