TIME has a habit of running out, particularly in the case of legal claims that, as anyone in the construction industry will know, can take years to manifest and prepare.
But it is not news to most people that if you have a claim and fail to raise it promptly then you may well find yourself with no right to pursue it at all.
The time limits, or limitation period, within which claims must be brought are set down by statute ? the main one being the Limitation Act 1980. The intention of limitation is to prevent people being plagued by 'stale' claims and to encourage speedy disposal.
When tested, the main issues arising from this legislation are which time limits apply and from which date.
Limitation is particularly complex in construction contracts where the problems are often discovered well after a project is complete. The three most common claims are the right to damages for breach of contract, the right to enforce claims pursuant to the contract (for example a claim for payment), and the right to damages in tort or for negligence.
The latter does not depend on there being a contract.
More than one of these rights may arise out of the same circumstances and any proceedings will identify which types of claim are being pursued.
Looking first at claims based on contract, rather than those based on tort, the general rule is that the right to pursue a claim exists for six years. If your contract is executed as a deed then the limitation is 12 years. That is straightforward but how do you determine from when the six or 12 years will start?
So far as a claim for breach of contract is concerned the time period will start from the date of the breach. But it is worth noting that in a construction contract the limitation period for defective works will generally run from the date of completion of all of the work and not an earlier date when the defective work was undertaken.
What about claims pursuant to the contract as opposed to a claim for breach of the contract? When does the time period start to run? Here, we are talking about a claim not for damages but simply to pursue your contractual entitlement. In the recent case of Henry Boot Construction v Alstom Combined Cycles, the Court of Appeal confirmed that in the case of a claim for payment, the six year limitation period will start to run from the date of issue of the cer tif icate in question, whether it is an interim certificate or a final one. This applies even if the work was executed more than six years prior to the issue of the certificate.
That leaves claims for a right to damages based on tort. Here, the general limitation period is also six years. But the date from which the six years starts to run is not simply the date when the negligent act occurred; there must also be a damage arising from the act. The damage may occur some time after the act of negligence. So if a contractor negligently installs defective pipes but damage does not occur until some time later ? say when the pipes burst ? then the time period will not start to run until the damage is caused.
Dissatisfaction with the decision in the case of Pirelli General Cable Works v Oscar Faber & Partners led to the introduction of the Latent Damages Act 1986. This allows claims for negligence to be brought outside the normal six year limitation period for latent defects.
Pirelli had engaged Oscar Faber to design a factory chimney back in 1969. Serious damage occurred to the chimney as a result of a design failure but Pirelli did not discover this until 1977. It then tried to sue Oscar Faber for negligence.
It was found that Pirelli could not 'with reasonable diligence' have discovered the problem before 1972, but the court decided that the start date of the limitation period was when the damage came into existence regardless of when the claimant could have first discovered it.
The Latent Damages Act changed the position so that a claim for negligence (other than claims for personal injury) can be brought outside the normal six-year limitation period where the claimant does not, or could not, discover the damage until after the expiry of the six year period. In this case the claimant will have three years to raise its claim from the date when it could first have discovered the problem. This is subject to a time limit of 15 years from the date of the negligent act.
In Scotland the law is similar to that in England and Wales except that, in general, there is only one time limit for claims whether under contract or in negligence: five years with an overriding limit of 20 years.
The five-year period in the case of claims pursuant to a contract starts to run from the date when the right to claim was first capable of being enforced.
In the case of damages for breach of contract or damages for negligence (excluding personal injury claims) the five year period runs from when the problem manifests itself.
The start date for this period is postponed in the case of latent defects until the date when the claimant first becomes aware, or could with reasonable diligence have become aware, of the damage caused by either the breach of contract or the negligent act.
Finally, it is worth remembering that the limitation period is stopped by the issue of court or arbitration proceedings.