Limitation of Actions Consultation - Law Commission

oth cases the set-off or counterclaim appears to have exceeded the amount of the
“main” indebtedness. 89
Thus where the defendant acknowledges the debt, but at
the same time contends that an existing set-off or counterclaim reduces the
creditor’s claim in part, it appears that this will be an acknowledgement of
indebtedness for the balance only.
(b) Part payment
8.36 Part payment of a debt can be viewed as a sort of acknowledgement which, due to
its inherent certainty, needs no formality. 90
Nevertheless, questions arise as to
whether a payment relates to the debt in question, and whether certain actions
constitute a payment.
8.37 A payment must be “in respect of” 91
the debt in question in order to restart the
limitation period. In Surrendra Overseas Ltd v Government of Sri Lanka 92
Kerr J also
rejected the contention that the payment made by the defendants was a
“payment” in respect of the whole of the debt claimed. As with an
acknowledgement, a part payment, in order to restart the limitation period for an
action on a debt, “must be evidence of an admission of liability for the debt
claimed”. 93
This can only be assessed by reference to the act and intention of the
debtor. 94
Here the debtor clearly did not accept liability for any sum other than
the amount actually paid to the plaintiff, and in consequence the payment was not
a sufficient acknowledgement of the whole amount claimed by the plaintiff.
8.38 The same test was applied in Kleinwort Benson Ltd v South Tyneside Metropolitan
Borough Council. 95
Here payments were made by the defendants in the belief the
payments were required under the terms of an interest rate swap contract. The
contract was void because ultra vires the local authority. Hobhouse J held that the
payments made under the void contracts could not be regarded as evidence that
the defendants acknowledged their liability to make restitution to the plaintiffs of
the sums earlier received by the defendants. Unaware of that liability, the
defendants had had no such intention.
8.39 Where there is a series of dealings between the plaintiff and the defendant, it is
necessary to differentiate between situations where the dealings give rise to a series
88 (1871) 6 Ch App 822.
89 It has also been suggested that these decisions rest on the requirement, now obsolete, that
an acknowledgement should incorporate an express or implied promise to pay. See T Prime
and G Scanlan, The Modern Law of Limitation (1993), pp 54 - 55; A McGee, Limitation
Periods (2nd ed 1994), p 306.
90 See, eg, the Law Revision Committee Fifth Interim Report (Statutes of Limitation) (1936)
Cmd 5334, para 20.
91 Section 29(5).
92 [1977] 1 WLR 565. See para 8.34 above.
93 Ibid, 577.
94 See also Re Footman Bower & Co. Ltd [1961] Ch 443.
95 [1994] 4 All ER 972. See also on this case para 5.10 above.
156