Derek Arthur Richardson v Mark James Robertson & Ors

For limitation purposes, a purely personal and wholly contingent liability under an unsecured guarantee is not, without more, damage caused by fraudulent misrepresentation inducing the guarantee. The claimant suffers no actual or measurable loss until the contingency is fulfilled, ordinarily when a demand is made. A change in the claimant’s legal position, contractual restrictions or possible detriment does not itself amount to additional loss. The exception for a bilateral transaction conferring a less valuable package of rights did not apply to this guarantee. Because the deceit claim was clearly within time, the court granted permission to amend; it did not need to decide whether the new claim arose from the same or substantially the same facts under Civil Procedure Rules 1998, r 17.4.

The claimant applied for permission to amend existing proceedings to add a claim in deceit against the first and second defendants and to join a further defendant. The other proposed amendments and joinder were consented to and allowed. The remaining issue concerned alleged fraudulent misrepresentations about the claimant’s beneficial ownership, said to have induced him to enter into an unsecured personal guarantee in favour of AIB. The defendants opposed the amendment solely on limitation grounds under Civil Procedure Rules 1998, r 17.4. The central question was whether time began to run when the guarantee was executed or only when AIB made a demand under it.

Permission to amend was granted. The proposed deceit claim was within the applicable limitation period, so there was no reasonably arguable limitation defence.

1. Under s 35 of the Limitation Act 1980 and r 17.4 of the Civil Procedure Rules 1998, the court applied the accepted four-stage approach: whether limitation was reasonably arguable, whether the amendment added a new cause of action, whether the new claim arose from the same or substantially the same facts, and whether permission should be granted. The proposed deceit claim was admittedly new.
2. The court adopted the approach in Ballinger v Mercer Ltd [2014] EWCA Civ 996. Where a prima facie limitation defence exists, the claimant must show that it is not reasonably arguable. A short point of law may be determined summarily, but seriously disputed factual issues ordinarily require a trial.
3. The court applied the reasoning in Wardley Australia v State of Western Australia (1992) 175 CLR 514, Law Society v Sephton [2006] 2 AC 543 and Axa Insurance v Akther & Darby [2009] EWCA Civ 1166. A purely contingent liability is not itself damage. There must be actual, measurable or additional loss before time begins to run.
4. The execution of a purely personal guarantee, unsecured on the claimant’s property, did not cause actual damage. Although the Guarantee immediately affected the claimant’s legal position through its primary terms and Clauses 4, 5, 6 and 12, any resulting detriment was not measurable or additional loss of the relevant kind. The guarantee was not a bilateral transaction conferring a diminished package of rights merely because it was given in consideration of banking facilities.
5. Damage therefore accrued when demand was made under the Guarantee, on 3 August 2022. The court did not need to decide whether the deceit claim arose from the same or substantially the same facts as the existing claims. A possible future alternative-transaction case did not create an arguable limitation defence on the pleaded case. Any remaining matters, including costs or permission to appeal, were left for further order.