A person may be denied the right to rely on the Statute of Limitations by the courts of equity. If it would be dishonest or unconscionable for him to do so, the chancery courts have long held, that he may be estopped from relying on the statute. Estoppel may arise where the defendant through his actions or words, leads the claimant to believe that proceedings would not be necessary and the claimant in reliance has refrained from instituting them. An estoppel may arise, even by correspondence is “without prejudice”.
If the defendant or is his insurers request that claimant to refrain from issuing proceedings while negotiations are on-going, then they may be estopped from raising the statute even where they do not concede liability. There must be a clear and unambiguous representation, which is intended to affect the relationship between the parties. The general principles of estoppel apply. It must be reasonable for the claimant to rely on the statements or representations. It must be shown that the claimant relied on the representation and acted to his detriment accordingly.\”Fraud\”
The presence of “fraud” in either a narrow or broader sense, may preclude the party at fault form relying on the Statute of Limitations. In its narrow sense, fraud means intentional or reckless words or actions which mislead the claimant. There is a broader concept of fraud in equity which includes unconscionable words or acts of a person in a position of trust (and potential abuse) who owe fiduciary duties to the claimant, such as a trustee or professional advisor
The principle is embodied in the Statute of Limitations itself. Section 71 provides that where an action is based on the fraud of the defendants on his agent or any person through whom he claims or where the right of action is concealed by fraud, the period of limitation shall not begin until the plaintiff has discovered the fraud or could with reasonable diligence have discovered it.
The provision does not enable an action to be brought to recover, or enforce any charge against, or set aside any transaction affecting, any property which has been purchased for valuable consideration by a person who was not a party to the fraud and did not at the time of the purchase know or have reason to believe that any fraud had been committed.
The principle applies to concealment of the claimant’s case and to of some classes of mistake, which have been induced by the defendant. Fraud or concealment in the sense may arise where a fiduciary advisor, such as a solicitor or medical doctor, disguises and conceals wrongdoing. In this sense, fraud covers unconscionable behaviour, which need not be dishonest.
Where the claim is itself based on a fraud (as opposed, for example to negligence) this general limitation period will not apply until the fraud has been discovered. The fraud is discovered when the fraud itself becomes known. The circumstances which are in fact fraudulent may be known, but may not be known to be fraudulent.
Fraudulent concealment may arise if the concealment is knowingly undertaken. Deliberately keeping secret, the basis of the claim is likely to suffice. If on the other hand, the defendant did not know that he committed a wrong, there may not be the requisite deliberate concealment.
It has been suggested in some cases that there must be a special relationship between the parties, which makes the concealment unconscionable in the circumstance. That requirement has been criticised. Other cases have criticised this test as overly burdensome on claimants.
A person may be held fraudulently to conceal his identity. Therefore, a business or trading name which is misleading due to default on the defendant’s part may be a basis for disallowing a Statute of Limitations defence, where an erroneous defendant is thereby sued. The concealment must be the reason why proceedings have not been issued or have not issued against the correct defendant.
A failure by a solicitor to disclose his negligence may be fraudulent concealment on account of his fiduciary obligations and his obligations to keep his client advised. The principle does not seem to apply, where the solicitor does not realise that he has made a mistake. Difficult issues may arise where the professional indemnity insurance policy obliges the solicitor not to admit the claims.
Mistake Not Usually a Ground
The Act provides that in the case of an action for which a period of limitation is fixed, the action is for relief from the
consequence of a mistake, the period of limitation does not run until the claimant has discovered the mistake or when it could with reasonable diligence have been discovered.
The limitation period is not extended, where property or assets are purchased by an innocent purchaser for value without notice of the mistake. The above provision does not enable any action to be brought to recover, or enforce any charge against, or set aside any transaction affecting, any property which has been purchased for valuable consideration, subsequently to the transaction in which the mistake was made, by a person who did not know or have reason to believe that the mistake was made.
The Statute of Limitation provides a number of other circumstances where the running of the limitations period frozen/suspended or restarted afresh. The two most important cases in which the statute is restarted is where there has been an acknowledgment or part payment by the defendant.
An acknowledgment and part payment are principally applicable to debts and other claims for a fixed/liquidated amount. The acknowledgement must be in writing. This is a significant limitation. Strictly speaking, the principle is not limited to the case of debts, but it arises principally in that context. It most commonly applies to
- claims to recover a debt
- claims of a mortgagee to recover a mortgage debt;
- claims to the non-real estate of a deceased person;
- claims to recover land by an owner or mortgagee;
- claims by a mortgagor to redeem land in the possession of the mortgagee;
- rights of residence or equivalent rights.
The principle is likely to apply include to a sum which is fixed or ascertainable, as opposed toa general sum claimed, which subject to assessment and judgment.
In some cases, the principle of an acknowledgment only applies. In other cases, part payment (which is in the nature of acknowledgment) is also applicable. Importantly, part payment does not require to be proved in writing.
Although an acknowledgment must be in writing, it need only acknowledge the debt in general terms. It need not specify the amount. However, the debt itself must be a fixed sum or be capable of being ascertained. Claims for unliquidated sums for breach contract or torts / civil wrongs are not covered. An acknowledgment or admission of such a claim is not enough, although it may raise issues of estoppel.
In the case of a debt, an acknowledgment or part payment may revive a debt which is already statute barred. This contrasts with the position in respect of land, where an acknowledgment after the statutory 12-year period, does not revive title (which is extinguished upon expiry of the statutory period).
An acknowledgment by one party may bind another party. Acknowledgment by a person in possession, binds all others in possession. The principle applies to co-owners and to successors in title. The acknowledgment by one co-owner binds the others. The acknowledgment must be made to the person whose claim is in issue or to his or her agent.
An acknowledgment may be made by an agent. The agent must have authority to make the acknowledgment. The general principles of agency apply. The presence or absence of authority is commonly disputed in such cases.
The acknowledgment must be in writing signed by a person making it. No particular form of wording is necessary. It may arise formally or informally. The acknowledgment may be implied.
The broad principles of the Statute of Frauds apply. Anything intended to authenticate a document may be held to be a signature. therefore, a name on an e-mail may suffice.
The acknowledgment must be an acknowledgment in substance. If a debt is mentioned in the context of its denial, that will not be an acknowledgment.
An acknowledgment in relation to a title may be an acknowledgment of a better title and need not be necessarily, a denial of the maker’s title.
There are different views as to the extent to which it is possible to prevent what is otherwise an acknowledgment by making it \”without prejudice.\” Difficult questions may arise as to whether the correspondent is in fact “without prejudice”, in the sense that it qualifies to be inadmissible in evidence. There must be some dispute in respect of which a settlement is sought. Generally, the courts have sought to protect “without prejudice” discussions and correspondence rule so that what would otherwise constitute an acknowledgment should be inadmissible if it falls within the scope of a “without prejudice” statement.
A part payment is effectively an acknowledgment of a debt. A part payment is valid, even though it is made under compulsion such as an immediate threat of enforcement or in the course of execution to an who executes. However, involuntary payment does not appear to be an acknowledgment on first principles. If done under duress or undue influence, the act is a nullity in accordance with general principles.
If the part payment is made in relation to part of the debt which is admitted, it does not acknowledge the contested part, provided that this is made clear.
The acknowledgment must refer to a particular debt. Evidence may be given in order to link it to a particular debt. Where there are a number of different debts and payment is made without referring to one or more of them, then the payment shall, in the absence of other circumstances, be presumed to be appropriated equally in respect of each of the debts which are not statute barred. If all debts are statute barred, then the payment is presumed to be appropriated rateably to each.
A creditor may appropriate payment to a debt unless the debtor directs or it is expressly or impliedly agreed, to which debt it should be appropriated.
Where a claimant is a person is under a disability, the statute of limitations is suspended in certain cases until the disability ceases. The principal disabilities are minority (being under 18 years’ old) and lack of mental capacity, whether so formally declared or not.
A person is conclusively presumed unsound mind / lacking mental capacity in modern terms if he has been detained as such or convicted or acquitted on this basis. He must be incapable of managing his affairs in order to qualify for this disability. The person may have been under a disability when the claim arose. The person may become unsound mind / loose mental capacity because of the incident itself, the subject of the litigation.
The general principle is that the limitation period runs the standard limitation period after the person ceases to be under a disability or dies. The most common limitation period is six years. The claimant has an extended period of time of less than six years after cessation of disability in other cases, where a shorter limitation period applies, including for example
- personal injury cases, two years from cessation of disability or death,
- Slander, one year subject to extension by the court to up to two years utmost.
There are exceptions to the general suspension of limitation periods in respect of persons who are under a disability. It does not apply to penalties. If the person who claims, does not claim directly, but claims through another who is not under disability, the principle does not apply.
There is an outer 30-year time limit in the case of
- an action to recover land or money charged on land;
- an action on an encumbrance claiming the sale of land;
- on an action on a right of residence or equivalent lien over land.
Under the 1957 legislation, as originally enacted, persons under the age of majority in the custody of a parent or guardian were not subject to a disability. This rule did not apply to other minors, who were under a disability until they attained the age of majority. This principle was found unconstitutional by the Supreme Court in 1972. Since then, all children under 18 years of age, are subject to a disability, thus reinstating the pre-1957 law.