Nigel Mather & Anor v Balvinder Singh Rattan

In a deceit claim, the claimant bears the burden under section 32 of the Limitation Act 1980 of showing that the fraud could not have been discovered with reasonable diligence. The inquiry is objective but concerns what the actual claimant could have learned. Reasonable diligence applies throughout, including whether circumstances gave reason to investigate. Reliance on a representation that a person was formally appointed a director is not made immaterial by speculation that the person acted as a de facto director. For causation, the claimant may recover loss flowing directly from changing position in reliance on the fraud, subject to any proved alternative transaction and the ordinary rules on benefits and mitigation. Where the fraud continues to operate and the claimant is locked into the investment, full recovery may be available. The appeal was dismissed.

The claimants invested £1 million in shares in Yagna Limited after the defendant, its director and majority shareholder, represented that Lak Basran had been appointed a director. The High Court found the representation fraudulent, found reliance and causation, rejected a limitation defence, and awarded the claimants £1 million in damages: [2025] EWHC 438 (Ch).

The defendant appealed on limitation, reliance and causation. He argued that the claimants could have discovered the fraud by searching Companies House, that they would have invested despite any lack of formal appointment because Mr Basran acted as a de facto director, and that the company’s failure rather than the misrepresentation caused the loss.

Snowden LJ gave the judgment of the court. Males LJ and Lewison LJ agreed. The appeal was dismissed on all three grounds.

1. Limitation. Under section 32 of the Limitation Act 1980, the claimants bore the burden of establishing that they could not, with reasonable diligence, have discovered the fraud. The statutory issue is single, although reasonable diligence operates at two stages: whether the actual claimants were reasonably attentive to matters requiring investigation, and what a reasonably diligent investigation would have revealed. The test is objective as to what could have been learned, but concerns the actual claimants and the evidence. The judge’s imperfect wording about the defendant raising the limitation defence did not show any misunderstanding of the burden. The finding that nothing put the claimants on inquiry before September 2015 was open to him. They therefore had no reason earlier to search Companies House for the formal status of Mr Basran.
2. Reliance. The claimants’ evidence, properly understood, showed reliance on the representation that Mr Basran was formally on the board. The assertion that he may have acted as a de facto director did not make the representation immaterial. A de jure director has greater powers to obtain information and greater rights to participate in management. Further, de facto directorship was not established as common ground or by a factual finding. The Court of Appeal would not engage in island-hopping through selected evidence or disturb primary findings unless they were plainly wrong. They were not.
3. Causation and damages. In deceit, damages represent the financial loss flowing directly from changing position under the fraudulent inducement. The court need not speculate about what the claimant would have done if the representation made had been true. A defendant may, in principle, prove that without the misrepresentation the claimant would have entered an alternative transaction and lost the money anyway. That case was not established here. The judge accepted that the claimants would not have invested without the representation, and there was no proper evidential basis for a different counterfactual.
4. The measure of damages was correctly applied. The claimants had no immediate realisable value in the shares, the fraud continued to operate, and they were effectively locked into the investment until September 2015, when it was clear that the shares were worthless. The full investment was therefore recoverable, subject to the applicable rules concerning benefits and mitigation.
5. It would not have been appropriate for the judge to adopt an inquisitorial approach and develop an unadvanced counterfactual on behalf of the unrepresented defendant under CPR 3.1A. That was additional procedural guidance rather than a necessary basis for the disposal of the appeal.

1. Court of Appeal (Civil Division). The appeal on limitation, reliance and causation was dismissed: [2025] EWCA Civ 1596.
2. High Court of Justice, Business and Property Courts in Manchester. HHJ Hodge KC found fraudulent misrepresentation, rejected the limitation defence, awarded £1 million in damages, interest and costs: [2025] EWHC 438 (Ch).