RG Carter v Kier Business Services: time is of the essence
The recent ruling on RG Carter Building v Kier Business Services raised the question of how much time has to elapse before cost claims become barred under section 10 of the Limitation Act 1980. Theresa Mohammed and Zoeyah Shaheen of Trowers & Hamlins explain.
When do contribution proceedings become statue barred under section 10 of the Limitation Act 1980?
In RG Carter Building Limited v Kier Business Services Limited, Edward Pepperall QC considers the proper construction of this section in the context of a settlement agreement reached following arbitration proceedings.
The claimant, Carter, built a new science block at Boston Grammar School in 2001-2002.
The building was designed by the defendant, Kier, but subsequently suffered issues of water ingress.
The client, Lincolnshire County Council, therefore brought arbitration proceedings against Carter, which were settled in 2015 upon the agreement that Carter would carry out remedial works at its own cost.
In September 2017, Carter issued proceedings against Kier seeking an indemnity or contribution of £205,908.60 in respect of the cost of settlement.
As the parties entered into a standstill agreement on 28 April 2018, the issue before the court was whether the contribution claim was statute barred on the same date.
In summary, Carter submitted that the remedial works were not agreed until the arbitration proceedings produced a settlement agreement, signed by the parties on 29 June 2015.
The two-year limitation period did not therefore expire until after the standstill agreement.
Kier, on the other hand, submitted that the remedial works were agreed by 16 April 2015; the remaining matters to be concluded were merely ancillary which did not prevent the time from running. As such, the claim was already stature barred at the date of the standstill agreement.
The relevant section of the Civil Liability (Contribution) Act 1978, section 1, provides that any person liable in respect of any damage can recover contribution from any other person liable in respect of the same damage.
Section 10(1) of the Act 1980 provides that no action to recover a contribution pursuant to the 1978 Act can be brought after the expiry of a period of two years from the date on which such right accrued.
Such right is treated as accruing on the date of any judgment or award against the party seeking the contribution (section 10(3) of the 1980 Act) or upon agreement to pay compensation in the case of a settlement (section 10(4) of the 1980 Act).
Under section 10(4), if a person agrees to make a payment in compensation for damage, “the relevant date shall be the earliest date on which the amount to be paid by him is agreed between him (or his representatives) and the person… to whom the payment is to be made.”
The question for the court to address in these circumstances was therefore, whether time runs under section 10(4): only once the parties have entered into a binding agreement for the payment of compensation; or whether something short of a binding agreement is sufficient to start time running.
Only one trigger date
In reaching his conclusion, Mr Pepperall QC emphasised that section 10(3) and 10(4) are intended to be mutually exclusive.
Consequently, there can only be one trigger date to start time running under section 10: the date of the judgment or award requiring a payment in cases where such issue is the subject of a juridical or arbitral determination; or the date of the agreement to make the payment in a case were the issue is compromised.
On this reading, therefore, Mr Pepperall QC concluded that upon the proper construction of section 10(4), time only starts to run from the date of a binding agreement as to the amount of the compensation payment.
This is the central point of agreement and not whether the parties have reached agreement on any ancillary matters. In determining whether there has been a binding agreement, Mr Pepperall QC referred back to the decision in Pagnan SpA v Feed Products Ltd  to conclude that the parties may reach a binding agreement as to the settlement payment, but leave the remaining details for payment to be confirmed at a later date.
In such cases, time will run from the date of agreement in relation to the amount of the payment.
In the current circumstances, Mr Pepperall QC found that there was no binding agreement between Carter and the council by 28 April 2015; binding payment terms were only agreed when the settlement agreement had been signed on 29 June 2015.
The contribution claim was therefore brought in time and the limitation defence failed.
Theresa Mohammed is a partner and Zoeyah Shaheen is a solicitor at Trowers & Hamlins