The Court of Appeal has handed down judgment in Doyle v PRA Group (UK) Ltd  EWCA Civ 12. The case addresses the recurring question of when limitation starts to run in respect of a claim for the debt due under a credit card agreement. Sir Terence Etherton MR, giving the judgment of the Court, held that limitation commences from the date specified in the default notice for payment of the arrears.
The appellant borrower had argued that the default notice was irrelevant to the question of limitation, as it was a mere procedural requirement for recovery. The underlying cause of action in debt accrued when he first defaulted.
The Court dismissed this argument and found that service of a default notice was more than a procedural requirement for recovery; it was necessary in order to found the cause of action. A cause of action arose when the claimant was able to issue a statement of claim capable of stating every fact which, if traversed, it would be necessary for them to prove in order to support their right to judgment. Absence of a valid default notice gave the debtor a complete defence. CCA s87 provided that without a default notice there was no right to demand accelerated payment of the balance. It therefore did not merely impose a procedural requirement, but qualified the creditor’s substantive legal rights.
The creditor only becomes entitled to repayment once the contractual and statutory pre-conditions to that entitlement have been satisfied. For unsecured CCA regulated loans, there is a statutory precondition to the creditor’s entitlement to early repayment: it must have served a default notice (and waited for the 14 day period to expire). It should be noted that secured loans which were CCA regulated when entered will now be consumer credit back book mortgage contracts (article 2 of the Mortgage Credit Directive Order 2015). As such, the CCA requirement for default notices will no longer be applicable (CCA s87 is not one of the transitional CCA provisions carried over for consumer credit back book mortgage contracts: article 29 of the 2015 Order).