Matthew v Sedman [2019] EWCA Civ 475: limitation in ‘midnight deadline’ cases

Articles | Fri 22nd Mar, 2019

Suppose you are under a professional obligation to do an act by no later than the end of 2 June, in default of which your client will suffer immediate loss. You can comply with your obligation by doing the act in question (for example, online) at any time up until midnight on that date. If, through negligence, you allow the deadline to pass without acting – thereby giving your client the right to sue you as soon as the clock strikes midnight – what counts as the first day of the six-year limitation period: 3 June or 4 June? The answer is 3 June. So said the Court of Appeal in Matthew v Sedman, a case in which shareholder trustees intending to apply on behalf of their beneficiaries under a court-sanctioned scheme of arrangement failed to submit the application by the ‘Bar Date’ defined in the scheme.

The disappointed beneficiaries, who had lost at first instance, argued on appeal thus:

1. Since the trustees could, without fault, have made their application at any time during the course of 2 June, the cause of action for failing to do so did not arise until at least a ‘nano-moment’ into the following day, 3 June.
2. The beneficiaries were entitled to take advantage of the long-standing rule that the day on which a cause of action accrues is not counted for the purposes of calculating a limitation period. So if you have an accident at work in your lunch break, the three years in which to sue your employer are not treated as starting until the following morning: see Marren v Dawson Bentley & Co Ltd [1961] 2 QB 135.
3. It followed that 3 June fell to be disregarded. The first day of the beneficiaries’ limitation period was 4 June, and they were therefore still in time to sue the trustees when they issued the claim form on 3 June six years later.

The Court of Appeal were not persuaded. Irwin LJ held (by reference to a speech of Lord Diplock in Dodds v Walker [1981] 1 WLR 1027) that in a ‘midnight deadline’ case it was wrong to attribute the accrual of an action to the day after the relevant midnight. Underhill LJ agreed, saying there was a clear distinction between the case where a cause of action accrues at the stroke of midnight because it is based on a failure to do something by the end of a specified day, and the case where the cause of action accrues part way through a day.

Irwin LJ went on to examine the rationale for the first-day exclusionary rule. It had its origin in the criminal law, where in one case (Young v Higgon (1840) 4 JP 88) the Court had reasoned that if, hypothetically, a statute required a complaint to be laid within one day, an offence might be committed a few minutes before midnight, and there would only be those few minutes in which to lay the complaint, ‘which would be to reduce the matter to an absurdity’. Irwin LJ declined to point out the absurdity of the hypothesis itself, saying merely that a midnight deadline case was different ‘in the sense that the deadline provides a categorical indication that the action accrued by that point in time, rather than accruing on the day following midnight. For that reason, no fractions arise’.

He speculated that other considerations might have arisen if the deadline for applications under the scheme of arrangement had expired on 9am on the relevant day, leaving the whole of the working day later than the moment the action accrued. On this point Underhill LJ’s ‘strong provisional view’ was that only the midnight cases were to be treated differently. In any other instance the first-day exclusion would apply because there was no rational basis on which to distinguish between ‘fractions of a day that are or are not sufficiently big to count’.

Needless to say, if the beneficiaries had not allowed several billions of nano-moments to elapse before suing their trustees, none of this interesting argument would ever have seen the light of day.

Matthew v Sedman [2019] EWCA Civ 475 (judgment date: 20 March 2019)

PS In actual fact the claim form was not issued until 5 June six years after the ‘Bar Date’. 3 June was a Saturday, when the Court office was closed. So the hapless beneficiaries had additionally to rely on the decision in Pritam Kaur v S Russell and Sons Ltd [1973] QB 336, which extends the limitation period until the first day after expiry of the six years when the office is open again.