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Owed a Debt for Work Done? Don’t Delay Taking Advice

PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.

If you are owed a debt for work done, any delay in seeking legal advice could result in you being left empty handed. In one case on point, an architectural practice that claimed to be owed almost £25,000 for its design work on a social housing project left it too late to launch a debt recovery claim.

The practice issued its employer under a contract a social housing provider with an invoice for £42,375 plus VAT. The invoice, which was sent in April 2009, was rejected by the employer. The practice was subsequently awarded £24,033 by a contract adjudicator, but launched proceedings in May 2015 to recover the£24,697 balance. Its claim was, however, dismissed by a judge on the basis that it had been issued more than six years after the accrual of the cause of the action and was thus statute barred by virtue of Section 5 of the Limitation Act 1980.

In dismissing the practice’s appeal against that ruling, the High Court noted that, in actions for payment in respect of works or services, the default position is that the six-year limitation period begins to run when the relevant work is completed. There was nothing in the wording of the contract to suggest that the parties were intending that the practice’s entitlement to payment would not arise until 30 days after the invoice was issued.

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