ALLIANZ GLOBAL INVESTORS GmbH & Ors. v RSA INSURANCE GROUP LIMITED

On a summary application concerning limitation under Limitation Act 1980, the court must decide whether the claimant has a realistic case that the concealed fraud could not have been discovered with reasonable diligence. The statutory inquiry is single, although it may conveniently be analysed in two stages: whether there was reason to investigate, and what a reasonably diligent investigation would have revealed. Reasonable diligence is assessed objectively, but by reference to the actual claimant’s business, position, resources and circumstances, rather than by disregarding material differences between claimants. Questions of discovery and reasonable discoverability are ordinarily factual. Where the evidence is fragile, disclosure or tested evidence may materially affect the result, and summary determination is inappropriate.

More than 70 institutional investors brought claims under section 90A and Schedule 10A to the Financial Services and Markets Act 2000, alleging misleading published information and dishonest delay by RSA concerning misconduct in its Irish subsidiary. Two later sets of proceedings were issued in the alternative after concerns arose about the standing of some original claimants.

RSA applied to strike out or obtain summary judgment on the new claims, contending that the claimants could with reasonable diligence have discovered the alleged fraud before 11 May 2015. The claimants relied on section 32 of the Limitation Act 1980 and argued that their different investment businesses, resources and losses, together with the evidential gaps, made summary determination inappropriate.

1. Application dismissed. The issue was whether the new claimants had a realistic case that they could not, with reasonable diligence, have discovered sufficient facts to plead the alleged fraud before 11 May 2015. The court emphasised that a realistic case did not indicate any view on the ultimate merits.
2. Section 32 contains one statutory test. The court could usefully consider first whether there was anything to put the claimant on notice of a need to investigate, and secondly what a reasonably diligent investigation would have revealed. Reasonable diligence applies throughout both stages.
3. The objective standard does not require the court to assume a hypothetical claimant detached from the actual claimant. Personal traits such as naivety, shyness or indifference are irrelevant, but the claimant’s actual business position may be material. The court should consider the nature of the claimant’s business, resources reasonably available, the scale and impact of its loss, and its usual monitoring practices. The different positions of actively managed and tracker funds were therefore potentially relevant.
4. The evidence did not establish market practice concerning institutional investors’ monitoring of announcements, press reports or specialist publications. Nor did it establish how the claimants would have responded to the relevant material. Further disclosure and tested evidence might affect the outcome.
5. The late-2013 and early-2014 announcements, even if known to the claimants, could realistically have been understood as reporting independent investigations which confined the wrongdoing to Ireland and found no obvious indicators at group level. The 2015 press reports could also realistically have been regarded as general, disputed allegations which did not provide a properly particularised fraud case. It was therefore unnecessary to decide precisely when the claim became pleadable.
6. The claimants had a realistic case under section 32. The limitation application failed. The court also directed attention to the serious allegation concerning Mr Rash, which should be reconsidered if based only on a possible misreading of the EAT decision.