Author: Nicola Sharp
11 April 2023
3 min read
Nicola Sharp of Rahman Ravelli comments on a recent case in the High Court determining when a claim is time-barred in a civil fraud case.
In 2015, Wirecard purchased a collection of Indian payment businesses. But the deals that took place before the sale are now subject to high-profile scrutiny. Proceedings were brought in October 2017 alleging that minority shareholders in Hermes i-Tickets Pte Ltd (‘Hermes’) were duped out of millions of dollars. The minority shareholders (the ‘claimants’) sold their 6% holding to the majority shareholders, only to see it sold on again to Wirecard, at a vastly inflated price.
The original claim is complex, involving an international fraud, and the proceedings are pending before the Commercial Court. Among the causes of action are allegations of deceit, intimidation, conspiracy and joint tortfeasance.
In February 2022, the minority shareholders sought to expand the circle of defendants involved in the proceedings (the ‘new proceedings’). In a hearing on 30 March 2023 in the High Court, the new defendants brought an application to set aside an order giving the claimants permission to serve the proceedings out of the jurisdiction. The basis of the challenge was that the new proceedings were time-barred.
It was common ground that the cause of action arose on or around 9 September 2015 when claimants signed the share purchase agreement under which they sold their minority shareholding in Hermes.
After discovering alleged deceit, intimidation, conspiracy and joint tortfeasance of the defendants, the claimants issued the new proceedings on 16 February 2022.
On the face of it, the new proceedings are time-barred. Under section 5 of the Limitation Act 1980, the claim must be brought within six years from the date on which the cause of action accrued, which would be 8 September 2021.
The claimants relied on section 32 of the Limitation Act 1980, which provides for the postponement of the running of the limitation period in cases of fraud, concealment or mistake. The claimants contended that they could not (with reasonable diligence) have discovered the fraud and the involvement of the new defendants in it before 16 February 2016, i.e. six years before the claim form was actually issued.
The burden was on the claimants to show that the fraud would only be discoverable by exceptional measures, going beyond what they would reasonably be expected to take. Simon Rainey KC, sitting as the Judge, asked three questions to determine whether the claimants had met this threshold.
In order to plead a claim alleging fraud or dishonesty, legal counsel must have reasonably credible material to support the allegations (Medcalf v Mardell  1 AC 120). But in circumstances of fraud, where concealment is part of the wrong, the relevant material is not always available within the normal limitation period.
Section 32 of the Limitation Act will step in to grant the victims of fraud more time to plead their case. But there is a high threshold for the claimant to overcome. Claimants need to take action and investigate as soon as they have been put on notice of a potential fraud against them.
The action that a claimant could and should take is determined on an objective standard, and it appears that claimants can be expected to go to far-reaching and expensive lengths to investigate complex cases of alleged fraud.
Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.