Rahman v Rahman

A contractual cause of action for breach of a simple contract accrues when the breach occurs. Where performance is conditional and no express time is fixed, the obligation must be performed within a reasonable time or upon demand, allowing reasonable time for compliance. A request need not be formal where the commercial relationship makes its meaning clear.

Parties may also consensually extend the time for performance. During that extension, no cause of action arises. Laches requires unreasonable delay and circumstances making relief unjust. Its application is fact-specific and does not depend on rigid categories derived from earlier cases.

This was an appeal by the first defendant, Azizur Rahman, from an order made after a trial in the Central London County Court. The respondent, Habibur Rahman, had obtained damages in lieu of specific performance and damages concerning distributions under an agreement that he would receive a one-third shareholding in two companies.

The appeal concerned whether the contractual claim was barred by the Limitation Act 1980 and whether the equitable defence of laches barred relief. The central questions were when breach occurred, whether the obligation was continuing, and whether the parties’ continuing discussions postponed performance.

1. Appeal dismissed. The appellant failed on both limitation and laches.
2. Under section 5 of the Limitation Act 1980, the contractual claim accrued when the obligation to allot shares was breached. Once the respondent’s immigration condition was satisfied, the obligation had to be performed within a reasonable time or upon demand. A formal demand was unnecessary. The respondent’s ordinary request that the shareholding be sorted out was sufficient to trigger the obligation, subject to reasonable time for compliance (paras [50]–[57]).
3. The respondent’s request in 2006 likewise made clear that he wanted his shares allocated. However, the judge below had found continuing discussions and promises that matters would be resolved. Those findings supported the conclusion that the parties had consensually postponed performance. A person who, without reserving rights, gives extra time cannot treat the other party as being in breach during that period (paras [61], [77]–[89]).
4. The June 2009 meeting was material because it was the final substantive meeting and no further meeting occurred. The breach therefore arose shortly afterwards, within six years before proceedings were issued. It was unnecessary to decide the alternative issue whether the obligation was a continuing contractual obligation arising afresh each day. The distinction between an ordinary single breach and an exceptional continuing obligation was identified but left for a case where it was determinative (paras [88], [93]–[98]).
5. Laches requires both unreasonable delay in commencing or prosecuting proceedings for specific performance and circumstances making relief unjust. The inquiry is broad and fact-specific. It is reviewable where an irrelevant factor is taken into account or a relevant factor is omitted, but authorities concerning particular factual situations do not mandate a result in other cases (paras [102], [109]–[117]).
6. The judge was entitled to find no unreasonable delay. The respondent had maintained his shareholding claim, had been dismissed, and had faced Employment Tribunal proceedings in which the appellant’s conduct and the use of fabricated evidence were relevant to the assessment of delay. The appeal was dismissed (paras [112]–[119]).

• High Court (Queen's Bench Division): appeal from the order of Recorder Ann McAllister dated 14 July 2017 in the Central London County Court; appeal dismissed.