The Limitation Act 1980 (‘the Act’) outlines the rules about when a Claimant must issue legal proceedings in Court to avoid the Defendant defending the claim on the basis that the Claimant is out of time. This is known as the ‘limitation period’.
The purpose of this article is to consider the point at which this limitation period commences (and expires) for breach of contract, negligence and fraud claims.
The article will also briefly touch upon limitation periods for defamation and at which point the limitation period might expire. There are also various statutory exceptions in the Act.
However, please note that we will not be detailing the limitation rules in respect of product liability or personal injury and, in general, as limitation is a very detailed and complex area of law. It is always recommended that you seek legal advice first.
The General Rule
If the limitation period has expired then the Defendant has a complete defence to the claim. It is therefore important for a Claimant to know where they stand before launching proceedings when the limitation period is up for debate.
If the Claimant loses the limitation argument, the Court may order them to pay the Defendant’s legal costs (as well as having already paid for you own) and it will likely mark the end of the road for the Claimant’s claim.
The General Rule is that the there is a limitation period of:
- 6 years for actions in respect of simple contracts and certain actions in tort (i.e. a civil wrong which causes damage), such as negligence; or
- 12 years for actions on a specialty, such as breach of an obligation contained in a deed (typically used in transactions concerning the sale of land).
The time usually commences on the day on which the cause of action accrues e.g. the date of the breach of contract or when damage was caused, in the case of a tort.
For example, if a breach of contract occurs on 20 October 2020, the Claimant will have until 19 October 2026 to issue a claim in Court against the Defendant for any loss arising as a result of that breach.
In certain circumstances, the limitation period does not begin on the day on which the cause of action accrues but instead the date on which the Claimant discovers, or ought to have discovered (with reasonable diligence) the damage.
Section 14A of the Act provides that where the Claimant does not have full knowledge of all relevant facts, the limitation period is the later of:
- 6 years from when the cause of action accrued; or
- 3 years from the date when the Claimant knows or ought to have known the relevant facts to the cause of action.
For example, if a negligent act occurs on 20 October 2020 but the Claimant only discovers the relevant facts on which to bring a claim on 20 October 2027, the Claimant may have an argument to say that the limitation period will expire on 19 October 2030.
However, this also needs to be considered in line with Section 14B of the Act, which provides for a 15-year long-stop date for any claim for negligence.
Claims based on fraud
Section 32 of the Act provides that the limitation period of six years does not commence until the Claimant has:
- discovered the fraud, concealment or mistake; or
- could have with reasonable diligence discovered the fraud, concealment or mistake.
Where there is a dispute as to when the Claimant, with reasonable diligence, should have discovered the fraud, concealment or mistake, the burden to prove this lies on the Claimant’s shoulders.
In practical terms, if fraud occurs on 20 October 2020 but with reasonable diligence it could only have been reasonably discovered on 20 October 2027, the Claimant will have an argument to suggest that the limitation period runs from 20 October 2027, not 20 October 2020.
There needs to be a very careful analysis of exactly when the Claimant became aware / could have become aware of the fraud with reasonable due diligence if they are to rely on this section of the Act. This question is very fact sensitive and will differ enormously from case to case.
Defamation or malicious falsehood
Section 4A 4A of the Act provides that the limitation period in respect of slander or libel is one year from the date after the publication of the alleged slanderous or libellous information. This is a very short period and therefore the exact date of publication is very important to establish.
For example, if there has been slanderous or libellous dissemination of information published on 20 October 2020, the Claimant will have until 19 October 2021 to issue proceedings.
However, as per Section 32A of the Act, the court has the general power of discretion to exclude this time limit if it is just and equitable to do so (but these instances are likely to be very rare).
Limitation is of the utmost importance when considering any potential Court action. If you are in any doubt about the limitation period which may apply to your claim, we urge you to seek immediate legal advice to avoid any potential loss of rights or remedies.
Where the limitation period is close to expiring, it may be possible to agree with the Defendant that the limitation period should not run for an agreed period (this is known as a ‘standstill agreement’) or otherwise, to issue a claim in Court to protect your claim from expiring (known as ‘protective proceedings’).
This article is provided for general information only and is not intended to be nor should it be relied upon as legal advice in relation to any particular matter. If you require specific legal advice on any issue detailed above or otherwise, we at Burlingtons Legal LLP will be able to assist. Please contact us on +44 (0)20 7529 5420 if you wish to discuss further.