Knowing your limits – recent rulings on calculating limitation periods

The Court of Appeal has delivered two recent decisions that provide useful guidance on correctly calculating the time limit for commencing court proceedings. The first case to note is Otuo v Watchtower Bible and Tract Society of Britain [2017] EWCA CIV 136 in which it was confirmed that the day on which a cause of action arises should not be counted when calculating the limitation period. Another significant decision was recently handed down in the case of Al Rawas v Hassan Khan (a firm) [2017] EWCA CIV 42 which considered the limitation rules to be applied to counterclaims.

It was shown that a day can make all the difference in the case of Otuo v Watchtower Bible and Tract Society of Britain. The claimant’s libel claim was initially stuck out when the court at first instance found that its claim was brought out of time by one day. The claim was subject to a one year time bar and proceedings were issued on 19 July 2013 following an alleged libellous announcement made on 19 July 2012. On appeal, the Court of Appeal reversed the decision and confirmed that the count for limitation purposes should begin on the day after the alleged tort was committed. This meant that the claim was brought on the very edge of the limitation period but not over it.

The implications are that, when calculating when a limitation period will expire, the last day on which proceedings can be issued will be the same date of the month, the applicable number of years after the event giving rise to the claim (in other words, the anniversary date of the claim assuming that the applicable time limit is a number of years).

The rules for calculating the limitation period for counterclaims were considered in the case of Al Rawas v Hassan Khan. It was confirmed that a counterclaim has no special status and is subject to the same limitation rules as a claim. The claimant was a firm claiming for their unpaid fees and the defendant sought to counterclaim for professional negligence. The defendant would have been out of time to bring a fresh action but argued that it could advance a counterclaim. It relied upon section 35(1) of the Limitation Act 1980 which states that any new claim made in the course of an action is deemed to have been commenced on the same date as the original action.

Whilst the Court of Appeal acknowledged that the provision was “not a model of clarity”, it refused the defendant’s argument. The Court clarified that the section only had the procedural effect of deeming any counterclaim as having been brought on the date on which the main action was commenced. It does not have the effect of overriding the underlying limitation period for the claim.

The practical ramifications of this are that, in cases where two parties have potential claims against each other, it is not always feasible for one party to sit back with the plan of raising a counterclaim in an attempt to extinguish any claim that might brought by the other party. If a claim becomes stale, it cannot be later revived in order to fight or set-off against any claims that have been issued in time.

These cases provide further clarity on the approach to be taken when calculating the date on which a claim becomes time barred. They also serve as a useful reminder of the importance of  being vigilant when it comes to ensuring that claims are brought within time.