Imran Arif v Dalbir Singh Sanger

The claim concerned alleged fraudulent or negligent misrepresentations inducing the claimant to invest in a joint venture to purchase land beside the Widow’s Son pub for residential development. The central legal issue was whether the claimant could rely on s32 of the Limitation Act 1980 to postpone the commencement of the six year limitation period in relation to alleged fraud or deliberate concealment. The judge identified three separate causes of action for limitation purposes: (1) that the defendant (through Dalco) was a hidden seller involved in fixing the price for the land; (2) that the land was easily developable; and (3) that the membership structure of the joint venture company was as represented.

The court applied authorities on the meaning of 'fraud' and 'deliberate concealment' under s32 and on the tests for when a claimant is treated as having 'discovered' facts (including the distinction between the fraud limb and the deliberate concealment limb). The judge held that an objectively reasonable claimant in the actual claimant's position could, with reasonable diligence in 2012 (or by March/April 2013 at the latest), have discovered the material facts alleged to have been concealed (including that the pub and land were in the same ownership, the existence of restrictive covenants and the Grade II* listing, the split in purchase price, the pre-application advice and planning application, and changes to directorship). Consequently the limitation defence succeeded and the claim was time-barred.

Background and parties: The claimant invested redundancy and family funds in Bow Properties Developments Limited (incorporated 14 December 2012) to buy land adjacent to the Widow’s Son pub for residential development. The defendant was alleged to have made fraudulent or negligent misrepresentations inducing the claimant to enter the joint venture and invest.

Nature of the claim and relief sought: The claimant pleaded ten representations (and implied representations about director duties under the Companies Act 2006 and the company’s articles) and sought damages for loss said to flow from those misrepresentations. The claimant accepted the relevant causes of action were complete by 14 February 2012 (first payment) or at the latest by 22 March 2012 (purchase of the land). The claim form was issued on 5 July 2019.

Procedural posture and issue for decision: This was a trial of a preliminary issue: whether the claimant could overcome the defendant’s limitation defence relying on s32 of the Limitation Act 1980 (fraud or deliberate concealment), given the six year limitation period in s2. The court also considered whether there were multiple separate causes of action for limitation purposes and the extent of the claimant’s knowledge or what he could have discovered with reasonable diligence.

Issues framed by the court:

• Whether the pleaded misrepresentations amount to one or more causes of action for limitation purposes (the judge concluded there were three separate causes of action).
• Whether s32 operated to postpone the start of the limitation period in respect of any of those causes of action because of fraud or deliberate concealment.
• What the appropriate test for discovery was (considering authorities on the fraud limb and the deliberate concealment limb) and what a person in the claimant’s position could have discovered with reasonable diligence.

Court’s reasoning and findings: The judge reviewed authorities on s32, the meaning of 'deliberate concealment' and the standard of 'discovery' and 'reasonable diligence' (including Seedo v El Gamal, Canada Square Operations Ltd v Potter, FII Group Test Claimants v HMRC and related authorities). The claimant was found to be an educated, business‑degree holder, an investor and a director of Bow with the ability to request company or third‑party documents. The judge found, on the balance of probabilities, that the claimant either did visit the land in early 2012 or, in any event, could have done so and could, with reasonable diligence, have discovered that the land was the pub’s beer garden, that the pub and land were being bought together (and that the defendant, via Dalco, was acquiring the pub), the existence of restrictive covenants and a lease, the Grade II* listing, the pre-application advice and the subsequent planning application, and changes in directorships. The judge concluded these matters could have been ascertained in 2012 or by March/April 2013 and that the claimant could have gathered sufficient material to plead fraud or negligent misrepresentation by then. Because the claim form was issued outside the relevant period and s32 did not postpone commencement, the limitation defence succeeded.

Subsidiary findings: the judge accepted witness evidence (including that of the defendant, an assistant and a third party investor) that supported discovery or availability of documents and pre-application advice; he found the claimant’s evidence to be unreliable in parts and that the claimant had the means and opportunities to investigate.

Conclusion: The judge held that the claimant could not overcome the limitation defence and the claim was time-barred.

This was a first-instance determination of a preliminary issue. The court held that the claimant could not overcome the defendant’s limitation defence under s32 of the Limitation Act 1980. The judge concluded that an objectively reasonable person in the claimant’s position could, with reasonable diligence in 2012 (and by March/April 2013 at the latest), have discovered the relevant facts alleged to have been concealed, so the six year period had expired. The claim is therefore time‑barred.