Limitation Act 1980 – Mortgage loan – Sale of mortgaged property by respondent mortgagee – Sale price leaving shortfall – Appellant agreeing to make repayments of £10 per month towards indebtedness while reserving position that sale price too low – Payments ceasing – Claim for repayment of debt allowed – Whether claim time-barred under section 20 of 1980 Act – Whether part-payment starting time running again within section 29(5) – Appeal dismissed
In 1990, the appellant purchased a house for £95,000, having obtained a mortgage of £85,500 from the respondent building society, secured on the property. He made no repayments either of interest or capital. In April 1991, the respondent obtained a possession order, suspended on terms that the appellant once more failed to meet. Accordingly, in 1992, the respondent sold the house; after the sale proceeds of £57,500 were set off against the sums owing, an outstanding debt of £48,340 remained. The respondent made no further attempt to enforce the debt until October 1995, when it wrote to the appellant asking for his proposals for payment. The appellant expressed concern at the shortfall between the 1990 valuation and the lower price that the respondent had secured for the property, and indicated that he did not agree with the extent of the alleged indebtedness. In 2000, after further protracted correspondence, the appellant agreed to make regular payments to the respondent of £10 per month, without prejudice to his position. These commenced in October 2000 but stopped in 2004, with the debt reduced by £530.
In 2008, after further delays, the respondent brought proceedings to recover the debt. The appellant contended that the 12-year limitation period for the recovery of mortgage loans, provided by section 20 of the Limitation Act 1980, had expired. The respondent dismissed that argument on the basis that the appellant had acknowledged the claim and had made payments in respect of it, within the meaning of section 29(5), such as to start time running again. The respondent’s claim was allowed and the appellant appealed. He contended that part-payment was only a subspecies of acknowledgement and that where it had been made clear that part of the claim was disputed, the acknowledgement related only to the undisputed balance. He submitted that he had agreed to make the £10 payments, while continuing to dispute liability, because it was easier and cheaper than litigation.
Held: The appeal was dismissed.
Although part-payment could be regarded as a subspecies of acknowledgement, it was explicitly separated from acknowledgement and given equal status to it by section 29(5) of the 1980 Act, such that it provided a free-standing mechanism for the computation of time: Surrendra Overseas Ltd v Sri Lanka (The Apj Akash) [1977] 2 All ER 481 distinguished. Even if that were not so, time would have begun to run again in December 2000 in respect of as much of the debt as was unaffected by the alleged sale at an undervalue. The unquantified nature of any undervalue did not prevent there from being an acknowledgement in law: Baildon v Walton (1847) 1 Exch 617 considered. The only debt to which the series of monthly payments from 2000 onwards was referable was the mortgage debt, since there was no evidence that the appellant owed any money other than debt to the respondent. The claimed undervalue was irrelevant, because the purpose of section 29(5) was not to fix any particular sum but to enlarge the time for bringing proceedings in which that issue could be litigated if raised by the appellant. In any event, the appellant had not pleaded a sale at an undervalue in the instant proceedings. Had the claimed undervalue been such as to extinguish the mortgage debt, it might have been arguable that the only purpose of the £10 payments was to get the building society to leave alone the appellant, but the appellant had advanced no valuation of his own, either in negotiation, or at trial, and the contention had no reality. On any possible view, he still owed money to the respondent.
There had been both acknowledgement and part-payment – although proof of the latter would have been sufficient – within the 12 years before the issue of the instant proceedings. Accordingly, the respondent’s claim was not statute-barred.
Paul Lakin (instructed by hlw Commercial Lawyers LLP, of Sheffield) appeared for the appellant; Naomi Candlin (instructed by Optima Legal, of Bradford) appeared for the respondent.
Sally Dobson, barrister
