Given that many of the current “distressed” loans become distressed shortly after the collapse of Lehman Bothers on 15 September 2008, it is no surprise that many borrowers stopped making any payments on various loans around 2010/2011. As a result of many payments ceasing around 2010/2011, it is also no surprise that the Statute of Limitations defence is being increasingly raised in court proceedings.
One recent such case is Promontoria (Arrow) Limited – v – Burke & ors, where the High Court delivered a judgment on 19 December 2018 in respect of Promontoria’s application for summary judgment.
The Judge stated that it was “significant that the parties were unable to point to any authority on the scope of application of s.36(1)(a) of the Statute and the interplay between that provision and s.11(1)(a).”
Section 11(1)(a) deals with the 6 year statute and s.36(1)(a) deals with the 12 year statute in respect of mortgages/charges.
The judge held that the defendants had an arguable case, so the matter has to go back to the High Court for a determination.
For those of who have clients who are considering using the Statute of Limitations as a defence, then you will find the judgment itself a very useful exposition of the law in this area. For those of you advising banks/vulture funds on issuing demand letters the judgment sets out the pitfalls that can occur given the interplay of s11(1)(a) and s.36(1)(a)
I set out below a link to the judgment.