When is a debt not a debt? When does a claim of prescription fail? Lawyers frequently throw the concepts of prescription and limitation around (and the difference between the two is, in itself, a whole topic of conversation for geeky types) and in Guernsey we rely on French principles such as empêchement to seek to overcome any issues.
Sometimes, however, a simple acknowledgment can be enough to reset the prescription clock.
This article looks, briefly, at how prescription operates and discusses how interruption serves to reset the clock on prescription, which then runs for 6 years from that date. Principles of renunciation or waiver are briefly discussed to show how an acknowledgement of a debt might serve as one or any of interruption, renunciation, or waiver.
Prescription Principles
- Prescription is the period after which a creditor is unable to pursue a debtor or a right may no longer be pursued under the law. Gallienne, writing in 1845, described extinctive prescription, in Guernsey (quoting Pothier – did I mention this is a geeky article?) as “a plea of inadmissibility that a debtor can use against the action of the creditor who has neglected to exercise it, or to have his right recognised during the time regulated by law“. [1]
- Gallienne notes that “It operates to extinguish the right to pursue in court what is due.” [2] Prescription operates as the extinction of the right to bring an action, rather than extinction of the underlying cause of action.
- Prescription can be waived or renounced, and renunciation may be express or implied. However:
“Tacit renunciation is not easily presumed: it is up to the judges to assess whether the fact from which one wishes to derive the renunciation necessarily presupposes the abandonment of an acquired right. And since it is possible to renounce prescription, the judges cannot, ex officio, supplement the means resulting from it; the party must formally oppose it.” [3]
- Gallienne details a distinction in prescription period between debts that have been recognised in writing and those that have not:
“The debtor of a sum of movable property is released by the prescription of ten or thirty years. “Any movable debt for which there is neither written acknowledgment nor unexpired court act shall be prescribed after ten years from its creation.” (Order of April 11, 1836.) But, if it is otherwise, that is to say, when there is written acknowledgment or unexpired court act, then the old prescription of thirty years remains in force..” [4]
- The first Order in Council relating to prescription mobilière appears to be that registered on 6 July 1844. This ratified the Ordonnance referred to by Gallienne of 11 April 1836. As set out by Gallienne, the original period of 30 years for a debt recognised in writing remained:
“…when there is recognition in writing, or a court act not expired, then the old prescription of thirty years remains in force.”
- The 1844 Order in Council reduced the 30-year prescription period for “personal actions and suits relating to personal property” not recognised in writing to 10 years. An Order in Council relating to any remaining prescription trentenaire registered on 31 July 1847, provided that:
“All movable property and personal actions which are now prescribed by the lapse of thirty years will in the future be prescribed by the lapse of ten years.”
- The Loi Relative aux Prescriptions 1889 states that:
“Toutes demandes nbvf et actions personelles qui se prescrivent maintenant par le laps de dix ans seront à l’avenir prescrites par le laps de six ans.”
- Accordingly, the modern position is that the prescription period for an action relating to personalty is 6 years. The purpose of the above exercise is to show that the route to the 6 year prescription period is different for a demande mobilière recognised in writing to one which is not. A distinction between the two remains.
- Prescription can be interrupted:
“Interruption… wipes out all the time that had previously elapsed, and the limitation period can only run from the day of the interruption; therefore, the entire period required to prescribe must elapse again.
Civil interruption results from the recognition by the possessor or debtor of the right of the person against whom he prescribed…” [5]
- Upon interruption of prescription, prescription (or rather the period before prescription applies) runs afresh from the day of the interruption. The entire time required to prescribe must pass again. Interruption results from the recognition that the debtor makes of the right of the one against whom he is prescribed. Terrien makes clear that the times are not joined together.
- Importantly, because the time periods of prescription are now unified but via different routes, debts subject to an interruption are to be treated differently to those that are not. The effect of recognising a debt in writing remains – prescription runs from the day of the interruption. The entire time required to prescribe must pass again.
- Notably, in this regard, judicial interruption appears to have developed in Guernsey on this basis. Acts of Court may be renewed by the Court – providing for the clock to “reset” on judgments that would otherwise be prescribed.
Acknowledgement of Debt
- The question of an acknowledgement of debt, whether in the context of reconnaissance par écrit, interruption or waiver (renunciation) is still at large in Guernsey and Jersey. It is helpful to look to other jurisdictions for just what constitutes the acknowledgment of a debt.
- In relation to the Limitation Act 1980 in England & Wales, where an “acknowledgment” of the claim or part payment re-starts the limitation period in much the same way as interruption, acknowledgement has been considered by the Courts.
- In order to be effective, an acknowledgment must be in writing signed by the debtor (section 30, Limitation Act 1980):
- A typed signature at the foot of an e-mail will probably suffice.
- Any letter from the debtor referencing the debt must be dated (a) prior to expiry of the primary limitation period and (b) within the six/twelve years prior to issue of the claim.
- An acknowledgment must contain a “sufficiently clear admission of the title” of the creditor to the debt but there is no longer any requirement that it includes an implied promise to pay.
- In Dungate v Dungate [6], the English Court of Appeal held that a letter stating “keep a check on totals and amounts I owe you, and we will have account now and then” amounted to an “acknowledgment”.
- Therefore, any reference by the debtor to their debt in signed correspondence addressed to the creditor should suffice, unless the letter is expressly stated to be without admission of liability.
Tying the strands together
- So where does this get us? It is clear from Gallienne that debts subject to reconnaissance par écrit are treated differently to debts where there is no such acknowledgement. While the prescription period is now the same, where a debtor recognises that a debt is due and owing, the debt is treated differently.
- Such reconnaissance par écrit amounts to an interruption of prescription. There is no reported authority or other learning to suggest that the position has moved from that enunciated by Gallienne. Where interruption occurs, prescription runs from the day of the interruption. The entire time required to prescribe must pass again.
- While there is no further reported learning from Guernsey or Jersey, acknowledgement of a debt – in other words reconnaissance par écrit – provides such interruption. An acknowledgement of debt need be little more than a reference by the debtor to their debt in signed correspondence to the creditor. A typed signature at the foot of an email suffices in this regard.
- Once prescription has arisen as a defence it may be waived (renunciation). Given that this can be tacit or express, it is enough that the debtor acknowledges that a debt continues to be owed to a creditor to waive prescription.
References
[1] Gallienne, Traité de la renunciation par loi outré et de la garantie (1845, Guernsey) at 315
[2] Ibid. at 315
[3] Ibid. at 316
[4] Ibid. at 318
[5] ibid. at 320
[6] [1965] 1 W.L.R. 1447