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 five years, if the defendant should regularly pay the interest. But it was also provided that the repayment of the loan could be accelerated in two circumstances. One arose if the borrower died before the expiration of the term, in which case it would be lawful ‘to call in the said principal sum upon giving to the executors or administrators six calendar months’ notice in writing’ of the intention to call in the loan. And the second was that if the borrower: ‘should make default in payment of any quarterly payment of interest as aforesaid for the period of twenty-one days next after the same should become payable, it should be lawful for [the creditor] immediately upon the expiration of such twenty-one days to call in and demand payment of the said principal sum and all interest then owing or accruing in respect thereof.’ The action to recover the loan was commenced more than six years after 21 days had run following the defaulting payment of a quarterly instalment of interest, but there was no demand prior to the service of the writ separate from the issue and service of that writ. So the issue before the court was whether in those circumstances the claim was time-barred, or whether it was saved from being time-barred by the absence of any formal demand prior to the issue of the writ.
Held: No such demand was necessary, and the claim was time barred.
Lindley LJ said: ‘The agreement is one reasonably easy to be understood. It provides for a loan for five years, subject to a provision that if default is made in punctual payment of interest, the principal shall be recoverable at once. Now, the Statute of Limitation (21 Jac. I, c. 16) enacts that such actions as therein mentioned including ‘all actions of debt grounded upon any lending or contract without specialty’ shall be brought ‘within six years next after the cause of such action or suit, and not after.’ This expression ’cause of action’ has been repeatedly the subject of decision, and it has been held particularly in Hemp v. Garland 4 QB 519, decided in 1843, that the cause of action arises at the time when the debt could first have been recovered by action. The right to bring an action may arise on various events, but it has always been held that the statute runs from the earliest time at which an action could be brought.’
Fry LJ said: ‘The agreement contains a stipulation that the lender shall not call in the principal sum for a period of five years, if the borrower should so long live, and should duly and regularly pay the interest. This implies a contract by the borrower that the principal debt should be paid at once on the death of the borrower, or on default in payment of interest. The subsequent provisions imply a contract by the lender not to enforce payment after the death of the borrower until the expiration of a six months’ notice, and a contract not to enforce payment of the capital for default in payment of interest until twenty-one days after such default, thus giving the borrower further time. Subject to the stipulations, the implied contract to pay the principal remained in force. The principal, therefore, became payable twenty days after the first quarterly instalment of interest became due, and from that time the statute of limitations began to run. If authority is wanted, Hemp v. Garland 4 QB 519 is in point.’
Lopes LJ said: ‘Now, when first had the plaintiff a cause of action? When default was made for twenty-one days in payment of an instalment of interest. Hemp v. Garland (1842) 62 R.R. 423, is in point.’
Fry LJ, Lindley LJ, Lopes LJ
 2 QB 509
England and Wales
Approved – Hemp 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 . .
Cited – 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 . .
Lists of cited by and citing cases may be incomplete.
Updated: 16 May 2022; Ref: scu.605194