The Midnight Hour
The Stroke of Midnight – or a Tale of Two Time Bars – Matthew & Others v Sedman & Others [2021] UKSC 19
A trust held shares in a company, against which (by reason of a Court order) the then- trustees (the Respondents) were entitled to claim by the ‘Time Bar date’ in respect of losses suffered due to misleading information. The date in question was 2 June 2011. The then-trustees failed to bring any claim within that time and the current trustees (the Claimants) claimed against them for negligence and breach of trust, in proceedings issued on Monday 5 June 2017 – which, the Respondents said, were too late pursuant to the Limitation Act 6 year time bar.
The statute wording for both tort and breach of contract is “after the expiration of six years from the date on which the cause of action accrued”. The Respondents said that the cause of action accrued at the midnight hour on 2 June 2011, so the 6 years expired on Friday 2 June 2017; the Claimants said that the last moment that the Respondents could have brought the claim against the company was midnight 2 June 2011, so the cause of action in respect of their failure accrued at the very first moment of 3 June 2011, meaning that this day was not to be taken into account in calculating 6 years; the limitation period therefore expired, they said, on Saturday 3 June 2017, when the Court office was closed, remaining so until Monday 5 June, when proceedings were issued, protecting time.
The High Court ruled that time expired on 2 June 2017 and that the claim was time barred. On appeal, the Court of Appeal agreed. Both Courts spent considerable time debating cases where a cause of action accrues part way through a day and contrasting those where it accrued at the very end of a day. The Supreme Court, on a further appeal, considered solely cases with a midnight deadline. It found that it was insignificant whether in such cases the cause of action accrued at the midnight hour or a moment thereafter, as on any view the ‘moment thereafter’ day was for practical purposes a complete, undivided day.
Lord Stephens in delivering the Supreme Court’s judgment explained:
… the reason for the general rule which directs that the day of accrual of the cause of action should be excluded from the reckoning of time is that the law rejects a fraction of a day. The justification for that rule is straightforward; it is intended to prevent part of a day being counted as a whole day for the purposes of limitation, thereby prejudicing the claimant and interfering with the time periods stipulated in the Limitation Act 1980.
In other words, if the day following a midnight deadline were to be excluded from the calculation of the six years, the limitation period would, in effect, be six years and one day.
In summary, the day upon which a cause of action accrues – be it 0001 hours, 1200 hours or 2400 hours is excluded from the calculation of the 6 year time period under the Limitation Act. In this case, an act had to be done by midnight on the deadline day; the cause of action (in tort and/or breach of contract) resulting from the failure to act was held to have accrued at midnight that day, or so close to it that the following day was nonetheless a complete day and would not be excluded from the 6 year calculation. Accordingly, the claim had become time-barred on the 6th anniversary of the deadline day.
On the basis that Saturday 3 June 2017 had been the last day for issuing proceedings, the Claimants had contended that issue on Monday 5 June was sufficient to interrupt time, given Court closure over the weekend. In the event of the Courts’ finding in this case, the point was irrelevant but, given that proceedings may now be issued electronically 24/7 in many Courts, including the Commercial Court, issue of proceedings on the working day next following a time bar expiry may no longer be sufficient.
By Louise Glover and Mathias Haugen
