The facts of the appeal
Mr Su is a Taiwanese businessman. He was a beneficial owner in several shipping businesses that traded under the name “TMT”.
Clarksons is a Financial Conduct Authority (FCA) regulated company which brokers freight forwarding agreements. The second defendant was Mr Karakoulakis, who was a broker, employed by Clarksons.
The original case
In July 2008, discussions were held between Mr Su (on behalf of TMT), Mr Karakoulis (acting on Clarkson’s behalf), and a third party, Lakatamia Shipping Company Ltd. These discussions resulted in an oral freight forwarding agreement.
Lakatamia performed its part of the freight forwarding agreement, but TMT failed in performing his part of the contract.
In 2011, Lakatamia issued High Court proceedings against TMT and Mr Su. In the same proceedings, a freezing order application was granted against TMT and Mr Su. An appeal was made by Mr Su as to whether he should have been included in the litigation in his personal capacity, but this was dismissed by the Court of Appeal.
The case came to the High Court in October 2014, and was heard by Cooke J. Mr Su was found to be “a very unsatisfactory witness”. Cooke J found that Mr Su was personally liable for breach of the contract along with TMT. Permission to appeal was granted, on the terms that monies be paid into court. No monies were paid into court, and no appeal was made.
Mr Su bought an action against Clarksons and Mr Karakoulakis. The claim was issued on 5 November 2015. His claim was that the defendants should only have brokered a deal between the corporate entities, and that the defendants had breached their“warranty of authority”. In the alternative, Mr Su pleaded that Clarksons had owed him a duty of care, and negligently failed to ensure that only TMT was a party to the contract.
Mr Su claimed loss and damage arising from the judgment sum in the original proceedings, the costs he incurred in defending those proceedings, and the losses caused by the freezing order.
The defendants defended the claim, stating that the matter was time-barred due to the Limitation Act 1980. This was because the cause of action accrued on 7 July 2008, when the contract between TMT, and Lakatamia was concluded. The limitation period therefore passed on 8 July 2014.
Mr Su relied on the date of knowledge exception contained within s14A of the Limitation Act. This section allows a party to issue proceedings three years after the date of knowledge of any breach.
Mr Su argued that his date of knowledge was 5 November 2014, the date of Cooke J’s judgment. The defendants argued that his date of knowledge was earlier than this, and was formed in July 2009.
The Court of Appeal judgment
Kitchin LJ considered the date of knowledge provision under s14A of the Limitation Act 1980. As he pointed out, it would be of no assistance in Mr Su’s claim for breach of contract, but only for his alternative claim; that the defendants had been negligent. He considered the case of Haward v Fawcetts and Lord Nicholls’ comments:
“Knowledge does not mean knowing for certain and beyond possibility of contradiction. It means knowing with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking advice and collecting evidence: ‘Suspicion particularly if it is vague and unsupported will indeed not be enough, but reasonable belief will normally suffice…’
He continued quoting Lord Nicholls in the Haward case:
“For time to start running there needs to have been something which would reasonably cause Mr Haward to start asking questions about the advice he was given”.
Kitchen LJ therefore applied this doctrine. At paragraph 38 of his judgment he states:
“… it is sufficient that the Claimant knew enough for it to be reasonable to begin to investigate further…
… By the end of July 2012 Mr Su knew that it was asserted by Lakatamia in its particulars of claim that he was a party to the FFA Contract and he also knew that two Judges of the High Court and the Court of Appeal considered that Lakatmia has a good arguable case that he was personally liable of up to US$ 48m in respect of its breach. It seems to me to be absolutely plain that by this time he knew enough for it to be reasonable to begin to investigate further and… to start asking questions at to set about investigating…”
Mr Su should therefore have started investigating, at the latest, when the proceedings were issued against him by Lakatamia. His date of knowledge was therefore placed at the end of July 2012.
This is a helpful judgment outlining the previous case law, but Kitchen LJ actually pinpoints the date of knowledge in this case.
The judgment reiterates the fact that someone relying on section 14A of the Limitation Act 1980 must show that the date of knowledge was reasonable, and that a litigant must be proactive when any suspicion of negligence arises.
Notes for practitioners
When taking instructions, it is vital to take clear instructions as to the client’s suspicions of when negligence took place. It would be wise to take a detailed proof of evidence relating to how the client came to realise that negligence had taken place.
This is obviously very important in professional negligence cases where a lay client may not fully understand technical procedures, and only realise later that negligence has occurred.