Contractual limitation clause did not trigger defence under Section 1(3) of the Limitation Act 1980

In a construction case a typical limitation clause in a collateral warranty said:

“Notwithstanding the date hereof no proceedings shall be commenced against the Contractor after the expiry of twelve years from the date of issue of the last written statement by the Client that practical completion of the Project has been achieved under the Contract”.

This presented a procedural bar to any right the beneficiary of the warranty may have against the contractor being enforced in proceedings brought by the beneficiary issued after the cut-off time.

In the case of Bloomberg LP v Malling Pre-Cast Ltd [2015] the High Court ruled that this clause did not of itself extinguish the underlying substantive right, which might remain.

So, in proceedings by the beneficiary of the warranty against them, the project’s engineers might issue Part 20 proceedings against the scheme’s contractor claiming a contribution under section 1 of the Civil Liability (Contribution) Act 1978 and the limitation clause did not prevent that.

So the contractor had not demonstrated that the engineer had no real prospect of succeeding in its Part 20 Claim.

Outwith the clause, it may be that issues of limitation would arise later in the Part 20 proceedings or even in the main action but it was too early in the proceedings to say.

If as a matter of general law, the contractor could be said to have “ceased to be liable by virtue of the expiry of a period of limitation or prescription which extinguished the right on which the claim against” the contractor was based, this would entitle the contractor to a limitation defence under the proviso contained in section 1(3) of the Limitation Act 1980, quite independently of warranty’s limitation clause, in respect of the damage.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.