City & General (Holborn) Ltd v Royal & Sun Alliance Plc

When a claimant seeks more time to serve a claim form, it is enough for the defendant to show that an extension might deprive it of a limitation defence. The extension should then be refused, or a without notice extension set aside. Debatable limitation questions should ordinarily be determined in fresh proceedings, rather than on the interlocutory application.

Uncertainty about the amount of loss, including pending determination of a related claim, is not a good reason for failing to serve within the prescribed period. A court addressing the extension need not decide the underlying limitation dispute, and an order which leaves that dispute open creates no issue estoppel upon it.

The developer claimed under contractors’ all risks and property damage policies for losses allegedly caused by basement flooding or water ingress, a crane collapse and bacterial contamination. Its claim form was issued shortly before expiry of the possible limitation period for part of the claim, but was not served within four months.

Ramsey J granted a without notice extension. Christopher Clarke J subsequently set that order aside because there was no good reason for the failure to serve and the extension might deprive the insurers of a limitation defence.

The developer appealed, arguing that the claims should have been considered separately, that successive water ingress could create fresh causes of action, and that the insurers’ offers had acknowledged the claims under section 29(5)(a) of the Limitation Act 1980.

1. Appeal dismissed. The judge was entitled to set aside the without notice extension. His finding that there was no good reason for failing to serve within four months was correct and was not susceptible to appeal. Inability to establish the full extent of loss pending determination of a contractor’s arbitration was insufficient.
2. The argument that each head of claim should receive separate treatment had not been advanced below. Both parties had invited an all-or-nothing decision, and it was too late to advance a different approach on appeal. In any event, separate treatment would be inappropriate where the limitation position for each claim remained debatable.
3. Where disputed limitation questions arise, they should ordinarily be decided in fresh proceedings rather than on an application to extend time for service. Under Hashtroodi v Hancock [2004] 1 WLR 3206 and Hoddinott v Persimmon Homes (Wessex) Ltd [2008] 1 WLR 806, it is enough that the defendant might lose a limitation defence. An extension should then be refused or set aside.
4. Christopher Clarke J had not decided whether successive water ingresses causing fresh damage created successive causes of action. Although an analogy with Darley Main Colliery v Mitchell (1886) 11 App Cas 127 was arguable, it was difficult and had to accommodate the observations in The Starsin. The point remained open in any fresh action, so no issue estoppel arose.
5. The alleged acknowledgment under section 29(5)(a) of the Limitation Act 1980 was both new and doubtful. An offer for a small part of a much larger demand might at most acknowledge the smaller amount. More fundamentally, section 29(5) applies only to a debt or other liquidated pecuniary claim, whereas substantial authority treats a claim under an indemnity policy as one for unliquidated damages. Those questions could be determined in fresh proceedings and did not justify extending service.

1. Court of Appeal (Civil Division): The appeal was dismissed unanimously. The order setting aside the extension remained effective.
2. High Court, Technology and Construction Court, Christopher Clarke J: The without notice extension was set aside because there was no good reason for late service and the insurers might otherwise lose a limitation defence.
3. High Court, Technology and Construction Court, Ramsey J: A without notice order extended the period for serving the claim form.