Ross v McGrath

For limitation purposes, an acknowledgment of a debt need not state the precise amount, provided the debt can be identified and its amount ascertained by calculation or extrinsic evidence. The debtor must acknowledge indebtedness and legal liability to pay the claim. The document must be construed as a whole and in its context, viewed from the perspective of the reasonable recipient. A reservation about the amount owed does not necessarily deny the existence of the debt. A letter acknowledging liability under identified heads while reserving the debtor’s position on quantum can amount to an acknowledgment under the Limitation Act 1980.

The respondent claimed £83,339.39 from the appellant for building work and materials and two loans arising from their earlier business relationship. The claim form was issued on 29 April 2002, more than six years after the causes of action accrued, so the claims were prima facie time-barred under sections 5 and 6 of the Limitation Act 1980.

The High Court, Queen’s Bench Division, Preston District Registry, determined a preliminary issue on 26 January 2004. Grigson J held that a letter dated 1 May 1996 was not protected by without-prejudice privilege and acknowledged the claims for the purposes of sections 29 and 30. The appellant appealed only on the acknowledgment issue: whether the letter acknowledged the claims within section 29(5).

1. Appeal dismissed. The letter of 1 May 1996 was an acknowledgment of liability under each of the five heads identified in its final paragraph, although it reserved the appellant’s position as to the amounts due.
2. Under section 29(5) of the Limitation Act 1980, the debtor must acknowledge indebtedness and legal liability to pay the relevant claim. The acknowledgment need not state the precise amount. A general acknowledgment is sufficient where the amount can be ascertained by calculation or extrinsic evidence without further agreement.
3. The document must be construed as a whole and in its context. The relevant question is what the reasonable recipient would understand from the language used in its surrounding circumstances. The first paragraph acknowledged monies owed and promised payment when funds became available. Paragraph 4, read with the earlier draft letters, identified the particular debts. The added reference to the respondent’s suggestion showed that the appellant intended a different result from signing the drafts, but it did not withdraw the acknowledgment.
4. The only reservation was as to quantum, not the existence of the liabilities. The court accepted the judge’s alternative reasoning, but not his preferred reasoning, which failed to give effect to the changes from the draft letters. The findings that there was no denial of liability, set-off or cross-claim supported that conclusion.
5. Lord Justice Clarke delivered the principal judgment. Mr Justice Jackson and Lord Justice Tuckey agreed. The appellant was ordered to pay the respondent’s costs, summarily assessed at £7,168.68, by 4.00 pm on 16 August 2004.

• Court of Appeal (Civil Division): Appeal dismissed. Lord Justice Clarke held that the 1 May 1996 letter acknowledged liability under the relevant heads of claim, subject only to a reservation as to amounts. Mr Justice Jackson and Lord Justice Tuckey agreed.
• High Court, Queen’s Bench Division, Preston District Registry: Grigson J determined the preliminary issue on 26 January 2004 and held that the letter acknowledged the claims under sections 29 and 30 of the Limitation Act 1980. The Court of Appeal agreed with the judge’s alternative reasoning.