Limitation Periods & Time Limits: Supreme Court ruling on limitation periods where cause of action accrues at midnight (Matthew v Sedman – 2021)

This decisive judgment by the Supreme Court addresses circumstances where a limitation period accrues at, or on the expiry of midnight, confirming that the immediate day following should also be included in limitation period calculations.

The background

In Matthew v Sedman [2021], the appellants were trustees of a trust which held shares in a company, Cattle plc. They had replaced the respondents, who retired in 2014. A company report for Cattle plc published in 2008 contained misleading information which had resulted in suspension of shares trading. The trust had a valid claim against Cattle plc and a subsidiary company, Welcome Financial Services Ltd under a scheme of arrangement, the trust being able to bring its claim against Welcome until midnight, at the end of the day, on Thursday 2 June 2011.

The respondents did not commence their claim against Welcome on or before Thursday 2 June 2011. The appellants therefore brought proceedings on Monday 5 June 2017 against the respondents in negligence, breach of trust and breach of contract, which the respondents argued was out of time and statute-barred under the 6-year limit contained in the Limitation Act 1980.

This case considered whether Friday 3 June 2011, which was the day immediately after the midnight deadline for commencement of the claim against Welcome, should be included in the 6-year limitation period.

• If Friday 3 June 2011 was included in the calculation, the limitation period would have expired on Friday 2 June 2017, at the end of the day. As a result, the claim against the respondents was brought out of time.
• If Friday 3 June 2011 was excluded from the limitation period calculation, the accrual of time would have started from Saturday 4 June 2011, with the limitation period expiring on Saturday 3 June 2017 at the end of the day. Given the courts’ weekend closures, that would mean a limitation period expiring on Monday 5 June 2017 at the end of the day, resulting in the claim being brought in time.

The Court of Appeal found that Friday 3 June 2011 was included in the limitation period calculation. The judgment stated that, where the cause of action accrues at, and not after, midnight, the day immediately following the expiry should be included. Accordingly, the Court of Appeal found that the claim had been brought out of time. The appellants appealed the decision in the Supreme Court.

The decision

The Supreme Court dismissed the appeal, agreeing with the Court of Appeal. The day immediately following a midnight deadline was found to be a ‘complete, undivided day’ and should therefore be included in a limitation period calculation.

Excluding a full day in a case such as this would have the effect of extending the limitation period to 6 years and 1 day, which was not as intended by parliament when drafting the legislation. Any part of a day, but not a whole day, immediately following the cause of action accrual is excluded from the calculation of the limitation period. The effect of this is such that:

• If the cause of action accrues at midnight, the following day beginning at 00.01 is included in the limitation period calculation; and
• If the cause of action accrues during the day and not at midnight, the day on which the cause of action accrues is excluded when calculating the limitation period.

Advice and action for landlords

Decided in the Supreme Court, this is a landmark judgment for the litigation sector, providing clear guidance on the position relating to midnight deadlines and calculation of limitation periods.

Midnight deadlines consistently prove tricky to negotiate, with clarification required as to whether ‘midnight’ refers to the end of one day, or the beginning of the next. This case will be an important reference points for matters going forward where limitation periods are in question due to a midnight deadline. Our advice would always be to refer to periods either side of midnight, and to specific dates where possible, for example to state ‘Friday 2 July at 11.59pm’ rather than the more ambiguous ‘midnight’.