The Law Commission

SUMMARY

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 & Guest^[0] 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:

•    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.

•    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.

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 Act1987.

PART I

INTRODUCTION

1. The Scope of this Review

1.1      In our Sixth Programme of Law Reform we recommended that "there should be a comprehensive review of the law on limitation periods with a view to its simplification and rationalisation." The first stage of this review was completed with the publication of our Consultation Paper, Limitation of Actions, in January 1998. We received a very large number of responses (182) to the Consultation Paper, and we have derived enormous assistance from them. We are most grateful to consultees for the time which has been spent in considering, and responding to, our provisional proposals. A list of those who responded is included in Appendix B to this Report.
1.2      In this Report we now make our final recommendations for the reform of the law on limitation periods for civil claims. The prosecution of criminal offences is therefore by its nature excluded. We are also of the view that our recommendations should not apply to applications related to matrimonial and family proceedings. It would be inappropriate, for example, for an application in relation to the care of children following a divorce to be subject to a limitation period. We therefore propose to exclude any claim relating to 'family proceedings'.^[1] Similarly, our recommendations will not extend to purely administrative claims, such as an application for directions by a trustee.
1.3      In a number of cases, claims which would otherwise come within our recommended limitations regime are subject to a limitation period which is prescribed in an enactment other than the Limitation Act 1980. With a few exceptions,^[2] we do not propose to include these claims within our regime. This will, for example, exclude applications for judicial review, and claims under the Human Rights Act 1998, from the scope of the new Act. The other major exclusion from our review is what we described, in our Consultation Paper, as "purely procedural" aspects of the law. With one exception, relating to the rules governing the addition of new claims to existing actions,^[3] we do not make recommendations in respect of any areas that are dealt with by Rules of Court or under the courts' inherent jurisdiction to determine matters of practice and procedure.^[4] Our recommendations will be limited to claims for substantive relief - that is, claims for a remedy for a wrong, the enforcement of a right, or for restitution.

2. Problems with the current law

1.4      In the Consultation Paper we identified the major problems of the current law:^[5] it is unfair, complex, uncertain and outdated.
1.5      Traditionally, the limitation period has started from the date the cause of action accrued, whether or not the claimant knows of the potential claim. This caused injustice where the injury suffered by the claimant did not become apparent for several years. Provision has been made for such cases of latent damage in actions for personal injuries,^[6] under the Consumer Protection Act 1987^[7] and in some other cases.^[8] However, the provision for latent damage does not extend to most causes of action. Outside the areas of personal injuries and consumer protection, the limitation period will only run from the date the claimant knows the relevant facts if the claim is brought in negligence. Even where the claim is for personal injuries, provision for latent damage does not extend to deliberately caused injuries. Here the limitation period remains six years, running from the date of accrual of the cause of action. This has led to the anomalous result that a claimant who has been sexually abused by her father may have longer to bring a claim for damages against her mother for negligently failing to prevent the abuse than to bring a claim against her father for actually committing the abuse.^[9]
1.6      It is necessary to balance the interests of the claimant (who wishes to have as long as possible to bring a claim) and the defendant (who must be protected from stale claims) in setting a limitation period. It will never be possible to achieve complete fairness between the parties (indeed the imposition of any limitation period could be regarded as doing 'rough justice' to the claimant). However the balance struck under the present law does not give sufficient recognition to the interests of the claimant. And even though the changes referred to have resulted in some improvement, in each case a different regime has been adopted, introducing needless complexity into the law.
1.7      The law lacks certainty in some areas. For example, it is unclear precisely what "actions to recover sums recoverable by virtue of an enactment" are under section 9 of the Limitation Act 1980.^[10] The correct interpretation of the provisions in the Limitation Act 1980 on breach of trust,^[11] on conversion^[12] and on actual and constructive knowledge^[13] is also unclear.
1.8      The law is outdated in some respects. The traditional limitation period of six years which applies to some actions founded on tort and actions founded on breach of (simple) contract originated in the Limitation Act 1623 when communication and gathering information was far more difficult than it is today. The law has also preserved some traditional distinctions which no longer have any relevance, such as the restriction of the concept of acknowledgments to claims for specified amounts^[14] and the distinction between actions on a simple contract (subject to the six year limitation period) and actions on a specialty (subject to a twelve year limitation period).
1.9      More importantly, the Limitation Act 1980 cannot be applied straightforwardly to causes of action such as the newly recognised law of restitution founded on unjust enrichment. This has been recently illustrated by Kleinwort Benson Ltd v Lincoln City Council.^[15] The House of Lords recognised that money paid under a mistake of law should be recoverable, and held that section 32(1) of the Limitation Act 1980 applied, so that the period of limitation does not begin to run until the claimant could with reasonable diligence have discovered the mistake. Where the 'mistake' results from a 'change' in the common law after the relevant payment has been made, the limitation period under the current law will only begin to run when the claimant should have discovered the 'change', no matter how long before the 'change' the payment has been made. This led Lord Goff of Chieveley to remark:

I realise that this consequence may not have been fully appreciated at the time when this provision was enacted, and further that the recognition of the right at common law to recover money on the ground that it was paid under a mistake of law may call for legislative reform to provide for some time limit to the right of recovery in such cases.^[16]

3. The Provisional Proposals in our Consultation Paper

1.10      In our Consultation Paper on limitation periods we proposed to resolve the problems identified above by applying a single, unified, limitations regime as far as possible to all causes of action. The main elements of this "core regime" were provisionally recommended to be as follows:

(1) There would be an initial limitation period of three years that would run from when the claimant knows, or ought reasonably to know, that he or she has a cause of action.

(2) There would be a long-stop limitation period of ten years, or in personal injury claims of thirty years, that would run from the date of the act or omission which gives rise to the claim.

(3) The claimant's disability (including supervening disability) would extend the initial limitation period (unless, possibly, there is a representative adult other than the defendant). Adult disability would not extend the long-stop limitation period (and we sought views as to whether minority should do so). Deliberate concealment (initial and subsequent) would extend the long-stop. Acknowledgments and part payments should start time running again but not once the initial or long-stop limitation period has expired.

(4) The courts would not have a discretion to disapply a limitation period.

1.11      With two exceptions, the main elements of the core regime, and in particular the move to a limitation period starting from the date on which the facts establishing the claimant's cause of action are discoverable by the claimant, were welcomed by the majority of consultees. The two exceptions were, first, our proposal that there should be a long-stop of thirty years applying to actions for personal injury; and, secondly, our proposal to remove the courts' discretion to disapply the limitation period in relation to personal injury claims. With some hesitation, we have been persuaded by consultees' responses that these two provisional proposals should not form part of our final recommendations.

4. Outline of our Main Recommendations

1.12      We recommend that there should be a core limitation regime^[17] which will apply to claims for a remedy for a wrong, claims for the enforcement of a right and claims for restitution, as follows:

(1) There should be a primary limitation period of three years starting from the date that 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) For the purposes of the definition of the date of knowledge, the injury, loss, damage or benefit will be considered to be significant if

(a) the claimant knows the full extent of the injury, loss, or damage suffered by the claimant or benefit obtained by the defendant or

(b) if a reasonable person would think that, on the assumption that the defendant does not dispute liability and is able to satisfy a judgment, it is worth making a civil claim.

(3) The courts will not have a discretion to disapply the primary limitation period, except in relation to claims in respect of personal injuries.

(4) There should 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 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).

(5) During the claimant's minority the primary 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 twenty-one.

(6) Adult disability (including supervening disability) should suspend the primary limitation period. Adult disability should not affect the long-stop limitation period.

(7) The long-stop limitation period should not run where the defendant has dishonestly concealed relevant facts.

(8) Acknowledgments and part payments should start time running again, but not once the primary or long-stop limitation period has expired.

(9) 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 modify our provisions on concealment, minority or other disability or the application of the long-stop limitation period to claims under the Consumer Protection Act 1987.

1.13      We recommend that the above core regime should apply without any qualification to the following actions:

(1) tort claims (except for personal injury claims, and conversion claims);

(2) contract claims (on both simple contracts and specialties);

(3) restitutionary claims;

(4) claims for breach of trust and related claims, including claims in respect of the personal estate of a deceased person;^[18]

(5) claims on a judgment or arbitration award; and

(6) claims on a statute.

1.14      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. However, the protection given to the adult claimant suffering from a disability will not be unlimited. Where the claimant under a disability 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. All personal injury claims will be subject to this regime, whether the claim concerned is made in negligence or trespass to the person (including claims in respect of personal injury).
1.15      We also recommend that the core regime should extend, but with some qualifications, to the following claims:

(1) claims under the Law Reform (Miscellaneous Provisions) Act 1934 and the Fatal Accidents Act 1976;

(2) claims under the Consumer Protection Act 1987;

(3) conversion;

(4) claims by a subsequent owner of damaged property;

(5) claims for a contribution or an indemnity;

(6) claims in relation to mortgages and charges; and

(7) claims under the Companies Act 1985 and insolvency proceedings.

1.16      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.
1.17      We further recommend that actions against public authorities should not be subject to special (shorter) limitation periods; 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. Subject to a few exceptions, we do not propose to alter specific limitation periods laid down in enactments other than the Limitation Act 1980. We recommend that the core regime would apply to all actions unless excluded by another provision of the proposed Bill (or any other enactment).
1.18      We have considered our recommendations in the light of the European Convention of Human Rights. Any law which imposes a limitation period on the time within which a claimant may bring a civil claim limits the claimant's right of access to the court. This is not an absolute right under the Convention, but any limitations imposed on it must not restrict or reduce the claimant's right of access to the court to such an extent that the essence of the right is impaired. In addition, such limitations must pursue a legitimate aim and be proportionate to that aim in order to comply with Article 6 of the Convention.
1.19      The European Court of Human Rights has considered the extent to which statutory limitation periods are compatible with Article 6 of the Convention in Stubbings v United Kingdom in the context of a claim for damages for sexual abuse. It noted the margin of appreciation afforded to states to regulate the right of access to the courts, and recognised that limitation periods serve a legitimate aim and in the case in question were proportionate. The Court suggested however that the law on limitation periods as applied to claims in relation to sexual abuse might have to be reconsidered in the light of developing awareness of the problems of such claimants. In the course of our review we have therefore given this issue particular attention,^[19] as well as considering generally whether our recommendations comply with the European Convention on Human Rights.
1.20      We are satisfied that the recommendations we make in this report are compatible with the Convention rights implemented in the Human Rights Act 1998.

5. The Structure of this Report

1.21      The rest of this Report is set out as follows. In part II we describe the present law on limitations in outline, and the developments in the law which have taken place since the publication of the Consultation Paper in some detail. In part III we discuss the core regime in the light of the comments we have received from consultees, and in part IV we discuss the application of the core regime to a number of causes of action which are regarded as in some way problematic under the current law, and which are therefore accorded special treatment. In part V we set out our final recommendations in relation to a number of additional issues connected with the law on limitation periods. We summarise our recommendations in part VI.
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Note 0    1 [2001] 1 All ER 172.    [Back]

Note 1    ‘Family proceedings’, for this purposes, will be defined by reference to s 32 of the Matrimonial and Family Proceedings Act 1984, including claims relating to matrimonial causes, legitimacy, adoptions, applications for consent to the marriage of a minor or a declaration under s 27B(5) of the Marriage Act 1949, and under Part III of the Family Law Act 1986.    [Back]

Note 2    Which are discussed at paras 4.279 - 4.288 below.    [Back]

Note 3    We consider that it is necessary to deal with this for two reasons. First, this area is governed by section 35 of the Limitation Act 1980, and cannot be reformed without primary legislation. Secondly, as discussed in our Consultation Paper (at paras 9.28 - 9.33) the rules under the current law have proved difficult to apply.    [Back]

Note 4    Examples of these “procedural matters” include applications to extend the period for which a claim form is valid (Civil Procedure Rules 1998 (“CPR”), r 7.6), matters which must be specifically included in the particulars of claim or the claim form (CPR, Parts 8 and 16), the rules governing the amendment of statements of case (CPR, Part 17) and applications to strike out an action for abuse of process (CPR, r 3.4).    [Back]

Note 5    Limitation of Actions, Consultation Paper No 151 (1998), paras 1.1 - 1.5 and 11.1 - 11.15.    [Back]

Note 6    Limitation of Actions, Consultation Paper No 151 (1998), paras 1.13 - 1.14 and 3.29 - 3.76.    [Back]

Note 7    Limitation of Actions, Consultation Paper No 151 (1998), paras 1.19 and 3.101 - 3.104.    [Back]

Note 8    Limitation of Actions, Consultation Paper No 151 (1998), para 1.18 and 3.87 - 3.3.100.    [Back]

Note 9    S v W [1995] 1 FLR 862; Stubbings v Webb [1993] AC 498.    [Back]

Note 10    Limitation of Actions, Consultation Paper No 151 (1998), paras 7.10 - 7.16.    [Back]

Note 11    Limitation of Actions, Consultation Paper No 151 (1998), paras 4.6 - 4.13.    [Back]

Note 12    Limitation of Actions, Consultation Paper No 151 (1998), paras 3.108 - 3.115.    [Back]

Note 13    Limitation of Actions, Consultation Paper No 151 (1998), paras 3.52 - 3.65.    [Back]

Note 14    Previously known as “liquidated damages”.    [Back]

Note 15    [1999] 2 AC 349.    [Back]

Note 16    [1998] 2 AC 349, 389.    [Back]

Note 17    Which will be enacted in Parts I and III of the Bill: the “standard limitations provisions” and “general modifications of the standard limitations provisions”.    [Back]

Note 18    Though we do make special provision in respect of bare trusts and future interests, and we except claims made by the Attorney General or the Charity Commissioners. See paras 4.105 - 4.106, 4.110 - 4.112 and 4.116 - 4.119 below.    [Back]

Note 19    See paras 3.125, 3.162 and 4.23 - 4.33 below.    [Back]