If you believe you have a claim under a construction contract be conscious of the risk of expiry of limitation
It is a common misconception that potential claims can live for ever. Sadly however, they are as mortal as the rest of us.
It is impossible to do justice here to the complexities of the law of limitation but suffice to say that when it comes to claims under building contracts, it will be at the very least prudent, as and when issues arise, to be conscious of the risk of expiry of limitation and be careful if there are any issues between the parties that have been, or could reasonably have been, detected at least five years ago.
This is a general observation and each situation will depend on its own facts, but by way of example, a monetary claim that arose more than six years ago based on a written contract that had not been executed as a deed, may well have passed its sell by date.
The lack of opportunity to indulge in cross examination can be a positive advantage to the case. But generally speaking that live witness with a relative recent recollection of events is more useful
Contracts often address time periods for entitlement to make claims, and these should not be ignored. In some cases, they may transpire to be an absolute bar to bringing proceedings. Therefore, it is important to check those parameters, not only after a claim has arisen, but also during the course of the operation of the contract, as sometimes it will simply be too late.
Also the longer one leaves the claim, the more difficult it can be to locate and/or obtain evidence. Legal practitioners may tell you that there are some occasions when a witness has unfortunately passed away, but the lack of opportunity to indulge in cross examination can be a positive advantage to the case. But generally speaking that live witness with a relative recent recollection of events is more useful. Also, particularly in the world of adjudication, if a claim is pursued late in the limitation day, one wonders whether an adjudicator will ask the question to him or herself: “Why did you leave it so long if the claim was strong?”
One issue that has troubled those involved in the word of construction disputes is that of how the introduction of adjudication has affected the limitation period. This was recently addressed by the Court of Appeal in Aspect Contracts (Asbestos) Limited vs Higgins Construction Plc , which clarified that under adjudication the accrual of a cause of action is the date of payment or overpayment pursuant to an adjudicator’s decision, and it is that point from which a losing party can claim to be entitled to have payment or over payment returned. Thus, and as somewhat of a rarity, this is a situation where, in effect, the limitation clock can be reset for a losing party in adjudication. This is related to the interim nature of an adjudication award.
It would certainly be wrong, in my view, to use this potential extension of time limits to change strategy regarding timing of recovery of monies. If you believe you have claims under construction contracts, either under contract or at common law, do bear in mind that you can fall foul of the grim reaper of claims.
Laurence Cobb is head of construction at law firm Taylor Wessing