Limitation Periods After Midnight Deadlines

Matthew & Ors v Sedman & Ors [2019] EWCA Civ 475

20 March 2019

What day does a cause of action accrue if the claimant must first wait for the expiry of a time limit set for midnight: 24:00 today or 00:00 tomorrow? Then, should that day, in accordance with established principles, be excluded when calculating limitation?

Background

The Appellants were the present trustees and beneficiaries under a testamentary trust, the main asset of which were shares in a company, Cattles plc. The Respondents were the former trustees of the trust, who, upon retirement, were replaced by the 1^st and 2^nd Appellants on 1 August 2014.

On Monday 5th June 2017 the claimants issued a claim for equitable compensation, damages for breach of trust, an order for the reconstitution of the trust estate, and an account in respect of a court sanctioned scheme of arrangement registered at Companies House on 2 March 2011. By the terms of the arrangement, claims by shareholders and creditors could be made until midnight on Thursday, 2 June 2011 (‘the Bar Date’).

It was common ground that the Appellants’ cause of action accrued immediately after the expiry of the midnight deadline for the Bar Date, i.e., on 3 June 2011.   The primary issue in the present appeal was whether 3 June 2011 should be excluded when calculating limitation, in accordance with the long-established principle that the day on which an action accrues is excluded for limitation.  If 3 June 2011 were not excluded, limitation expired on Friday 2 June 2017, and the claim would be time-barred. If 3 June 2011 were excluded, then the six-year period expired on Saturday, 3 June 2017 with the final day for issue agreed to be Monday 5 June 2017. Hence, the claim would be in time.

The Appeal

The Court of Appeal began by rejecting any metaphysical speculation on whether the relevant cause of action accrued at midnight 2 June 2011, i.e., on expiry of the Bar Date for claims under the scheme, or immediately thereafter in the very early seconds of the morning of 3 June 2011.   Citing Lord Diplock’s rejection in Dodds v Walker [1981] 1 WLR 1027 of “attribut[ion] to the one day or the other the punctum temporis between 24.00 hours on September 30 and 00.00 hours on October 1,” Irwin LJ found that in the case of a midnight deadline, it was wrong to attribute accrual of the cause of action to the day after the relevant midnight.

Irwin LJ did not disagree that the principle of excluding the day of accrual of an action from limitation is well-established. Its rationale was explored through the authorities, which showed a common theme in the injustice and absurdity which would arise in the theoretical case where the relevant limitation period was one day.  Irwin LJ cited the example given in Pritam Kaur v S Russell and Sons Ltd. [1973] QB 336 (CA), the most significant modern authority on the issue: if a person were injured at 23.50 hours and that day of injury were included for the purposes of a one-day limitation period, the person would have only 10 minutes to bring his claim.

The authorities which establish the principle that day on which the cause of action accrued is excluded for the purpose of calculating limitation were, thus, held not to be directly applicable to midnight deadline cases. Given that the correct approach in these cases was to hold that the cause of action accrues at midnight, not the day after, the potential injustice caused by fractions of a day does not arise.

Underhill LJ agreed, and further ventured upon the hypothetical situation raised but left open by Irwin LJ: whether the outcome would be different if the relevant time limit for the Bar Date had not been midnight, but partly into the day, such as 09.00 hours or 15.00 hours.  Underhill LJ’s ‘strong provisional view’ was that in such cases, the general rule that such day were excluded should apply, because there was “no rational basis upon which to distinguish between fractions of a day that are or are not sufficiently big enough to count.”  In the instant case, however, the essential point was, given that the cause of action properly accrued at midnight, there was no part of 3 June 2011 in which the Appellants did not enjoy their cause of action.

The appeal was, thus, unanimously dismissed.

Commentary

This case will be highly useful for practitioners, especially in commercial contexts, where both midnight deadlines and specific time limits are frequently relevant to the question of when a cause of action – most often in contract or debt – arise.   Such practitioners should remain vigilant in midnight deadline cases, noting that limitation period will begin on any full day in which a claimant ‘enjoyed their cause of action,’ even if realistically, a court office will not be open until later in that day in order for a claim to be issued.  It will be interesting to note how court attitudes to time may further develop in response to the increasing use of online claim forms and online filing, available at any time of day or night.