Limitations Act 1980

Discussion in 'Finance, Property, Law' started by mad_mac, Aug 2, 2009.

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  1. I am after some advice concerning an official error and back dated rent payments.

    I will try to be as brief as possible.

    The problem concerns a tenant whose rented property is tied to his job. The tenancy agreement states that the rent charge should be 8% of gross annual salary.

    Here comes the problem. The annual increases have not been actioned by the landlord (a Government Agency), and a letter was dispatched to the tenant to inform him that he owed £2000 in back rent to 2003. The rental rate was immediately increased to the correct amount. In the letter it stated that the official error was not the tenants fault and as a sign of good faith only 1 years worth of backdated rent would be recovered.

    I wrote to the department to find out information as to the year when the rent applied represented 8% of gross annual salary, and was informed 1996.

    The tenant approached a solicitor who seemed somewhat reticent after finding out the landlords were a Government Department, and advised the tenant to pay the 1 years back rent.

    I am concerned that the tenant has been given the incorrect advice. My reasoning is as follows:

    (a) The incorrect rent was applied for a period of 13 years (failing to initiate the correct amount of 8% of gross salary) and clearly displays a failure of the internal audit procedure for this error to have continued over such a protracted period of time.

    (b) Under the Limitation Act 1980 CHAPTER 58 Section 19 it states:

    19 Time limit for actions to recover rent

    No action shall be brought, or distress made, to recover arrears of rent, or damages in respect of arrears of rent, after the expiration of six years from the date on which the arrears became due.

    Not being of a legal disposition am I correct to assume that all recovery charges should have been written off?

    Whilst I appreciate this forum is not to be used as a legal advice thread or Arrse CAB, it would be useful to know if my layman's legal interpretation is out of focus.

    Apologies for being slightly vague, however, I wish to protect the anonymity of the individual concerned.

  2. is it that bird fom sands who does trix?
  3. In 2001, the Law Commission: Limitation of Actions (Law Com No 270 July 2001) paras 4.154- 4157 proposed that the limitation period for the recovery of rent be reduced to three years from the date when the landlord acquired actual or constructive knowledge of the rent default or 10 years from the date of that default, whichever is the earlier

    In my personal opinion, if the tenant's rent increase fell due in 2003, it will or has become statute-barred this year under section 19 which, I suspect is the reason for the letter.

    On the one hand, if the limitation period is about to expire shortly, the landlord may been seeking to pray in aid of the reviving mechanism under section 29(5) under which any part payment or acknowledgement of an existing debt revives the limitation period. Such traps are regularly sprung on debtors in order to circumvent the six year limitation periods for basic contracts.

    However, the issue concerns rent which means that section 29(5) operates subject to the limitation imposed under Section 29(6) Limitation Act 1980 which disapplies the reviving procedure in respect of the payment or part payment of rent.

    If, on the other hand, the limitation period under section 29(6) has already expired then under section 29(7), no part payment or acknowledgement will revive the limitation period.

    Since the landlord has already stated in writing that no culpability attaches to the tenant, the landlord effectively bars himself from raising the issue of fraud or mistake in order to postpone the limitation period under section 32(1).

    If the tenant has a guarantor, then the latter may not be so protected.

    Some professonal journal articles which touch upon this subject:

    Keep a close watch on the time
    Enforcement; Landlords' rights; Limitation periods; Rent arrears.
    E.G. 2009, 0905, 111

    Limitation period for claim on guarantee
    Arrears; Guarantees; Limitations; Rent
    Comm. Leases 1996, 10(5), 10-11

    Time-limits and rent arrears
    Arrears; Guarantees; Limitations; Rent.

    E.G. 1996, 9619, 123

    Guarantors of rent and limitation of actions
    Arrears; Guarantees; Limitations; Rent.

    H.L.M. 1996, 3(1), 10-11
  4. Thank you for the response Iolis.

    Your opening paragraph relating to Item 2 of the Seventh Programme of Law Reform concerning the Limitations Act provides further clarity to this matter.

    The interesting point here is that whilst the initial letter only mentioned backdated increases to 2003, the mistake of failing to apply the increases dates back 13 years in total.

    It seems that the Landlord was, or may have had, some knowledge of the statute bar and was less than forthright in correspondence indicating the exact time period for the error.

    The date of knowledge would be significant in this case, and as the Department has responsibility with both the individuals pay and rent, it could be argued that this knowledge, or indeed this constructive knowledge should have been established within a couple of years of the error occurring through internal audit procedures.

    Key quotes in this legislation seem to be:

    In our Consultation Paper, we set out five options to be considered as the general starting point for the limitation period, ranging from the date of accrual of the cause of action to the date of 'discoverability', whereby the starting point for the limitation period would be decided by reference to the date the claimant has or ought to have knowledge of the cause of action

    what the claimant in his or her circumstances and with his or her abilities ought to have known had he or she acted reasonably

    It is my opinion also that the action to recover monies should have been time barred under section 19.

    Section 29 is irrelevant in my opinion, as the statute time bar has been exceeded considerably.

    It is annoying that due to some rather lazy legal advice, and exerted pressure from a Government Department, the individual has accepted responsibility and is paying the outstanding amount.

    Personally, if it was me, I would have stuck to my guns and flatly refused to pay and issued a legal challenge.

  5. If I was the defendant in this case I would refuse to pay the arrears as culpability rests with the claimant, and technically the defendant has not defaulted as he was unaware of his arrears and was not informed of them. The claimant in this case is solely responsible for their own loss as a result of their own failure to communicate..

    There was a test case concerning this and the tenant paid nothing towards the arrears. I will attempt to find the necessary article on Monday.
  6. Thanks Bossdog. After trawling the internet, I know that it is a common occurrence for monies to be written off by HMG if it has been caused by official error due to said Dept.

    I am also aware that HMG has a policy to try to protect public money and wherever possible try to recover monies.

    I do find it galling that because this case concerned HMG, the solicitor the individual sought advice from, dismissed his defence after a 10 minute consultation, a cursory leaf through correspondence dispatched and received, and advised him to pay.

    I drafted numerous letters advising the Department concerned that they were not to deduct the outstanding rent increases from his pay and quoted the Limitations Act 1980 as a valid defence.

    No inference to legislation was acknowledged by the letter recipient, merely a wish to extract monies from the individuals pay (by extracting a monthly payment direct from pay over a 10 month period) to resolve the matter.

    I had assumed, perhaps incorrectly, that a solicitor would give definitive and accurate advice to reinforce my lack of legal knowledge and was surprised by his response to admit liability and pay.

    This has certainly spurred me on to study law further!!!!
  7. If the solicitor had consulted HALSBURY'S LAWS OF ENGLAND 286, 988 he would have given the legal advice that the landlord could not, as a matter of law, enforce the arrears!

    However, it appears from the facts stated that the tenancy was tied to the contract of employment which may have raised separate issues not evident on the available facts. It is thus not possible to say with certainty that the individual was given negligent advice actionable on the principle estabished in Headley Bryne.

    It is reasonable to infer that HMG was able to elicit the consent of the individual to an attachment of earnings attributable, in no small measure to the 'legal' advice given to the individual by his solicitor.

    There appears to be an absence of recent case-law on Lexis/Nexis or Westlaw which would seem to indicate that this is an uncontentious area of law.
  8. The solictor concerned was not aware of any seperate issues concerning tenancy and employment and did not seek to question on this matter.

    Indeed, a contract was signed some 30 years ago and the individual has not been able to locate this documentation.

    I would contest that if the Landlord was in a position of legal authority, any onus or liability attributable to the individual would have been alluded to in earlier correspondence, rather than a letter indicating rent increase arrears within the claimants statute limitation time (incorrectly directing the error date as 2003 instead of 1996).

    By default, I would take the stance of HALSBURY'S LAWS OF ENGLAND 286, 988 and would wait for a legal rebuttal from the claimant.

  9. I wonder if the solicitor concerned is one of those who complain that the world will end in 2011 when the Legal Services Act 2007 comes into force to reform the way in which legal services in England and Wales are regulated.

    Lawyers and non-lawyers will be able to set up in business together, allowing consumers a chance to obtain both legal and other services from a different range of providers.

    Lawyers have described the legislation as ‘Tesco Law’ and claim that it will undermine the ‘quality of advice’.

    If you aspire to graduate in law I suspect that your skills would be rather more in demand after 2011 than they are now.

  10. There does seem to be a wide variance of standards within the profession.

    It reminds me of when I purchased my front garden off the council. After jumping through legal hoops over a two to three year period, I was finally allowed to purchase the land as long as I abided by a restrictive covenant which was included in the land deed (This was drawn up in 1960, upon the council purchasing the land off a landowner and subsequently building housing).

    I spent 2 days translating the covenant from "Law of Property Act 1925" speak into plain English, the end result being that the benefit of the restrictive covenant could only be enforced in so long as the original landowner was in possession of the adjoining land. The original landowner had sold up 10 years previously and no amendment was made to the covenant through the Land Registry.

    My conveyancer was shocked that I had picked this little gem out of the deed, and I instructed them that the restrictive covenant was not annexed and was non enforceable and liable to challenge through the Land Tribunals.

    This emphasises that whilst carrying out the job of basic conveyancing, the solicitors were not interested in the accuracy and relevance of any subsequent documentation. In short, provide a rapid turnover to maximise profit.