Excel Polymers Ltd. v Achillesmark Ltd.

An agreement extending a limitation period is ordinarily construed objectively as a simple extension to a specified date. Unless the parties expressly agree otherwise, it does not prevent proceedings being issued during the extension or create an additional period afterwards for steps required to commence proceedings.

Estoppel by convention requires a common underlying assumption, communication of that assumption between the parties, and circumstances making it unjust to resile from it. A private and uncommunicated understanding is insufficient. A representation must also be proved and must causally induce the relevant conduct.

The claimant sought damages from its insurance broker for alleged professional negligence in failing to arrange insurance cover of £960,000. The parties agreed that the cause of action arose on 12 February 1998, so the ordinary limitation period expired on 12 February 2004.

The parties later agreed standstill arrangements extending the period to 10 June 2004. The defendant was dissolved and required restoration to the register before proceedings could be issued. Proceedings were issued on 2 August 2004. The preliminary issues were whether the agreement extended limitation beyond 10 June, and whether the defendant was prevented by estoppel by convention or estoppel by representation from relying on limitation.

1. Construction of the agreement. The agreement was to be construed objectively, by reference to the words used and the relevant background known to the parties. Its effect was a straightforward extension of the limitation period, first to 10 May 2004 and then to 10 June 2004.
2. The agreement did not contain, expressly or by necessary implication, a term preventing proceedings from being commenced during the extension or allowing a further reasonable period afterwards. Certainty was important in the context of limitation and insurance claims. The claimant remained responsible for taking all necessary steps to commence proceedings within the extended period.
3. Estoppel by convention. The requirements identified in London Borough of Hillingdon v ARC Limited 2000 16 June, paras 43–52, were not satisfied. There was no common assumption that the agreement postponed commencement until after 10 June and allowed a further reasonable period. Nor had any such assumption been communicated between the parties.
4. Estoppel by representation. The alleged December 2003 statement was not made in the form relied upon. In any event, it was understood as an agreement in principle to extend limitation for a period to be agreed, and its effect was subsumed by the definite agreement made on 9 January 2004. It therefore did not causally induce the claimant’s subsequent conduct.
5. The preliminary issue was determined in favour of the defendant. The claim was statute barred.