| LIMITATION OF ACTION — Breach of contract — Equitable remedy — Specific performance — Whether six-year limit in contract and tort applicable by analogy — Limitation Act 1980, ss 2, 5, 36(1)
P & O Nedlloyd BV v Arab Metals Co and others [2006] EWCA Civ 1717
CA: Buxton, Jonathan Parker and Moore-Bick LJJ: 13 December 2006
It was not appropriate, pursuant to s 36(1) of the Limitation Act 1980, to apply a limitation period to a claim for the equitable remedy of specific performance by analogy to the six-year limitation period in contract and tort.
The Court of Appeal so held when, inter alia, allowing the appeal of the claimant, P & O Nedlloyd BV, from a judgment of Tomlinson J, sitting in the Queen’s Bench Division (Commercial Court) on 5 October 2006, refusing its application for summary judgment on an application for an order of specific performance by the third defendant, Ireland Alloys Ltd, of a contract of carriage entered into in May 1998, and entering summary judgment for the third defendant on that part of the claim. The judge found it just that the claimant should be confined to its remedy in damages. The grounds of appeal were, inter alia, that the claim in equity for specific performance was subject to (though not outside) a six-year limitation period which was to be imposed by analogy to the six-year limitation in law and pursuant to ss 5 and 36(1) of the 1980 Act; and that the judge should have granted the application where the only defence advanced by the third defendant, viz laches, could not defeat such an application subject to a limitation period. The court in the course of argument focused on the issue whether a limitation period should be applied at all in such a case.
MOORE-BICK LJ said that s 36(1) of the 1980 Act required one to ask whether, before 1 July 1940, a court of equity would have applied by analogy the six-year statutory limitation period to a claim for specific performance of a simple contract. No authority prior to that date provided a definitive answer, necessitating recourse to general principle. Applying dicta of Lord Westbury in Knox v Gye (1872) LR 5 HL 656, a court would by analogy apply the statutory limitation period if the remedy in equity, viz specific performance, were “correspondent to the remedy at law” and where the suit in equity “corresponds with an action at law”. In Cia de Seguros Imperio v Heath (REBX) Ltd [2001] 1 WLR 112 the court referred to these criteria and found the principles applicable. In that case it was unsurprising that equity should apply by analogy the limitation periods applicable to claims at law for an account and for damages for breach of duty, whether in contract or tort, to claims for an account and for equitable compensation, because in each case the same facts gave rise to a claim, whether at law or in equity, and the same kind of relief was obtainable. A claim for specific performance raised different considerations, however, because relief comparable to that available from the courts of equity was not available from the common law courts, and because the facts needed to support a claim for specific performance were not in all aspects the same as those necessary to support a claim for breach of contract. Thus, whatever might be said about the undesirability of allowing a claim for specific performance to be brought more than six years after a breach of contract had occurred, the absence of a corresponding legal remedy made it impossible to say either that the remedy in equity was “correspondent to the remedy at law” or that “the suit in equity corresponds with an action at law”. Accordingly, no six-year limitation period was applicable to the claim for specific performance; and the defence of laches was not bound to fail. Thus the judge, in dismissing the claimant’s application, should not have entered judgment for the third defendant but should have given directions for trial.
JONATHAN PARKER and BUXTON LJJ agreed.
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