Limitation is the first thing to consider in every case and the calculation of limitation must be right.
The law sets out deadlines for starting claims (referred to as limitation periods). The reason for this is to stop claims being started a long time after the action giving rise to the claim occurred (often referred to as the cause of action). The date on which the cause of action occurred is referred to as the date on which the cause of action accrued.
There are strict rules that determine the limitation period. Once the limitation period has expired, the other party has a complete defence to your claim.
However, the rules can sometimes be hard to work out even for the most experienced solicitor.
There are three questions to ask in every case:
The Limitation Act 1980 tells you how long you have to start a claim. The basic rules are:
However, the limitation periods are extended in certain circumstances. In a negligence claim, for example, following the initial 6 years, there is a further 3 years from the date of knowledge but provided the 3 years falls within a period of 15 years overall from the date of the negligent act.
When does the time start to run?
It is important to identify the type if action involved and when the cause of action accrued.
The start date is usually the day on which the cause of action accrues but discounting the actual day itself. That is, the date the contract is formed or the date on which the negligence took place etc. However, sometimes the start date is the date of discovery e.g. personal injury claims, fraud or where the other party might have concealed facts.
In other situations such as a contract for building works, the cause of action accrues on the completion of the works.
Do I need to identify the loss?
The majority of claims will involve a claim for money to compensate for the loss. In most cases, people will want to wait until the loss is significant or substantial. Most people will want to wait until they can quantify the loss. However, this is a trap for the unwary. Provided the cause of action has accrued, the time starts to run irrespective of how much loss has already been incurred.
What amounts to knowledge?
People are often surprised to find that the limitation period has expired despite them not actually knowing about the cause of action. A typical scenario is a mistake a solicitor or surveyor has made during a house purchase. Something wrong with the title to the property might not be found out until something arises to prompt the homeowner to look at the title in detail e.g. a boundary issue. However, the date of knowledge is the earliest date on which the purchaser could notice the mistake, which is not necessarily the same date on which they actually noticed it. During the purchase, the purchaser would have had a number of opportunities to consider the title and to spot the mistake.
Get legal advice as soon as possible
Limitation is complicated. You should ensure that you have all the information to hand when a dispute arises. You should ensure you take legal advice as soon as possible and not put things off.
If you have any questions about this subject, or are considering making a claim as described here please get in touch with our team:
T 0115 988 8777