In the recent High Court decision of Almacantar v Railway Pension Exempt Unit Trust, the Court have made the position clear: contractual limitation periods in contracts must be strictly adhered to.
The decision comes as a stark reminder for parties to not only give formal notice when they intend to issue a claim, but to strictly comply with the time limits set out within agreements if they wish the claim to succeed.
In this case, the claimant, Almacantar, and the defendant, Railway Pension Exempt Unit Trust (“RPEUT”) had entered into an Agreement in relation to a transfer of a beneficial interest in a leased property.
The Agreement contained an indemnity provision that, if the transfer attracted stamp duty land tax (SDLT), then the RPEUT would pay half of any SDLT, interest or penalties, subject to a maximum cap of £1.6 million, as well as an indemnity for legal costs. If there was any SDLT liability, the Agreement acknowledged that RPEUT had the right to challenge HMRC.
The Agreement stated that any claim by Almacanter against RPEUT under the indemnity provision should be brought within 7 years of the date of the Agreement.
When HMRC assessed Almacantar’s tax liability, Almacantar sought to enforce the indemnity clause in the Agreement. However, RPEUT refused to indemnify the claimant on the basis that the indemnity had, in fact, expired. Almacanter did not give formal notice of the claim pursuant to the Agreement until September 2019, when the notice in fact should have been given by 23 June 2018.
In response, Almacantar argued that RPEUT remained liable to pay half of the SDLT by reasons of estoppel, waiver and variation/interpretation of contracts. They contended that there was a mutual understanding that the time limits and notice requirements did not apply and that this common assumption was evidenced by their correspondence with HMRC over a period of eight years, of which RPEUT was aware. They also claimed that RPEUT should have given reasonable notice if they were intending to rely upon the time limits contained in the indemnity clause of the Agreement.
RPEUT applied for a summary judgment on the basis that Almacantar would have no real prospect of success in bringing the claim and there was no other compelling reason why the case should be disposed of at trial.
The Court found in favour of RPEUT and found that Almacantar would have no real prospect of success in bringing the claim.
In respect of the limitation on contractual claims, the Court referred to the earlier decision of
Laminates Acquisition Co v BTR Australia Ltd  EWHC 2540 (Comm);  1 All ER (Comm) 737:
"Notice clauses of this kind are usually inserted for a purpose, to give some certainty to the party to be notified and a failure to observe their terms can rarely be dismissed on a technicality.”
The Court noted that the Agreement itself contained both an entire agreement clause, and a clause stating that any variations must be in writing, noting that the Supreme Court found in the case of Rock Advertising Ltd v MWB Business Exchange  UKSC 24 that “no oral variation” clauses are effective.
- Having reviewed the extensive correspondence between the parties over several years, the Court concluded that there was nothing sufficient to show a common assumption that the time limits or notice periods would not apply, or to waive the notice provisions.
The case confirms that Defendants can rely on the certainty provided by contractual limitation periods and the associated notice provisions.
Would be Claimants should ensure that they are aware of any such deadlines, and seek advice well in advance of the expiry – or risk losing the right to bring the claim. The circumstances in which a Court will waive such requirements are limited.
Written by Emily Blakemore and Judith Hopper.
 Almacantar (Marble Arch) SARL v Railway Pension Exempt Unit Trust  EWHC 2385 (Comm)