Know Your Limitation… Dates
Tuesday 6th March 2018
Knowing how long you’ve got to bring a claim is vital – an issue recently highlighted by the case of Ice Architects Ltd v Empowering People Inspiring Communities .
In this claim for non-payment for goods or services, the court decided that entitlement to payment, and so the start of the six year limitation period in which a court claim could be brought, arose when the services were carried out, not the date that the invoice for those services was due to be paid.
Ice Architects was employed by Empowering People Inspiring Communities (‘EPIC’). The agreed payment terms were for Ice to “invoice EPIC on a monthly basis for work completed to date… EPIC Ltd will endeavour to make payment within 30 days of receipt (unless otherwise stated)’
On 23 April 2009, Ice invoiced EPIC for design services provided in 2008. Part of the invoice was recovered and proceedings to recover the rest were issued on 21 May 2015, more than six years after Ice had done the work, but within six years of the date that their invoice should have been paid.
The court held that the entitlement to payment had arisen when the services were carried out and, as a result, Ice had issued proceedings out of time.
Ice appealed – the only point on appeal being whether the court was right to reject their argument that the agreed payment terms amounted to an agreement that entitlement to payment did not arise until 30 days after EPIC received the invoice.
The appeal was dismissed on the basis that a reasonable person, in the position of the parties, would have understood that the “basis of payment “ was an agreement dealing with billing and payment, and that there was nothing on the plain reading of the wording to suggest the entitlement to payment did not arise when the work was carried out.
This case demonstrates:
- How important it is to carefully consider the date a cause of action arises.
- That clear words are needed if parties intend a cause of action to arise after the date on which services are provided.
- Had the Appointment been a Deed, Ice would have had the benefit of a 12 year limitation period instead of the 6 years afforded under a simple contract.