Jonathan Seitler QC guides practitioners through the basics of the law relating to limitation periods arising in property cases
What is the importance of limitation periods?
Limitation periods are like death – once they expire, there’s just no coming back. It doesn’t matter how hard you plead, how unfair it is or how much the other side will enjoy a windfall from it, you can’t argue with the Limitation Act 1980 (“the 1980 Act”). It’s as final as final can be.
What are the key limitation periods?
In a claim for breach of contract, the “primary” limitation period requires the claim to be brought within six years of that breach of contract. In a claim in tort for breach of duty, it’s six years from the date when loss first arose. In what is called an “action on a specialty”, which means an action arising from breach of an obligation under seal, the period is 12 years from the breach.
Similarly, the limitation period for enforcing a money judgment is also six years, this time from the date on which the judgment became enforceable.
There are no specific limitation periods for equitable remedies under the 1980 Act but in general equity follows statutory time limits under the doctrine of laches.
The limitation period for breach of the duty to build residential dwellings in accordance with statutory requirements is also six years, running from the completion of the dwelling itself or, in respect of a claim arising from defective work of rectification, six years from that: see section 1(5) of the Defective Premises Act 1972.
The “secondary” limitation period for non-personal injury claims in tort only is three years from the date of knowledge of the claim, subject to a 15-year long-stop.
When do limitation periods start to run?
In a case where the limitation period is measured from the date of breach – a claim in contract or on a speciality – it starts to run when the defendant does something contrary to its contractual obligation, such as not pay rent on the due date (in which case the rent payment date will be the first date of the limitation period) or allow an item it has an obligation to repair, to fall into disrepair.
This means that where a breach is continuing – such as a failure to repair – a fresh breach arises every day such failure occurs. The distinction between continuing and once-and-for-all breaches is the same as in relation to the law relating to waiver of the right to forfeit (see the Potted Guide to Forfeiture, EG, 10 December 2016, p70).
In a case where the limitation period is measured from the date of loss (a claim in tort), it starts on the date that the claimant’s rights become less advantageous as a result of the defendant’s breach of duty. This would be the date that completion occurs in respect of a transaction that gives rise to a claim: see Nouri v Marvi and others [2010] EWCA Civ 1107; [2010] 3 EGLR 79.
In actions based on fraud, or where a fact relevant to the claim has been deliberately concealed by the defendant, the limitation period does not begin to run until the claimant has discovered the fraud or could with reasonable diligence have discovered it.
What precise step must be taken within the limitation period?
The act which stops the limitation period from running is the claimant doing all in its power to bring the claim: see Bhatti v Asghar [2016] EWHC 1049 (QB). This usually involves delivery of the claim form to the court office: see Civil Procedure Rules (CPR) practice direction 7A.5.1. That rule provides that, although proceedings are started when the court issues the claim form, where it is received in the court office any earlier, the earlier date is the date that counts for the purposes of the 1980 Act. Doing all in one’s power to bring the claim also involves paying the correct issue fee: see Page v Hewetts Solicitors [2013] EWHC 2845 (Ch) and Dixon and another v Radley House Partnership (a firm) and others [2016] EWHC 2511 (TCC); [2016] PLSCS 278.
Once issued under CPR 7.2, it is then necessary for there to be valid service of the claim form within four months of that issue, in accordance with CPR 7.5. In theory, the court has power under CPR 7.6 to extend this four-month period for service where there is good reason to do so, but the discretion to allow it is unlikely to be exercised where doing so would deprive the defendant of a limitation defence.
Therefore, where a limitation period is about to expire and the claimant is under pressure to issue proceedings, yet may not be able yet to formulate its claim, the preferable course is for the parties to enter into a standstill agreement, freezing the position as regards limitation. This, though, obviously requires the co-operation of the prospective defendant. In the absence of such agreement, the only other option is to issue proceedings and seek an immediate stay.
What level of knowledge starts the three-year period running under the secondary limitation period?
The three-year period starts to run when the claimant has knowledge or ought to have had knowledge of the material facts about the loss suffered, the identity of the defendant and that such loss was attributable (at least in part) to acts or omissions of that defendant. In this context “knowledge” does not mean “know for certain”; it means “know with sufficient confidence to justify embarking on the preliminaries to the issue of a claim” and includes knowledge available to the claimant from its own observation of the facts, and knowledge which would have been ascertainable to it with reasonable further enquiry, including of an expert where reasonable to expect an expert to be consulted: see, Halford v Brookes [1991] 3 All ER 559.
When does the 12-year limitation period for an action on a specialty arise?
It applies in relation to actions based on breach of an agreement under seal. There is controversy about whether a deed without a seal (as occurs under many leases) is a specialty for these purposes. The better view is that execution under seal (wax or wafer or at least an impression on the paper) is not a key requirement of a specialty and that mention of the lease being signed as a deed is enough to create the 12-year limitation period.
In relation to mortgage debts, by reason of section 20 of the 1980 Act, the limitation period is 12 years from default in re-payment of mortgage instalments in relation to the principal sum and six years from the same default in relation to interest arrears.
What is the limitation period as regards adverse possession of land?
Under the Land Registration Act 2002, where the period of adverse possession relied on ends after 13 October 2003, a person can apply to be registered as owner of registered land if, for 10 years ending on the date of the application, that person has been in adverse possession of that land. Such a person can also apply on the basis of 10 years’ adverse possession even if evicted in the past six months. This is dealt with in more detail in the Potted Guide to Adverse Possession (EG, 3 October 2015, p96).
The 10-year period allowing a “squatter” to acquire rights of ownership by adverse possession must not be confused with the 12-year period otherwise available to the registered proprietor for bringing a claim to recover land. That 12 years runs from the date that the right to possession arose.
Jonathan Seitler QC is a barrister at Wilberforce Chambers
Checklist
• What is the importance of limitation periods?
• What are the key limitation periods?
• When do limitation periods start to run?
• What precise step must be taken within the limitation period?
• What level of knowledge starts the three-year period running under the secondary limitation period?
• When does the 12-year limitation period for an action on a specialty arise?
• What is the limitation period as regards adverse possession of land?
Critical limitation periods at a glance
| Breach of contract or lease not under seal | 6 years from breach |
| Breach of duty (tort) | 6 years from loss |
| Action on a specialty (lease under seal) | 12 years from breach |
| Enforcing a judgment | 6 years from judgment |
| Breach of statutory duty in building | 6 years from completion of dwelling |
| Secondary limitation period in tort | 3 years from date of knowledge, subject to 15-year long-stop |
| Adverse possession | 10 years from adverse occupation |
| Right to recover land | 12 years from right to recover |
The podded guides
Be sure to check out our new tie-in podcast series where Jonathan Seitler QC takes a more informal, but no less incisive, look at key areas of law: www.egi.co.uk/legal/pottedguide/
