Inframatrix Investments Ltd v Dean Construction Ltd

A contractual limitation clause should be construed according to its natural meaning and, where possible, should provide an easily ascertainable time limit. Where the agreed period runs from practical completion of services, and that event has not occurred, an alternative trigger running from the contractor’s last performance of services may apply. Activities undertaken solely in without-prejudice negotiations or to avoid litigation do not become contractual performance merely because privilege is later waived. The parties’ contractual limitation period cannot be postponed by implying words that allow the client to decide when time starts to run.

Inframatrix Investments Ltd claimed damages from Dean Construction Ltd for alleged breaches of a construction agreement concerning roofing and cladding works. The High Court granted summary judgment for Dean Construction Ltd, holding that the claim was barred by clause 17.4 of the agreement: [2011] EWHC 1947 (TCC).

On appeal, Inframatrix argued that the alternative limitation trigger in clause 17.4(b) applied only where practical completion would never occur, and that a later site meeting, inspection and report constituted contractual services. The central issues were the construction of the limitation clause and whether those later activities restarted the limitation period.

1. Appeal dismissed. Clause 17.4 was intended to provide an easily ascertainable limitation period. Its operation did not depend on investigating the merits of the claim.
2. Clause 17.4(a) applied where there had been practical completion of the Services. If practical completion had not occurred, clause 17.4(b) applied according to its natural meaning. The words did not justify an implied qualification restricting paragraph (b) to cases where practical completion was no longer expected to occur. Such an implication would allow the claimant to dictate when time began to run.
3. The definitions in clause 19.1 applied only where the context admitted. Clause 17.4 expressly referred to practical completion of the Services, not practical completion of the Project, so the defined term relating to the Project did not govern.
4. The principle discussed in Alghussen Establishment v Eton College [1988] 1 WLR 587, concerning construction against a party seeking to benefit from its own wrong, did not govern this limitation clause. The contractual context was materially different.
5. The defendant last performed Services under the agreement in February 2009. The March 2010 meeting and inspection, and the subsequent report and offer, formed part of without-prejudice negotiations following a letter before claim and the Construction Pre-Action Protocol. They were not contractual performance. The later waiver of privilege did not retrospectively convert non-contractual acts into performance under the agreement.
6. Lord Justice Elias agreed that the activities could, in principle, have been contractual services if undertaken in response to a contractual direction while the relationship continued. But the without-prejudice basis of the activities prevented the claimant from asserting that they were performed pursuant to the contract. More than one year had elapsed since the last contractual Services, so clause 17.4 barred the proceedings.

• Court of Appeal (Civil Division) dismissed the appeal and upheld the summary judgment dismissing the claim.
• High Court of Justice, Queen’s Bench Division, Technology and Construction Court granted Dean Construction Ltd summary judgment and dismissed the claim: [2011] EWHC 1947 (TCC).