The Limitation Act 1980
Energy companies may sometimes attempt to pursue debts more than six years after the sum fell due. A six-year legal recovery limit is placed on sums due under the contract (actual or deemed), after which time it is statute-barred.1s24(1) Limitation Act 1980 In Scotland, the limitation period is five years.2Prescription and Limitation (Scotland) Act 1973 The Limitation Act 1980 applies to a contract to supply energy in the same way that it applies to other contracts. This means that if you have not acknowledged the debt for six years, the energy company cannot take court action to recover the money claimed. Paying the energy company for the sum claimed would constitute acknowledgement, as would any written correspondence about the debt. It is not usually possible to acknowledge a debt verbally – eg, over the telephone. You should exercise caution about your contact with the energy company if the debt is nearing the six-year limit, as acknowledging the debt can start the clock running again. Do not ignore any summons from the county court and seek advice about whether you need to defend the claim – eg, because the time limit for taking action has expired. If you do not do this within 14 days of being sent the proceedings, a judgment in default may be entered against you even if there is no valid basis for the claim.
If the supplier has obtained a county court judgment within the relevant limitation period, then in theory there is no limit on the amount of time that the energy company can pursue you for the balance due under the judgment. This is because enforcement action is not subject to a limitation.3Lowsley v Forbes [1998] UKHL 34 However, if the judgment is over six years old, the creditor will need to obtain the permission of the court to enforce the debt. The court will consider the supplier’s reasons for the delay in enforcement action, why leave should be granted and reasons for enforcement. Caselaw has shown that the court will refuse to grant permission unless there are ‘exceptional circumstances’.4The Society of Lloyd’s v Longtin [2005] EWHC 2491 (Comm) For more information on court proceedings, see Chapter 14.