Reform of the Law on Limitation of Actions - Government Accepts Law Commission Proposals

The established law on limitation periods looks set for a radical change following the Government's announcement on 16 July 2002 that it accepts in principle the Law Commission’s proposals for reform of the law on limitation of actions for civil claims. The Government has said it plans to introduce new legislation after further consideration and when the opportunity arises.

Broadly, under the proposals, a claim would have to be brought within a period of three years from knowledge of the cause of action with a long-stop period of ten years from accrual of the cause of action, after which a claim could not be brought. The Government believes this will provide greater clarity and certainty in the law by unifying the various disparate periods of time in which claimants currently have to bring claims in a wide range of civil proceedings.

Problems with the Limitation Act 1980

In a consultation paper published in 1998, the Law Commission described the current law on limitation as unfair, complex, uncertain and outdated. The Limitation Act 1980 makes different provisions in respect of different causes of action, and it is not always clear into which category a cause of action falls. The date on which the limitation period starts to run does not always take account of the claimant’s knowledge of the relevant facts, leading to cases of unfairness, and provisions relating to deliberate concealment have not worked well. Indeed, one recent example of the uncertainties in relation to the Limitation Act 1980 was the Court of Appeal decision in Brocklesby v Armitage Guest [2001] 1 All ER 172 the effect of which was that under section 32 of the Act a professional subject to a claim for negligent advice would never have a valid limitation defence. This was reversed by the House of Lords in April 2002 in Cave v Robinson Jarvis & Rolf [2002] UKHL 18, but caused much confusion and concern in the meantime.

The Law Commission’s proposals

Following a consultation period, the Law Commission’s final recommendations were set out in its Report on Limitation of Actions published in July 2001.

It recommended that the Limitation Act 1980 be repealed and replaced with a new Act setting out a wholly new core limitation regime for the majority of claims. This core limitation regime, which will apply to the majority of claims for a remedy for a wrong, or for enforcement of a right, and to claims for restitution, would introduce a primary limitation period of three years starting from the date that the claimant knows, or ought reasonably to know:

1. the facts which give rise to the cause of action,
2. the identity of the defendant, and
3. if the claimant has suffered injury, loss, or damage or the defendant has received a benefit, that the injury, loss, damage or benefit was significant.

There would, however, be a long-stop limitation period of ten years, starting from the date of the accrual of the cause of action, or, for those claims in tort where loss is an essential element of the cause of action or for claims for breach of statutory duty, from the date of the act or omission which gave rise to the cause of action.

The core regime would apply without qualification to the majority of tort, contract and restitutionary claims, claims for breach of trust and related claims, claims on a judgment or arbitration award, and claims on a statute. The core regime would also apply to other claims but with certain qualifications. In personal injury claims, no long-stop limitation period would apply, and the court would have a discretion to disapply the primary limitation period. Claims in relation to land would simply be subject to a limitation period equivalent to the long-stop limitation period, running from the date on which the cause of action accrues. The long-stop limitation period would not run where a defendant concealed relevant facts, but only if the concealment was dishonest.

In its response to the consultation paper in 1998, Herbert Smith supported proposed changes to the law that would promote certainty in the limitation regime. It is hoped that a new law will now clarify and simplify the rules relating to limitation of actions.

© Herbert Smith 2002

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