Limitation Act 1980: Let's knock it on the head

[Seminole]

I've spent some time over the past few days trying to understand how the LA works and I have to say that I'm getting a bit confused. I would like to use this thread to resolve some of these issues and I will post on other sites as necessary to try and come to a definitive view.

 

To begin with I want to assume that Section 32 doesn't apply ie there is no error or deliberate concealment. Personally, I believe that this section does apply to bank charges but it simplifies things if we put it to one side for a moment.

 

Until I came across this site all I knew about the LA was that if someone being pursued for a debt didn't acknowledge that debt in writing for a period of six years (12 for a mortgage), then the debt could not be enforced through the court. I've heard contradictory reports about whether the clock startes from the point of last payment or written contact or from the date that the creditor defaults the account. Does anyone know which is correct?

 

If the debtor is unfortunate enough to make contact within the six year period, the clock starts again. The debt is not statute barred for a period of six years from the date of acknowledgement. This raises two very important questions:

 

1) Does this restarting of the clock work both ways? Presumably if a debtor doesn't make contact for six years, he is prevented in the same way as a creditor from bringing legal action over the debt. Until the bank charges issue arose I had never even thought about this but presumably this is true because of the thought we are giving to the Section 32 issue. However, and it's a big however, the acknowledgement of debt issue must work both ways. If the debtor acknowledges the debt, is it correct that the debtor could pursue a claim over the debt for a period of six years from the acknowledgement?

 

2) Does the commencement of legal proceedings restart the clock for LA purposes ie does the very fact that the creditor brings proceedings mean that the clock is restarted for both parties?

[Seminole]

The next question is what is statute barred and this is where I get really confused.

 

Taking an extremek and simplified example.

 

X opend a bank account in 1997 with a £100 overdraft facility. He issues two cheques. Cheque 1 for £25 clears successfully. Cheque 2 for £90 bounces and the bank adds a fee of £30 to the account. The balance is therefore £55 o/d.

 

X forgets about the account and let's assume that the bank doesn't make any more charges or adds interest. Years pass. X moves and the bank doesn't find him. In 2000 the bank does track him down and "persuades" him to pay the £55.

 

In 2006 X finds CAG and discovers that £30 of the monies he paid the bank were unlawful charges but the charge was applied more than six years ago.

 

Assuming Section 32 doesn't apply, is X able to recover the £30 ie is it statute barred because it arose more than six years ago?

 

At the moment I have really simplified this but depending on the view that's reached we could add a default and CCJ to the mix but I would prefer to keep it really simple for the moment.

[Movingon]

OK... my views.

 

The six years begins when the "cause for action" happens. So - when you fail to make a payment for the first time - this is the "Cause for Action". This would be when the six years start.

 

With the banks, this would be when the first unlawful charge was levied, the six year clock starts ticking... therefore any unlawful charges before that (ignoring s.32) would be statute barred - irrecoverable.

 

And yes, the SoL applies to everyone involved; it doesn't specifically exclude anyone on grounds of their identity does it?

 

As to the rest, I'm confused too. LOL

[Seminole]

Now this is where it really does start getting confusing.

 

I agree with your analysis based on cause of action. In the highly simplified example I quoted, what would have happened if the bank had found X less than 6 years after its last contact with him but more than 6 years since the charge was applied to the account.

 

In this scenariio, the bank could pursue X for the whole balance on the account but X doesn't seem to be able to counterclaim for the unlawful charge because it seems to be statute barred. In other words the balance is claimable but a constituent element of it is not.

 

That seems remarkable unfair to me and actually doesn't seem very logical.

[Tygermoth]

Wow dude ..... heavy

 

 

 

(now have a headache)

[Movingon]

What if, when the bank lodges their claim for the balance, something happens which opens up a challenge, or counterclaim, based upon the unlawful charges? What about reciprocity? (Like if they have the right to claim then so do we kinda thing).

 

I think that to get this deeply into it we would need a lawyer or someone with legal thinking... Don Quixote?

[pj41]

Hi All,

 

Just to throw my two penneth in on the example. The account is £45 in credit not £55 overdrawn (the £90 cheque wasn't honoured).

 

I'll tell you what it is easy to get confused. LOL

 

 

cheers

 

 

Paul

[barracad]

The account is £45 in credit not £55 overdrawn (the £90 cheque wasn't honoured).

 

No, it's £55 overdrawn - there was never any money in the account in the first place so how could it be in credit?

[pj41]

Hi,

 

Just testing!! Sorry the account has £100 overdraft. Didn't see that bit, must be the wine!!

 

Just charge me £30 for the oversight.!!

 

Cheers

 

Paul

[sequenci]

with banks it is when they serve a default notice (on regulated agreements anyway).. with things like mortages and secured loans over 25k it would be when the whole balance becomes due. This can vary depending on the agreement signed. usually it's when the debtor is in arrears for 2 or 3 months.

 

now for some caselaw.... "it has always been held that the statute runs from the earliest time at which an action can be brought"

 

Reeves v Butcher [1891] 2 QB 509

 

with regard to acknowledgment

 

It must be in writing. It must be signed by the person liable (s30(1)) or an agent working on that person's behalf, and must be made to the person whose claim is being acknowledged or his/her agent. A printed name may count as a signature.

 

"Assuming Section 32 doesn't apply, is X able to recover the £30 ie is it statute barred because it arose more than six years ago?"

 

my gut feeling is no. it's barred.

[Spiceskull]

The assumption here is that section 32 does not apply. However, the bank is fully aware of the terms and clauses of UTCCR, or at least is ought to be, and therefore that any charge must be a reasonable representation of loss/cost to the bank.

 

When applying this penalty charge, it should surely be duty bound to inform customer X of this. As the bank knew full well that the charge did NOT represent a true measure of loss, then it is guilty of withholding this information from customer X...

 

The bank could argue that the charge was a pre-estimate of loss, and therefore was an average. My argument would then be that the bank must inform me of this. After all, the contract it is holdin me to is between the bank and me...not me and every other customer the bank has...

 

I believe that the statute barred element will be broken down soon, and I am hoping to try this if HSBC don't play ball.

 

See the steps I took to get my bank charges back.

Spiceskull v HSBC.

Thank you Consumer Action Group.

Read my blog.

 

[sequenci]

I've been thinking about this a great deal!

 

*If* the limitation period does not start to run until the claimant discoveres or should have discovered the concealment then surely it will not start until the laws are in place?

 

So if you use unfair contracts that is 1999!

 

but then would the banks argue that the terms were fair until that point?!

 

haha.

[Movingon]

The Unfair Terms in Consumer Contracts Regulations are 1999, yes; they're aligned I believe to the European Laws on the subject. However the Unfair Terms (Contracts) Act was commissioned in 1977... and we always quote this too.

[sequenci]

The Unfair Terms in Consumer Contracts Regulations are 1999, yes; they're aligned I believe to the European Laws on the subject. However the Unfair Terms (Contracts) Act was commissioned in 1977... and we always quote this too.

 

damn, i didn't know that

[Spiceskull]

The Unfair Terms in Consumer Contracts Regulations are 1999, yes; they're aligned I believe to the European Laws on the subject. However the Unfair Terms (Contracts) Act was commissioned in 1977... and we always quote this too.

The very same argument I would use. The Act is almost 30 years old, and the regs were drawn up by way of enforcing the act. Clearly there are technicalities and slight changes, but an unfair contract is an unfair contract.

 

Of course, the other aspect of the Contracts act is the very term "unfair" - this means (broadly) that you are not beholden to an unfair term, and this is demonstrated by reference to terms that were not individually negotiated i.e. you take them all or you take none at all...

 

See the steps I took to get my bank charges back.

Spiceskull v HSBC.

Thank you Consumer Action Group.

Read my blog.

 

[Seminole]

OK, this is still really bugging me so let me ask the question in a slightly different way.

 

I purchased something from X 7 years ago for £1,000 but didn’t pay. I then did a runner and X didn’t find me until 2 years ago when he chases for payment. I acknowledged the debt and therefore restarted the clock for Limitation Act purposes. For whatever reason X stopped chasing but started again a year later. I would have had no Limitation Act defence because I restarted the clock by acknowledging the debt.

 

X sued me a year ago and I paid up. For whatever reason I now believe that he should have charged me £900 and not £1,000. Surely restarting the clock must work equally for both sides and it can’t stop permanently when the debt is repaid?

 

Extending this is into a more realistic (and real world) example, I had a bank account for 10 years from 1991. The bank terminated the account in 1999 and transferred the balance to its debt management unit. The balance included charges for 1998 and 1999. The bank eventually sued for the balance in 2002 and was repaid in 2004.

 

My argument is that the bank restarted the clock in 2002 by commencing proceedings and I certainly restarted it by paying the debt in 2004. The bank is trying to argue that charges in 1998 and 1999 are statute barred. If the clock was restarted in 2002 or 2004 then surely this isn’t the case.

 

The argument used here and elsewhere is that the charges should be tested individually to see if they should be statute barred. I can see the point but surely this argument works both ways. If the bank is chasing a balance which is, after all, a series of transactions, then the claim should be for the current balance minus the balance six years ago as those transactions must be statute barred. I’m sure there’s a serious logical flaw here but I don’t see what it is.

[thewifeandI]

I would be interested in a clarification on this. I agree with Seminole that where the balance that they are chasing is made up of unlawful charges then whilst the debt is active those charges cannot be statute barred.

 

In my own claim I included all specific charges for the last seven years as I had statements for them. I also included an estimate for charges applied in the period from opening the account in 1995 to the first statement that I had. I wrote an explanation in my LBA of how I calculated the estimate and the period it covered. I got full settlement of my claim without a quibble.

 

In my wife's claim they are refusing all charges over 6 years old, so they are cutting the settlement back by about £300. I may just have been lucky and it was an oversight by their legal / account management teams.

[maybelline]

much less technical but, if a peson had a debt to an institution from years ago, more than 6 years and it was not acknowledged by the debtor for that period it becomes statute barred - if a bank applies unlawful charges for a continuing period of more than six years but the charges are acknowleged since they are paid and contact is therefore being maintained these are maybe not stature barred?

 

I'm sure its more complex, very interesting.

[Seminole]

Another issue to chuck into the mix:

 

A debt that has been subject to a CCJ can't be statute barred ie there is no limitation on when the debt can be collected under the CCJ. Again, it's hard to see how this doesn't work both ways as well.

[maybelline]

I agree, why not both ways.

[thewifeandI]

Another issue to chuck into the mix:

 

A debt that has been subject to a CCJ can't be statute barred ie there is no limitation on when the debt can be collected under the CCJ. Again, it's hard to see how this doesn't work both ways as well.

That's probably a good bargaining tool when they threaten to send a debt to collections / legal action. If they want to do that they will have to refund all unlawful charges first otherwise they can be challenged in court - i.e. 'the balance they are claiming is made up (mostly) of unlawful charges and I demand to see how they were arrived at because I dispute the amount owed'.

 

I reserve the right to be wrong though! ;-)

[sequenci]

if a lender wishes to enforce a ccj debt after 6 years they need the leave of the court, i wonder if this is true the other way round.

 

also if this is proven, is it worth getting a ccj before asking for your charges to be refunded!

[maybelline]

cant get my head around the timescale - if the timescale 'begins' from when you last admit owing and are in contact (or make a payment) then its 6 years from that? when it comes to back charges then its 6 years back from whenever you make the request (even though contact maintained).

 

in your example given I can only see a gap of 3 yrs between the bank terminating the account and contacting again in 2002 so how is that period statut barred? sounds like some kind of contradiction between whether going backwards or forwards on the calendar.

[paulwlton]

I have been paying a ccj since 1998, at £38.00 a month, the ccj was for a loan that cleared a big overdraft off, banks advice. i have still got the loan agreement stating this. this overdraft was made up of unlawfull charges,so basically i have been paying back a percentge of these charges every month since 98, if the bank says the charges were more than 6 years ago tough luck , i would argue the fact that i'm still paying these charges back in an active debt, so i would say the limitation act could only start from when i made the last payment on my ccj. any advice on this.

[blueskies]

Seminoles arguement must have taken a lot of lateral thought to come up with but I cannot see how a court could deny this arguement without upsetting the equity of contract balance.

 

I am watching this thread with interest but cannot get my head round how this will work for an account that remains open in with a positive balance. It fits perfectly with Seminoles position as his account is closed and has been settled within the last 6 years.