Limitation and personal guarantees: when does time start to run? Time starts on demand, not execution

We examine a recent case involving an unsecured personal guarantee, where it was held that the actionable loss for a deceit claim was suffered when the guarantee was called upon rather than when it was executed - Richardson -v- Robertson and others [2026] EWHC 2286 (Ch0).

Background

In 2013, the Claimant, Mr Richardson, purchased Moonstone Holdings Limited (‘Moonstone’), a Maltese company which owned 98% of the shares in Wasps Holdings Limited (‘WHL’).

In April 2017, the Claimant restructured his holdings in Moonstone, on the recommendation of the First and Second Defendants ( ‘the Defendants’). The Claimant exchanged his shares for investor shares in the sub-fund of another company (Jacaranda). The Defendants sent the Claimant an ownership structure chart for the group companies which showed him as the ‘ultimate beneficial owner’. As a result of this transaction, the Claimant lost his ability to control the corporate structure, he claimed that he was unaware of this and that as security was repeatedly told by the Defendants that he remained the ultimate beneficial owner

In October 2018, AIB Group (UK) Limited (‘AIB’) agreed to provide WHL with an overdraft, on the condition that the Claimant provided a personal guarantee (‘Guarantee’) as security. The Claimant alleged that he entered into the Guarantee in reliance upon the representations that he was still the group’s ultimate beneficial owner.

In 2022, AIB sent a letter of demand to the Claimant under the Guarantee. The Claimant commenced proceedings against the Defendants in 2023, and the bank also commenced proceedings against the Claimant in April 2025.

As a result of AIB’s claim against him, the Claimant sought to introduce an additional claim in deceit against the Defendants; alleging that their representations regarding the ultimate beneficial ownership of the group were false, or that they were reckless to this and such representations had induced him to provide the Guarantee. The Defendants defended the application this on the basis of limitation.

The law

In order to determine whether the Claimant’s deceit claim had been made outside of the relevant limitation period, the court had to consider when time started to run.

Section 2 of the Limitation Act 1980 (the ‘Act’) provides that an action founded on tort cannot be brought after six years from the date on which the cause of action accrued. Section 32 of the Act can postpone the commencement of the limitation period in cases involving fraud. However, the issue before the court in this case was whether the Claimant had suffered the damage necessary to complete his cause of action in deceit.

The six-year limitation period begins the moment the Claimant suffers actionable, material damage. The question in this case was whether time started to run when the Claimant entered the Guarantee, or when AIB demanded payment under it.

The decision

The Defendants argued that the Claimant suffered damage when he signed the Guarantee in October 2018. They submitted that the tort of fraudulent misrepresentation was actionable when the Claimant allegedly relied upon the misrepresentations. Their position was that the Claimant suffered a detriment or loss at that time, because this moment exposed him to a contingent liability.

The Claimant highlighted that the Guarantee was unsecured. When he signed it, he suffered no measurable loss and only became liable to pay when AIB demanded it. The Court considered the decision in Wardley Australia -v- State of Western Australia (1992) 175 CLR 514 whereby the State had been induced by the Defendant’s misrepresentation to indemnify a bank and the court decided that damage only occurred when the State was required to pay under the indemnity; no damage was suffered by the State whilst its obligation was contingent.

Wardley was considered in Law Society -v- Sephton & Co [2006] 2 AC 543, and Lord Hoffmann agreed with the proposition that the possibility of an obligation to pay money in the future is not in itself damage. Thus, no cause of action had accrued. This was analysed by the Court of Appeal in Axa Insurance -v- Akther & Darby [2009] EWCA Civ 1166. In Axa, the court drew a distinction between a contingent liability that causes an immediate and measurable reduction in the value of an asset, and one that merely creates the possibility of a future payment. A personal unsecured guarantee, therefore, is the latter and loss does not occur until a demand is made under it.

On this basis, the judge held that the proposed deceit claim was brought within the relevant limitation period and the application was granted.

Importantly, the court considered the issue in the context of an application for permission to amend the claim. The court concluded that the proposed deceit claim was not time-barred and permitted the amendment.

Comment

The decision highlights the distinction between a completed loss and a merely contingent exposure. It provides useful clarification that entry into an unsecured personal guarantee will not necessarily start the limitation clock as there may not be actionable damage at that point. In the case of an unsecured guarantee giving rise only to a contingent liability, the court held that the limitation period for a deceit claim began when a demand was made under the guarantee rather than when it was executed. However, the position will ultimately depend on the terms of the guarantee, in particular, whether it is secured against the individual’s assets and the facts of the case.

The decision may be particularly relevant where claims arise out of financial advice, restructuring exercises or lending arrangements entered into many years earlier. Parties should not assume that the limitation period necessarily begins when a contingent obligation is undertaken.

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This article was co-authored by Trainee Solicitor, Rosa Fattorini.