BMW Financial Service (GB) Ltd v Hart: CA 10 Oct 2012

This appeal is concerned with a point of limitation arising out of a standard hire purchase contract concerning a car. The respondent had failed to maintain his payments, and theappelleants issued a termination notice. He was abroad fr a while, and the car repossessed and sold in his absence. Much later, the company sued for the balance due, obtaining judgment by default The defendant argued that the claim was out of time, and the judge at first instance set aside the judgment as out of time.
Held: The appeal succeeded. The judgment in default was re-instated.
Lord Justice Lewison said: ‘This is not a case of repayment of a loan already made. The consideration under the contract moving from Mr Hart was the obligation to make a series of periodical payments, plus the final balloon payment. In the ordinary way, therefore, BMW would have had to wait for each instalment to fall due before it could sue for that instalment. The payments due under clause 12 are not simply an accelerated payment. Other losses are also recoverable, and adjustments need to be made to the outstanding future payments of hire in order to produce a calculated rebate.’
Lord Justice Moore-Bick said: ‘ the right to recover the sum set out in clause 12 did not arise unless and until the hirer gave notice to terminate the contract. That was a right that he could choose to exercise or not, but unless he elected to do so, the contract continued in existence and instalments of hire would have fallen due at the stipulated intervals. Under section 5 of the Limitation Act 1980 time in a case of this kind runs from the date when the cause of action accrues. In this case, the cause of action to recover the amounts claimed under clause 12 did not accrue on the customer’s default alone, but only upon the election of the hirer to terminate the contract.’
Lord Justice Rix said: ‘ in this case there can be no right to sue for the clause 12 payments, that is to say for the full sum due upon an acceleration less any debits which should be credited, or plus any additional amounts which might be claimable, until a termination notice has been given or an acceptance of the repudiation has otherwise been communicated. In this case, the same termination notice was both the exercise of the right to terminate by notice, and also an acceptance of a repudiation, itself a matter referred to in clause 12. It is only upon the serving of such a notice or a communication of such an acceptance of a repudiation that the much greater amounts due under clause 12 become due. Before such a notice or acceptance of repudiation, the only amounts due are the outstanding instalments. Unlike the cases discussed in the jurisprudence, the mere failure to pay an instalment does not by itself, under the provisions of the relevant contract, accelerate the obligation to repay the whole amount outstanding.’

Rix, Moore-Bick, Lewison LJJ
[2012] EWCA Civ 1959
Limitation Act 1980 5
England and Wales
CitedHemp v Garland, Administrator and Co 1843
The Defendant gave a warrant of attorney to secure a debt payable by instalments, the plaintiff to be at liberty, in case of any default, to have judgment and execution for the whole, as if all the periods for payment had expired. Held that, in an . .
CitedReeves v Butcher CA 1891
A five-year loan was granted by the plaintiff to the defendant under a written agreement, providing for a ‘power to call in the same at an earlier period in the events hereinafter mentioned’. The plaintiff agreed not to call in the money for the . .

Lists of cited by and citing cases may be incomplete.

Consumer, Limitation

Updated: 17 November 2021; Ref: scu.513713