Here is a round-up of some recent cases involving limitation.
When does time start running?
In Matthew and others v Sedman and others, the Chancery Division of the High Court considered the issue of the exclusion of the day when the action became completely constituted at the very first moment of that day.
The facts were unusual, but the court held that if the cause of action is completed during the day, then that day is excluded for the purposes of limitation; that is, limitation does not run until the next day. However, if the cause of action accrued at the very first moment of the day, then that day does count.
In this specific case, the cause of action accrued at the very first moment of Friday 3 June 2011 and therefore the last day for issuing the claim form was Friday 2 June 2017. Had the action accrued during Friday 3 June 2011 then the last day would have been Saturday 3 June 2017, and because weekend days do not count, it would in fact have been Monday 5 June 2017.
This is a useful, recent restatement of the law and may be relevant in some of the matters in the A to J lists.
Time runs from when work completed
In Ice Architects Ltd v Empowering People Inspiring Communities, the Queen’s Bench Division of the High Court held that a cause of action accrued on the date when the work which formed the subject matter of the invoice was completed, rather than when the invoice was delivered, or a specific period after the invoice was delivered.
The relevance was the determination of the date when the six year Limitation Act 1980 period began to run. Here, if it ran from when the work was completed, then the claim was out of time, but if it ran from the time related to the invoice, then it was in time.
In this case, the main issue was whether the default position, that is that an action for payment for works or services accrues on completion of the work, had been displaced by the contractual terms. The High Court held that clear words are needed to displace the time of accrual of the cause of action in a claim for work and services, so as to give the creditor control over the start of the limitation period. The cases of Levin v Tannenbaum and Henry Boot Construction Ltd v Alstom Combined Cycles Ltd could be distinguished because in neither of those cases could the quantum of the debt be identified on completion of the work in question.
In the judgment, the court referred to the decision in Coburn v Colledge, which concerned a solicitor’s bill, and in that case the court held that the time ran from the completion of the work and not from delivery of the bill nor from one month after the delivery of the bill. The relevance of that point was that section 37 of the Solicitors Act 1843, replicated in the Solicitors Act 1974, provides that a solicitor cannot commence an action for recovery of fees until one month after the delivery of the bill. The court deals with this in paragraph 13 in its judgment. However, that appears to be in conflict with the decision of the Court of Appeal in Phillips and Co v Bath Housing Co-Operative Ltd.
In Ice, the court also made the point that although the Solicitors Act 1974 prevented an action on a bill until one month after it had been delivered, it did not preclude other modes of debt enforcement, such as the service of a statutory demand for payment within 21 days (see In Re A Debtor, referred to at paragraph 19 of the judgment in Ice).
Summary judgment
In Richards v McKeown and another, the Court of Appeal considered the correct approach to limitation issues raised at the summary stage and allowed an appeal against an order for summary judgment in favour of the defendant.
The claimant had issued a claim against her former solicitors for negligence in relation to the handling of an Employment Tribunal claim and a civil claim against her former employers, and she amended the claim to include a claim for personal injury. The defendant’s solicitors applied to strike out the claim, or for summary judgment to be entered, or for the amendment to be disallowed as it was beyond the personal injury time limit.
Shortly before the hearing the claimant raised section 33 of the Limitation Act 1980, which gives the court power to extend the limitation period in personal injury claims.
The judge at first instance entered summary judgment for the defendants on the basis that the whole of the claim was subject to the shorter three year personal injury limit because it included a claim for personal injury. The judge also held that section 33 did not apply to mixed claims.
The first appeal was unsuccessful because, although the judge held that section 33 did apply to mixed claims, the claimant had not applied under that section. The first appeal judge also held that the personal injury elements of the claim could not be severed.
On further appeal to the Court of Appeal, that court held that section 33 did apply to mixed claims and that it was wrong to decide a section 33 issue on a summary application and a section 33 application was not required at that stage. The correct course of action was for the claimant to plead section 33 in reply to any limitation defence advanced by the defendant. An anticipated limitation defence to one element of the claimant’s claim did not provide a secure basis for summary dismissal of the entire action. Furthermore, the court had the power to sever the personal injury aspects of the claim.
Amending the name of a party
In Best Friends Group and another (t/a Best Friends) v Barclays Bank Plc, the Court of Appeal was hearing an appeal against the decision of a High Court judge who had dismissed an application to amend the claim form, so as to substitute the appellant Mr Bennett as the named claimant in place of Best Friends Group.
The limitation period for bringing the claim had expired and so Mr Bennett had to apply under CPR 17.4, which relates to amendments to statements of case after the end of the relevant limitation period.
CPR 17.4(3) reads:
The Court may allow an amendment to correct a mistake as to the name of a party, but only where the mistake was genuine and not one which would cause reasonable doubt as to the identity of the party in question.
The Court of Appeal pointed out that this involves three stages of an enquiry:
- Was the mistake genuine?
- Was it a mistake which would not have caused reasonable doubt as to the identity of the claimant?
- If those questions are answered in favour of the applicant, should the court exercise its discretion in favour of the applicant, the discretion being explicit from the use of the word “may”?
The High Court judge had concluded that it was not a genuine mistake and it would have caused reasonable doubt as to the identity of the claimant, but even if he was wrong on those points, he should still decline to exercise his discretion in the applicant’s favour.
The case concerned an action against the bank for negligence in the handling of swap transactions and the claimant was “Best Friends Group”, an unlimited company. It was common ground that the claimant should have been an individual, Mr Bennett.
The claim form had apparently been amended prior to service to read “Mr Andrew Bennett t/a Best Friends”, but the judge held that that amendment was ineffective because permission of the court was needed.
The facts are complicated and set out in full in the judgment but one of the key factors was the long delay in the application to amend:
“The result has been months of delay, incurring a huge amount of unnecessary costs, all caused by what [counsel then instructed for Mr Bennett] himself described to me as ‘sheer incompetence.’ I do not consider, in those circumstances, that it would have been appropriate to exercise my discretion to permit an amendment had I otherwise been satisfied that the requirements of CPR 17.4 were met.”
The Court of Appeal accepted that it was not for a court to exercise its discretion so as to punish a party for a harmless error by its legal representative.
However, the Court of Appeal said that that is not what had happened. Rather than a prompt application to amend the claim form to put matters right, an unwarranted allegation of deliberate concealment was made, and “sheer incompetence” was neither a sufficient explanation nor such as to come near to a justifiable excuse to what were repeated failures in the conduct of the litigation in what is a specialist court (the Mercantile Court), where high standards of efficiency and expertise are expected of practitioners.
The Court of Appeal pointed out that it will rarely disturb a discretionary decision made at a case management hearing, and that principle has recently been restated in Barton v Wright Hassall LLP.
