The special status of limitation and the dangers of late amendments

In the case of Daniel Alfredo Condori Vilca & ors –v- Xstrata Limited & Compania Minera Antapaccay S.A. [2018] EWHC 27 (QB), the Court considered whether the Defendant had waived its right to raise limitation as a defence because it had raised this defence late in the procedural process and undertaken acts during the litigation which were incompatible with a defence of limitation.

The defence of limitation is a statutory defence founded in the Limitation Act 1980 and acts as an absolute defence to an action brought after the expiry of the relevant limitation period prescribed for that action. Its purpose is to prevent the threat of legal action ‘hanging over’ parties indefinitely after a dispute first arises.

The facts

The Court was asked to discern whether at any stage in proceedings the Defendant had acted incompatibly with a defence of limitation thereby waiving its right to raise this defence.

The Claimants asserted that the Defendant had undertaken a number of acts which would be incompatible:

1. The Defendant consented to amendments that were in issue rather than contesting their admission on the basis of limitation.
2. The Defendant participated in several contested hearings (relating to disclosure) at great personal cost which would be obsolete if limitation were relied upon.
3. The Defendant attended mediation.
4. The Defendant agreed directions to trial.
5. The Defendant exchanged factual and expert evidence on all substantive issues.

The law

Mr Justice Stuart-Smith proceeded to summarise the English law on the subject before setting out his conclusions.

The Judge turned to the case of Ketteman & Ors v Hansel Properties & Ors [1987] AC 189. The conclusion of the Lord Griffiths in this case was that the defence of limitation was a statutory defence designed to prevent “stale claims” and that a Defendant may, in some cases, wish to contest a claim on its merits rather than relying on the statutory defence. In doing so, the Defendant entitled the Claimant to assume that the Defendant did not wish to rely upon the time bar.

The case in question however was different to this previous case, because the Defendants attempted to rely upon limitation at the close of the trial, after the case had been tested on its merits in Court. Furthermore, Mr Justice Stuart-Smith concluded that such a position on limitation could no longer be taken “as a rule of law or practice” as it was inconsistent with more recent statements of authority. He concluded that Ketteman did not preclude the Court from exploring the issues in this case. Consequently, the matter to be considered was whether or not the Defendants had undertaken acts during the proceedings which would have been incompatible with a late amendment to take a limitation defence.

The decision

Mr Justice Stuart-Smith determined that the test of objectivity was not satisfied, identifying a number of aspects of the claim which influenced his decision:

1. The Claimants maximised the complexity of procedures from an early stage.
2. The Defendants remained inactive on the issue of limitation rather than taking positive steps to preclude limitation being raised as a defence between 2015 and 2017. The Judge refused to consider this a tacit waiver, instead concluding that nothing was done which was incompatible with a late pleading of limitation.
3. The Defendants may have breached their obligation to assist the Court which derives from the Overriding Objective but this was itself a separate matter and did constitute a tacit waiver of the defence of limitation

Mr Justice Stuart-Smith concluded that, although on different facts a Defendant may waive its right to raise limitation if it delayed unnecessarily in raising the defence, in this instance the defence was raised early enough in proceedings and the various acts the Claimants sought to rely upon did not constitute a tacit waiver of the right to rely upon this defence.

Conclusion

Although Defendants need to be careful about waiting too long to raise a defence of limitation, the judgment suggests that the court will be reluctant to refuse late amendments which raise limitation points. However, where a late amendment will affect a trial date and lead to adjournment the courts are likely to approach the issue differently by penalising the Defendant on costs