Whether an Acknowledgment of Debt Must Explicitly Recognize the Debt or the Creditor’s Rights to Circumvent Limitation Laws

CASE TITLE: ONYEMA v. EDE & ANOR (2024) LPELR-61758(CA)

JUDGMENT DATE: 12TH MARCH, 2024

JUSTICES: ONYEKACHI AJA OTISI, JCA
JAMES GAMBO ABUNDAGA, JCA
MUSLIM SULE HASSAN, JCA

DIVISION: KADUNA

PRACTICE AREA: LIMITATION LAW

FACTS:
This appeal originates from a judgment by the Kaduna State High Court, delivered on February 4, 2016.

The case involves the 1st Respondent lending the Appellant N1 million in September 2008 for a contract, with the Appellant providing a post-dated Bank PHB cheque for the amount. When the cheque bounced, the 1st Respondent reported the matter to the police, leading to the Appellant’s bail, which he subsequently jumped.

Despite legal actions taken by the Appellant, including a dismissed fundamental rights enforcement suit, the 1st Respondent pursued recovery through a writ of summons and motion for summary judgment in the Kaduna State High Court. The Appellant denied receiving the loan, claiming it was his ex-wife who approached the 1st Respondent on behalf of family friends. However, the trial Court ruled in favor of the 1st Respondent, deeming the Appellant’s defense as fanciful. This ruling prompted the Appellant’s appeal to the Court of Appeal.

ISSUE(S) FOR DETERMINATION:
This appeal was determined on the following issues thus;

1. Whether the claim of the 1st Respondent had become statute barred, impacting the jurisdiction of the trial Court to entertain the claim.
2. If the claim of the 1st Respondent was not statute-barred, whether summary judgment was rightly entered in favour of the 1st Respondent as endorsed in the Writ of Summons and Statement of Claim.
   

COUNSEL SUBMISSIONS:

The Appellant’s counsel argued that the action brought against the Appellant was barred by the statute of limitations because it was filed over five years from the time the cause of action arose, citing several cases. He also contested the summary judgment entered against the Appellant, asserting that he had a defense, and challenged the trial Court’s judgment awarding professional fees for previous suits.

On the other hand, the 1st Respondent’s counsel contended that the action was not statute barred and referenced legal steps taken in the matter. He argued that the issuance of a dud cheque constituted an offense and invoked a provision that fraud, concealment, or mistake could extend the statute of limitations. The 1st Respondent’s counsel supported the trial Court’s judgment, emphasizing the Appellant’s admission of guaranteeing the loan and the principle that a guarantor is equally a debtor. He also defended the award of solicitors’ fees as indemnification for the successful party and deterrent against frivolous litigation.

The Court was urged to dismiss the appeal for lacking merit and to uphold the trial Court’s decision.

DECISION/HELD:
In the final analysis, the appeal was struck out for being statute barred.

RATIO:
LIMITATION LAW – ACKNOWLEDGEMENT OF DEBT: Conditions for an acknowledgment of debt that will revive the right to recover the debt

“Section 18 of the Limitation Law of Kaduna State, provides:

‘No action founded on contract, tort or any other action not specifically provided for in Parts 1 and 11 of this Edict shall be brought after the expiration of five years from the date on which the cause of action accrued.”

To take the case for recovery of debt out of the provisions of the Limitation Law, there must be sufficient acknowledgment of the debt, prior to when the action to recover the debt is filed. Where the debt has been acknowledged by the debtor before the limitation period, the debtor remains liable to pay. For an acknowledgement to avail a claimant, in this circumstance, it must be established that such an acknowledgment was in writing, and it must be clear, unequivocal and unconditional.

The rationale behind this principle was explained by the Supreme Court, per Coker, JSC, in L.T. Thadani & Anor v. National Bank of Nigeria Limited & Anor (1972) LPELR-3147(SC), thusly:

“The principle of acknowledgment or part-payment is founded on the theory that, by so doing, the debtor establishes a fresh contractual relationship so that a cause of action then starts to run from the date of the fresh contractual relationship. In Stamford Spalding & Boston Banking Co. v. Smith (1892) 1 QB 765, Lord Herschell at p. 768 stated thus concerning the effect of a document that is relied upon as an acknowledgement:

“It cannot be disputed that an acknowledgement, in order to exclude the operation of the statute, must be absolute and unconditional, and one from which a promise to pay the debt can be inferred. But it was argued that if an acknowledgement is in fact made, it is immaterial to whom it is made. Such appears to have been considered the law at one time, and there are certainly some dicta to that effect; but that is not the law now.

In my opinion, since the decision in Tanner v. Smart (1827) 6 B & C 103, it has been abundantly settled that an acknowledgement to a stranger is not sufficient. It must be to the creditor or his agent, to someone who was entitled to receive payment of the debt, and to whom you could presume a promise to pay the debt.”

The position therefore is that before a writing could be described as an acknowledgement to take the case out of the Statutes of Limitation, the writing by the debtor should recognise the existence of the debt or the rights against himself. Beyond this, whether a document does this or not is a question of fact, depending on its contents.
(Emphasis supplied).

See also: Ihesiaba v. Young Shall Grow Motors Ltd. (2016), LPELR-42257(CA); Obun v. Obanliku Local Government Council & Ors (2017), LPELR-43804(CA).

Contrary to the holding of the learned trial Judge, the legal actions undertaken by the 1st Respondent in the reports and petition to the Police did not amount to an acknowledgement of the debt of N1 million by the Appellant to the 1st Respondent. The letter from the Appellant’s Solicitor to the DPO Sabon Gari Division, Kaduna, as well as the judgment of the Federal High Court in Suit No. FHC/KD/CS/142/2010, dismissing an application to enforce fundamental rights filed by the Appellant, do not amount to acknowledgements of the debt, within the meaning of the law. An acknowledgement to a stranger is not sufficient.

The position of the law is that, before a writing could be described as an acknowledgement of the debt, to exclude the operation of a Limitation Law, the writing by the debtor should recognise the existence of the debt or the rights against himself. The acknowledgement must be to someone who was entitled to receive payment of the debt, in this case, the 1st Respondent. The written acknowledgement must be absolute and unconditional.

I have carefully gone through the Record of Appeal and cannot find any acknowledgement of the debt to the 1st Respondent by the Appellant after the cheque was dishonoured on 10/10/2008 and before the case leading to this appeal was instituted by the 1st Respondent on 10/10/2014. No such acknowledgement of the debt to the 1st Respondent by the Appellant exists.

Section 24(b) of the Limitation Law of Kaduna State defines a statute-barred debt as:

“a debt in respect of which the period fixed for the bringing of an action to recover it has expired.”
By virtue of the provisions of Section 18 of the Limitation Law of Kaduna State, an action to recover the proceeds of the cheque dated 9/10/2008 ought to be instituted not later than five years from that date, which would be circa 8/10/2013. By calculation of the raw figures, which extricates the discretion of the Court, the Writ of Summons, Statement of Claim and Motion for Summary Judgment filed on 10/10/2014 by the 1st Respondent against the Appellant to recover the debt created by the dishonoured cheque, were unquestionably filed out of time. Therefore, by the provisions of Sections 18 and 24(b) of the Limitation Law of Kaduna State, the debt was statute-barred.

Once the time to file an action has run out under a limitation statute, the right to seek remedy in the enforcement of the accrued right in Court is taken away, leaving the right bare and untouched. The right remains but the means to enforce it become extinguished at all times. The cause of action becomes extinct with the operation of law and it can no longer be maintained in the law Court. See Ibrahim v. Judicial Service Committee, Kaduna State (supra); ACN & Anor v. INEC & Ors (2013) LPELR-20300(SC); Abdullahi v. Loko & Ors (supra); Nongo v. Achado & Ors (supra), Yau-Yau v. APC & Ors (supra) A Court of law would, for this reason, have no jurisdiction to adjudicate upon a suit which is statute barred.” Per OTISI, J.C.A.

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