Unauthorised non-demanded overdraft statute barred after 8 years of non-payment?

[hacksaw]

I have a US dollar business account with Lloyds TSB which is overdrawn. No overdraft limit. Last payment was made in October 2003. I have not made any acknowledgments since then.

 

In most cases, under the Limitation Act 1980, a debt becomes statute barred six years after the last cause of action. However, I'm not sure when exactly is the last cause of action for this overdraft. I have been reading many pages from this forum, searching for "overdraft statute barred" but I'm still confused, as some say cause of action is last payment/acknowledgment in writing.

 

I have read about the case in lloyds bank ltd v margolis 1954 WLR 644, 659 (google this and look at the first link: a PDF from a website actuaries.org.uk) where it was held that for an overdraft the last cause of action starts when a formal demand is issued. However, what is the case for an unauthorised overdraft? Surely in their terms and conditions it would say something like "If you go over your overdraft limit you agree to pay this amount to us immediately". Unfortunately I don't have a copy of the terms and conditions anymore. I suppose I could do an SAR.

 

The bank have not sent a formal demand for repayment yet, but they may do so soon. I have been receiving statements and notification of interest charges, but no other letters before September 2011.

 

They've sent me two letters recently from their Colmore Row Business Centre, the first one about the account being "in excess" and the second one a notice that interest will be charged at a higher rate etc.

 

Unfortunately it caught their attention because a few months ago I opened a sterling business account with them, which I regret now.

 

The balance is at least double what it should be, because the annual maintenance fee is £30 per year and they've been taking £60 per year. Nevertheless I can't afford to pay even half the overdraft back and even worse I can't afford another default on my credit file and harrassment from debt collectors, which I have been free from in the last few years. I know how to deal with debt collectors now because of this great site, but my family don't.

 

I also have a sterling business account (as mentioned above) with them, a current account and a Halifax current account. Now that Halifax are part of the Lloyds Banking Group, I wonder if they can set-off money from that account to pay off some of the overdraft? Maybe its now time to bank elsewhere?

 

Any help is much appreciated. Thanks.

 

24th* September 2011

 

Re: Currency account in excess

 

We need to talk to you about the above. We have tried calling you to discuss it, but without success.

 

Please note that it's nothing to do with the marketing of any new services - it relates to one of the products or services which you currently use.

 

As it's urgent, please call us as soon as you can.

Dear Sir,

 

USD Currency Account

 

I'm writing to let you know that your Currency Account has become overdrawn or if you have an agreed overdraft, you have exceeded that limit. I'm sending you the information below to ensure you're aware of the interest that will be charged as a result of the overdrawn position.

 

Your account 30*** ******** has been in excess from 15th* September 2011

 

The information below is correct as of 15th* September 2011

 

A. Amount of unauthorised borrowing USD $3,312.25 * (Excess Amount - i.e. the difference between the authorised limit and the overdrawn balance)

B. Current balance USD $3,312.25* DR

C. Interest rate as at 15th* September 2011 12.25 rate plus 12% or the agreed margin as quoted

*Fictitious to protect my privacy, but the real amounts/dates are very close. Edited October 31, 2011 by hacksaw

[hacksaw]

OK I found the terms and conditions on their website (the latest ones) but not the original ones when I opened the account.

 

From this I found the following that could be relevant to my case:

 

1.5 The Currency Account is an account denominated in a currency other

than sterling. It is a condition of your Currency Account, unless otherwise

agreed in writing between us, that you maintain a sterling account with

us and operate your Currency Account in accordance with your sterling

account Authority.

4.3 Your Currency Account should not become overdrawn without

arrangements having been made with us nor should the Currency

Account operate in excess of the agreed borrowing limits.

 

4.4 You should only issue instructions to us to withdraw funds from your

Currency Account where there are sufficient funds available at the time

those instructions were issued or, where an overdraft limit has been

agreed and the withdrawal will not cause that limit to be exceeded.

However, if at any time such instructions would result, without prior

arrangement, in the Currency Account becoming overdrawn, or the

agreed overdraft limit being exceeded, we may in our sole discretion and

without contacting you, allow an overdraft to be created or allow the

agreed overdraft limit to be exceeded. In these circumstances the new

or excess overdraft is an unauthorised overdraft and you will be charged

at the applicable rate for unauthorised borrowing. For details of our

unauthorised borrowing interest rate please refer to the documentation in

your application pack or www .lloydstsb .com/business.terms

10.2 We may terminate this Agreement immediately if any of the

following occur:

 

(i) if you breach in a serious or repeated way this Agreement or any

other agreement with us.

10.7 If your sterling account is closed, we may give you two months’ written

notice to close your Currency Account.

My first sterling business account which I opened several years ago was closed in late January 2005.

 

Could someone please confirm whether or not this overdraft is statute barred, or do I have to wait 6 years after the formal demand for repayment, when it is issued?

 

Thanks.