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An expired limitation period can operate as a complete defence
to a claim, so missing a limitation deadline could be your worst
nightmare. The Court of Appeal case of Inframatrix Investments
Ltd v Dean Construction Limited [2012] EWCA Civ 64 serves as a
useful reminder of the importance of knowing your contract and when
your limitation period expires, but working out the latter is not
always straightforward.
Dean Construction Limited (DCL) was a specialist roofing and
cladding contractor engaged by Inframatrix Investments Limited
(IIL) to undertake works at a factory. The contract was originally
prepared by IIL's lawyers but the final executed version
reflected DCL's amendments to the proposed twelve year
contractual limitation period at clause 17.4 as follows:
"No action or proceedings under or in respect of this
Agreement shall be brought against the Contractor after (a) the
expiry of 1 year from the date of Practical Completion of the
Services or; (b) where such date does not occur, the expiry of 1
year from the date the Contractor last performed Services in
relation to the Project."
DCL undertook the relevant works between November and December
2008. Snagging items were completed in February 2009, at which
point DCL maintained that its works were complete. In October 2009
IIL initiated the pre-action protocol procedure alleging the works
undertaken by DCL were defective. A site meeting between the
parties took place in March 2010, after which DCL offered to return
to the site to carry out further investigative and remedial work.
IIL rejected this offer and proceedings were issued in December
2010.
The dispute focused on the contractual limitation period at
clause 17.4 and when time started to run. IIL contended that
practical completion of the services had not been achieved and, by
implication, clause 17.4 (b) would only apply where practical
completion "does not occur because time for occurrence is
no longer expected to be achieved by the client". The
Court rejected these arguments. The implied words on clause 17.4(b)
were unnecessary and unjustified as it would mean IIL would be able
to dictate the point at which time would begin to run. As there was
no mechanism for "Practical Completion of the Services"
to be certified and the contract did not adequately define what it
meant, clause 17.4(b) applied, and time would run out one year from
when DCL last performed services. On this point DCL argued that it
last performed services in February 2009. IIL disagreed and
asserted it was in March 2010 when DCL undertook an inspection. The
Court rejected IIL's assertion as the site meeting and
investigations in March 2010 were undertaken as part of the
pre-action protocol; they were not in the performance of the
services under the contract. As a result, the claim was issued more
than a year later, and was out of time.
Practical Tips
Before agreeing to limitation periods shorter than the normal
contractual limitation consider whether they could be problematic
in the future.
Ensure contractual limitation provisions are clear on the date
when time begins to run. The courts are unlikely to infer the
intention of the parties.
As soon as a potential dispute arises, check the contract and
diarise the limitation period. If you are in doubt over which
contractual limitation period is applicable, always choose the
worst case scenario and plan against the shortest limitation
deadline.
If time is running out before a dispute is settled, either seek
the other party's agreement to extend the contractual
limitation period, or issue proceedings and seek a stay to allow
pre-action protocol steps to be followed.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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