[ Post New Message | Post Reply to this One | Send Private Email to Troy Simpson | Help ]

Response to Shortfall Statute Barred but interest not??

from Troy Simpson (troy.simpson@bigpond.com)
I am having a similar problem understanding the effect of s20(5) of the Limitation Act (as interpreted by the Bristol Case and the Crammer case) in relation to arrears of interest.

My fact situation is this: A loan was secured by a mortgage more than 12 years ago. The borrower defaulted. But NO ACTION to recover the loan has ever been taken. Now, the lender wants to sue for the interest. He is not suing for the principal because he understands that the claim is statute barred.

But, in relation to interest, he claims that the last 6 years' of interest is NOT statute barred, as the interest has accrued, or "become due", each month since default. In other words, out of the last 12 years, the lender argues only the first 6 years' of interest are barred, the last 6 years are not barred.

I have received similar advice as Steve: that the 6-year claim period relating to interest starts every month that the interest payment becomes due, meaning the last 6 years' of interest are not barred. But this advice is from a lender, not a lawyer.

My argument, again like Steve, is that the interest "became due" -- or, in other words, the cause of action accrued -- ON DEFAULT more than 12 years ago, meaning that ALL the interest is now statute barred, not just the last 6 years' worth.

Is there any authority on point? Or is it an open question? What legal arguments could be raised in favour of my interpretation? For example, isn't the Bristol interpretation of the Limitation Act in relation to the principal consistent with my interpretation relating to interest (ie the relevant date when "payment becomes due" is the date of default, not the date on which monthly interest payments have since become due)? Isn't my interpretation more consistent with the intention of the Limitation Act that a lender who has sat on his hands for 6 years cannot now say he wants the interest after all? Any ideas?

Cheers

Troy

(posted 7440 days ago)

[ Previous | Next ]