Under English law, a potential Claimant has a set period of time to commence a claim, after which it will be time barred and the Claimant will be unable to bring the claim (known as the limitation period). Due to the consequences for the Claimant of the limitation period expiring, it is crucial that the Claimant correctly calculates the limitation date. The Supreme Court has recently provided further guidance on the computation of time for limitation purposes in the case of Matthew & Others v Sedman and Others  UKSC 19.
Overview of Limitation Periods
Although there are exceptions and it is possible for the limitation period to be extended (by way of a "standstill" agreement between the parties), the general position is that a claim cannot be brought after the expiration of six years from the date on which the cause of action accrued (in respect of claims brought under tort or contract). The date of the cause of action differs depending on the type of action. For example:
- In contractual claims, the cause of action accrues on the date of the breach of contract
- In negligence claims, the cause of action accrues on the date that the damage is suffered; and
- In claims brought under an indemnity clause, the cause of action accrues on the date that the loss is incurred.
A claim is "brought" for limitation purposes when the court receives the claim form, and not the date on which the sealed claim form is served on the Defendant.
The Supreme Court decision
The Claimants were the trustees and beneficiaries of a will trust and the Defendants were accountants of the trust (and former trustees). The trusts' main assets were shares in a company called Cattles Plc. In 2010 proceedings were commenced for a court-sanctioned scheme of arrangement in relation to Cattles (the "Scheme"), following the FSA finding that information in Cattles' annual report (and other documents) was misleading. The Scheme set a "bar date" for claims under the Scheme of midnight on 2 June 2011.
The Defendants (as trustees) failed to make a claim under the Scheme on behalf of the Claimants (as beneficiaries) on or by the Bar Date, resulting in the Claimants being excluded from the Scheme. The Claimants brought proceedings against the Defendants for negligence and breach of trust (the "Claim") on Monday 5 June 2017. An application was subsequently made by the Defendants for summary judgment and/or strike out on the basis that the Claim was time barred. Specifically, the Defendants argued that the Claimants' cause of action had arisen when the Defendants failed to make a claim under the Scheme by the bar date of midnight on 2 June 2011. As more than six years had passed by the time the Claim was brought (5 June 2017), the Claim was time-barred.
At first instance, it was common ground that if the last day for issuing proceedings was Saturday 3 June 2017, the claim would be in time because it would have been issued on the next working day (Monday 5 June 2017). It was also common ground that if the cause of action had accrued part way through a day, that day should be excluded when calculating the relevant time period because the law does not recognise fractions of individual days. The key issue therefore was whether 3 June 2011 itself should be included in the six year limitation period
The High Court relied on previous authority and held that the cause of action had accrued at the very first moment of 3 June 2011. The Claimants could have issued the claim form at any time on 3 June 2011 (the day after the Bar Date), and therefore that day should was to be included in calculating the 6 year limitation period. This decision was upheld in the Court of Appeal.
The Supreme Court unanimously agreed with the previous rulings. The Claimants had argued that even if the cause of action arose at the very first moment of a day, that day would already have commenced and, applying the principle that you exclude the day on which the cause of action arose, should therefore be excluded.
However, the Supreme Court found that when something has to be done by midnight on a given day, the cause of action arises so early on the following day that it makes no real difference for limitation purposes. In "midnight deadline cases" the following day should be included when calculating limitation as it remained a completely undivided day. The Claimants had the whole of the day on 3 June 2011 to issue a claim and therefore excluding that day would give the Claimants the benefit of six years and one day in which to bring the Claim. Therefore, it was concluded that the Claim was time barred.
Key points to note
- Failing to bring a claim within a limitation period has severe consequences. The claim cannot be brought after the limitation date.
- Limitation periods are applied strictly by the Courts. A Claimant should never assume that it will be given the "benefit of the doubt", even in finely balanced cases where the limitation date is not immediately obvious.
- Potential Claimants need to consider limitation issues at the outset of any case and determine with confidence the date from which limitation starts to run. If in doubt, a Claimant should seek legal advice.
- It may be possible to agree with the Defendant the date from which the parties will treat the limitation period has having commenced, including extending the limitation period through a standstill agreement. However, it is not guaranteed that a prospective Defendant would agree to this.