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.
