Statute Barred???

[Evader]

They can enter a default even if you have not made a payment or acknowledged the debt, this makes no difference to the debt becoming statute barred unless you acknowledge the debt or make a payment now if the debt is already statute barred then if you make a payment it does not stop the debt from being statute barred, once statute barred always statute barred and there is nothing legal they can do to you.

 

dpick

 

Thanks for clarifying that. The confusion arises because s.5 of the Limitation Act 1980 states that the six year period runs from the "cause of action" accruing. It could be argued that the "cause of action" accrues only when a Default Notice (under the Consumer Credit Act) expires.

 

The reason is that it is only until the default notice expires that a Cause of Action accrues, therefore the Limitation could be argued to run from then?

[Evader]

i have asked about proof of an alledged payment from 2007 but they have not provided this is there a time limit regarding this or can they take as long as they wish also asked for copy of the contract signed

 

Be careful what you write to them if there is any doubt as to whether the debt is statute barred. You should mark correspondence "Without Prejudice" and prefix any mention of loan/debt etc with the word "alledged".

 

I would suggest that you write to them stating that the ALLEGED debt is statute barred because the last payment was made on XXXXX. State that you will defend any proceedings brought and may bring proceedings for an injunction under the Adiministration of Justice Act and a complaint to the Office of Fair Trading should there be further contact.

 

Please do not telephone them and avoid responding to every communication received. Send the above letter stating your position and leave it at that.

[rory32]

The confusion arises because s.5 of the Limitation Act 1980 states that the six year period runs from the "cause of action" accruing. It could be argued that the "cause of action" accrues only when a Default Notice (under the Consumer Credit Act) expires.

Indeed it has been argued that the cause of action runs from the default notice. However, such arguments have been totally dismissed. It is well documented in case law that the cause of action runs from the default (not to be confused with a default notice). The default being when a payment was expected and none was made.

 

Be careful what you write to them if there is any doubt as to whether the debt is statute barred. You should mark correspondence "Without Prejudice" and prefix any mention of loan/debt etc with the word "alledged".

 

The basic requirements of an acknowledgment are that it must be in writing and signed by the debtor or his agent. In this context ‘signed’ means in manuscript and not typed (see Firstpost Homes Limited v Johnson [1995] 1 WLR 1567).

 

The vital characteristic of an acknowledgement is that it must amount to an unequivocal admission that the debt remains due: Surrendra Overseas Ltd v Government of Sri Lanka [1977] 1 WLR 565. The court must construe the alleged acknowledgment as a whole – the creditor will not be allowed to pick and choose those parts of a document which suits it, while ignoring others.

 

An acknowledgment need not quantify the debt due, it is sufficient that the amount owed may be ascertained by extrinsic evidence: Dungate v Dungate [1965] 1 WLR 1477. However, a document which admits all the facts necessary to give rise to liability, but in which the debtor denies that he is in fact liable, will not amount to an effective acknowledgement.

 

To be effective, the denial must amount to a denial of liability for all times and all purposes: Bank of Baroda v Mahomed [1999] Lloyds Rep Bank 14.

[Evader]

Indeed it has been argued that the cause of action runs from the default notice. However, such arguments have been totally dismissed. It is well documented in case law that the cause of action runs from the default (not to be confused with a default notice). The default being when a payment was expected and none was made.

 

The basic requirements of an acknowledgment are that it must be in writing and signed by the debtor or his agent. In this context ‘signed’ means in manuscript and not typed (see Firstpost Homes Limited v Johnson [1995] 1 WLR 1567).

 

The vital characteristic of an acknowledgement is that it must amount to an unequivocal admission that the debt remains due: Surrendra Overseas Ltd v Government of Sri Lanka [1977] 1 WLR 565. The court must construe the alleged acknowledgment as a whole – the creditor will not be allowed to pick and choose those parts of a document which suits it, while ignoring others.

 

An acknowledgment need not quantify the debt due, it is sufficient that the amount owed may be ascertained by extrinsic evidence: Dungate v Dungate [1965] 1 WLR 1477. However, a document which admits all the facts necessary to give rise to liability, but in which the debtor denies that he is in fact liable, will not amount to an effective acknowledgement.

 

To be effective, the denial must amount to a denial of liability for all times and all purposes: Bank of Baroda v Mahomed [1999] Lloyds Rep Bank 14.

 

Very impressive Rory 32 as your submission is backed by authority. However, do you happen to have authority for the proposition that the s.5 limitation period does not run from the expiry of the Default Notice? Would be great if you did as I have not found anything yet.

[rory32]

Bristol & West v Bartlett [2002] EWCA Civ 1181; [2003] 01 EG 69) / West Bromwich BS v Crammer [2003] EWHC 2618 / Scottish Equitable plc v Thompson [2003] 07 EG 137, CA; [2003] All ER(D).

 

These are all mortgage shortfall cases so involve specialities rather than simple contracts. However, the court of appeal did define the true position in the Bartlett case as the cause of action arises once there is a failure to make the payments due.

[Evader]

Bristol & West v Bartlett [2002] EWCA Civ 1181; [2003] 01 EG 69) / West Bromwich BS v Crammer [2003] EWHC 2618 / Scottish Equitable plc v Thompson [2003] 07 EG 137, CA; [2003] All ER(D).

 

These are all mortgage shortfall cases so involve specialities rather than simple contracts. However, the court of appeal did define the true position in the Bartlett case as the cause of action arises once there is a failure to make the payments due.

 

Thanks. Ill have a look at them and hopefully there will be something in the judgement to calify the position. It just that I have received a solicitors letter regarding this and they are using the date of the Default Notice as the trigger for six years.

[rory32]

The default notice can't be used as the trigger as this would make a farce of the limitation period. Using their argument in theory a simple contract could have the same limitation period as a speciality e.g. wait almost 6 years to issue a default notice and then have another 6 years to enforce the default that the notice referred to. I think not.

 

This argument that the solicitors are using has been used before by certain sols that DCA's tend to use. It has time and time again been shown to be complete rubbish and is purely designed solely to mislead you. Personally I would report the matter to the OFT.

[Evader]

Trust me I am going to take tis further but wanted to be sure of the legal position first. I agree with your comments about it making a mockery of the limitation period - why issue the Default Notice after six years? Why not wait 10 or 20 years or when it suits you? There is one issue that I havent been able to find out the answer to and it is whether there is any time limit for issuing a Default Notice....

[rory32]

There isn't a time limit for issuing a default notice under the 1974 Act. There are what would be considered good practices but there was no set in stone time limit. From the 1st of October 2008 however there are now timescales for this.

 

I would also point out that under contract law the cause of action is always determined from the breach of contract. A breach occurs when the account is not paid. As the creditor you can not pick and choose when you would like the limitation period to run from.

[Evader]

It seems that the position is that one needs to consider the Credit Agreement to ascertain what term was breached and when that breach occurred. From that date; the limitation period runs. The agreement cannot stipulate when the contract can be considered to be breached, only when the agreement ends/terminated.

 

The Default Notice is required before the creditor can take enforcement action. It has no bearing on the limitation period.

 

s.6 of the Limitation Act 1980 deals with the rolling contract eg. credit card agreements. I have been informed that a letter written to the Debtor requiring payment can trigger off s.6 and the 6 year period runs from when that letter was sent, i.e it is the "Demand for Repayment".

 

I have not been able to find a case specifically on this point only mortagage related cases which rory32 kindly provided.

[rory32]

It seems that the position is that one needs to consider the Credit Agreement to ascertain what term was breached and when that breach occurred.

The breach would run from when payment was not made in normal circumstances.

 

I have been informed that a letter written to the Debtor requiring payment can trigger off s.6 and the 6 year period runs from when that letter was sent, i.e it is the "Demand for Repayment".

 

I don't know who informed you of this but did they actually give you any statute to back up their opinion?

[Evader]

Yes under normal circumstances the failure to pay would be the breach. As for authority to back up the proposition that a letter could constitute a "Demand for Repayment" under s.6 Limitation Act 1980, I am working on that and will revert shortly I hope.

[make them aktiv runners]

Under section 5 there are 2 cause of action dates dependant upon if any payment has been made on the contract at all.

 

If no payment has ever been made, cause of action is the date when the first payment fell due.

 

If payment(s) have been made, cause of action is the date of the last payment or written acknowledgment by debtor. Section 5 determines the cause of action as being the first payment due and section 29 allows for that date to change due to further payments/acknowledgements.

 

A cause of action must accrue before a creditor gains a right of action. In both cases above, the right of action is the date of missed payment (note it is a later date for the 2nd).

 

A right of action is a right to do whatever is necessary to enforce the contract. Default and termination notices are indeed contractual requirements, however, they are part of the right of action and therefore do not change the cause of action date.

 

Section 6 applies to more complicated contracts than CCA regulated agreements/mortgages. The types of things covered in there are business to business contracts and consumer contracts where the consumer is dependant upon a business performing something for them, eg employing a builder to build you a house.

[jaglover]

just a quick update regarding dlc they have today stopped all proceedings on the account and are not persueing the alleged £1400 i am so pleased and owe a big thank you too all of you who have helped with advice if anyone wants me to email them what i exactly put in the letter they can contact me at [email protected] however dlc did say in the letter that this dispute will stay on my credit file unless the full ammount is paid in full but if it is not proven in the first place then it should be removed by law thats my thinking will let you all know on any update once again thanks