Professional Negligence: On The Stroke Of Midnight The Limitation Clock Started Ticking

• Published date: 05 July 2021
• Subject Matter: Insurance, Litigation, Mediation & Arbitration, Insurance Laws and Products, Personal Injury, Professional Negligence
• Law Firm: Mills & Reeve
• Author: Mr David Gooding and Kelly Hockley

Where a cause of action commences on the stroke of midnight - exactly at the start of a new day - does the limitation clock start ticking on that day or the following one?

That was the discrete issue before the Supreme Court in Matthew & Others v Sedman & others [2021] UKSC 18 in a case against former trustee accountants.

In a decision handed down this morning, the Supreme Court found in favour of the defendant accountants. The Court affirmed that in stroke of midnight cases, you do include the date the cause of action arises when counting the start of the limitation period. This is distinct from cases where the cause of action commences during part of the day - in those cases the limitation clock starts ticking the day after - the law does not recognise part of a day.

Professional indemnity specialists from the accountants team at Mills & Reeve acted for the successful defendants and their insurers together with Clare Dixon QC and Nicholas Broomfield of 4 New Square.

The Claim

The Defendants were former trustees of the Evelyn Hammond Will Trust. The Claimants are the existing trustees and beneficiaries of the Trust. The principal asset in the Trust were shares in Cattles Plc valued at almost '400,000. Cattles Plc also owned Welcome Financial Services Limited. After trading in Cattles' shares was suspended, both companies entered into court sanctioned schemes of arrangements. The Welcome scheme required any claims to be submitted on behalf of shareholders to the administrators by 2 June 2011 and before midnight. This was known as the Bar Date. The Defendants failed to submit claims before the Bar Date preventing them from making a claim under the Welcome scheme.

The Claimants then issued proceedings against the former trustees on Monday 5 June 2017. The Defendants argued the claim was time-barred because the last day for issuing proceedings was Friday 2 June 2017 in accordance with the six year time-limit under the Limitation Act 1980.

In 2017, the Defendants successfully applied to strike out that part of the claim in relation to the Welcome scheme on grounds of limitation. The Claimants appealed the decision of HHJ Hodge QC. The Court of Appeal dismissed the appeal in 2019 upholding the first instant decision and making clear that in midnight cases, you do include the day in which the cause of action accrues. The Claimants appealed again to the Supreme Court.

Arguments

The parties' respective positions (click image to view full size):

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