The difference a day makes when it comes to limitation was brought into sharp focus with a recent case in the UK Supreme Court (UKSC). In the case of Matthew and others v Sedman and others, the court had to rule whether the day which commences at or immediately after the midnight deadline counts towards the six-year limitation period. In a unanimous judgment, the court ruled that where a cause of action accrues at midnight on a given day, the relevant limitation period includes the day immediately after that midnight deadline.
Facts
The appellants replaced the respondents as trustees of a trust in 2014. The trust previously held shares in a company. In 2011, the High Court approved a scheme of arrangement of the company’s subsidiary. The scheme provided that “in order to be entitled to any scheme payment, scheme creditors must, on or prior to the bar date, submit a claim form”. The bar date was Thursday 2 June 2011 and the respondents failed to submit a claim by that date.
The appellants brought the proceedings against the respondents alleging negligence and breach of trust by a claim form issued on Monday 5 June 2017. If the six-year period provided by the Limitation Act 1980 included Friday 3 June 2011, it would have expired on Friday 2 June 2017, and the claim form would have been issued out of time. If the period excluded Friday 3 June 2011, and so began on Saturday 4 June 2011, the six-year period would have expired on Saturday 3 June 2017, allowing the claim form to be issued in time on Monday 5 June 2017, the next day the court’s offices were open.
The question for the court was therefore whether the day which commences at or immediately after the midnight deadline counts towards the six-year limitation period.
Decision
Lord Stephens handed down the judgment and dismissed the appeal. The limitation period began on Friday 3 June 2011. The claim was therefore brought out of time.
The court referred to the concept of the “midnight deadline” case as formulated in Dodds v Walker. The Court of Appeal agreed that these cases were distinct from cases in which the cause of action accrues part way through the day.
The UKSC held that the authorities relied upon by the appellant were in fact cases in which the cause of action accrued part way through the day, for example the death of the testator (Mercer v Ogilvy) or the passage of an Act of Parliament (The Goldsmiths’ Co v The West Metropolitan Railway Co).
The court held that the true “midnight deadline” case among the authorities was Gelmini v Moriggia, in which a promissory note expired at midnight on a given date, and Channell J held that the relevant limitation period ran from the next day because “the cause of action is complete at the commencement of that day”.
Approving Gelmini, the court derived a general principle that the law rejects a fraction of a day for the purposes of limitation, meaning that limitation periods begin on the date after the accrual of the cause of action. There being no “long-standing authority which excluded a whole indivisible day” (paragraph 47), the court concluded that the exception to the normal rule is the “midnight deadline” case. That is because there is simply no fraction of a day to which the normal rule can attach. The alternative would extend limitation periods to six years and one day in “midnight deadline” cases (paragraphs 36 and 48). It did not matter whether the cause of action accrued at the expiry of 2 June 2011 or at the very start of 3 June 2011, because either way there was for practical purposes a complete undivided day (paragraph 46).
Comment
This decision will be welcomed by practitioners as a helpful exposition of the calculation of the limitation period and clarifying the position on midnight deadlines.
In particular, practitioners advising in insolvency litigation will take note that the midnight deadline arose from the definition of “bar date” as defined in the applicable scheme. On other drafting in which the bar date is defined with a time (say, 5.00 pm), while the midnight exception would not have applied, the outcome would have been the same. The midnight deadline issue is more likely to arise out of contractual mechanisms rather than naturally occurring events such as the death of a testator.
The “divisibility” of time was considered by several judgments referred to in the case; Lord Stephens stated that the common law eschews such metaphysics (paragraph 47). However, as memorably pointed out by Lord Greene MR in Re Grosvenor at paragraph 144 (a case not concerned with limitation, but the inheritance consequences of fatal air raids killing multiple family members during the Second World War), the courts will provide a practical, common sense answer when these questions are posed by litigants:
“The statement that time is infinitely divisible was said to be a scientific fact. I should prefer to call it a metaphysical conception. No doubt, when a bevy of angels is performing saltatory exercises on the point of a needle it is always possible to find room for one more, but propositions of this character appear to me to be ill suited for adoption by the law of this country which proceeds on principles of practical common sense.”
On these facts, the “midnight deadline” exception applied; in other cases, it will not. The usual high standard of close attention must be paid when advising on the date of accrual for limitation purposes, and, as ever, it is best to avoid issuing proceedings anywhere near the expiry of limitation wherever possible.
