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Limitation rules

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04/11/2015

The background facts to both Arcadia v Visa [1] and WH Newson v IMI [2] involve allegations of competition law infringements, but arguments raised by defendants in both cases are of general application. The cases therefore serve as up-to-date examples of some of the tactics that defendants can deploy to avoid or limit liability.

Limitation

In Arcadia, in 2013 the claimant (a group of high street retailers) issued a claim for damages against Visa, alleging that card fees set by Visa dating back to 1997 were in breach of competition laws. In accordance with the limitation period for tort-based claims as per section 2 of the Limitation Act 1980 (the LA), Visa applied for strike out or summary judgment in respect of those parts of the claim that alleged infringements prior to 2007, on the basis that that was more than six years before issue of proceedings. However the retailers sought to rely on section 32 (1) (b) of the LA, claiming that Visa had deliberately concealed facts relevant to the action. Section 32 (1) (b) provides that where any fact relevant to the claimant’s right of action has been deliberately concealed by the defendant, the limitation period does not start to run until the claimant discovered, or could with reasonable diligence have discovered, the concealment.

First the High Court and then Court of Appeal had to decide what is a “fact relevant to the claimant’s right of action”? The retailers argued that, essentially, this meant all facts necessary and sufficient to enable the claimant to come to an informed view about the prospects of success of a claim, but the courts disagreed, confirming:

  • Section 32 (1) (b) must be construed narrowly.
  • There is a distinction to be drawn between facts which found the cause of action and facts which merely go to prospects of success or are broadly relevant to a claimant’s case.
  • Section 32 (1) (b), and the delayed limitation period, therefore only arises where there is deliberate concealment of fundamental facts which the claimant has to prove to establish a prima facie case.

The Court of Appeal also rejected the retailers’ argument that the domestic law of limitation contravenes EU principles of effectiveness and full compensation.

Contribution

In WH Newson there had been a European Commission finding, in 2006, that a cartel (of which IMI formed part) had unlawfully fixed prices and committed other competition law infringements during a period ending in 2004. The claimant issued proceedings against IMI for follow-on damages in 2012, relying on section 32 (1) (b) LA. The claimant argued that IMI and others in the cartel had deliberately concealed the cartel and the competition infringements, such that the earliest time the concealment could have been discovered was when the Commission decision was announced in 2006. IMI settled with the claimant and then pursued a contribution claim against another cartel member.

Sections 1 (1) and 1 (4) of the Civil Liability (Contribution) Act 1978 (the CL(C)A) together provide that a person liable for damage or a person who has settled but would have been found liable if the claim against him had been established may recover a contribution from another person liable for the same damage.

The other cartel member resisted the contribution claim arguing, in accordance with Part 20 of the Civil Procedure Rules (CPR), that IMI had had a “collateral defence” (the limitation defence) – that is, a defence where the burden would have fallen on IMI.

The High Court noted, however, that the claimant would have had to have shown that it could not reasonably have found out about the cartel infringements prior to 2006. The burden of succeeding on the limitation point would not, therefore, have fallen on IMI and there was no valid CPR 20 collateral defence argument on which the cartel member could rely to avoid contribution liability.

WM Comment

The Arcadia and WH Newson cases have complex competition factual contexts and each explore only a fairly specific limitation/contribution question. However both cases are a good reminder of the wider laws of limitation and contribution, which can represent important tactics for defendants who might be able to avoid liability altogether, or who might be able to mitigate their losses by involving other liable parties. Both cases also provide helpful worked examples of the circumstances in which a deliberate concealment of facts may delay commencement of a limitation period; and WH Newson provides High Court guidance as to how a Part 20 collateral defence might be established.

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[1] Arcadia Group Brands Ltd & Ors v Vica Inc & Ors [2015] EWCA Civ 883
[2] WH Newson Holding Ltd & Ors v IMI Plc and Anor [2015] EWHC 1676 (Ch)
[3] The level of knowledge will be a question of fact in each case

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