Limitation and the Midnight Hour

Limitation and the Midnight Hour

The majority of common law legal systems contain rules which specify the length of time in which a Claimant has to commence legal proceedings.  Once the relevant period has expired the Claimant is prohibited from bringing any claims thereafter.

These restrictions are founded upon sound policy precepts: the obligation on a Claimant to pursue a claim with reasonable diligence; the desire to avoid legal cases which have grown stale and where memories have dimmed or documents lost.

The running of a limitation period begins when the facts giving rise to the Claimant’s legal case actually accrue.  For instance, in the case of a claim for damages for breach of contract, when the contract is broken.

Today the Limitation Act 1980 (“the 1980 Act”), which came into force on 13^th November 1980, lays down the strict time limits in which a Claimant can sue.  The time limits themselves depend upon the particular category of claim.  For instance, the 1980 Act states that an action founded on tort (a civil wrong) shall not be brought once after the expiry of 6 years from the date on which the facts giving rise to the claim arose.

The origins of the statutory regime of limitation began with the Limitation Act 1939 (in force on 1^st July 1940).  Prior thereto by accidents of historical development and as a result of judicial intervention, this branch of the law displayed a bewildering diversity of rules and was encumbered with artificial distinctions.  For instance, different Acts of Parliament specified differing periods for each type of claim (including an Act Concerning Informers which hailed from the reign of Elizabeth I).

1. Matthew & Others v. Sedman & Others UK 2021 [UKSC] 19:  The Supreme Court were required to decide whether Friday 3^rd June 2011 (the day which commenced at or immediately after the midnight hour) counted towards the calculation of the 6-year limitation period in negligence under the Limitation Act 1980.
2. Section 2 of Limitation Act 1980 (the 1980 Act): This states that an action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action (ie the facts giving rise to the claim) accrued.
3. Section 5 of the 1980 Act: This stipulates the time limit for actions found on a breach of contract and provides that such an action shall not be brought after the expiration of six years from the date on which the cause of action accrued.
4. Section 21:  This relates to legal proceedings respecting trust property and again – in common with sections 2 and 5 aforesaid – provides that the limitation period relevant to any claims for breach of trust shall not be brought after the 6-year period permitted for so doing has expired.
5. The brief facts:  The Appellants [A] were Peter Matthew and others.  They were Professional Trustees.  The Respondents [R] were Barrie Sedman and the two others.  They too were Professional Trustees.  Earlier in the day R had had the conduct of a Trust established under the 1948 Will of one Mrs Evelyn Hammond deceased, who died in 1952.  R retired on 1^st August 2014 and were replaced by A.  A were entitled to certain benefits under the Trust.
6. Welcome:  One of the assets held by the Trust were shares in Welcome Financial Services Limited (“Welcome”).  The Welcome Shares were subsequently acquired by Cattles, a Company listed on the London Stock Exchange. 
7. Misrepresentation:  In 2007 Cattles published an Annual Report which the Financial Services Authority subsequently found to be misleading in important respects.  In April 2009 trading in the Cattles’ – previously Welcome – shares was suspended.  In December 2010 Welcome and Cattles applied for and obtained Court approval to Schemes of Arrangement in relation to inter alia the Welcome Shares.  On 28^th February 2011 the Court gave that approval. 
8. Deadline:  The terms of the Court’s approval contained a deadline.  This meant that R were required to submit to Welcome a Claim Form for compensation (for the losses occasioned by the misrepresentation) by midnight Thursday 2 June 2011.  R failed to meet this deadline.  It followed that no recompense could be made.
9. A’s claims against R:  Accordingly A claimed R for R’s failure to lodge the Claim Form in time. Those claims were founded upon negligence, breach of trust and breach of contract.  Each of those claims was subject to a 6-year limitation period.  Those claims were issued on Monday 5^th June 2017. 
10. Common Ground:  It was common ground between A and R that if Friday 3^rd June 2011 (commencing immediately following the midnight hour) counted towards the calculation of the 6-year limitation periods, then the last day for issue was Thursday 2^nd June 2017, in which case A was out of time.
11. Alternative scenario:  In contrast, if Friday 3^rd June 2017 were excluded for the purposes of the relevant 6-year limitation periods, then all parties recognised that such did not expire until Monday 5^th June 2017 (where the preceding weekend did not count towards the computation of time; the proceedings could only issue once the Court Office was open).
12. The Litigation: A issued their claims against R on Monday 5^th June 2017.  R responded by applying to strike out A’s claim on the grounds that their proceedings had been issued out of time (under the provisions of the 1980 Act in question), had no real prospect of success, and that there was no other reason why the Welcome claim should be allowed to continue to trial.
13. High Court:  The High Court granted R’s application to strike out.  The Judge stated:

“if the cause of action accrues at the very first moment of that day [on the facts 3^rd June 2011] then A have the full 6 years [in which to bring a claim].”

The Judge went on to say:-

“At any moment during that day A can bring a claim; and to exclude that day from the calculation for Limitation Act purposes would have the effect of giving [them] an extra day over and above the statutory limitation period for bringing the claim.”

It followed that the last day for issuing the Claim Form was Friday 2^nd June 2017.

1. The Court of Appeal:  A chose to appeal to the Court of Appeal [CA].

The question for CA was this: whether 3^rd June 2011 should have been included or excluded for the purposes of calculating the limitation period.

Both members of the CA held that there was a discrete category of cases which could be termed “midnight deadline” cases which were distinct from cases in which the cause of action accrues part-way through a day.

The CA held that this distinction justified including 3^rd June 2011, being the day after midnight, in the calculation of time.

1. The Supreme Court: A was given permission to appeal to the Supreme Court the question on the discrete issue as to whether Friday 3^rd June 2011 should fall within or without the period of reckoning of the 6-year period of limitation respectively attributable to claims in negligence, breach of trust and breach of contract.
2. The Supreme Court: Following consideration of earlier authorities the Supreme Court dismissed A’s appeal and upheld the decision of the CA.  Regard was had to McGee on Limitation Periods (8^th Edition, 2018) wherein at paragraphs 2.005 – 2.007 it was stated thus:-

“The general rule in calculating the expiry of a limitation period is usually expressed as being that parts of a day are ignored.” 

The Supreme Court held that this formulation was ambiguous and needed to be clarified by example.

1. Marron v. Dawson Bentley & Co:  One of the most satisfactory authorities on this point was Marron.  The Claimant (C) was injured in an accident at 13:30 on 8^th November 1954.  The claim was issued on 8^th November 1957. 

The question was whether time had expired at the end of 7^th November 1957.

Judge Havers held that it had not : the day on which the cause of action accrues is to be disregarded in calculating the running of time.

It therefore followed that the time began to run at the first moment of 9^th November 1954 and expired at the end of 8^th November 1957.

1. The Supreme Court’s formulation was this:-

“The rule is that any part of a day (but not a whole day) happening after the cause of action accrues is excluded from the calculation of the limitation period.”

1. The Supreme Court and its reasoning:  LJ Stephens, giving the lead Judgment, respectfully reasoned thus:-

“The reason for the general rule which directs that the day of accrual of the cause of action should be excluded from the reckoning of time is that the law rejects a fraction of a day.  The justification for that rule is straightforward; it is intended to prevent part of a day being counted as a whole day for the purposes of limitation, thereby prejudicing the Claimant and interfering with the time periods stipulated in the Limitation Act 1980.”

• However, in relation to the facts of Matthew, Lord Stephens went on to say:-

“However, in this case it was, in my opinion correctly, submitted that in a midnight deadline case, even if the cause of action accrued at the very start of the day following midnight, that day (after midnight) was a complete undivided day.  I consider that it would impermissibly transcend practical reality if the stroke of midnight or some infinitesimal division of a second after midnight led to the conclusion that the concept of an undivided day was no longer appropriate.”

And:

“when the issue is framed in terms of metaphysics – which the common law eschews – or of the principle that the law does not concern itself with trifling matters – the conclusion is the same: realistically, there is no fraction of a day.”

• It followed that for the purposes of the reckoning of time, A’s causes of action accrued at the very start of Thursday 2^nd June 2011 (where R had a whole day in which to submit the Claim Form but did not) and expired on Friday 3^rd June 2017.  A’s application was dismissed.
• Corollary: By way of corollarythe Supreme Court stated that were a full undivided day in a midnight case to be excluded from the reckoning of time, then its effect would be to produce a limitation period of 6 years and 1 complete day. 

The Supreme Court was of the view that this would unduly distort the 6-year limitation period and prejudice the Defendant by lengthening the statutory limitation period by a complete day.

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This Article contains views founded upon the interpretation of current legal practice and procedure.  However, each case is fact-specific and much may turn upon the individual nature of the case or changes in the law or differing judicial interpretations.