Statute of Limitation: When Acknowledgement of Debt Will Revive the Right of Action

In the Supreme Court of Nigeria

Holden at Abuja

On Friday, the 12th day of December, 2025

Before their Lordships

Helen Moronkeji Ogunwumiju

Adamu Jauro

Jummai Hannatu Sankey

Obande Festus Ogbuinya

Abubakar Sadiq Umar

Justices, Supreme Court

SC/543/2015

Between

Petroleum Products Marketing Co. Ltd                                               Appellant

And

Masters Maritime Limited                                                                Respondent     

(Lead Judgement delivered by Honourable Abubakar Sadiq Umar, JSC)

Facts

The Appellant is a company engaged in the transportation, marketing and distribution of petroleum products, while the Respondent is a company engaged in the business of buying and selling petroleum products. Sometime in 1997, the parties entered into an agreement for the Appellant to supply various petroleum products to the Respondent, for the operation/maintenance of the Respondent’s ships at various seaports amounting to the total sum of USD1,013,678.80. The Respondent failed to make payment after the delivery of the products, pursuant to their agreement, and after several demands by the Appellant.

Consequent upon the above, the Appellant commenced Suit No. M/175/2000 against the Respondent, for recovery of the outstanding debt. Further to settlement negotiations, the Respondent wrote a letter dated 29th November, 2020 stating its intention to settle the debt, and how it proposed to amortise its indebtedness to the Appellant. This caused the Appellant to withdraw the suit. Unfortunately, the Respondent failed to fulfil its obligations, under the settlement terms.

Thereafter, the Appellant commenced an action against the Respondent at the High Court of Lagos State on 20th September, 2005, claiming the sum of USD 1,013,678.80; interest on the said sum at the rate of 25% from 1st December 1997 until judgement; and 10% post judgement interest until final liquidation of the debt. 

In reaction to the suit, the Respondent raised a Preliminary Objection, challenging the jurisdiction of the trial court to entertain the action on two grounds. First, that the suit was an admiralty matter over which the trial court lacked jurisdiction. Second, that the action was instituted by an agency of the Federal Government and, consequently, was not within the jurisdiction of the trial court to determine. 

In its ruling, the trial court held that the matter is not an admiralty matter, but one involving money had and received. The court, however, agreed that the State High Court lacked jurisdiction over matters, where the administration or management or control of a Federal Government agency is called to question. Thus, the court upheld the Respondent’s Preliminary Objection, and struck out the Appellant’s suit.

Dissatisfied with the decision, the Appellant appealed to the Court of Appeal. Thereat, the Respondent raised the issue of limitation of action, arguing that if indeed, the suit was one for simple contract, then the suit was statute-barred having been instituted more than 6 years from the time the cause of action arose. The lower court agreed with the Respondent and dismissed the Appellant’s Appeal, on the ground that it was statute-barred.

Still dissatisfied with the decision, the Appellant further appealed to the Supreme Court.

Issues for Determination

The Supreme Court formulated a sole issue for determination of the appeal: to wit:

i. Whether the Court of Appeal was right, when it held that the Appellant’s claim was statute-barred.

Arguments

Arguing this issue, the Appellant submitted that in order to determine whether an action is statute barred, the court must ascertain when the cause of action arose. That a cause of action arises from the time the breach that causes an injury occurs. The Appellant submitted that to determine whether the action is within the limitation period, the court would consider the date on which the cause of action arose and the date on which the Writ of Summons was issued. The Appellant referred to the letter written by the Respondent on 29th November 2000 wherein the Respondent admitted its indebtedness and the subsequent action instituted by the Appellant on 30th September 2005, to posit that the claim was not statute barred. Accordingly, it urged the Supreme Court to resolve the issue in its favour and hold that the action was not statute-barred.

The Respondent on its part, relied on Section 7 of the Limitation Act of 1966 and the case of TEXACO INC. v SHELL P.D.C.N. Ltd. (2002) 5 NWLR (Pt. 759) 241, to submit that, a statute of limitation is one which provides that no court shall entertain proceedings for the enforcement of certain rights, if such proceedings were commenced after the lapse of a definite period of time. The Respondent submitted further that the court will look at the Writ of Summons and Statement of Claim, to examine when the cause of action arose vis-à-vis the date when the originating process and the pleadings were filed, to determine whether a suit is statute-barred. The Respondent argued that by the averments contained in paragraphs 5, 7 and 8 of the Appellant’s Amended Statement of Claim, it admitted that its cause of action arose on 27th January, 1991. The fact that the present action was not commenced until 2005, shows that the action was instituted outside the applicable limitation period and was therefore, statute-barred.

Court’s Judgement and Rationale

In resolving the sole issue, the Supreme Court held that a cause of action consists of every fact which would be necessary for the Plaintiff to prove, if traversed, in order to support the Plaintiff’s right to judgement. A cause of action can be described as a civil right or obligation which is presented for determination by a court of law, or a dispute in respect of which a court of law is entitled to invoke its judicial powers to determine – A.G. FEDERATION & ORS. v ALHAJI ATIKU ABUBAKAR (2007) 10 NWLR (PT. 1041) 1.

In determining when a cause of action accrued, the court is required to have recourse to the originating process and the pleadings. The examination of the originating process and the pleadings principally serves three purposes: firstly, for the court to confirm the time the cause of action arose; secondly, to ascertain the nature of the wrong committed; and thirdly, to confirm when the action commenced.

The Supreme Court held that a right of action does not subsist indefinitely. Where a statute prescribes a period within which an action must be commenced, the action must be instituted within that period, failing which it becomes statute-barred. Thus, where the period between the accrual of the cause of action and the commencement of the action exceeds the period prescribed by the applicable limitation statute, the action is statute-barred. –  CIL RISK & ASSET MANAGEMENT LTD. v EKITI STATE GOVERNMENT (2020) 12 NWLR (PT. 1738) 203.

The Supreme Court held that, a cause of action for recovery of debt arises after demand has been made for its payment and the debtor refuses to pay the debt.  In this case, the Appellant had issued three invoices to the Respondent to request for payment for the petroleum products supplied, which the Respondent failed to honour the requests to pay. The limitation period for recovery of debt arising from breach of contract has been codified under the relevant limitation law. Section 8(1) of the Limitation Law of Lagos State, which is the relevant limitation law applicable to this case, provides that any action founded on a simple contract, which includes an action for recovery of debt must be brought to court within six years from the date the cause of action arose.

Failure of the Respondent to make payment after the issuance of the final invoice on 10th February, 1998 gave rise to the Appellant’s cause of action, and naturally, the limitation period ought to start therefrom. If indeed, the limitation period is to be reckoned from 10th February, 1998, then by 10th January, 2004, the prescribed limitation period under Section 8 of the Limitation Law of Lagos State, would have lapsed.

The above notwithstanding, the Supreme Court re-affirmed the principle of law that an acknowledgement of debt made within the limitation period will reset the limitation period, and the period will begin to count afresh from the date of such acknowledgment. The Apex  Court, relying on the provisions of Section 38(1) of the Limitation Law of Lagos State and its earlier decision in NIGERIA SOCIAL INSURANCE TRUST FUND MANAGEMENT BOARD v KLIFCO NIGERIA LTD. (2010) 13 NWLR (Pt. 1211) 307 at 329, held that “where there is acknowledgment of a debt, which must be in writing and signed by the party that is liable, the right to recover the debt by action is revived”. The conditions where an acknowledgment of debt will reset the limitation period for recovery of debt, are that: such acknowledgement must be in writing; it must be addressed to the creditor; it must be signed by the debtor or his agent or legal representative; the admission of liability must the unequivocal and it need not state the specific amount owed.

Given the above, the Supreme Court held that the Respondent’s letter of 29th November, 2000 reset the limitation period which started counting from that date and not 10th February, 1998. The Appellant having commenced the action against the Respondent in September 2005 which was 5 years from the date of the acknowledgment of the debt by the Respondent, as against the 6 years period prescribed by the limitation law, the Appellant’s suit was not statute barred.  It follows that the Court of Appeal was in error, when it held that the Appellant’s action was statute-barred.

The Supreme Court allowed the appeal, and set aside the judgement of the lower court. Consequently, the Supreme Court ordered that the suit be remitted to the Chief Judge of Lagos State for assignment to another Judge of the High Court of Lagos State, for expeditious trial.

Appeal Allowed.

Representation

Abimbola Kayode for the Appellant.

Pablo Amaran for the Respondent.

Reported by Optimum Publishers Limited, Publishers of the Nigerian Monthly Law Reports (NMLR)(An affiliate of Babalakin & Co.)