Search

How can we help?

Icon

When is it too late to claim?

Two recent decisions, one concerning a claim for a very large sum of money and one for one very much smaller, give further guidance on how limitation periods affect claims for payment under a construction contract.

The small claim

LJR Interiors Ltd v Cooper Construction Ltd concerned drylining works by LJR for Cooper, which were completed in 2014.  The works were subject to a purchase order rather than a formal contract, so the Scheme for Construction Contracts applied by default.  Cooper paid for the works, save for £1900 which it disputed.  LJR took no formal action at the time to recover this balance.

In 2022 LJR issued a further payment application, seeking £3,256.58 & VAT.  Cooper failed to pay the sum claimed or to serve a payless notice and LJR referred the claim to adjudication.  The adjudicator rejected Cooper’s argument that the claim was statute barred, taking the view that the breach of contract for limitation purposes did not occur until the final date for payment of the sum applied for.  The adjudicator further decided that the Scheme did not impose any time limit for submitting an application for payment.  Cooper still didn’t pay and LJR issued proceedings to enforce the adjudication award.  Cooper cross applied for a part 8 declaration that the claim was barred for limitation.

Unsurprisingly the court agreed with Cooper, dismissing the enforcement application and directing that the claim was stature barred.  In the absence of any specific contractual condition precedent for payment, such as the issue of a certificate, the right to be paid accrues when the work in question is done.  Any other situation would allow the claiming party to indefinitely prolong limitation by delaying issuing an application for payment.

Limitation issues are enforced robustly by the courts and will usually operate as a complete defence to a claim.

The big claim

The Court of Appeal considered a similar issue, albeit not for a construction contract, in Consulting Concepts International Inc v Consumer Protection Association (Saudi Arabia).  CCI and CCP entered into an agreement on 10 June 2013, which provided that CCI’s invoices would be paid with 90 days.  CCI delivered invoices for c.$15m in late 2013 and also claimed sums due under an undertaking given by CCP.  CCP didn’t pay and CCI issued proceedings on 27 December 2019.  Save for one invoice, this was within 6 years plus 90 days of the invoices.  In other words, the claim would be in time for limitation purposes if the cause of action didn’t start running until 90 days after delivery of the invoices.

CCP applied to strike out the claim on the basis that it was statute barred.  It succeeded in both the High Court and Court of Appeal.

As with the LJR v Cooper case, the case referred to the 2005 decision of Henry Boot Ltd v Alstom Ltd, which confirms that in the absence of a clear condition precedent a debt accrues when the work in question is done.  The right to sue for payment might be delayed (such as waiting 90 days after delivery of invoices in this case) but that doesn’t stop time running for limitation purposes in the meantime.

Practical implications

Both cases are a reminder not to take any risks over limitation and, if there is any doubt, to either issue proceedings or agree a standstill within six years of the work being carried out.  Limitation issues are enforced robustly by the courts and will usually operate as a complete defence to a claim.  The cases also emphasise the importance of good contract administration and prompt invoicing.

About this article

Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

About this article

Read, listen and watch our latest insights

art
  • 16 April 2025
  • Employment

End of the Line for Fire and Rehire? What Employers Need to Know

The Employment Rights Bill, introduced in October 2024, aims to restrict the practices of ‘fire and rehire’ and ‘fire and replace’.

art
  • 14 April 2025
  • Employment

Consistency is Key: Strategies for Harmonising Disciplinary Processes

It is an unfortunate reality that occasionally employers will find themselves in a position where it is necessary to proceed with a disciplinary process.

Pub
  • 28 March 2025
  • Employment

Talking Employment Law: Redundancy and settlement agreements – What you need to know

In this podcast, Lucy White and Shauna Jones, members of the employment team at Clarkslegal, will guide you through the complex topics of redundancy and settlement agreements.

art
  • 28 March 2025
  • Employment

Injury to feelings awards: Updates to Vento Bands 2025

Injury to feelings awards: Updates to Vento Bands 2025 For discrimination and detriment cases, compensation can also cover non-financial losses, which, in most cases, will include an injury to feelings award.

Pub
  • 24 March 2025
  • Employment

Talking Employment Law: The Employment Rights Bill – Part 1

In part 1 of the Employment Rights Bill podcast in the ‘Talking Employment Law’ series, Louise Keenan and Lucy White, members of the employment team, will discuss some of the main provisions of the Bill, including unfair dismissal and family rights.

art
  • 21 March 2025
  • Employment

Increase to Tribunal Award Limits Effective from 6 April 2025

As of 6 April 2025, the Employment Rights (Increase of Limits) Order 2025 will increase the compensation limits which apply to various Employment Tribunal awards as well as other statutory payments.