The High Court in England & Wales (Commercial Court, QBD) issued a judgment on 20 December 2018 which is positive news for lenders in the area of limitation.

In Munroe K Limited v Bank of Scotland, the Claimants had raised proceedings in relation to three interest rates swaps on 13 November 2006, 3 October 2008 and 21 November 2008. The Claimants said that the bank had failed in its duties in relation to certain financial calculations. The Bank defended, asking the court to grant summary judgment in its favour on the ground that the period for this part of the claim to be made had expired (other aspects of the claim were not considered at this time). 

This issue is, of course, governed by Section 14A of the Limitation Act 1980. The material question under the legislation (in particular, section 14(8)(a) of the Act) was when the Claimants knew "that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence".

The court found that on a true analysis of the cause of action on which the Claimants relied, the Bank's failure was in not advising or informing the Claimants of their potential liability to the Bank on the swaps when the swaps were sold in 2006 and 2008. 

Other, later, factors were said by the Claimants also to have been relevant but Mr Justice Robin Knowles was clear that by 2009, with the fall in interest rates at that time, the Claimants knew they had an actual liability on the swaps and that it was significant. 

The key part of the judgment, from lenders’ perspectives, is that the court held that “section 14A does not work to extend the limitation period until every last particular of breach is identified”.

In cases where there are a number of factual developments leading to the alleged claim, this decision will assist in reiterating that - in general - where the Claimant is aware of a liability by a certain point, limitation will start to run, even if subsequent factors also apply.