Supreme Court provides clarity surrounding the calculation of time for midnight deadlines

This case review was co-authored by Sarah Hitchcock, Trainee Solicitor, London.

The Supreme Court recently upheld the Court of Appeal ruling that where a cause of action accrues at midnight, the whole day after midnight should be included when calculating time for limitation purposes.

Background

The appellants in this matter were the current trustees and beneficiaries of a trust (the Trust) with principal assets as shares in a company called Cattles plc. The respondents were the former trustees of the Trust.

In April 2009, trading in Cattles’ shares was suspended. Then in December 2010, Cattles and its subsidiary, Welcome Financial Services Ltd (Welcome) applied to enter into court sanctioned schemes of arrangement. The schemes included a provision for shareholders to makes claims. These had to be submitted “on or prior to the Bar Date”. This was defined as the first business day falling three months after the “Effective Date”, which was 2 March 2011. The deadline therefore fell on Thursday 2 June 2011.

However, the respondents did not make a claim on or before the deadline. The appellants therefore issued a claim in negligence and breach of trust on Monday 5 June 2017 (the Welcome Claim).

Trial at first instance

Under the Limitation Act 1980, limitation for this claim expired six years from the date on which the cause of action accrued. The respondents therefore maintained that the claim was statute barred.

The court had to consider whether Friday 3 June 2011 should be included in the calculation of the limitation period in light of the midnight deadline. If Friday 3 June 2011 was included, the limitation date would expire on Friday 2 June 2017 and the Welcome Claim would have been issued out of time. However, if Friday 3 June 2011 was not included, the limitation period would end on Saturday 3 June 2017. It was agreed between the parties that if the limitation period was deemed to expire on Saturday 3 June 2017, proceedings could be brought on Monday 5 June 2017 as the court office would be shut on a Saturday.

At first instance, HHJ Hodge QC posed the question “when a cause of action is completely constituted at the very first moment of a particular day, does that day fall to be included when calculating the applicable six years’ limitation period or does it fall to be excluded?”

HHJ Hodge QC held that the cause of action had accrued at the very first moment of 3 June 2011. This meant that 3 June 2011 would be included in the relevant limitation period, and the Welcome Claim was issued out of time. However, permission to appeal was granted as HHJ Hodge QC considered the matter to be “interesting and not unimportant”

Court of Appeal

At the Court of Appeal, Lord Justices Irwin and Underhill considered the question of when the relevant cause of action accrued. They concluded that it was wrong to attribute the accrual of the cause of action to the day after the expiry of the midnight deadline.

The Court of Appeal also agreed that no fractions of a day arise in midnight deadline cases. The relevant cause of action accrued by the first moment of the day after midnight, as opposed to the day following midnight.

The Court of Appeal therefore held that the trial judge was correct in concluding that in a midnight deadline case, the following day should be included for limitation purposes. As such, the Welcome Claim was out of time and the appeal was dismissed.

Supreme Court

The appellants then appealed to the Supreme Court who also dismissed the appeal.

The Supreme Court considered various case law, which established that where a cause of action accrues part-way through the day it would be excluded for limitation purposes. Regardless of whether the cause of action was considered to accrue on 2 June 2011 or 3 June 2011, the 3 June 2011 was still a complete and undivided day and not a fraction of a day.

The Supreme Court therefore held that if the day was not included, the appellants would receive the benefit of an additional day alongside the six year limitation period. This would prejudice the respondents by lengthening the limitation period. The day following the midnight deadline should be included in the limitation period and the Welcome Claim was brought outside of the limitation period.

Comment

The ruling in this decision has provided necessary clarity of the circumstances surrounding midnight deadlines. This clarification is welcomed by practitioners, who must ensure that when calculating time following a midnight deadline the whole of the following day is included and any deadlines are met accordingly.