Limitation of Actions Consultation - Law Commission

a definition of who within an organisation is the “directing mind and will”, and
case law has provided little prospective guide as to where the line would be drawn.
12.74 The authorities were reconsidered by the Privy Council in Meridian Global Funds
Management v Securities Commission. 106
Lord Hoffman 107
stated that “the rule of
attribution is a matter of interpretation or construction of the relevant substantive
rule”. “It is a question of construction in each case as to whether the particular
rule requires that the knowledge that an act has been done, or the state of mind
with which it was done, should be attributed to the company.”
12.75 Consequently, there is no pre-established test of identification which would be
applied to corporate knowledge for the purposes of limitation. Unless dealt with
specifically in the limitation legislation, the courts would need to develop a test in
the light of their view of the purposes of the limitation regime. As is noted in
Gower’s Principles of Modern Company Law:
Welcome and more straightforward though the new approach is, it
inevitably leaves uncertainty as to who will be regarded as the relevant
person in the corporate hierarchy for the purposes of the identification rule
in any particular case...Since, however, a precise answer to the question of
whose acts and knowledge are to be attributed to the company depends ex
hypothesi on an analysis of the context of the particular rule with which the
court is dealing, it is doubtful whether more certainty can be provided at a
general level. 108
12.76 Given the uncertainty of how the courts would apply the principles of
agency and the identification test to discoverability by a corporate plaintiff
- and given that this is already an issue of uncertainty under the present
law of limitations 109
- it is our provisional view that we should lay down
specific statutory provisions setting out how discoverability would apply to
corporate plaintiffs. We ask consultees if they agree. If consultees
disagree, we ask them how they believe the courts would, or should, apply
the discoverability test to corporate plaintiffs.
(ii) Actual knowledge
12.77 The key question for corporate knowledge is, at what level the knowledge of the
employee should be considered to be the knowledge of the company: whether the
company’s knowledge should be confined to the knowledge of the senior
management, or whether the knowledge of junior employees should also be taken
into account. The identification principle (and to some extent the principles of
agency) look to higher levels of management within a company, asking, for
example, who within the company has the power to make decisions in respect of a
particular transaction. In our opinion this sets a threshold which is too high for
the purposes of the start of the limitation period. A company should not be able
106 [1995] 2 AC 500
107 Ibid, at 507, 511
108 PL Davies, Gower’s Principles of Modern Company Law (6th ed 1997), p 231.
109 See paras 12.71 - 12.72.
276