In May we confirmed that there has been a decision by the High Court regarding “date of knowledge” for the purposes of determining the limitation period applicable to swaps cases.
If you click here you can download a copy
of the judgment Kays Hotels Ltd v Barclays Bank Plc  EWHC 1927 (Comm).
Most of the damage done by IRHPs has been done during the 2006 to 2008 period, though the banks continued to sell them up until 2012. However, post 2008 it was very hard for a bank to convince a customer that they faced interest rates going up to 15%, so the
sales o0f these products slowed to a trickle.
Under the Limitation Act 1980 a business has, generally, a period of six years within which to bring a claim. The dates vary dependent upon the individual case. For instance, we would use six years from the date of first being advised by the Bank about IRHPs,
as this would allow a s. 138D from being run. In Green & Rowley v RBS the claimants had the problem that their original solicitors issued a claim using six years from the date of the trading of the hedge, and as such their legal remedies for breach of COB
failed due to them being time barred. Bank customers also become confused about when the limitation date is, with some thinking that as they never signed the trade confirmation there is no date, or where they have signed it it runs from the date of trade,
and others think that time stopped because they issued a letter of claim within the six year period. All of which is not true.
Principally, you should go for either six years from the date of advice or six years from the date of trade.
What happens if you have missed this six year period? There are two extensions available in the Limitation Act 1980. S. 14A gives an additional three years from the date at which the reasonable businessman would become of the negligence. That is not the
same as the date that you became aware, but is in fact the date at which the average reasonable businessman in your business was likely to have become aware if s/he undertook a reasonable amount of enquiry. There is a lot to understand in this case, so it
is always worth speaking to a member of our banking litigation team.
Berg believes that the Kays Hotel case is of vital importance. It opens up the ability of bringing a case to court where the date of knowledge can be evidenced as being within three years of the date of issuing the claim. Barclays fought this case and lost.
It is also likely that there will be more cases over the next two years where the claimant relies upon the extension in the Act and the Bank involved objects and defends the case all the way to the Court handing down a decision.
If you have been unable to bring a Court claim and now wish to (because, for instance, you did not get consequential losses in the review or were found to be sophisticated), please contact a member of the Berg Banking & Financial Litigation Team.
You can view the Berg website pages that look at the whole service we offer in relation to banking and finance here.