Goldtrail Travel Ltd (in Liquidation) v Malcolm Grumbridge  EWHC 1713 (Ch)
On 24 June 2021, dismissing an appeal from the Chief Master in the Chancery Division, Adam Johnson J gave an insightful judgment in which he declined to apply s.32 of the Limitation Act, 1980 so as to extend limitation for a sufficient period to allow the claim form to have been issued in time. The judge concluded that the claimant knew sufficient facts to be able to plead a claim against the defendant at the time of an earlier fraud action which it had brought several years earlier.
The court held that the later discovery of a handful of new documents did not impact the fact that the claimant could have brought its claim sooner. The appeal judgment is a vivid example of the court cutting through a mass of factual complexity to identify the few relevant facts to answer the question when the claimant could, with reasonable diligence, have met the ‘statement of claim’ test.
The judgment gives clear guidance that a claimant wishing to rely on s.32 should set out clearly at an early stage the facts that it did know at the relevant time(s) and why they were insufficient to plead a case. A focus on the facts that it did not know was misplaced.
The original Goldtrail litigation
The dispute follows-on from the well-known Goldtrail litigation. Goldtrail was a travel agency which, in 2010, was put into administration. In 2012, its creditors started a fraud claim in which they argued, among other things, that Goldtrail’s sole director had breached his fiduciary duties and misapplied company funds. At trial in 2014, Rose J (as she then was) ruled in the creditors’ favour. There were subsequent appeals, including to the Supreme Court.
The defendant was not a defendant in the original litigation. But he was called as a witness at trial, where Rose J considered him to be “truthful”.
The current claims
On enforcement, there was a shortfall of recoveries both as to the judgment debt and costs. In an attempt to recover this deficit, Goldtrail, in 2019, over seven years after the start of the original litigation, Goldtrail started its new action against the defendant.
Goldtrail sought to justify suing out of time by saying that it was unable to plead a claim of dishonest assistance against the defendant until it came into possession of a few documents which, it argued, for the first time clearly showed his involvement in the original fraud. The defendant applied for Goldtrail’s claim against him to be struck out or for summary judgment to be entered in his favour on the basis that the claims were statute barred.
The Chief Master’s decision
In 2020, Chief Master Marsh entered summary judgment for the defendant. He considered that Goldtrail had no real prospect of success: the primary limitation period had expired and Goldtrail did not have a real prospect of success of arguing that it should be extended because it was able to plead a claim much earlier.
The Chief Master accepted that new materials had become available in 2018. Nevertheless, he considered that Goldtrail had failed to explain why the information it had when it made its claim in the original litigation in 2012 was not sufficient for it to have pleaded a claim of dishonest assistance against the defendant at that time.
The extension of the limitation period
On appeal, Adam Johnson J upheld the Chief Master’s judgment, holding that the Chief Master had applied the correct legal test when granting summary judgment. He held that, when an earlier fraud claim is brought against a number of actors, and a later claim is brought against another actor allegedly involved in the same dishonesty, the burden was on the claimant to explain why that party had not been included in the original claim. Goldtrail had failed to give such explanation.
The critical issue was that whilst in 2012 Goldtrail had enough information to plead a claim for dishonest assistance against the defendant, it had chosen not to pursue that claim at that time. In those circumstances, the relevant issue is what Goldtrail knew during the currency of the primary limitation period – and in particular when it initiated the original litigation in 2012 – not the additional information it claimed to have discovered in 2018.
In relation to the issue of concealment under s.32(1), Adam Johnson J considered that the tests under s.32(1)(a) and s.32(1)(b) of the Limitation Act run in parallel. He stated that they are just “different ways of compartmentalising the same facts in terms of legal analysis.” The judge considered that, if for purposes of s.32(1)(b), Goldtrail had sufficient facts to justify a claim of dishonest assistance against the defendant in 2012 when it initiated the original litigation, then “it must follow” that, for purposes of s.31(1)(a), the defendant’s purported fraud had to have already been discovered by then.