Limitation of Actions Consultation - Law Commission

Commission felt that the difficulties involved in extending acknowledgements to
unliquidated claims would outweigh the advantages to be gained, and noted that
“the nature of the debtor-creditor relationship is entirely different from that of the
tortfeasor to the injured party.” 253
Although this reasoning was not entirely
accepted by the other dissenting Law Reform Commissions, it was felt that the
anomalous situations referred to in the New South Wales Report would only occur
rarely and that the inability to acknowledge unliquidated claims was not a serious
deficiency in the current law. 254
12.164 The Alberta Law Reform Institute reviewed the principles behind the doctrine of
acknowledgement and part payment. It noted that the justification for restarting
the limitation period when the debtor has acknowledged his or her liability is that
the debtor has by that conduct renounced the protection of the limitations system,
and that a part payment by the debtor will in addition induce the creditor to
believe that there is no need for prompt litigation. It was suggested that these
principles explained why the doctrine of acknowledgement does not apply to a
claim for unliquidated damages:
[B]ecause until a duty to pay a certain or ascertainable sum has been
imposed on a person, he will have no legal duty to admit, much less to
perform by payment. 255
12.165 The Law Reform Commission of Western Australia agreed with the justifications
for not recommending an extension put forward by the Alberta Law Reform
Institute and considered that there had not been shown to be any serious
deficiencies in the present law, whereas the proposed change might give rise to a
number of difficulties. 256
12.166 As is apparent from the above discussion, there are arguments both for and against
an extension of the doctrine of acknowledgements and part payments to
unliquidated claims. The argument in principle against such an extension rests on
the fact that, in contrast to liquidated claims, the defendant does not come under a
duty to pay compensation to the plaintiff until the amount of the compensation
has been quantified by the court (or agreed between the parties in a settlement,
which, pre-empting the decision of the court, imposes a contractual duty to pay
compensation on the defendant). This assumes that an acknowledgement given
by the defendant can only be effective if it encompasses both liability and
quantum. An acknowledgement will cover both elements with liquidated claims,
as the quantum of damages owed to the plaintiff will not be in issue. With
unliquidated claims, an acknowledgement may only extend to the liability of the
defendant, who may wish to contest the quantum of the claim. But, even where
quantum is contested, one can argue that the defendant who acknowledges the
claim, or makes a part payment in relation to it, gives up the right to the protection
253 Ontario Law Reform Commission, Report on Limitation of Actions (1969) p 125.
254 See Law Reform Commission of British Columbia, Report on Limitations, Part 2 - General,
LRC 15 (1974) pp 91-92; Newfoundland Law Reform Commission, Working Paper on
Limitation of Actions, NLRC-WP1 (1985) pp 216 - 217.
255 Alberta Law Reform Institute, Limitations, Report No 55 (1989), p 92.
256 Report on Limitations and Notice of Actions, Project No 36 Part II (1997) para 18.41.
310