The judgment concerned the trial of a preliminary issue as to whether proceedings were time barred pursuant to Section 10 of the Limitation Act 1980.  Between 2001 – 2002, the Claimant, R.G. Carter Building Limited (“Carter”), built a new science block at Boston Grammar School. The science block, which was designed by the Defendant, Kier Building Services Limited (“Kier”), began to suffer issues with water ingress. Consequently, the Client, Lincolnshire County Council, brought arbitration proceedings against Carter. The arbitration was settled in 2015. 

On 20 September 2017, Carter issued proceedings against Kier seeking an indemnity or a contribution of £205,908.60 in respect of the cost of the settlement. Kier argued that Carter’s claim was time barred. The parties entered into a standstill agreement on 28 April 2017 and the issue before the Court was whether Carter’s claim was time barred as at 28 April 2017. 

Section 1 of Civil Liability (Contribution) Act 1978 provides that any person liable in respect of any damage can recover contribution from any other person liable in respect of the same damage. Section 10(1) and 10(3) of the Limitation Act 1980 provides that no action to recover a contribution pursuant to the 1978 Act shall be brought after the expiry of a period of two years from the date on which such right accrued.  This might accrue either after the expiry of two year period (as a result of section 10(3)) or from the earliest date on which an agreed settlement (as a result of Section 10(4)). 

Carter claimed that there was no ‘agreement’ of the kind referred to in Section 10(4) until the parties signed the formal binding agreement on 29 June 2015. In contrast, Kier argued that no formal binding agreement was necessary before time started to run. Furthermore, Kier argued that an ‘agreement’ for the purposes of Section 10(4) was made when Carter had agreed to carry out the remedial works in April 2015, prior to the conclusion of the binding agreement.    

The Court held that time started to run pursuant to Section 10(4) on the date of the formal binding agreement. The issue with starting to run time prior to a formal binding agreement is that the litigation or arbitration remained on foot. The Court underlined that, for the purposes of Section 10, there can only be one trigger event; either the date of the subsequent formal agreement (Section 10(4)) or the date of the judgment or award (Section 10(3)). Therefore, the Court held that Carter’s claim against Kier was not statute barred.

This case confirms that on the proper construction of Section 10(4) of the Limitation Act 1980, time will start to run from the date of a formal binding agreement.