Jan 31, 2017

Statute Barred Debt And Its Revival | Simileoluwa Owotomo

In discussing this poignant issue, one must discuss debt within the constraints of the law. A debt exists when a certain sum of money is owed from one person (the debtor) to another (the creditor). Hence 'debt' is properly opposed to unliquidated damages to liability, when used in the sense of an inchoate or contingent debt; and to certain obligations not enforceable by ordinary process. 'Debt' denotes not only the obligation of the debtor to pay, but also the right of the creditor to receive and enforce payment. SeeNIPOST v. I. E. Co. Ltd. (2006) 8 NWLR (Pt. 983) Pg.435.

In ARAKA V. EJEAGWU (2000) 12 S.C. (PART I) 99, the meaning of what it means for a subject matter to be statute barred was succinctly stated as follows -

In my interpretation "statute-barred" simply means barred by a provision of the statute. It is usually as to time i.e. the bar gives a time limit during which certain actions or steps should be taken, and one is barred from taking action after the period specified in the statute. Any action taken after or outside the specified limit or period is of no avail and has no valid effect. The bar can be lifted or the limit extended only if the statute allows it to be done. Where there was no such extension, the action carried out will be invalid, and the court will treat as such."PER KALGO J.S.C. (P.47, Paras.A-C).

According to Section 34(a) of the Limitation Law of Lagos State, a statute barred debt means a debt in respect of which the period fixed by this Law for bringing of an action to recover it has expired.


In discussing whether a debt is statute-barred, one must understand the provisions of the statute that gives a time limit within which certain actions or steps should be taken for debt recovery.

In OKONTA & ANOR V. EGBUNA (2013) LPELR-21253(CA), the issue of whether a debt is statute barred by virtue of the Limitation of Action Law was discussed as follows:         

"Let me reproduce the provisions of S. 12 (c), and 20(1) (a) and S. 18 of the Act for case of reference and to make the treatment of this issue clearer. S. 12 (c) states that - "A right of action shall cease to exist in the following circumstances. ...(c) Lapse of time where the time allowed under the law for bringing action in respect of a particular matter has lapsed."

S.20 (1) (a) states that- "The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued, that is to say, (a) actions founded on simple contract or on tort."

S. 18 states that - "The provisions as regards limitation of actions provided in this Law shall have no application where a person bringing an action to recover land, or the person through whom he claims, derived his title to such land solely under customary law."

It is clear from the express wordings of S. 18 that it excludes only actions for recovery land from application of the Limitation of Actions Law. A debt recovery action is not excluded by S. 18 from the application of the Limitation of Action Law.”
It is clear from S. 20 (1) (a) that an action on a simple contract for recovery of debt must be brought to court within six years from the date the cause of action accrued. S. 12 (c) states the consequences of the failure to comply with S.20 (1) (a) of Act. It is stated clearly that the right of action shall cease to exist and therefore not be exercisable after the expiration of the 6 years period. It is clear from the writ of summons and statement of claim that the suit at the trial court was filed over 6 years after the respondent demanded for the refund and the appellant failed to do so. Clearly the action was statute barred. Such a claim is not maintainable after the limitation period of 6 years has expired." Per AGIM, J.C.A. (Pp. 23-25, paras. F-A

In the case of MERCANTILE BANK OF NIGERIA PLC V. FETECO NIGERIA LTD (1998) 3 NWLR (PT.540) 143, the question for determination in the instant case was whether the claim of plaintiff for a debt of N5, 791,857.61 being outstanding loan plus interests thereon was statute-barred or not under the English Limitation Act of 1623, which required such suits to be commenced within six years from the date of accrual of cause of action, being debts that arose from a simple contract.

It was held that the limitation period is six years and by virtue of the provision ofSection 15 of the Interpretation Act Cap. 192, Laws of the Federation of Nigeria 1990 and the year on which the particular event occurred is excluded. See also ANWADIKE V ADM-GEN OF ANAMBRA STATE (1996) 7 NWLR (Part 460) 315.

From the above, it is trite to deduce that the limitation period for debts that arose from a simple contract is six years excluding the year on which the contract commenced. SeeSection 20 (1) (a) of the Limitation of Action Law.
Hence, a debt can be said to be statute barred when the limitation period of six years, after the year of contract, has lapsed.

There is indeed a remedy to revive a debt that is statute barred and same will be discussed as follows;

The principle of Acknowledgment and Part payment
An acknowledgment of debt to remove the bar must be made to the proper person by the proper person, that is, the debtor and the creditor, with the proper formalities when they are required by statute and must be in terms sufficient to warrant the inference of a promise to pay the debt.

Part payment of debt to remove the bar must be made under such circumstances as amount to an acknowledgment of the debt. It must appear that the payment was made on the account of the debt for which the action was brought and that it was made as a part payment of a greater debt.                                                                              
In THADANI & ANOR. v. NATIONAL BANK OF NIGERIA LTD. & ANOR. (1972) 1 S.C. (75), the principle of acknowledgment and part payment was further discussed:

"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 which is relied upon as an acknowledgement:-

It cannot be disputed that an acknowledgement, in order to exclude the operation of the , 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 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 upon its contents." Per COKER, J.S.C. (Pp. 11-12, paras. A-B).

In NIGERIA SOCIAL INSURANCE TRUST v. KLIFCO NIGERIA LTD (2010) LPELR-2006(SC) (2010) 13 NWLR (Pt.1211) 307 S.C. on whether an acknowledgment of the debt that is statute barred will revive the right to recover it, it was held as follows:     

"...Meaning that there must have been an initial indebtedness which according to the Limitation law is statute barred arising after a lapse of a period of years from the accrual of cause of action in the case. The limitation law here is a period of 6 years being a simple debt. However, where there is acknowledgment of the debt, the right to recover by action is revived and it is the crux of matter in this case."PER CHUKWUMAH-ENEH, J.S.C (P. 29, paras. E-F)

Section 45 of the Limitation Law of Lagos State states as follows-

(1) Every acknowledgment shall be writing and signed by the person making the acknowledgment.
(2) An acknowledgment under Sections 38,39,40,41,42,43 or 44 of this Law-
(a) may be made by the agent or the agent of the person by whom it is required to be made under whichever, of these sections is applicable; and
(b) shall be made to the persom or the agent of the person whose right or claim is being acknowledged.

Section 46 of the Limitation Law of Lagos State states as follows;
(2) An acknowledgment of a statute-barred debt shall not bind any successor of the acknowledgor on whom the liability devolves on the determination of any person’s interest in property under a settlement taking effect before the date of the acknowledgment”

From the above, it can be deduced that an acknowledgment as a remedy for a statute barred debt must be in writing, must be signed by the debtor or his agent and must be made by the creditor or his agent
As regards part payment, Section 49 of the Limitation Law of Lagos State states as follows;

(1) Where
(a) any right of action has accrued to recover any debt; and
(b) the person liable therefor makes any payment in respect thereof;
the right of action shall be deemed to have accrued on and not before the date of such payment.
(2) Payment of interest in whole or in part shall, for the purposes of this section, be treated as a payment in respect of the principal debt.

In N.S.I.T.F.M.B. v. Klifco Nig . Ltd. (2010) 13 NWLR (Pt.1211) 307 S.C., it was held that “… where there is acknowledgment of the debt, the right to recover by action is revived..” 

It must however be noted that what constitutes acknowledgment is a matter of fact depending on each case. See THADANT AND ANOR V. NATIONAL BANK OF NIGERIA (1967 - 1975) 2 NBLL. 383 per COKER , JSC.
"One of the principles of the statute of limitation is that those who go to sleep on their claims should not be assisted by the courts in recovering their property. But another equally important principle is that there shall be an end of these matters, and that there shall be an end to stale demands."

In conclusion, for a debt statute barred to be revived, there must be an initial indebtedness; there must be an acknowledgment of the debt or part payment of the greater debt.

Simileoluwa Owotomo

Associate at Ayodele, Olugbenga & Co. 

Ed's Note- This article was originally posted here