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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> OT Computers Ltd v Infineon Technologies Ag & Anor [2021] EWCA Civ 501 (14 April 2021) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2021/501.html Cite as: [2021] WLR(D) 200, [2021] BPIR 986, [2021] EWCA Civ 501, [2021] 3 WLR 61, [2021] 4 All ER 1095, [2021] QB 1183 |
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CIVIL
DIVISION)
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Mr Justice Foxton
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE COULSON
and
LORD JUSTICE MALES
____________________
OT COMPUTERS LIMITED (IN LIQUIDATION) |
Respondent/Claimant |
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- and - |
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(1) INFINEON TECHNOLOGIES AG (2) MICRON EUROPE LIMITED |
Appellants/ Defendants |
____________________
Daniel Jowell QC, Emily Mackenzie & Richard Howell (instructed by Allen & Overy LLP) for the Second Appellant
Paul McGrath QC, David Scannell QC & Stefan Kuppen (instructed by Osborne Clarke LLP) for the Respondent
Hearing dates: 24th & 25th March 2021
____________________
Crown Copyright ©
Lord Justice Males:
(1) The judge found that the Granville Companies had or could have had a sufficient basis on which to plead a claim by (at latest) July 2005 and the Granville Companies were refused permission to challenge this conclusion.
(2) The judge held that, if he was wrong to take account of OTC being in administration, it would have been in the same position as the Granville Companies and its claim would therefore have been time-barred. OTC seeks, if necessary, to argue by way of a Respondent's Notice that it was in a different position, but that issue will only arise if the judge's approach to section 32(1) was mistaken.
(3) Infineon and Micron were refused permission to challenge the judge's conclusion that a reasonably diligent insolvency practitioner could not have discovered the relevant facts.
(4) Leaving aside the Respondent's Notice, therefore, the issue on the appeal is one of law, and arises on the basis that a time came more than six years before the commencement of proceedings (in fact by July 2005, almost 11 years beforehand) when a person continuing to carry on business could, but an insolvency practitioner exercising reasonable diligence would not, have discovered the relevant facts.
The facts
"81. On this basis, I am satisfied that with the exercise of reasonable diligence, the Granville Companies could have discovered not simply the US developments which Mr Scannell acknowledges they had constructive knowledge of, but also the fact and progress of the Commission investigation, and the significant provisions which Infineon had made for a fine resulting from that investigation."
Section 32
"(1) Subject to subsections (3) and (4A) below, where in the case of any action for which a period of limitation is prescribed by this Act, either—
(a) the action is based upon the fraud of the defendant; or
(b) any fact relevant to the plaintiff's right of action has been deliberately concealed from him by the defendant; or
(c) the action is for relief from the consequences of a mistake;
the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it. References in this subsection to the defendant include references to the defendant's agent and to any person through whom the defendant claims and his agent.
(2) For the purposes of subsection (1) above, deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty".
"29. Mr Kimmins, appearing for Canada Square, argued as a general point that section 32 of the LA 1980 should be interpreted restrictively because it is an exception to the running of time. The courts should not encourage or facilitate the trial of stale actions. I do not accept that as a matter of general principle. The LA 1980, like the many Limitation Acts before it, strikes a balance between the competing aims of protecting defendants from stale claims but allowing claimants to overcome the expiry of the ordinary time limit where the statute so provides. This was explained recently by the Supreme Court in describing the rationale behind section 32(1)(c) in Test Claimants in the FII Group Litigation v Revenue and Customs Commissioners [2020] UKSC 47, [2020] 3 WLR 1369 ('FII'):
'228. … First, section 32(1)(c), like the equitable rule which preceded it, necessarily qualifies the certainty otherwise provided by limitation periods. It means that the 1980 Act does not pursue an unqualified goal of barring stale claims: its pursuit of that objective is tempered by an acceptance that it would be unfair for time to run against a claimant before he could reasonably be aware of the circumstances giving rise to his right of action.'
30. That in my view applies equally to section 32(1)(b) and section 32(2)."
"167. The first step is to identify the facts which are relevant to the claimant's right of action. That expression has been narrowly interpreted to refer to a fact without which the cause of action is incomplete (Arcadia Group Brands Ltd v Visa Inc [2015]EWCA
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Civ
883, [2015] Bus LR 1362). It is in accordance with the statutory purpose that there should be such a narrow interpretation: if the claimant can plead a claim without needing to know the fact in question, there is no good reason why the primary limitation period should not apply. But it does not necessarily follow that the section as a whole should be narrowly interpreted. It should be given its natural meaning without a predisposition to interpret it either narrowly or broadly."
"155. … It is the duty of the court, in accordance with ordinary principles of statutory construction, to favour an interpretation of legislation which gives effect to its purpose rather than defeating it."
"155. … The fundamental purpose of limitation statutes is to set a time limit for the bringing of claims. As the Law Reform Committee stated at para 7 of its Report, 'the purpose of the statutes [of limitation] goes further than the prevention of dilatoriness; they aim at putting a certain end to litigation and at preventing the resurrection of old claims, whether there has been delay or not".
"193. The purpose of the postponement effected by section 32(1) is to ensure that a claimant is not disadvantaged, so far as limitation is concerned, by reason of being unaware of the circumstances giving rise to his cause of action as a result of fraud, concealment or mistake. …"
"… I conclude, first of all, that it is impossible to devise a meaning or construction to be put upon those words which can be generally applied because, as it seems to me, the precise meaning to be given to them must vary with the particular context in which they are to be applied. In the context to which I have to apply them, in my judgment, I conclude that reasonable diligence means not the doing of everything possible, not even necessarily the doing of anything at all; but it means the doing of that which an ordinary prudent buyer and possessor of a valuable work of art would do having regard to all the circumstances, including the circumstances of the purchase."
"The question is not whether the plaintiffs should have discovered the fraud sooner; but whether they could with reasonable diligence have done so. The burden of proof is on them. They must establish that they could not have discovered the fraud without exceptional measures which they could not reasonably have been expected to take. In this context the length of the applicable period of limitation is irrelevant. In the course of argument May LJ observed that reasonable diligence must be measured against some standard, but that the six-year limitation period did not provide the relevant standard. He suggested that the test was how a person carrying on a business of the relevant kind would act if he had adequate but not unlimited staff and resources and were motivated by a reasonable but not excessive sense of urgency. I respectfully agree."
"116. … the judge was right in his conclusion that it is inherent in section 32(1) of the 1980 Act, particularly after considering the way in which Millett LJ expressed himself in Paragon Finance Plc v DB Thakerar & Co [1999] 1 All ER 400, that there must be an assumption that the claimant desires to discover whether or not there has been a fraud. Not making any such assumption would rob the effect of the word 'could', as emphasised by Millett LJ, of much of its significance. Further, the concept of 'reasonable diligence' carries with it, as the judge said, the notion of a desire to know, and indeed, to investigate."
"255. … Equally, the answer to the question arising under section 32(1)(b) does not depend upon the characteristics of the particular claimant: whether, for example, it was inclined to await further developments, and to allow other taxpayers to make the running. The standard is 'could' …"
"56. Given the stringency of the s.32(1) test – which involves an enquiry into what the claimant could rather than should have discovered – the fact that the claimant is a company in liquidation is likely to be most significant in determining whether it can be said that the claimant was reasonably put on enquiry that there was something which merited investigation (rather than when determining whether a claimant who had been put on enquiry had exercised reasonable diligence in following matters up). Certainly, this is the context in which the issue arises most acutely in this case. In this regard, I am not persuaded by Mr Jowell QC's submissions that in determining whether the Claimants were reasonably on notice of the need to enquire into whether they had suffered loss from a price-fixing cartel, I am required (for example) to assume that OTC was still a trading company buying and selling DRAM in and after June 2002 when in fact it had ceased to trade in January of that year. In my view, this is to read too much into Millett LJ's statement that the reasonable diligence test is to be measured in a business context by considering 'how a person carrying on a business of the relevant kind would act". However, I accept that when it comes to considering the ability of a claimant to investigate matters of which, objectively, it has been put on notice, the question of what constitutes reasonable diligence is unlikely to admit of any substantial distinction between companies which are, and are not, in liquidation."
The parties' submissions in outline
Discussion
"The question is not whether the plaintiffs should have discovered the fraud sooner; but whether they could with reasonable diligence have done so. The burden of proof is on them. They must establish that they could not have discovered the fraud without exceptional measures which they could not reasonably have been expected to take. In this context the length of the applicable period of limitation is irrelevant. In the course of argument May LJ observed that reasonable diligence must be measured against some standard, but that the six-year limitation period did not provide the relevant standard. He suggested that the test was how a person carrying on a business of the relevant kind would act if he had adequate but not unlimited staff and resources and were motivated by a reasonable but not excessive sense of urgency. I respectfully agree."
"33. Section 14(3) uses the word 'reasonable' three times. The word is generally used in the law to import an objective standard, as in 'the reasonable man'. But the degree of objectivity may vary according to the assumptions which are made about the person whose conduct is in question. Thus reasonable behaviour on the part [of] someone who is assumed simply to be a normal adult will be different from the reasonable behaviour which can be expected when a person is assumed to be a normal young child or a person with a more specific set of personal characteristics. The breadth of the appropriate assumptions and the degree to which they reflect the actual situation and characteristics of the person in question will depend upon why the law imports an objective standard."
The Respondent's Notice
Disposal
Lord Justice Coulson
Lord Justice Peter Jackson
ORDER
UPON the appeals of the Appellants against paragraphs 2 and 4 of the Order of Mr Justice Foxton dated 28 February 2020 and against paragraph 3 of the Costs Order of Mr Justice Foxton dated 22 April 2020
AND UPON hearing counsel for the Appellants and counsel for the Respondent
IT IS ORDERED THAT:
[BY THE COURT]