If a claimant is induced by fraudulent misrepresentation to enter into an unsecured personal guarantee, when does the limitation clock start to tick in respect of a claim? Is it when the claimant gives the guarantee? In Richardson v Robertson & Ors [2026] EWHC 2286 (Ch), Richard Spearman KC, sitting as a Deputy Judge of the Chancery Division, held, when determining an application to amend, that time started to run when a demand was made under the guarantee, not when the guarantee was executed.
Brief summary of the material facts
Mr Richardson purchased Moonstone Holdings Limited (“Moonstone”), a Maltese company which owned 98% of the shares in Wasps Holdings Limited (“WHL”), the owner of Wasps Rugby Club. The First and Second Defendants recommended that Mr Richardson restructure his holdings and, in 2017, he exchanged his shares in Moonstone for investor shares in a sub-fund of a company called Jacaranda Special Situations Sicav Plc (“Jacaranda”). Mr Richardson claimed that he was repeatedly told by the First and Second Defendants that he was still the ultimate beneficial owner of Moonstone, but in fact this was not correct because he had no voting rights. Rather, legal ownership and control of Moonstone (and so WHL) had passed to Jacaranda.
In 2018, AIB Group (UK) Limited (“AIB”) agreed to provide WHL with an overdraft. Mr Richardson agreed to provide a personal guarantee in relation to that facility on the basis, he said, that he was the ultimate beneficial owner of the company. In 2022, AIB called in the guarantee and, in 2025, AIB issued a claim against Mr Richardson in respect of it.
As a result of AIB’s claim against him, Mr Richardson sought to introduce an additional claim in deceit into existing claims against the First and Second Defendants. By way of this claim, Mr Richardson alleged that the First and Second Defendants knew the representations regarding the ultimate beneficial ownership of WHL were false, or they were reckless as to this. The Defendants argued that the claim had been made out of time.
The legal question
Whether Mr Richardson’s proposed deceit claim had been made outside of the relevant limitation period depended on whether time started to run when he entered into the guarantee, or when AIB made a call on it.
Mr Richardson placed reliance on the judgment in Wardley Australia v State of Western Australia (1992) 175 CLR 514. In Wardley, the State of Western Australia had been induced by the defendant’s misrepresentation to indemnify a bank against loss on a loan to a company in difficulties. The High Court decided that the State suffered no damage while its obligation under the guarantee remained contingent and damage occurred only when it was called.
The House of Lords considered Wardley in Law Society v Sephton [2006] 2 AC 543, which concerned the Law Society’s liability to pay claims out of its compensation fund. In Sephton, Lord Hoffmann expressed complete agreement with the proposition that a claimant sustains no actual damage until a contingency is fulfilled (in that case, until a claim was made against the compensation fund, no loss or damage had been sustained and no cause of action had accrued): the possibility of an obligation to pay money in the future is not in itself damage.
In Axa Insurance v Akther & Darby [2009] EWCA Civ 1166, the Court of Appeal analysed Sephton, drawing the distinction between contingent liabilities which affect particular assets of the person subject to the liability as well as their legal position, and contingent liabilities which have little effect on the same. Loss in respect of the former could be measured, whereas loss in respect of the latter could not. Sephton was an example of this: damage to the Law Society would not crystallise until a claim against the compensation fund had been made. Similarly, no loss would accrue under a personal unsecured guarantee until a call is made on the guarantee.
Applying the law to the facts, Richard Spearman KC asked whether Mr Richardson had sustained measurable loss or actual damage, in addition to the incurring of a purely contingent liability, when he entered the guarantee, or whether he sustained damage only when a demand was made under it. Finding the latter, the Judge considered that the claim in deceit had been brought well within the limitation period.
Practicalities
The decision in Richardson draws an important distinction between the mere assumption of a purely contingent liability and a measurable loss suffered on entry into a transaction. Entry into an unsecured personal guarantee will not necessarily start the limitation clock because the guarantor’s legal position has changed. The question is instead whether the guarantor has suffered an identifiable loss additional to the contingent liability they have accepted. This could be, for instance, because the value of a particular asset has diminished or because the guarantor has received a less valuable package of rights under a bilateral transaction. As always, however, when limitation is a material consideration, issuing protective proceedings should be another.
Disclaimer: This article is provided for general information only and is accurate as of 13 September 2026. It may not be updated to reflect subsequent legal or other developments. It does not constitute legal advice and should not be relied on as such. Specific legal advice should be obtained in relation to particular circumstances.
