OT Computers Ltd v Infineon Technologies Ag & Anor

Under section 32(1)(b) of the Limitation Act 1980, reasonable diligence is assessed objectively but by reference to the actual claimant and its circumstances when relevant information becomes available. A company which has ceased trading and is in administration or liquidation need not be treated as a continuing business with the knowledge, contacts and trade information of an active trader.

The inquiry has two factual stages: whether a reasonably attentive claimant in that position would have been put on notice to investigate, and what a reasonably diligent investigation would then have revealed. Personal traits are disregarded, but the claimant must not be assumed to be someone or something it is not. Earlier guidance framed by reference to a business of the relevant kind is not a universal statutory rule.

OT Computers Ltd, then in liquidation, brought follow-on damages or restitution proceedings arising from a price-fixing cartel in the DRAM market. Infineon Technologies AG and Micron Europe Ltd appealed from the preliminary-issues decision of Foxton J, [2020] EWHC 415 (Comm).

The first public information about the cartel emerged after OTC had entered administration, sold its business and assets, and ceased trading. The judge found that an active computer business could, by July 2005, with reasonable diligence have discovered sufficient facts to plead a viable claim. He also found that a reasonably diligent insolvency practitioner for OTC would not have done so.

The appeal raised the legal question whether, for section 32(1) of the Limitation Act 1980, OTC had nevertheless to be treated as still trading when the information emerged.

1. The appeals were dismissed unanimously. Lord Justice Males, with whom Lord Justice Coulson and Lord Justice Peter Jackson agreed, held that the judge was entitled to take OTC’s administration and liquidation into account. OTC’s claim was therefore not time-barred.

2. Section 32(1)(b) asks what the claimant could with reasonable diligence have discovered. The standard is objective, so the court considers what the claimant could have learned rather than merely what it actually learned. The objective standard does not, however, convert the actual claimant into a hypothetical continuing trader. The statute contains no such assumption, and its purpose is to prevent concealment from disadvantaging the actual victim of it.

3. Reasonable diligence applies throughout a single statutory inquiry. First, the claimant must be reasonably attentive to information which would put a person in its position on notice to investigate. Secondly, it is taken to know what a reasonably diligent investigation would reveal. Both matters are factual and depend upon the circumstances.

4. Personal characteristics such as naivety, lack of curiosity or reluctance to investigate are irrelevant. In contrast, OTC’s objective position after it had sold its business was material. It could learn relevant information only through its administrators or liquidator. It was unrealistic to attribute to it the trade contacts and market knowledge of an active DRAM purchaser.

5. The guidance in Paragon Finance Plc v DB Thakerar & Co did not compel a different conclusion. Its reference to a person carrying on a business of the relevant kind was not a statutory test applicable to every commercial claimant. It remained authoritative guidance, but could not require OTC to be treated as carrying on a business which it had ceased to carry on.

6. The unchallenged factual finding was that a reasonably diligent insolvency practitioner would not have been put on notice by the episodic public reports to investigate the cartel. Time remained postponed until the European Commission’s decision was published in May 2010. The proceedings, issued within six years of that date, were in time. The Respondent’s Notice did not require determination.

• Court of Appeal (Civil Division): dismissed the defendants’ appeals and upheld the conclusion that OTC’s claim was not time-barred: [2021] EWCA Civ 501.
• High Court, Commercial Court: Foxton J determined preliminary limitation issues and held that OTC’s administration and liquidation were relevant to reasonable diligence under section 32(1) of the Limitation Act 1980: [2020] EWHC 415 (Comm).