The answer to this question is that a recent decision of the Court of Appeal has established that for limitation purposes, time begins to run in Consumer Credit claims from the date of service of the Default notice rather than the date the debtor falls into arrears.
The case is Doyle V PRA Group Ltd  EWCA Civ 12. The brief facts of the case are that PRA by a series of assignments became the creditors under a credit card agreement originally issued by MBNA. Presumably, MBNA had sold the debt on as is the usual practice. When PRA came to sue for the balance owed, more than 6 years had elapsed since Mr Doyle had failed to pay instalments but less than 6 years since the Default notice was served. Doyle asserted that the claim was outside the limitation period as the cause of action accrued from the date of his missed payment whereas PRA not surprisingly relied on the date of the default notice.
The courts unanimous decision was that the effective cause of action accrued from the date of the default notice and not the date of the missed payments and therefore the claim was within the limitation period.
On the face of it the judgement is interesting in itself for the credit card and debt recovery industry but looking a little further into reasoning and it may be that the judgement extends beyond this limited field.
The decision turned on the point that a default notice is a statutory requirement( s87(1)CCA 1974) before a creditor can sue the debtor and therefore the court reasoned that this must form part of the cause of action. It may well be that this will extend to other cases where a statutory notice is a requirement, the Housing Act 1957 is mentioned and could be of relevance in a wide variety of claims where limitation is a consideration.
If you have any questions around consumer credit claims, you can contact Sean on 01613 593 103 or use the form below.
Dr Sean Curley
Senior Consultant Commercial and Finance Litigation Solicitor