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The
issue in this case was what is meant when parties to a dispute reach
a 'standstill' agreement. The claimant believed this prevented the parties
from taking any further steps in the proceedings, so that it would excuse
issuing proceedings out of time. The judge however, held for the defendant,
who contended that the agreement simply extended the statutory limitation
period.
This is a professional negligence claim whereby the claimant owned a
property which it claimed to have insured to a value of £960,000.
The defendant insurer, on the other hand, claimed that the claimant
had amended its policy, reducing the value to £150,000. The claimant's
property was then destroyed by a fire, and the defendant refused to
pay more that £150,000. The claimant therefore made a claim for
the remaining £810,000.
The claimant's cause of action arose on 12 February 1998, and was open
to 12 February 2004. The parties, in a series of telephone conversations,
agreed between themselves to make a number of extensions to the statutory
limitation period, by means of what the parties referred to informally
as a 'standstill agreement'. The 'standstill' agreement was agreed in
January 2004, initially until 10 May 2004 and finally to 30 June 2004.
Throughout this period, the parties continued negotiations to settle
the claim.
At the end of June, negotiations broke down. The claimant's solicitors
took steps to restore the defendant company to the register, and after
this was done, the claimant finally issued proceedings on 2 August 2004.
The defendant then applied to have the claim dismissed on the basis
that it was brought over a month out of time.
The claimant contended that the 'standstill' agreement prevented him
from taking any steps in the proceedings, including restoring the defendant
company to the register and commencing proceedings, while the agreement
was in force. He further contended that by entering into a 'standstill'
agreement, it was implied that he would be allowed reasonable time after
the expiry of the relevant period in which to bring the claim. The defendant
on the other hand asserted that the agreement merely extended the statutory
limitation period.
The judge found for the defendant and the claim was accordingly dismissed.
The judge held that a 'standstill' agreement merely operates to extend
the statutory limitation period: the agreement was made in the context
of extending the limitation period, and that is how a reasonable person
would construe it. Hence a 'standstill' agreement does not impose a
moratorium on the parties taking any steps in the proceedings - it merely
suspends the limitation period.
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