Legal Clinic

PEDRO vs. KADUNA TEXTILE LTD.(2018)LPELR-46740(CA)

 

ISSUE: ACKNOWLEDGEMENT OF DEBT-Whether an acknowledgement of debt takes an action for the payment of debt out of the limitation period within which to institute same

PRINCIPLE:

“I now turn to the Appellant’s contention that the Respondent’s admission of indebtedness and undertaking to pay the debt as contained in the said letter of 06/12/2004, renewed the cause of action. He puts his eggs in the baskets of the Supreme Court decision in the case of *NSITFMB VS. KLIFCO (NIG.) LTD.* (Supra) and the decision of this Court in SPDCN LTD. VS. EJEBU (Supra).

In the SPDCN LTD. VS. EJEBU’s case (Supra) a decision of the Port Harcourt Division of this Court, the cause of action accrued and began to run from 1991. The writ of summons was taken out on 25th July, 1998. The letter of admission of liability by the Respondent was written on 25th May, 1998, meaning that the letter of admission of liability by the Defendant (Respondent) was written after the effluxion of the limitation period of 5 years. The action was already statute barred by the time the letter of acknowledgment of liability was written following negotiations between the parties. Ejembi Eko, JCA, (as he then was) who read the lead judgment had this to say:

“Generally, negotiation by the parties does not prevent or stop the period of limitation stipulated by a statute from running. When in respect of a cause of action, the period of limitation begins to run, it is not broken and it does not cease to run merely because the parties are engaged in negotiation. The rationale for this is that the parties cannot by conduct or consent add to or subtract from the contents of a statute *(EBOIGBE VS. NNPC (1994) 5 NWLR (PT. 346) 649* referred to) *P. 342,* Paragraphs A – C. The fact that the acknowledgment or promise to pay liability that is statute barred creates or establishes a fresh contractual relationship.”

But went further to state the exception thus:

“This however is subject to qualification that where there has been admission of liability during negotiation and all that is remaining is fulfilment of the agreement it cannot be just and equitable that the action would be barred after the statutory period of limitation giving rise to the action if the defendant were to resile from the agreement during negotiation… See *NWADIARO VS. SHELL PETROLEUM DEVELOPMENT COMPANY (1990) 5 NWLR (PT. 150) PAGE 322 AT 338 – 339; SHEL PETROLEUM DEVELOPMENT COMPANY VS. FARAH (1995) 3 NWLR (PT. 382 PAGE 148 AT 156 RATIO 4.”*

In the *NSITFMB  VS. KLIFCO’s  case (Supra) where the Respondent wrote a letter, exhibit J to the Appellant admitting indebtedness to the Appellant but disputing the actual figure, the Supreme Court held that the letter was an admission of indebtedness notwithstanding that the actual figure was being disputed. The Court held:

“The limitation law here is a period of 6 years being a simple debt, however where there is acknowledgment of the debt, which must be in writing and signed by the party that is liable, the right to recover the debt is revived”.

What constitutes acknowledgment of debt is a matter of fact to be ascertained from the words used in each case and the construction placed on the words by the Court in ascertaining what they mean. See *SPENCER VS. HEMMERDE (1922) AC 578* . Such an acknowledgment must be unconditional and unequivocal. In other words the acknowledgment must be absolute as to leave no doubt to the existence of the debt and a promise or an undertaking to pay. Therefore an acknowledgment of debt owed to a creditor must be inferred and a promise to pay the debt must be unconditional and unequivocal.

Let me for the purpose of emphasis even at the risk of repetition recall here the relevant part of the letter. It states inter alia:

“The implication is that our Company (Kaduna Textile Ltd.) is indebted to you (Mr. Don Pedro) to the tune of N1,676,400 … we are not currently in a position to pay you … as soon as we are in a position to pay, we will do so … “.

There can be no better expression of acknowledgment of a debt and promise to pay the debt than the unequivocal phrase put down by the Respondent in the said letter. The acknowledgment of the debt is absolute. The promise to pay, when able to, is unequivocal. Given to the clear words of admission of liability and the commitment to pay the debt when in a position to do so, the period of maturity of the payment of the debt extends the time of payment to a time when the Respondent would be able to do so. It is an open promise to pay the debt and continues to operate until when the Respondent would be able to pay and the Appellant ready to wait or take steps to recover its money. It is a continuous and ongoing undertaking that remains active and alive until it is fulfilled or the Respondent takes steps to have it enforced. The undertaking connotes a definite assurance to the Appellant of the Respondent’s intention to pay the debt in the future.

In other words, the unequivocal acknowledgment of the debt and the continuous undertaking or promise to pay the debt constitute the conditions necessary for the invocation of the exception to the general rule and takes the matter outside the limitation law as decided in the NSITFMB’s case (Supra) wherein the Apex Court referred to and adopted the decision in the case of *AJIKE VS. CARDOSO (1939) 5 WACA 134.*

The Respondent having admitted its liability to the Appellant and promised to discharge its liability when it is able to do so, all that was remaining is the fulfilment of that promise to pay. I think it is not only the law, and I will say good law, but also equitable that the Respondent be estopped from resiling from his promise to pay after the effluxion of the limitation period.

Where a party makes an irrevocable representation to another party which that other party relies on to its detriment, the party who made the representation is in law, estopped from denying liability for the loss suffered by the party that relied on the representation. Where a party admits a fact which is conclusive, he is not permitted to contradict his admission to the prejudice of the party who has acted to his detriment on the admission. See *UKAEGBU VS. UGOJI (1991) 6 NWLR (PT. 196) 127, 146. See also EGBE VS. ADEFARASIN (1987) 1 NWLR (PT. 42) 1* . Iguh, JSC, summed up the law in this way:

“It is well settled that where one party has by his words or conduct made to the other a promise or assurance which was intended to affect legal relations between them and to be acted upon accordingly, then once the other party has taken him on his word and acted on it, the one who gave the promise or assurance cannot afterword be allowed to revert to the previous legal relations as if no promise or assurance had been made by him. He must accept their legal relations as modified by himself, even though it is not supported in point of law by any consideration, but only by his word”.

This explains the rationale of the object of estoppel which is to prevent an unjust departure by a person from the state of affairs previously admitted which has been acted upon by another to his prejudice, in that it will be inequitable to allow a party to resile from his admission or promise to the disadvantage of another to whom he has held himself out on the admission or promise.

Indeed the law treats as equivalent to an admission of an extremely high and conclusive nature that the party who made the admission must not to permitted to contend the contrary. See *YOYE VS. OLUBODE (1974) ALL NLR 657* . The Respondent in this case having admitted the debt and promised to pay when it is able to do so, takes the matter out of the limitation period and is estopped from relying on the limitation law as an escape route to shelve its responsibility of payment. I am therefore in agreement with the Appellant’s learned Counsel that the Appellant’s cause of action is not statute barred, but is still maintainable.” *Per WAMBAI, JCA.(Pp.18-25,Paras.E-C).*