To The Limit One More Time

The Court of Appeal's decision in Pegasus v Ernst & Young (March 2010) has once again favoured the defendants' argument that the claim against it was time-barred. Good news for professionals and their insurers, who may also find it a useful confirmation of the law of limitation, particularly in the context of reduced economic activity prompting businesses to try to claim losses in relation to advice dating back more than six years.

Legal setting

The six year primary limitation period in tort runs from the date that actual (as opposed to potential or prospective) loss or damage is first suffered. Since professionals usually owe duties in both contract and tort, and primary limitation in contract expires six years after the date of breach, primary limitation in tort could expire much later than in contract if the loss is first suffered long after the date of breach.