Shorter Reads

Know your limits – LIBOR fraud claim time barred

A fraud claim against NatWest Markets plc and the Royal Bank of Scotland plc has been struck out after it was held to be time barred due to knowledge deemed acquired from widespread press coverage. The decision emphasises the importance of acting promptly to establish what the limitation period is for any claim as soon as it is apparent there is a problem and the potential for proceedings.

1 minute read

Published 4 June 2020

Authors

Share

Key information

A banking fraud claim against NatWest Markets plc and the Royal Bank of Scotland plc (together, “the Bank”) has been struck out after it was held to be time barred.

The Claimant, Boyse (International) Ltd (“Boyse”), is a trust company, which held Sterling loan facilities with the Bank in order to fund its commercial property investments.

In 2007 and 2008, Boyse had entered into two LIBOR-referenced interest rate hedging products (“IRHPs”) with the Bank. However, in 2011 and 2012 the Claimant was forced to sell its properties as a result of the cost of the IRHPs and their negative effect on its cash flow and profitability.

On 6 February 2013 the FSA issued a Final Notice detailing the Bank’s misconduct in relation to JPY, CHF and USD LIBOR (but not GBP LIBOR). Readers will be aware that those findings received widespread publicity in the mainstream media and financial press.

Relying on the FCA’s findings, Boyse ultimately claimed that it had been induced to enter into the IRHPs by the Bank’s fraudulent misrepresentations in relation to LIBOR and sought damages for consequential losses. The claim form was issued on 19 February 2019.

The Bank applied to strike out the claim, arguing that it was issued just outside the applicable 6-year limitation period, which (on the Bank’s case) started running from the date of the Final Notice on 6 February 2013.

Where a claim is based on allegations of fraud, the period of limitation does not begin to run until a claimant has either discovered the fraud or could with “reasonable diligence” have discovered it.

Boyse argued that it could not with “reasonable diligence” have discovered the Bank’s LIBOR misconduct for at least two weeks after publication of the Final Notice on 6 February 2013. If the Court was prepared to accept that argument, then Boyse’s claim form would have been issued within time.

The Court, however, disagreed. Boyse had been aware that the IRHPs were referenced to LIBOR. It was because of their poor performance that the Claimant was forced to sell its properties at a loss long before 6 February 2013. There had been widespread publicity about the manipulation of LIBOR and the undermining of its integrity prior to the FSA issuing a Final Notice in relation to this particular Bank.

The Court considered that, objectively, Boyse was on notice that something had gone wrong and that a reasonably diligent person in Boyse’s shoes would have been alert to the widespread publicity before 6 February 2013. The Final Notice was a trigger that started time running and therefore Boyse’s fraud claim was held to be statute barred.

This decision emphasises the importance of acting promptly to establish what the limitation period is for any claim as soon as it is apparent there is a problem and the potential for proceedings. Particularly for claims for fraud and negligence the date on which the limitation period starts is very specific to the potential claimant’s situation regarding when the relevant knowledge was acquired. Establishing the extent of the knowledge or awareness necessary to start time running is also often complex. There are many traps for the unwary in the law of limitation periods and getting this correct is crucial because failing to do so is fatal to any prospect of recovering losses, no matter how strong the claim may be in substance.

The full judgment is available here: https://www.bailii.org/ew/cases/EWHC/Ch/2020/1264.html

Related latest updates
PREV NEXT

Related content

Arrow Back to Insights

Shorter Reads

Know your limits – LIBOR fraud claim time barred

A fraud claim against NatWest Markets plc and the Royal Bank of Scotland plc has been struck out after it was held to be time barred due to knowledge deemed acquired from widespread press coverage. The decision emphasises the importance of acting promptly to establish what the limitation period is for any claim as soon as it is apparent there is a problem and the potential for proceedings.

Published 4 June 2020

Associated sectors / services

  • Banking & financial disputes
  • Commercial disputes

Authors

A banking fraud claim against NatWest Markets plc and the Royal Bank of Scotland plc (together, “the Bank”) has been struck out after it was held to be time barred.

The Claimant, Boyse (International) Ltd (“Boyse”), is a trust company, which held Sterling loan facilities with the Bank in order to fund its commercial property investments.

In 2007 and 2008, Boyse had entered into two LIBOR-referenced interest rate hedging products (“IRHPs”) with the Bank. However, in 2011 and 2012 the Claimant was forced to sell its properties as a result of the cost of the IRHPs and their negative effect on its cash flow and profitability.

On 6 February 2013 the FSA issued a Final Notice detailing the Bank’s misconduct in relation to JPY, CHF and USD LIBOR (but not GBP LIBOR). Readers will be aware that those findings received widespread publicity in the mainstream media and financial press.

Relying on the FCA’s findings, Boyse ultimately claimed that it had been induced to enter into the IRHPs by the Bank’s fraudulent misrepresentations in relation to LIBOR and sought damages for consequential losses. The claim form was issued on 19 February 2019.

The Bank applied to strike out the claim, arguing that it was issued just outside the applicable 6-year limitation period, which (on the Bank’s case) started running from the date of the Final Notice on 6 February 2013.

Where a claim is based on allegations of fraud, the period of limitation does not begin to run until a claimant has either discovered the fraud or could with “reasonable diligence” have discovered it.

Boyse argued that it could not with “reasonable diligence” have discovered the Bank’s LIBOR misconduct for at least two weeks after publication of the Final Notice on 6 February 2013. If the Court was prepared to accept that argument, then Boyse’s claim form would have been issued within time.

The Court, however, disagreed. Boyse had been aware that the IRHPs were referenced to LIBOR. It was because of their poor performance that the Claimant was forced to sell its properties at a loss long before 6 February 2013. There had been widespread publicity about the manipulation of LIBOR and the undermining of its integrity prior to the FSA issuing a Final Notice in relation to this particular Bank.

The Court considered that, objectively, Boyse was on notice that something had gone wrong and that a reasonably diligent person in Boyse’s shoes would have been alert to the widespread publicity before 6 February 2013. The Final Notice was a trigger that started time running and therefore Boyse’s fraud claim was held to be statute barred.

This decision emphasises the importance of acting promptly to establish what the limitation period is for any claim as soon as it is apparent there is a problem and the potential for proceedings. Particularly for claims for fraud and negligence the date on which the limitation period starts is very specific to the potential claimant’s situation regarding when the relevant knowledge was acquired. Establishing the extent of the knowledge or awareness necessary to start time running is also often complex. There are many traps for the unwary in the law of limitation periods and getting this correct is crucial because failing to do so is fatal to any prospect of recovering losses, no matter how strong the claim may be in substance.

The full judgment is available here: https://www.bailii.org/ew/cases/EWHC/Ch/2020/1264.html

Associated sectors / services

  • Banking & financial disputes
  • Commercial disputes

Authors

Need some more information? Make an enquiry below.

    Subscribe

    Please add your details and your areas of interest below

    Specialist sectors:

    Legal services:

    Other information:

    Jurisdictions of interest to you (other than UK):



    Article contributor

    Enjoy reading our articles? why not subscribe to notifications so you’ll never miss one?

    Subscribe to our articles

    Message us on WhatsApp (calling not available)

    Please note that Collyer Bristow provides this service during office hours for general information and enquiries only and that no legal or other professional advice will be provided over the WhatsApp platform. Please also note that if you choose to use this platform your personal data is likely to be processed outside the UK and EEA, including in the US. Appropriate legal or other professional opinion should be taken before taking or omitting to take any action in respect of any specific problem. Collyer Bristow LLP accepts no liability for any loss or damage which may arise from reliance on information provided. All information will be deleted immediately upon completion of a conversation.

    I accept Close

    Close
    Scroll up

    Find out about Business

    Find out about Dispute Resolution

    Find out about Individuals & Families

    Find out about Real Estate

    We are Collyer Bristow - The law firm for those that
    value individuality, creativity and collaboration.

    Legal & Pricing info Regulatory InformationAccessibilitySitemapPricing and service information

    Listen to our latest podcast: Budget Miniseries: Impacts on Families with US Connections (Part 1)

    Listen to our latest podcast: Cracking the Code on Directors’ Service Agreements

    Read our latest article: Economist, or just economical with the truth? How can employers respond to ‘fake claims’ on a CV?

    Listen to our latest podcast: Autumn Budget 2024 Special (Part 2)

    Read our latest article: ‘Promoting the integrity of the register’: The new Companies House approach to non-compliance

    ExpandNeed some help?Toggle

    < Back to menu

    I have an issue and need your help

    Scroll to see our A-Z list of expertise

    Get in touch

    Get in touch using our form below.



      Business Close
      Private Wealth Close
      Hot Topics Close