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In this post, Max Eshraghi, an associate working within the insurance team at CMS, previews the decision which is awaited from the UK Supreme Court in the matter of Matthew and others v Sedman and others, which concerns the application of limitation timebar.  This post also features a contribution from another field, that of mathematics: we feature here comments and observations of Dr Richard Steiner, Honorary Research Fellow (School of Mathematics & Statistics, University of Glasgow), which Max then responds to from a legal perspective.  We hope readers of the blog enjoy this interesting post.

On 19 January 2021, the UK Supreme Court heard the appeal against the Court of Appeal decision in the matter of Matthew and Ors v Sedman and Ors [2019] EWCA Civ 475. The Supreme Court were concerned with key points regarding the importance of hours and minutes in calculating limitation periods and therefore the upcoming judgment will make important reading for litigators in all practice areas.

The judgment will seek to give clarity to cases concerning ‘midnight deadlines’ in the context of limitation and the following question previously considered by the Court of Appeal; when a cause of action is completely constituted at the very first moment of a particular day (a ‘midnight deadline’), does the cause of action accrue on the same day or the next day for the purposes of calculating the limitation period?

In this case preview, we consider the background to the case and the issues addressed in the appeal, as well as the potential ramifications of the Supreme Court’s judgment, which is expected in the coming months.

Background

The claimants were the current trustees and beneficiaries of a trust. The trust’s principal assets were shares in Cattles plc, which later acquired Welcome Financial Services Ltd. By April 2008 the trust held almost 162,000 shares in Cattles plc, valued at approximately £393,000.

However, in April 2009, trading in Cattles’ shares was suspended and in December 2010 both Cattles and Welcome applied to enter into court sanctioned schemes of arrangement (‘the Cattles Scheme’ and ‘the Welcome Scheme’). Both schemes were registered at Companies House on 2 March 2011.

The schemes included provision for shareholders (in this case, the claimants) to make claims for payment. Any claims under the Welcome Scheme had to be submitted “on or prior to the Bar Date” on 2 June 2011.

Consequently, to be made in time, a claim under the Welcome Scheme had to be made by midnight on 2 June 2011.

Missed Limitation

The defendants were the accountants and former trustees for the Trust and, when asked to submit a claim on behalf of the beneficiaries under the Welcome Scheme, they failed to do so until after the Bar Date of Friday 2 June 2011. The claimants were therefore barred from claiming for payment under the Welcome Scheme.

They issued a claim in negligence on Monday 5 June 2017. The issue then is did the claimants bring the claim in time?

The Arguments

A long-standing principle for calculating limitation is that where the cause of action accrues during the day, for example at 11am, that day is to be ignored when calculating the limitation period as the court does not recognise part of a day.

The defendants argued that the cause of action had accrued at the stroke of midnight 3 June 2011, rather than after midnight. The cause of action had accrued by the stroke of midnight and from midnight onwards, the claimants had the opportunity to bring the claim. Therefore, for the purposes of calculating limitation, Friday 3 June 2011 was to be included and limitation expired on 2 June 2017. Under this argument, the claimants’ claim was statute barred, having been issued more than six years since the cause of action in professional negligence accrued.

The Defendants relied on an early 20th Century authority of Channell J in Gelmini v Moriggia [1913] 2 KB 549, where it was clearly stated that:

“…in all cases of contract the person who has to pay has the whole of the day upon which payment is due in which to pay; therefore until the expiration of that day an action cannot be brought because until then there is no complete cause of action. The result is that an action cannot be brought until the next day; but it can be brought on that day because the cause of action is complete at the commencement of that day.”

The claimants, conversely, argued that the cause of action accrued after the stroke of midnight. Therefore 3 June 2011 was to be excluded for the purposes of calculating the limitation period. They relied upon the Court of Appeal authority of Pritam Kaur v S Russell and Sons [1973] QB 336 and the first instance decision in Marren v Dawson Bentley & Co Ltd [1961] 2 QB135, which established that where a cause of action accrues part way through a day, that day should be excluded for limitation purposes.

In this instance, they argued, a nanosecond would constitute ‘part of a day’ and therefore 3 June 2011 should not be included for the purpose of calculating limitation.

High Court Judgment

His Honour Judge Hodge QC, in finding that the cause of action accrued at the very first second of 3 June 2011, agreed with the Defendants at first instance.

He concurred that Gelmini was distinct from the case presented. Whereas in Gelmini the cause of action accrued part way through the day, leaving the Claimants no time to bring a claim on that day, here the cause of action accrued by the first nanosecond on 3 June 2011. The Claimants, therefore, had the whole day on 3 June 2011 to bring a claim. This is summarised best by the following passage:

“[Where] it is absolutely clear that the cause of action arises at the very beginning of a particular day, that day should not be excluded from the calculation for Limitation Act purposes. At any moment during that day the claimant can bring a claim; and to exclude that day from the calculation for Limitation Act purposes would have the effect of giving him an extra day over and above the statutory limitation period for bringing a claim. I therefore accept Miss Dixon’s argument that where the cause of action is complete at the very beginning of a particular day, you exclude that day for the purposes of calculating the limitation period. On that footing, the limitation period in the present case being on 3rd June 2011 and expired at the very end of 2nd June 2017. On that basis, the last day for issuing the claim form was Friday 2nd June 2017, and this claim is out of time.”

The claimants were granted permission to appeal to the Court of Appeal.

The Court of Appeal judgment

However, the Court of Appeal agreed with the Defendants and the previous judgment.

They affirmed that in ‘midnight deadline’ cases, the date upon which the cause of action accrues is included. The cause of action, they concluded, accrues by the first moment and not in the first moment of the day, giving any claimants time to pursue the claim for the entirety of the day. In this case, the cause of action accrued by midnight on 3 June 2011. It was therefore to be counted for the purposes of calculating limitation.

It follows then that the claimants were able to issue a claim form against the defendants at any point on Friday 3 June 2011 and during the following six years, so limitation expired after Friday 2 June 2017. For proceedings to have been issued in time, the claim form should have been issued by this date and not the following Monday (5 June 2017).

The Court of Appeal found that in instances where there was a ‘midnight deadline’ attributing the cause of action to the day after the expiry of the midnight deadline would be wrong. Lord Justice Underhill explained at [38] that in such cases “there is [not] even a ‘nanomoment’ after midnight when the cause of action is not in being”, echoing Lord Justice Irwin’s conclusion at [32] that, “it appears to me that Miss Dixon is correct. A “midnight deadline” case is different from others in the sense that the deadline provides a categorical indication that the action accrued by that point in time, rather than accruing on the day following midnight.”

Potential Outcome of the UK Supreme Court Appeal

Clearly then the claimants have appealed to the Supreme Court following two unfavourable judgments. The Supreme Court’s judgment will be limited to a distinct set of circumstances in its focus on ‘midnight deadlines’ and so, contrary to the claimant’s contentions, will not impact on the well settled wider legal principles of limitation.

It is likely that the Supreme Court will continue to draw a distinction, as the Court of Appeal has before, between the present set of facts and those of Gelmini, upon which the defendants rely. The Court of Appeal referred to the leading text books McGee on Limitation Periods (7th ed) and Chitty on Contracts (33rd ed) to make the point that the defendant’s position is supported by established legal principle and this is likely to have an impact on the Supreme Court judgment. The Supreme Court will have to decide whether Gelmini remains good law, following Marren and Pritam Kaur which were both adduced by the claimants. However, neither of these cases concerned “midnight deadlines” and it may be that the Supreme Court, like the Court of Appeal before it, do not regard these cases as authoritative on the issue.

A judgment in the claimant’s favour will provide an extra day’s relief to last minute litigators however it would have the potential to raise more questions than answers regarding the established principles of limitation.

Opinion of Dr Richard Steiner, Honorary Research Fellow (School of Mathematics & Statistics, University of Glasgow):

The case Matthew and others v Sedman and others concerns the date, for limitation purposes, of a cause of action arising because a claim under a scheme of arrangement was not made on or before 2 June 2011. Given that the limitation period was six years, would action taken on 3 June 2017 have been in time? (In fact the action was taken on 5 June 2017, being the first working day on or after 3 June 2017, but this makes no difference.)

 I think that confusion may have arisen from a failure to grasp that there does not have to be an earliest point of time at which action can be taken. The critical time is 2400 hours on 2 June 2011, or equivalently 0000 hours on 3 June 2011. Arguably action cannot be taken at the critical time, but can be taken at any time after that. On this analysis, there is no earliest point of time at which action can be taken, because for any point of time after the critical time there is another point of time in between the two. This means that action can be taken on 3 June 2011 but not before, so that the date of the cause of action is 3 June 2011.

 The alternative analysis has the cause of action arising at 2400 hours on 2 June 2011, so that the date of the cause of action is 2 June 2011. But 2400 hours on 2 June 2011 is also 0000 hours on 3 June 2011, so that on this analysis the date of the cause of action could also be 3 June 2011. It is not surprising that this analysis has caused difficulty. I think it helps the understanding to appreciate that the interval of time after some event does not contain an earliest point.

Further commentary on Dr Steiner’s view

Dr Steiner’s point is valid to an extent but the decision of the Court of Appeal was based more on practicalities than metaphysical arguments about time.

Lord Justice Irwin in the Court of Appeal decision derived help from a landlord and tenant case (Dodds v Walker [1981] 1 WLR 1024) in which Lord Diplock said “I do not personally derive assistance from pursuing metaphysical arguments about attributing to the one day or the other the punctum temporis between 24.00 hours on September 30 and 0.00 hours on October 1…”.

They found for the defendants largely because, practically speaking, the claimants had the entirety of 3 June 2011 to bring a claim, knowing from 24:00 on 2 June (or 00:00 on 3 June however one might want to express it) was the time when they were no longer to bring a claim and therefore had a cause of action.

It will be interesting to see if the Supreme Court consider any metaphysical arguments about time but it has not been the focal point of the decisions taken by Court of Appeal or the High Court to date.