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Does time for bringing a contribution claim begin to run when the extent of the remedial works was agreed in principle or when the settlement agreement was formally executed?

This was the question for the High Court in R G Carter Building Ltd v Kier Business Services Ltd [2018] EWHC 729 (TCC).

In 2001/2, R G Carter Building Limited built a new science block at Boston Grammar School. The science block was designed by Kier Building Services Limited. The block suffered problems with the ingress of water into the building and the client, Lincolnshire County Council, brought arbitration proceedings against Carter. The arbitration proceedings between Lincolnshire and Carter were settled in 2015 on terms that Carter would carry out remedial works at its own cost. The scope of the remedial works was eventually agreed on 25 June 2015 and a binding settlement agreement was entered into on 29 June 2015. Subsequently, on 20 September 2017, Carter issued proceedings against Kier seeking an indemnity or a contribution of over £200,000in respect of the cost of the settlement with Lincolnshire.

Kier argued that the claim was late because the remedial works were agreed by 16 April 2015, or 27 April 2015 at the latest, and it was therefore commenced outside the 2-year limitation period for contribution claims. Carter argued that there was no agreement as to the remedial works until Kier and Lincolnshire signed a settlement agreement on 29 June 2015, and that the claim was therefore brought in time.

The court ruled in Carter’s favour; the negotiations leading up to the agreement had been conducted on a subject to contract basis, and Kier and Lincolnshire had proceeded on the understanding that nothing was agreed until there was a binding agreement. Time therefore only began to run when the agreement was finalised and on that basis the claim had been brought (just) in time and it could proceed to trial. Kier’s limitation defence failed.

Tight time limits often apply in litigation and those who do not seek advice promptly are taking a serious risk that their valid claim will be defeated.

For further information, please contact one of our Dispute Resolution experts.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.