Cotter: Baffling delay
The London arm of a leading US law firm has been granted summary judgment against a $74m negligence claim because it was brought out of time.
A first claim was issued properly but not served in time and Orrick Herrington & Sutcliffe successfully challenged the second claim on limitation grounds.
Mr Justice Cotter said it was “truly extraordinary” that the claimants – a Nigerian company and its two owners – took two years from the time they knew their business deal had gone badly wrong to start wondering if they had been badly advised.
The claimants argued that Orrick’s negligence in advising them in relation to an investment deal “left them exposed to a predatory investor” belonging to the Carlyle group of companies.
Cotter J explained that entering into contracts with Carlyle in November 2018 “had little short of disastrous” consequences.
In October 2019, the owners were dismissed from their company without notice and in January 2020 it was forced to surrender to Carlyle its interest in a new business vehicle for nominal consideration; the company was also left with $28m in outstanding liabilities to third parties.
The total value of the claim was $74m. Orrick argued that the limitation period started running when the contracts were signed in November 2018.
In October 2024, the parties entered into a standstill agreement allowing the claimants up to 30 May 2025 to issue proceedings. They did so within that period but failed to serve them in time.
A second claim form was issued on 24 November 2025; Orrick argued this was statute-barred and sought to have it struck out.
The claimants’ primary argument was that no loss was suffered in November 2018 and it only crystallised, and limitation began running, in January 2020. If limitation ran from then, the second claim was in time.
Cotter J rejected this, holding that the primary limitation period began to run from November 2018 and so the claim would be out of time unless the claimants had a real prospect of relying upon a secondary limitation period of three years from their ‘date of knowledge’ under section 14A of the Limitation Act 1980.
The claimants said this knowledge was not acquired until September 2022, when they started taking legal advice on what happened; the effect of the standstill agreement would then have made the second claim valid.
Orrick argued that the trigger for the date of constructive knowledge was, at the latest, January 2020.
The judge described the claimants’ inaction between January 2020 and September 2022 as “baffling”, adding that, during pre-action correspondence that led to the standstill agreement, the claimants “clearly approached their claim” on the basis that they should issue within six years of the November 2018 contracts.
Cotter J decided that the three-year period started running in January 2020.
As soon as the individual claimants were dismissed, “they knew enough for a reasonable person placed in their situation to have taken steps to investigate why things had gone very badly awry” and whether Orrick had not done its job properly.
The judge said that the matter was, “somewhat unusually”, clear cut, and the claimants’ reliance on their lack of actual or constructive knowledge of the material facts giving rise to their claims under section 14A of the Limitation Act 1980 was “unrealistic”.
Cotter J said “the reality is that reliance on fallback arguments has only arisen because of a failure to progress a claim in what was previously acknowledged to be the limitation period”.
He went on: “It was never previously suggested that a lack of actionable damage and/or section 14 would provide a later date for the start of time running; quite the contrary as it was thought necessary to enter into a standstill agreement.”
Dismissing the claim, Cotter J said he would grant summary judgment “as there is no realistic prospect of the claimants arguing that their claims are not statute-barred”.
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