Limitation of Actions Consultation - Law Commission

liability in contract and tort - the accrual rule in contract causes little injustice:
plaintiffs can generally frame their action in the tort of negligence so as to take
advantage of the discoverability test introduced by that Act. Supporters of this
option might also argue that there is no merit in uniformity in limitations law if it is
achieved at the expense of certainty in contract law.
12.19 We should also point out that, because of the need to ensure certainty in relation
to the ownership of land, we later take the provisional view that actions to recover
land should not be subjected to a limitation period running from discoverability.
Rather a single long-stop limitation period should be applied to them. 29
One can
argue that the need for certainty in relation to contract claims means that they
should be treated somewhat similarly so that for contract claims (as opposed to
tort claims) there should be a single limitation period (of, say, ten years) running
from the date of the breach of contract.
12.20 The disadvantage of this option is that a fixed starting point for a limitation period
produces injustice where the plaintiff could not reasonably know of the breach of
contract (that is, where the damage is latent). Although contract has not had a
decision analogous to Cartledge v E Jopling & Sons Ltd 30
or Pirelli General Cable
Works v Faber (Oscar) & Partners, 31
exposing the injustice of a limitation period
running from accrual rather than discoverability, the possibility of such a decision
is hard to ignore in reforming the law. 32
The provisions of the Latent Damage Act
1986 cannot help plaintiffs where the breach is non-negligent and so cannot be
sued for in the tort of negligence (for example, the breach of a strict obligation to
build to a proper standard). Moreover, one may think that the time has come to
avoid encouraging reliance on ‘tort’ to overcome weaknesses in contract law. One
can also argue that it would be unfortunate and, arguably, renders the law
needlessly complex, to have a different starting date rule for contract than for tort.
And one should not ignore the possibility that, subject to the normal rules on the
validity of contractual terms, contracting parties can provide their own “more
certain” limitations regime (for example, with time running from accrual of the
cause of action rather than discoverability) should they so wish. 33
(f) Provisional conclusion
12.21 While each of the above five options has advantages and disadvantages, our
provisional preference, prior to hearing the views of consultees, is for option one
(date of discoverability). While we are most anxious not to create needless
uncertainty, at this stage in our thinking we believe that a reform of limitations law
that ignored the injustice to plaintiffs of “latent damage” - including in contract
claims - would be unacceptable. Moreover, we would hope that sufficient
certainty could be achieved first, by spelling out in legislation the precise
29 See paras 13.114 - 13.121 below.
30 [1963] AC 758.
31 [1983] 2 AC 1.
32 And if one sought to counter this by choosing a long limitation period (say, ten years) one
would, in contrast, be allowing a plaintiff who knows the facts from the outset a very long
period to commence proceedings.
33 See paras 14.1 - 14.6 below.
256