The Dutch Supreme Court ruled that that a prejudiced person's knowledge of another person possibly being liable for the damage suffered is not sufficient certainty regarding the identity of the liable person for the short limitation period of five years to start running (Dutch Supreme Court, 31 March 2017, ECLI:NL:HR:2017:552).
An action to claim damages is prescribed five years after the day following the one on which the prejudiced person becomes aware of both the damage and the identity of the person responsible for the damage (Article 3:310 (1) of the Dutch Civil Code ("DCC")). It is settled case law that the prejudiced person's knowledge of the damage and the identity of the person responsible therefor requires actual knowledge (daadwerkelijke bekendheid), as a result of which the mere suspicion of damage does not suffice for the limitation period to start running. The limitation period only starts running the day following the one on which the prejudiced person is actually capable of claiming compensation for the damage. A prejudiced person is considered actually capable of claiming compensation if that person has sufficient certainty that the damage was caused by the failure or wrongful act of the person involved.
In this judgment, the Dutch Supreme Court gives more clarity on the criterion when a prejudiced person has become aware of the identity of the liable person. According to the Supreme Court, in the given circumstances, knowledge of the person possibly being liable for the damage incurred is not enough to accept that the prejudiced person had sufficient certainty regarding the identity of the liable person for the short limitation period to start running. The fact that (i) the person liable for the damage suffered belongs to a restricted circle of three possibly responsible identified persons, and (ii) the prejudiced party could have safeguarded its position by giving notice of liability, is not sufficient for the short limitation period to start running.
In the case at hand, a company called Mispelhoef B.V. ("Mispelhoef") suffered damage due to excess water. According to Mispelhoef, this damage was caused either by roadworks or by the construction of an industrial estate. Mispelhoef identified three parties that were possibly liable for the damage: the Municipality of Eindhoven, the water authority De Dommel or the Directorate-General for Public Works and Water Management (Rijkswaterstaat) ("RWS"). As Mispelhoef believed it was obvious that the damage was caused either by the municipality or the water authority, rather than RWS, Mispelhoef's legal expenses insurer only held the municipality and water authority liable. To that end, the legal expenses insurer sent a letter to both the municipality and water authority, in which it identified the municipality and "the water authority / RWS" as the parties that were possibly liable for the damage.
When the municipality and the water authority both denied liability, after completing their own separate investigations, Mispelhoef requested a research agency to investigate the cause of the damage. The research agency concluded that RWS's work had caused the damage. Initially, RWS acknowledged liability and informed Mispelhoef that it would investigate the damage caused. However, RWS subsequently informed Mispelhoef that the claim had prescribed.
Mispelhoef issued legal proceedings. Both the District Court and the Court of Appeal of The Hague held that Mispelhoef's claim had prescribed. According to the Court of Appeal, Mispelhoef's claim prescribed five years following the day after it had sent the letters to the municipality and the water authority, as it appears from these letters that Mispelhoef was aware of both the damage and the three parties that were possibly liable for the damage suffered. The fact that Mispelhoef believed that the municipality and the water authority were primarily responsible should not have prevented Mispelhoef from safeguarding its rights by also sending RWS a similar letter, holding RWS responsible.
The Advocate General followed this judgment and advised – in short – that the fact that the party belongs to a restricted circle of three possibly responsible identified parties, is sufficient to accept that the prejudiced person had adequate certainty regarding the identity of the liable party.
Contrary to the Advocate General's opinion, the Supreme Court reversed the judgment and held that the Court of Appeal had wrongly considered it crucial that Mispelhoef was aware of the possibility that RWS was liable for the damage and that Mispelhoef could have safeguarded its position. Even taking into account that Mispelhoef obtained professional legal assistance, this mere possibility is not considered sufficient knowledge to accept that Mispelhoef had sufficient certainty that the damage was caused by the failure or wrongful act of RWS. In addition, the Supreme Court held that in this judgment the Court of Appeal had failed to recognize two factual circumstances, both of which were in the control of RWS.
Where most case law on the short limitation period concerns the criterion of knowledge of the damage, this judgment provides more insight into the criterion of knowledge of the liable person. The Supreme Court balances the various interests at stake: interests relating to legal certainty and primarily interests relating to fairness (billijkheid): avoiding the prejudiced person's right to claim damages becoming illusory on the one hand and legal certainty of the person causing the damages that the prejudiced person cannot needlessly await to taking action on the other hand. Explicitly taking into account the relevant circumstances of the case, the Supreme Court ruled in favour of the prejudiced person; avoiding that Mispelhoef's right to claim damages from RWS became illusory.
Perhaps the biggest relief of this outcome was for Mispelhoef's legal expenses insurer. It is remarkable that Mispelhoef's legal expenses insurer did not just send a letter holding RWS liable as well, safeguarding Mispelhoef's position. To avoid the risk of prescription, it's advisable to interrupt the limitation period by sending a notice of liability promptly after identifying the damage suffered and the responsible party.