BMW Financial Service (GB) Ltd v Hart [2012] EWCA Civ 1959 (10 October 2012)

When does a cause of action relating to an HP agreement accrue? It depends on the wording of the agreement itself. Sometimes the failure to make an instalment payment will create a cause of action: sometimes it will only be when notice of termination has been given. If proceedings have to be brought, they must be brought within the limitation period - the courts show no sympathy for claims issued late, even by just a day. For most motor finance claims, the limitation period is six years from when the action accrues, which is why it is so important to know when that happens. And it is not always easy to know.

It can even need the assistance of the Court of Appeal, as in BMW Financial Service (GB) Ltd v Hart [2012] EWCA Civ 1959 (10 October 2012), to work out when the clock starts to run. Mr Hart had agreed to pay monthly instalments, and a final balloon payment at the end of the agreement. The agreement said that BMW could only claim from him after serving a notice of termination on him, or when he had repudiated the agreement and they had communicated their acceptance of his repudiation.

Mr Hart failed to pay two instalments, which amounted to repudiation, and on 26 August 1999 BMW sent him a letter accepting his repudiation and giving notice of termination. Nothing happened for six years after that, when BMW sued on 26 August 2005. Mr Hart had moved abroad, so it was a simple matter for BMW to obtain judgment in default. The first that Mr Hart knew about the judgment was when he returned home in 2011. He applied to have the judgment set aside, arguing that the claim had been issued outside the six-year limitation period.

At first instance, the court agreed with him, holding that the limitation period started to run from when he first missed an instalment payment (July 1999).But the Court of Appeal decided that the wording of this particular contract meant that BMW could only make a claim once a termination notice had been given, or it had communicated its acceptance of Hart's repudiatory breach, both of which it had done. Only then did the money became due, and until then all that was due from Mr Hart was the outstanding instalments.

The agreement said that service of the notice was deemed to take effect two days after it was sent, which meant the key date was 28 August 1999. The claim form had been issued (just) within the limitation period.