The
Limitation of Actions Act
The
Court of Appeal in Shire v Thabiti Finance
has given a decisive interpretation to the troubling issue of
whether an acknowledgement or part payment can revive a statute-barred
debt. In this week’s Hot From the Bench, LawAfrica’s Charles
Kanjama casts a positive look at the law of Limitations. Cases
are available to subscribers to LawAfrica Law Reports: www.lawafrica.com
In all areas of civil law, advocates have to be ever vigilant
in asserting their client’s rights if not to walk into the cul-de-sac
of limitation. To overcome what Waki, J in Khanji v
Khanji called the “glaring behemoth of limitation”,
there has been a growing reliance on section 23(3) of the Limitation
of Actions Act. This section provides for fresh accrual of the
right of action on acknowledgment or part payment:
“(3)
Where a right of action has accrued to recover a debt or other
liquidated pecuniary claim … and the person liable or accountable
therefor acknowledges the claim or makes any payment in respect
of it, the right accrues on and not before the date of the acknowledgement
or the last payment,
Provided
that a payment of a part of the rent or interest due at any
time does not extend the period for claiming the remainder then
due, but a payment of interest is treated as a payment in respect
of the principal debt.”
Already in Transworld Safaris v Somak Travels Ltd (1997)
the Court of Appeal considered in passing the question of revival
of a statute-barred cause of action, and differentiated between
extinction and bar by limitation of time. In an application
seeking leave to file suit out-of-time against a tortfeasor,
the Court observed, “Under the 1953 Carriage by Air Act
the right to claim damages is extinguished (not time-barred)…
Extending time under the Act can in our view apply to ordinary
negligence... But once a cause of action is extinguished, it
cannot be revived.”
In
Industrial Development Bank v Aberdare Oil Millers
(2000), the question of part-payment arose after the defendant
pleaded limitation. The plaintiff had advanced certain monies
to the 1st defendant against the guarantee of the 2nd defendant.
The written demand was made in 1990 but the suit was not instituted
until 1997. While the Reply to Defence had joined issue with
the Defence, there was neither a plea of acknowledgment nor
of part payment. The court observed that part payment should
be specifically pleaded under Order VI rule 4(1) Civil Procedure
Rules. It then stated: “Part payment, if proved, would make
a plea of limitation not maintainable if the part payment occurred
within the six years time frame and if it otherwise complied
for example with section 24(2) Limitation of Actions Act.”
The
fact that the part payment had to be within a six years time
frame was taken for granted. Not so in Telkom v Kamconsult
(2001) where Justice Ringera came face to face with the issue.
The applicants brought a reference from an arbitral decision
on jurisdiction. They claimed that under section 109 of the
Kenya Posts and Telecommunications Act the relevant limitation
period was one year. The respondents argued that by engaging
in mutual correspondence after expiry of the limitation period
the parties kept the claim alive, and when KPTC thereafter acknowledged
their claims for professional fees and made some part payment,
the claims were revived.
Justice
Ringera conceded that he had not encountered any case law on
the issue, neither had counsel cited any, but had relied solely
on the smile of fortune to obtain a favourable interpretation.
After considering the marginal note to the section, Ringera
concluded, “The right which accrues afresh is the right
to recover the debt or other pecuniary claim. The acknowledgment
or part payment does not create a new or fresh cause of action.
What it does is to extend the accrual of the right of action…”
The court was fortified in its view by an analysis of the 1980
English Limitation Act which expressly denies the possibility
of reviving a time-barred cause of action.
It
is debatable whether a claim for professional fees according
to scale in respect of a terminated contract is a claim for
liquidated damages so as to be amenable to extension by acknowledgment
or part payment. Justice Ringera subsequently considered this
issue in Wanyoike v A.G. (2002). He held, “Special
damages to be proved cannot in my opinion be a debt. Neither
is the claim a liquidated pecuniary claim.”
In
Patel & anor v Patel (2001), the plaintiffs
had sold shares to the defendant in 1982 but had still not received
part of the purchase price. They instituted a suit in 1991 and
subsequently applied for summary judgment. The defendant raised
the plea of limitation in his defence. The plaintiff produced
evidence to show that there was part payment in 1989. The court
held without further ado, “the [part payment] amounted to
an acknowledgment of the debt which… not only postponed the
period of limitation, but also revived the cause of action if
at all it had been time-barred.”
The
court did not consider whether acknowledgment had been or needed
to be specifically pleaded. Neither did the court consider whether,
on the facts of the case, acknowledgment amounted to joinder
of issue to allow the case proceed to trial. The plaintiff was
granted summary judgment as prayed in the plaint.
In
the light of these cases, advocates must ponder whether the
latest forays into the issue by the Court of Appeal have finally
dispelled the ambiguities in this area of law. In KPTC
v Ndarua (2001), it was argued that acknowledgment
of a debt per se does not revive a cause of action which becomes
extinguished at the close of the limitation period. In an application
by KPTC for stay of execution pending appeal, the Court said,
“The Corporation having raised statutory limitation as a
defence, it is arguable whether the admission of part of the
claim took away the defence….” Surprisingly, the court
failed to consider the proviso to section 23(3) of the Limitation
of Actions Act and also raised the issue of whether interest
on the acknowledged principal sum would accrue from the date
of the cause of action or the date of the acknowledgment.
The
latest decision of the Court of Appeal in Shire v Thabiti
Finance (2002) decisively answers some of the questions
raised in the last two years as advocates continue to out-stare
and out-fox the glaring behemoth of litigation. The plaintiff
in this matter made a liquidated claim arising from a loan given
in 1981 to the defendant. The defendant contested the loan while
the plaintiff pleaded that the debt had been revived following
an acknowledgment in 1990. Justices Kwach, Shah and Pall expressly
disagreed with Justice Ringera’s views expressed in Telkom
v Kamconsult.
Having
inaccurately commented that the court in Telkom did not express
itself on the marginal note on section 23 of the aforesaid Act,
the court focussed on the words “fresh accrual of the right
of action.” Section 23(1) also talks of the right accruing
on and not before the date of acknowledgment. The court did
not equivocate: “[These words] leave no doubt that the legislature
intended that any acknowledgment or part payment not only extends
the limitation period but also revives an otherwise statute-barred
action falling within that provision.”
The
court relied on the English decision in Bush v Stevens
(1963) which interpreted the 1939 English Limitation Act, a
statute in pari materia with ours. The judges of appeal quoted
with approval: “in the specific circumstances of an acknowledgment
or part payment the right shall be given a notional birthday
and on that day, like the Phoenix of fable, it arises again
in renewed youth.”
The
question of whether an acknowledgment would revive a statute-barred
claim had been answered robustly in the affirmative. The sub-questions
of whether acknowledgment must be specifically pleaded, and
when such a joinder of issue ought to proceed to trial were
left for another day. It was at a later day, in Spielberg’s
‘Jurassic Park’ trilogy, that catastrophe followed the first
efforts of science to resurrect the ice-cold genes of a pre-historic
age. Today, we can only speculate whether at a later date this
interpretation of our courts will come back to haunt us in the
form of newly-audible shrieks of long forgotten claims.
Cases cited in this analysis are derived from LawAfrica Law
Reports:-
1.
Transworld Safaris v Somak Travel Ltd [1996] LLR 481 (CAK)
2. Khanji v Khanji [1992] LLR 597 (CCK)
3. IDB Ltd v Aberdare Oil Millers [1997] LLR 82 (CCK)
4. Telkom v Kamconsult [2001] 2 EA 574
5. Patel & anor v Patel [1991] LLR 1281 (CCK)
6. KPTC v Ndarua [2001] LLR 1405 (CAK)
7. Wanyoike v A.G. [2001] LLR 1387 (CCK)
8. Shire v Thabiti Finance [2000] LLR 1455 (CAK) - reported
in 2002 EA
9. Bush v Stevens [1963] 1 QB 1
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