The Court of Appeal, in City & General (Holborn) Ltd v Royal Sun Alliance Plc [2010] EWCA Civ 911, was asked to consider whether the earlier decision to set aside an extension of time for service of a claim form (granted due to the claim being time-barred) was correct. The claim bought by City & General (C&G) was in respect of damage suffered to a building in London as a result of flooding which started in April 2002, the collapse of a crane on an adjoining site in January 2003, and the infestation of the building’s water systems by bacteria which was discovered in May 2004. The claim form was issued on 16 January 2009 but not served within the four month deadline which expired on 17 May 2009. Following an application for extension of time, it was finally served on 15 June 2009, and the extension was then set aside in August 2009 following an application by Royal Sun Alliance (RSA).

On appeal, C&G argued that: (i) in respect of the first ground of appeal, the First Instance judge should have considered the three claims separately and come to a time-bar conclusion in respect of each; (ii) each time more water entered the site it caused fresh damage and therefore each time was a new cause of action; and (iii) the fact that RSA had made an offer of compensation for the water damage in March 2007 meant that it had acknowledged the claim so that the limitation period started again at that time under s.29(5)(a) Limitation Act 1980.

The Court of Appeal found against C&G on all counts as follows: (i) C&G had not asked the judge to consider the extension of time under this basis, and in fact both parties had contended for an “all or nothing” approach. Lord Justice Longmore, giving the leading judgment, stated that, in any event, it is sufficient for a defendant to show that he would be deprived of the time-bar defence if service of the claim form was extended; (ii) in respect of the second ground, none of the relevant case law had been to the judge’s attention. As such, the judge was not purporting to be ruling on this point, and indeed it would have been wrong for him to do so in an application for extension of time for service; (iii) in respect of the third ground of appeal, which was a wholly new point raised by C&G, the offers made by RSA were extremely small compared to the value of the claim for damages and as such could not be taken to be an admission of liability. Further, their Lord Justices noted the considerable case law which states that claims under a policy of indemnity are claims for unliquidated damages. As such, the provision in s.29(5) Limitation Act 1980 which only applies to “debts or liquidated pecuniary damages” would not apply.