Time bars
Arab Lawyers Network v Thompson Reuters (High Court) [2021]
A limitation clause which imposes a deadline on when claims can be brought can be very significant, since a failure by a claimant to abide by it can provide an absolute defence to the claim. In this particular case, the clause in question depended upon when the ‘basis for the claim became known’ [to the claimant].
Facts:
The contract between the parties stated that (clause 14.2) “No claim, regardless of form, which in any way arises out of this Agreement or the parties' performance of this Agreement may be made, nor action based upon such a claim brought, by either party more than one year after the basis for the claim becomes known to the party desiring to assert it". The question was whether ALN’s claims were defeated by this provision. There were two claims. The first was for non-payment of a so called ‘Agreed Royalty’. The second was in respect of alleged unauthorised continuing use of publications belonging to ALN. This claim was called the ‘Continued Use Claim’.
The Claim Form was issued on the 13th June 2017. Therefore, if the basis for the claim for payment of the Agreed Royalty became known to ALN earlier than 13th June 2016 the claim would be time-barred.
Decision:
The court said that ‘the basis for the claim’ must be equated with all of the circumstances which if pleaded would constitute an entitlement to claim the Agreed Royalty and that this must be the facts and circumstances which constitute a right or cause of action at law.
The question then becomes whether the basis for the claim for the Agreed Royalty is constituted by (a) the accrual of the Agreed Royalty at the end of the relevant quarter, (b) the expiry of the period for payment of the Agreed Royalty, being 60 days after the end of the relevant quarter, and/or (c) the issue of a valid invoice by ALN to TR.
The court said that for the purposes of clause 14.2, knowledge should be given its ordinary, natural meaning and should be answered by asking whether ALN knew or was aware of the basis for the claim. “Knowledge does not mean that ALN must have an unwavering conviction in the belief in the truth of the basis for the claim, but there must be a sufficient measure of confidence in the belief which is justified by evidence, experience or reasoning. A mere suspicion, even if supported by some indeterminate evidence, is not sufficient to constitute ‘knowledge for this purpose”.
So far as the claim relating to non-payment of the Agreed Royalty was concerned, the court held that ALN's entitlement to claim for payment of the Agreed Royalty existed no later than 60 days after the end of the relevant quarter. This is because the Agreement expressly stipulated that the "royalties payable hereunder shall be accrued" at the end of the relevant quarter and that the Agreed Royalty "shall be paid within 60 days after the end of each such quarterly period". It followed that ALN's claim for the Agreed Royalty is time-barred if the Agreed Royalty for the relevant quarter was payable before 13th June 2016.
In relation to the Continuing Use Claim, the court decided that ALN would have a real prospect of defeating the time bar defence that had been raised i.e. on the basis that it did not become aware of the basis for the Continued Use Claim until after 13th June 2016. Ultimately, it did not need to decide the point as this was a preliminary hearing and a full trial will follow unless the claim is settled in the interim.
Points to Note:
- What this case demonstrates is that time bars such as the one here can be extremely important and are to be ignored at your peril. Each case will turn upon the precise wording used in the clause in question.