Limitation of Actions Consultation - Law Commission

limitation period by entering into a covert arrangement with one co-debtor. 262
Law reform bodies in other common law jurisdictions, who have considered
introducing this distinction, have all recommended against it. 263
In our view, it is
more beneficial to increase the level of uniformity in this area of the law than to
retain the current distinction between the effect of acknowledgements and the
effect of part payments.
12.170 The position of a surety when a part payment is made by the debtor is worth
noting. Under the current law, a part payment in respect of “any debt or other
liquidated pecuniary claim shall bind all persons liable in respect of the debt or
claim”. 264
Where the surety is liable in respect of the debt which is the subject of
the guarantee, it appears that a part payment made by the debtor would bind the
surety, and revive his or her obligations so that a fresh limitation period would run
against the surety from the date of the payment. 265
If the rule is changed so that
both acknowledgements and part payments bind only the acknowledgor or the
person making the payment, a part payment by the debtor would not revive the
surety’s obligations: the surety’s liability would depend only on the contract
between the surety and the creditor, and whether the limitation period has expired
in respect of that contract. 266
12.171 The position with respect to actions for the possession of land, and in respect of
mortgages is different. An acknowledgement of the title to any land, benefice or
mortgaged personalty by any person in possession of it binds all other persons in
possession of the property. 267
Similarly, a payment in respect of the mortgage debt
by anyone who is liable for that debt will bind all other persons in possession of the
mortgaged property. 268
An acknowledgement of title to land would arguably be
ineffective unless it bound all in possession of the land. There is less reason to
262 As the New South Wales Law Reform Commission noted, “Such a state of the law, apart
from its incongruity, appears to us to be apt to encourage underhand transactions between
a creditor and one of his co-debtors”. First Report on the Limitation of Actions, LRC 3
(1967), para 259.
263 See New South Wales Law Reform Commission, First Report on the Limitation of Actions,
LRC 3 (1967), paras 258 - 259; Ontario Law Reform Commission, Report on Limitation of
Actions (1969), pp 123 - 124; Law Reform Commission of British Columbia, Report on
Limitations, Part 2 - General, LRC 15 (1974), pp 89 - 90; Institute of Law Research and
Reform, Alberta: Limitations, Report for Discussion No 4 (1986) paras 8.40 - 8.43; Western
Australia Law Reform Commission, Report on Limitations and Notice of Actions, Project No
36 Part II (1997), paras 18.48 - 18.50.
264 Section 31(7) of the 1980 Act. See para 8.45 above.
265 This interpretation is supported by Marks & Moss, Rowlatt on the Law of Principal and
Surety, (4th ed 1985), p 195, though the authority cited in support of this proposition, Re
Powers (1885) 30 ChD 291, is not precisely on point, given that the original limitation
period in respect of the bond given by the sureties had not expired when proceedings were
brought, and there is no suggestion in the case that payments made in respect of the
principal debt restarted the limitation period in respect of the bond. We are unaware of any
authority directly on point.
266 The surety may well remain liable when the limitation period has expired against the debtor
- see Carter v White (1883) 25 ChD 666.
267 Section 31(1) of the 1980 Act. See para 8.47 above.
268 Section 31(2) of the 1980 Act. See para 8.47 above.
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