Mather v Rattan: Court of Appeal clarifies limitation and causation in deceit claims

The Court of Appeal's recent decision in Mather v Rattan [2025] EWCA Civ 1596 provides important clarification on the application of section 32 of the Limitation Act 1980 and the principles of reliance and causation in claims for fraudulent misrepresentation.

The claimants, Mr and Mrs Mather, invested £1 million in a biotech company, Yagna Limited, between December 2012 and November 2014. The investment was made in reliance on an email from the defendant, Mr Rattan (a director and majority shareholder of Yagna), dated 5 December 2012. In that email, Mr Rattan stated that he had appointed Mr Lak Basran MBE, a personal friend of the Mathers, as a company director to protect investors' interests. This representation was false—Mr Basran was not appointed as a de jure director until September 2015, nearly three years later. When Yagna entered administration in April 2016, the Mathers' shares became worthless.

HHJ Hodge KC found that the Mathers had relied on Mr Rattan's fraudulent misrepresentation when making their investment and awarded damages of £1 million. The judge rejected Mr Rattan's limitation defence under section 32, holding that the Mathers had no reason to investigate the truth of the representation until September 2015, less than six years before the claim was issued in August 2021.

Mr Rattan appealed on three grounds. First, he argued that the judge had wrongly placed the burden of proof on him regarding limitation, when the burden lay on the Mathers to establish that section 32 applied. He contended that the Mathers could have discovered the falsity of the representation through a simple Companies House search and had failed to explain why they had not done so.

Lord Justice Snowden, delivering the leading judgement, rejected this argument. Whilst acknowledging that the judge's language could have been clearer, the Court held that he had correctly applied the test in section 32. Following Gresport Finance v Battaglia and OT Computers Ltd v Infineon Technologies, the judgement emphasised that reasonable diligence only requires investigation when something puts the claimant on notice. Since Mr Basran's appointment was offered as a means of protecting the Mathers' investment rather than as an end in itself, they had no reason to investigate until concerns arose about the investment's safety in September 2015.

Secondly, Mr Rattan argued that the Mathers would have been satisfied with Mr Basran acting as a de facto director, making the misrepresentation immaterial. The Court rejected this submission, noting that Mr Mather's evidence clearly indicated reliance on formal board appointment, and that there was no factual finding that Mr Basran was acting as a de facto director at the relevant time.

Finally, Mr Rattan contended that the judge failed to consider whether the misrepresentation actually caused the loss. He suggested the Mathers would have invested regardless, making the business failure—not the misrepresentation—the true cause of loss. The Court dismissed this argument, applying the principles from Smith New Court Securities v Citibank. The judge had accepted Mr Mather's evidence that the investment would not have been made without the representation, and Mr Rattan had not pursued alternative scenarios at trial.

The appeal was dismissed on all grounds, confirming the £1 million award. The decision reinforces that fraudsters cannot benefit from arguing that claimants should have verified their lies, and clarifies the proper approach to causation in deceit claims where reliance is established.

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