Architect's negligence: Strike Out Application fails to determine limitation position

Edwards-Stuart J recently held in Venulum Property Investments Ltd v Space Architects Ltd & 5 Ors (2013) that it was not appropriate to decide the limitation issues via a strike out application in the absence of full evidence.

The decision illustrates that it is not easy to achieve strike out based upon limitation arguments, because often the Court will require a proper exploration of the factual evidence in order to determine the limitation position.  The case also contains an interesting discussion about the trigger date for the limitation clock to start running: it is arguable that a purchaser suffers actionable loss as a result of an architect's defective plans on the date it contracts to buy a property conditional on the grant of planning permission, rather than on the date upon which planning permission is in fact granted.

The Claimant entered into a contact on 7 September 2006 for the purchase of a site for which conditional planning permission had been granted. The contract was split in two; Part A required the Claimant to pay the deposit and to assist the seller, R, in obtaining planning permission. Part B required the Claimant to complete the purchase if final planning permission was granted before 31 December 2006.

On 1 November 2006, final planning permission was granted. The Claimant later alleged that the architect's plans were not feasible and issued proceedings on 31 October 2012, more than 6 years after entering into the contract but less than 6 years after the granting of the final planning permission.

The Defendant applied to strike out the claim on the basis that it was time barred.  The question was when did limitation period expire and could that be determined upon the evidence before the court in the strike out application?  Ultimately, it was held inappropriate to determine the limitation position via the strike out application.  The judge found that to hold that the Claimant's claim was statute barred at a summary hearing and on the basis of the evidence before the Court would be draconian.

There was some useful discussion about limitation.  On behalf of the Claimant, it was submitted that Part B of the contract did not come into effect until final planning permission was granted, and that it was at this point that the Claimant suffered loss. It was also submitted that a purely contingent event cannot amount to actual damage for the purposes of the Limitation Act. In contrast, the Defendant argued that the contract was fully formed, and damage suffered, on 7 September 2006, notwithstanding that planning permission was a contingency at that point.  As such, the Defendant asserted that the claim was time-barred, having been issued over six years from that date.

Edwards-Stuart J's instinct was that the claim probably was time-barred because, in his view, damage was likely suffered on the formation of contract on 7 September 2006.  This was because, at that point, the grant of planning permission was not just a possibility but arguably a strong probability, and was worth less to the Claimant due to the architect's defective plans.   However, the Court would need to take a cautious approach and should hear factual evidence about whether, at the time the Claimant entered into the relevant transaction, the granting of planning permission was probable or only possible.  Also, evidence would be required to address whether a diminution in value of the Claimant's rights was in fact suffered as a result of the defective plans.  The Defendant's strike out application was therefore dismissed, although Edwards-Stuart J's obiter comments suggest it may well succeed in due course.

The case serves to emphasise that it will only be appropriate for Defendants to apply for strike out based upon limitation arguments in restricted circumstances, where there is no need for a detailed factual enquiry.