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England

Consulting Concepts International Inc v Consumer Protection Association

The cause of action for limitation purposes accrues when the work is done or the services are provided, not when a bill is given.

Summary

The Court of Appeal held that the cause of action in contracts accrues when the work is done or the service is provided, not when a bill or invoice is delivered.

The right to sue for payment might not arise until a time specified by the contract, but it is the right to payment that constitutes the cause of action, not the right to sue for payment.

An agreement must have a "special term" with "clear words" to delay the accrual of the right to payment.

Background

Consulting Concepts International Inc (CCI) provided research and consultancy services to Consumer Protection Association (CPA).

CCI submitted invoices to CPA less than 90 days before 27 December 2013.

CPA failed to pay for the services and CCI issued a claim on 27 December 2019.

The claim was based on several invoices which required payment within 90 days of the invoices being served as provided for by the contract.

CPA applies to strike out the claim on the basis it was statute barred under section 5 of the Limitation Act 1980, because it had been more than six years since the services were provided.

High Court decision

The High Court had to consider whether the cause of action began when the work was carried out by CCI. If so, CCI's claim was statute barred. However, if the cause of action began after the 90 days had expired to make a payment under the invoice, CCI's claim was not statute barred.

The High Court struck out CCI's claim. It agreed that the cause of action accrued when the services were provided no later than 17 December 2013.

CCI appealed to the Court of Appeal. CCI argued that as the invoices required payment in 90 days the cause of action did not accrue until the 90 days had expired. If this was the case, the claim would not have been statute barred according to CCI.

The court's decision

The Court of Appeal dismissed the appeal. It held that the cause of action accrues when the work is done, not when a bill is given. This was the principle established in Coburn v Colledge [1897] 1 QB 702 and followed in Henry Boot Ltd v Alstom Ltd [2005] EWCA Civ 814.

The court held that the right to sue for payment might not arise until a specified time for payment has expired, but that does not affect the accrual of the right to payment. The right to payment constitutes a cause of action.

The Court of Appeal said that there might be situations where the terms of the agreement delay the accrual of the right to payment, but a "special term" and "clear words" are needed to this effect. The court gave the example of the case of Henry Boot, where the right to payment depended on a third party certifying the value of the work done. The cause of action in that case was not until the work had been certified.

The Court of Appeal pointed out the agreement stated invoices would be paid by CPA within 90 days. It did not agree payment would not fall due until the 90th day.

Comments

This case confirms that when a debt is owed under a contract of services, the cause of action accrues when the service is provided.

This has implications for all contracts for the provision of services, including mobile phone and broadband contracts.

Where a contract is regulated by the Consumer Credit Act 1974, the cause of action does not accrue and time does not start to run until the expiry of a default notice. Read our case summary of Doyle v PRA Group.

Return to debt case summaries index.

Consulting Concepts International Inc v Consumer Protection Association (Saudi Arabia)

[2022] EWCA Civ 1699

Court of Appeal (Civil Division)

21 December 2022