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Certainty prevails: cause of action accrues when work done

Jason Rix

In Ice Architects v Empowering People Inspiring Communities, the High Court held that the entitlement to payment for work by ICE arose when the work was done, not when the invoice expired.

ICE provided design services to EPIC. The agreement stated that the “basis of payment” was that ICE “will invoice EPIC on a monthly basis for work completed to date” and that EPIC “will endeavour to make payment within 30 days of receipt (unless otherwise stated)”. At first instance, ICE’s action was found to be statute barred under the Limitation Act. ICE appealed, claiming that the entitlement to payment did not begin until 30 days after the issue of the invoice and therefore it was not time-barred.

The High Court reiterated the well-established principle in Coburn v Colledge: “in the case of a person who does work for another…unless there is some special term to the contrary, his right to payment arises as soon as the work is done.” It rejected ICE’s argument that an objective interpretation of the agreement meant the parties intended had agreed that ICE’s entitlement to payment did not arise until 30 days after the receipt of the invoice. There was nothing in the agreement to suggest the parties intended to displace the normal rule, and clear words were needed had the parties wished to do this. The “basis of payment” referred merely to the process of billing and payment, not the legal right to payment.

The High Court emphasised that the central purpose of the limitation provisions was to provide certainty and to avoid stale claims. If there were not certainty, courts would become embroiled in satellite issues like the successful delivery of invoices.

Comments published on Compact Contract do not necessarily reflect the views of Allen & Overy or its clients.

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