Author: Digby Hebbard
This article was published on The Construction Index on 10 August 2016
A recent case suggests the value of claims can be amended after limitations have expired. Digby Hebbard explains.
Given the nature of construction projects and their legacy, it is fairly common for claims arising from such projects to be tight up against expiry of limitation periods. You may have experience of this, and be used to trawling back through historical documents to ascertain the relevant chronology. When was the contract signed? Was it executed as a deed or a contract? When was the defect discovered? These are typical queries for limitation.
It would be fair to say that the primary focus for limitation purposes is the cause of action, i.e. is there a claim or not, ahead of the value of the claim. Indeed, if a claim is not time-barred by limitation, the value of the claim often will change over time as matters progress, further information becomes available and expert quantum input is involved.
You may also be familiar with “protective” proceedings – claims commenced to avoid expiry of limitation. In these instances, it would be relatively common for the value of the claim to change after the date proceedings were commenced. Not surprisingly, it has been argued by defendants that purported increases to the claim value constitute new claims and are therefore time-barred.
A recent case in the Technology & Construction Court demonstrates the Court’s approach to this novel argument (Glenluce Fishing Co. Ltd v Watermota Ltd  EWCH 1807 (TCC)). In this case, the claimant issued a claim for breach of contract shortly before the expiry of the limitation period. The claimant subsequently applied to amend the claim to increase the value of its claim (from £69,000 to £162,000). By the time of the application, the limitation period had expired.
The defendant argued that because limitation had expired, an amendment to introduce a new head of claim outside the limitation period should not be permitted.
The Court allowed the amendment. The judge noted that different considerations applied to the question of whether a claim had been ‘brought’ within the limitation period from the issue of whether a claim could be amended outside the limitation period. The judge said that these considerations should be kept separate: the authorities dealing with whether a claim has been ‘brought’ within the limitation period did not “justify a root and branch revision of the approach to be adopted to an application to amend”.
The Court therefore adopted a ‘traditional’ approach to the application to amend and allowed the amendment because, whilst the increase in the quantum was significant, it did not introduce a new cause of action and did not prejudice the defendant (and the claimant had paid the difference between its original filing fee and that which would have been payable for the higher sum – filing fees are directly related to the value of the claim). The judge considered that it was irrelevant that the claimant had not done all that it reasonably could to quantify its claim inside the limitation period.
Thus, on the issue of whether the value of a claim can be amended after limitation has expired, the position would appear to be that it can – this could be through the addition of new heads of claim or adjustment of the value of existing heads. The threshold is that the change must arise from the same or substantially the same facts as stated in the Claim Form: it cannot be a new cause of action. The Court will also consider any prejudice to the defendant were the amendment permitted, as against the prejudice to the claimant were it not.
Be aware though that if it was found that the value had been deliberately understated when the claim was issued (perhaps to avoid paying a higher filing fee) then this might be an abuse of process – which could be relevant to the decision of whether to allow a later amendment of the sum claimed.
From a practical perspective, for potential claimants in dispute resolution proceedings who are unlikely to know the true value of their claim until after the limitation period, it is suggested that:
Digby Hebbard, Partner, Fladgate LLP (email@example.com)