Mis-Selling Claim Defeated By The Statute Of Limitations – Komady v Ulster Bank

The background to the case was that the parties had entered into swap agreements on 14 July 2006, to hedge the interest rate exposure of Komady Limited. In late 2011, the relationship between Komady and Ulster Bank deteriorated. In mid-2012, Komady sought independent advice from financial and legal experts on the swap agreement and subsequently commenced its mis-selling claim in November 2012.

This claim would ordinarily fail, as the Statute of Limitations 1957 allows a maximum of six years to bring any action founded on a contract. On that basis, the defendant, Ulster Bank, sought to have the proceedings dismissed as a preliminary matter.

Komady alleged that Ulster Bank had fraudulently concealed the true nature of the swap agreement. The company claimed that it only became aware that the swap agreements were unsuitable for its objectives in 2012. Komady argued that the limitation period should therefore not begin to run until 2012, when the company received legal and financial advice informing it of the unsuitability of the agreements.

Ulster Bank, however, argued that the limitation period should run from the date that Komady entered into the swap agreement, as Komady could not point to any fact disclosed after July 2006 which was central to their ability to bring the claim, which is the central criterion for extending the limitation period under the Statute.

Judge Peart observed in his judgment of 26 June 2014 that to allow Komady to maintain its claim could mean that anyone who "brings a claim on the basis of a failure to...