The Law Commission (LAW COM No 270) LIMITATION OF ACTIONS Item 2 of the Seventh Programme of Law Reform: Limitation of Actions Laid before Parliament by the Lord High Chancellor pursuant to section 3(2) of the Law Commissions Act 1965 Ordered by The House of Commons to be printed 9 July 2001 HC 23 The Law Commission was set up by the Law Commissions Act 1965 for the purpose of promoting the reform of the law. The Law Commissioners are: The Honourable Mr Justice Carnwath CVO, Chairman Professor Hugh Beale Mr Charles Harpum Professor Martin Partington Judge Alan Wilkie QC The Secretary of the Law Commission is Mr Michael Sayers and its offices are at Conquest House, 37-38 John Street, Theobalds Road, London WC1N 2BQ. The terms of this report were agreed on 3 April 2001. The text of this report is available on the Internet at: http://www.lawcom.gov.uk ii EXECUTIVE SUMMARY The current law on limitation periods suffers from a number of problems. The Limitation Act 1980 makes different provision in respect of different causes of action. It is not always clear which category a cause of action falls into, and thus how it should be treated for limitation purposes. 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 in some cases to unfairness. In some cases the Act provides no protection to the claimant under a disability; in others, the protection given is too extensive, giving the claimant unlimited protection at the expense of the defendant even when the claimant has a representative who is fully aware of the relevant facts. Cases such as Brocklesbury v Armitage & Guest1 have shown that the provisions of the Act on deliberate concealment do not work well with the limitation regime applying to claims for latent damage other than personal injuries, and that they can penalise defendants who had no intention of concealing information from the claimant. In addition, the Act cannot readily be applied to new causes of action, such as claims for restitution. In this Report we recommend that these problems should be resolved by the introduction of a single, core limitation regime, which will apply, as far as possible, to all claims for a remedy for a wrong, claims for the enforcement of a right and claims for restitution. This regime will consist of: 1. A primary limitation period of three years starting from the date on which the claimant knows, or ought reasonably to know (a) the facts which give rise to the cause of action; (b) the identity of the defendant; and (c) 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. 2. A long-stop limitation period of 10 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 claims for breach of statutory duty) from the date of the act or omission which gives rise to the cause of action (but for personal injuries claims see below). We recommend that the above core regime should apply without any qualification to the following actions: the majority of tort claims, contract claims, 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 will be modified in its application to claims in respect of personal injuries. The court should have a discretion to disapply the primary limitation period, and no long-stop limitation period will apply. All personal injury claims will be subject to this modified regime, whether the claim concerned is made in negligence or trespass to the person. We recommend that claims to recover land and related claims, though not subject to the core regime, should be subject to a limitation period of the same length as the long- stop limitation period, running from the date on which the cause of action accrues. 1 [2001] 1 All ER 172. iii We also recommend that the core regime should extend, but with some qualifications, to the following claims: claims under the Law Reform (Miscellaneous Provisions) Act 1934, the Fatal Accidents Act 1976 and the Consumer Protection Act 1987; claims for conversion; claims by a subsequent owner of damaged property; claims in relation to mortgages and charges; and claims under the Companies Act 1985 and in insolvency proceedings. Subject to a few exceptions, we do not propose to alter other specific limitation periods laid down in enactments other than the Limitation Act 1980. We further recommend that where the core regime applies to common law remedies for a cause of action, it should also apply to equitable remedies for that cause of action; but that delay may still bar a remedy before the limitation period under the core regime has expired. We recommend that the core regime should apply to all claims unless excluded by another provision of the proposed Bill (or any other enactment). During the claimant’s minority the initial limitation period should not run. The long- stop limitation period should run during minority, but not so as to bar an action before the claimant reaches the age of 21. Adult disability (including supervening disability) should suspend the initial limitation period, but will not affect the long-stop limitation period. However, the protection given to the adult claimant suffering from a disability will not be unlimited. Where the claimant under a disability has suffered personal injury (to which no long stop period will apply) and is in the care of a responsible adult ten years after the later of (a) the act or omission giving rise to the claim and (b) the onset of disability, the primary limitation period should run from the date the responsible adult knew or ought to have known the relevant facts unless the responsible adult is a defendant to the claim. The long-stop limitation period should not run where the defendant has concealed relevant facts, but only if the concealment was dishonest. Acknowledgments and part payments should start time running again, but not once the initial or long-stop limitation period has expired. The parties may agree that the limitation regime we recommend should not apply to disputes between them, or should only apply in modified form. They will not however be able to reduce the protection afforded by our provisions on concealment, minority or other disability nor to modify the application of the long-stop limitation period to claims under the Consumer Protection Act 1987. iv THE LAW COMMISSION LIMITATION OF ACTIONS CONTENTS Paragraph Page PART I: INTRODUCTION 1 1. THE SCOPE OF THIS REVIEW 1.1 1 2. PROBLEMS WITH THE CURRENT LAW 1.4 2 3. THE PROVISIONAL PROPOSALS IN OUR CONSULTATION PAPER 1.10 4 4. OUTLINE OF OUR MAIN RECOMMENDATIONS 1.12 4 5. THE STRUCTURE OF THIS REPORT 1.21 7 PART II: AN OUTLINE OF THE PRESENT LAW 8 1. INTRODUCTION 2.1 8 2. CLAIMS FOR BREACH OF CONTRACT 2.2 8 3. CLAIMS FOUNDED ON TORT 2.4 8 (1) General 2.4 8 (2) Claims for damages consisting of or including damages for personal injuries and related claims 2.9 11 (a) General 2.9 11 (i) Damages in respect of personal injuries to the claimant or any other person 2.14 12 (ii) Actual and constructive knowledge 2.19 14 (b) Claims in respect of personal injuries surviving under the Law Reform (Miscellaneous Provisions) Act 1934 2.24 15 (3) Claims under the Fatal Accidents Act 1976 2.25 15 (4) Latent damage (other than personal injury) in the tort of negligence 2.26 16 (5) Claims under the Consumer Protection Act 1987 2.35 19 (6) Claims for defamation and malicious falsehood 2.37 19 (7) Conversion 2.38 19 4. CLAIMS IN RESPECT OF TRUST PROPERTY 2.39 20 (1) Claims for breach of trust 2.39 20 (2) Claims in respect of the personal estate of a deceased person 2.46 22 5. CLAIMS FOR RESTITUTION 2.48 22 v Paragraph Page 6. CLAIMS TO RECOVER LAND AND RELATED CLAIMS 2.52 23 (1) Claims to recover land 2.52 23 (2) Claims to recover proceeds of the sale of land 2.60 25 (3) Claims to recover rent 2.61 25 7. CLAIMS IN RELATION TO MORTGAGES AND CHARGES 2.62 25 8. MISCELLANEOUS CLAIMS 2.67 26 (1) Claims on a judgment 2.67 26 (2) Arbitration 2.69 27 (3) Claims on a statute (including claims for contribution) 2.71 27 (a) Claims on a statute 2.71 27 (b) Claims for contribution under the Civil Liability (Contribution) Act 1978 2.77 29 9. FACTORS POSTPONING THE RUNNING OF TIME 2.78 29 (1) Claimant under a disability 2.78 29 (2) Claim based on fraud 2.80 29 (3) Deliberate concealment 2.84 30 (4) Relief from the consequences of a mistake 2.89 32 (5) Acknowledgment and part payment 2.91 33 10. ADDITIONAL ISSUES 2.93 33 (1) What happens when time expires? 2.93 33 (2) What the claimant has to do to prevent the expiry of the limitation period 2.94 33 (3) Contracting out of, or waiving, the statutory limitation period 2.96 34 (4) Laches and acquiescence 2.97 34 (5) Application of the 1980 Act to equitable remedies by analogy 2.100 35 (6) Burden of proof 2.103 36 (7) The ‘Sevcon’ problem: restrictions on the claimant’s right to sue 2.104 36 (8) Adding new claims in existing proceedings 2.105 36 (9) Commencement and retrospectivity 2.114 38 PART III: REFORM I: THE CORE REGIME 40 1.