Bringing a counterclaim after expiry of limitation period

The claimant commenced proceedings in August 2013. In April 2014, the defendant served a counterclaim. That counterclaim had become time-barred, though, in 2012. However, the defendant argued that the effect of section 35 of the Limitation Act was that it could nevertheless advance its counterclaim, provided that it had not previously advanced a counterclaim. That argument was rejected by Laing J and the defendant appealed.

The case turned on the construction of section 35, which the Court of Appeal accepted was "not a model of clarity". It went on to hold, though, that section 35 had only the procedural effect of deeming any new counterclaim as having been brought on the date when the action was commenced (rather than on the date when the counterclaim was first made). It does not have the effect of disapplying the underlying limitation period for the counterclaim: "it is difficult to discern any intelligible legislative policy behind a provision which would enable a counterclaim of any age, and no matter how stale, to be pursued, merely because, as a matter of happenstance, the party raising such a new claim, had been sued. The judge pointed to the absence of clear words mandating such a surprising result; and she characterised such an intention as 'capricious' and productive of legal uncertainty. I agree." (as per Sharp LJ).