In Media Trust SpA v BGB Weston Limited & Ors

On an application to amend, the court should refuse permission where the defendant has a reasonably arguable limitation defence. Under section 32 of the Limitation Act 1980, “could with reasonable diligence have discovered” imposes a strict objective standard. It asks what could have been discovered, not what should have been discovered or what it was reasonable in the circumstances to investigate.

Once there is a trigger putting the claimant on notice of possible fraud or concealment, reasonable diligence requires investigation of matters which a straightforward enquiry would reveal. Reassurances by the alleged fraudster do not neutralise that trigger. Seriously disputed issues of fact, agency and knowledge should not be determined summarily where doing so would permanently deprive the defendant of a limitation defence.

The claimant appealed against an order of Master Dagnall dated 25 July 2023 permitting amendment of its Particulars of Claim. The proposed amendments introduced contractual and conspiracy claims concerning investments made by the Jacaranda Trust and alleged concealment of losses and fraud.

The Master held that the proposed contractual claim had a real prospect of success and that section 32 of the Limitation Act 1980 meant that the defendants had no reasonably arguable limitation defence. The defendants argued that the Master had conducted an impermissible mini-trial, wrongly resolved disputed questions of agency and knowledge, and misinterpreted reasonable diligence. The appeal concerned both the limitation issue and the real-prospect-of-success test for the contractual claim.

1. Limitation. The appeal was allowed on the section 32 issue. The Master had misdirected himself by treating “could with reasonable diligence” as effectively meaning “should have investigated”. The statutory question is whether the claimant could have discovered the fraud without exceptional measures which it could not reasonably have been expected to take: Paragon Finance Plc v DB Thakerar & Co [1999] 1 All ER 400.
2. There was an initial trigger when the claimant was told that the value of the investments had fallen by more than 50 per cent. Once put on notice, a simple enquiry to Interactive Brokers, or an audit comparing the relevant documents, could have revealed the fraud. The claimant’s reliance on reassurances and forged documents did not cancel the trigger. OT Computers v Infineon Technologies AG [2021] 3 W.L.R. 61 did not establish a double-trigger or qualify the statutory test.
3. Summary determination. The issues were unsuitable for summary disposal. The court should not determine seriously disputed questions of knowledge, concealment or agency without disclosure and cross-examination, particularly where the result would permanently deprive the defendants of a limitation defence. The alleged ostensible agency of the third defendant was also reasonably arguable because reliance was not pleaded or established and the relationship between the parties required further evidence.
4. Contractual claim. The appeal was dismissed on the real-prospect-of-success issue. Although the case on an oral or implied contract was thin, the Master was entitled at that stage to conclude that it just passed the threshold. Further disclosure might support fuller pleading or lead to abandonment.
5. The Master’s order permitting amendment was therefore set aside in consequence of the limitation ruling. The claim should have been dismissed, leaving the claimant to bring fresh proceedings if still able to do so.

• High Court (King’s Bench Division) — appeal from the order of Master Dagnall dated 25 July 2023; appeal allowed on the section 32 limitation issue and dismissed on the contractual real-prospect-of-success issue.
• Master Dagnall — permitted amendment of the Particulars of Claim and held that the defendants had no reasonably arguable limitation defence: [2023] EWHC 1491 (KB).