Q. I have a loan that has gone unpaid since January 2, 2010. Am I out of time to sue in the Small Claims Court?
There are time limits to bring a lawsuit in any court, including the Small Claims Court. A defendant has a defence if a claim is out of time. The governing law is the Limitations Act. Under section 4 of the Limitations Act, one has until the second anniversary from the date of discovering a claim to commence a lawsuit. After the second anniversary, your claim can be considered “statute-barred”.
The key word is “discovery”. In other words, one may have an outstanding debt that is more than 2 years old, but if it was not discovered until later on, then he may still have time to commence a claim.
To apply this to your case, I would need to know when you discovered that the loan was going to be unpaid. Are you stating in your question that you knew the loan would be unpaid since January 2, 2010? If that is the case, then you will likely be found to be statute-barred from making the claim.
Note, even in the case where you are possibly out of time, you are not precluded from filing a lawsuit. This is because the onus is on the Defendant to plead the limitation period in his Defence. If the Defendant fails to plead that the action is “statute-barred” as a result of a limitation period, you can still win in court unless a judge takes it upon himself to raise the issue himself.
However, if, as I assume to be the case, your question means to say that the loan was made on January 2, 2010, then you need to assess when you discovered you had a claim. This will depend on the facts. Perhaps you have emails where the debtor promised to pay you, only to renege on his promises much later. In such case you can arguably claim that you only discovered the claim less than 2 years prior and therefore are not statute-barred.
Of course, you are not allowed to be willfully blind to knowing that you will not be paid. This is because the Limitations Act makes it clear that if a person ought to have known that he was not going to be paid back on a certain date, then the limitation period would run from that date. So, for example, say you had text messages where the debtor promises to pay you back, but at the same time you received an email from a reliable source that the debtor has said explicitly he will not pay you, you may be arguably held to have known you were not going to be paid back on the date you received the email from the reliable source. (Note, you may be able to counter that just because a source said this, doesn’t mean you should be forced into believing its truth).
I cannot stress enough to our readers how important it is to not wait until the last second to get paid back. The moment you know a debt outstanding that may not be paid back, ensure to calculate when the 2 year period would be so that you ensure not to miss it. As I always advise, you should enlist the help of a legal professional to prepare your claim so that a potential limitation defence is limited (pun intended) to a minimum.
The information herein should not be taken as legal advice and may have been changed since published. Do not treat information provided in the article as a recommendation to act or refrain from taking action, or as legal advice. The information provided is not a substitute for the assistance of a licensed legal adviser.