Doodes v Gotham and another
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE LINDSAY,Mr Justice Lindsay |
| Judgment Date | 17 November 2005 |
| Neutral Citation | [2005] EWHC 2576 (Ch) |
| Court | Chancery Division |
| Docket Number | No. 1533 of 2005 |
| Date | 17 November 2005 |
[2005] EWHC 2576 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
IN BANKRUPTCY
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Lindsay
No. 1533 of 2005
Case No: CH/2005/APP/0438
Dan Stacey (instructed by Budd Martin Burrett) for the Appellant
Alexander Learmonth (instructed by BTMK Solicitors LLP) for the Respondent
Hearing date: 20 th October 2005 and written submissions dated
th and 28th October 2005
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Justice LindsayIntroduction
On the 12 th October 1988 a Bankruptcy Order was made against Kevin Leonard Doodes ("the Bankrupt") in the Chelmsford County Court. On the 12 th May 1989 Peter John Gotham ("the Trustee") became, as he remains, the trustee in that bankruptcy. On the 18 th December 1990 the Trustee applied to the Chelmsford County Court for possession of 22, Basildon Drive, Laindon, Basildon, Essex ("No. 22"), a residential property registered in the names of and lived in by the Bankrupt and his partner, Cheryl Barbara Perry. There was a substantial gap (the reasons for which have not been explored before me) until the 27 th February 1992 when Mr Recorder P.L. Storr made an order in that Court imposing a charge (then only a charge nisi, it would seem) on No. 22 in favour of the Trustee and removing No. 22 (or perhaps, as it should have been, the Bankrupt's interest in it) from the Bankrupt's estate pursuant to section 313 (1) and (3) of the Insolvency Act 1986. On the 29 th May 1992 the Chelmsford County Court made a Charging Order Absolute ("the 1992 Charge") charging the Bankrupt's interest in No. 22 in favour of the Trustee. The Bankrupt has been discharged from the 1988 bankruptcy.
After another unexplained gap, on the 16 th June 2004 the Trustee applied to the Chelmsford County Court for an order for, inter alia, the sale of No. 22 with vacant possession and for directions as to the payment of the proceeds of sale. On 7 th December 2004 the matter was transferred to the High Court where, on 3 rd March 2005, the Trustee applied to amend his application of the 16 th June 2004. In opposition to that application, the Bankrupt raised the argument that so long had elapsed – more than 12 years – between the making of the 1992 Charge in May of 1992 and the application for sale and for payment of proceeds in June 2004 that the Trustee, represented by Mr Learmonth, was barred from obtaining any substantive relief by reason of section 20 of the Limitation Act 1980. The Bankrupt's case was thus that there was no point in amending; No amendment could save the application which was inescapably doomed to fail by reason of limitation. In the High Court the matter came before Mr Registrar Baister who, by his reserved judgment of the 19 th May 2005, ruled that the 1992 Charge was not statute barred. By his Appellant's Notice of the 22 nd June 2005 the Bankrupt, represented by Mr Stacey, appeals. I have not been concerned with whether the 1992 Charge is or may be wholly or in part unenforceable or ineffective for any reason other than limitation; the only point in the appeal has been whether its enforcement is barred by limitation. I shall therefore assume, notwithstanding some doubts as to other features of the 1992 Charge, that, limitation issues apart, it has been and is a fully enforceable charge.
Background
The Cork Report – "Insolvency Law and Practice", Cmnd 8558 of 1982 – commented on the fact that eviction from a family home could be a disaster not only for the debtor himself but also to those who were living there as his dependants and who often had no legal or beneficial rights which they could enforce. A trustee-in-bankruptcy's claim for possession needed to be weighed, it said, against the competing claims of the debtor's wife and children to a roof over their heads. Considerable personal hardship could be caused to the debtor's family by a sudden or premature eviction and the writers of the Report believed that it was:—
"… consonant with present social attitudes to alleviate the personal hardships of those who are dependent on the debtor but not responsible for his insolvency, if this can be achieved by delaying for an acceptable time the sale of the family home. We propose therefore to delay but not to cancel, enforcement of the creditors' rights."
Much importance, said the Report, had, in reported cases, been attached to the ages, welfare and educational prospects of the children. Relief should not be limited to those who were married; the terms "husband" and "wife" should include persons of the opposite sex who were living as husband and wife – see Cork Report paragraphs 1114–1118, 1123 and 1125. When the Insolvency Act 1986 emerged it was seen that one way in which the legislature had dealt with the problems addressed by the Cork Report was by enacting section 313 as follows:—
"313. Charge on bankrupt's home
(1) Where any property consisting of an interest in a dwellinghouse which is occupied by the bankrupt or by his spouse or former spouse is comprised in the bankrupt's estate and the trustee is, for any reason, unable for the time being to realise that property, the trustee may apply to the Court for an order imposing a charge on the property for the benefit of the bankrupt's estate.
(2) If on an application under this section the court imposes a charge on any property, the benefit of that charge shall be comprised in the bankrupt's estate and is enforceable, up to the value from time to time of the property secured, for the payment of any amount which is payable otherwise than to the bankrupt out of the estate and of interest on that amount at the prescribed rate.
(3) An order under this section made in respect of property vested in the trustee shall provide, in accordance with the rules, for the property to cease to be comprised in the bankrupt's estate and, subject to the charge (and any prior charge), to vest in the bankrupt.
(4) Subsections (1) and (2) and (4) to (6) of section 3 of the Charging Orders Act 1979 (supplemental provisions with respect to Charging Orders) have effect in relation to Orders under this section as in relation to Charging Orders under that Act."
Section 313 has been amended with effect from the 1 st April 2004 but I have not understood the parties before me to argue that the amendments are relevant to the only question before me although the changes have had the effect that the question I am dealing with will in future arise in the different context provided for in sections 283A (2) and (3) and 313 of the Insolvency Act as amended by the Enterprise Act 2002.
The Insolvency Rules 1986, rule 6.237, make provision as to how applications to Court should be made under section 313 but there has been no inquiry before me as to how far, if at all, those rules were complied with or even whether Cheryl Perry was a "spouse" at all relevant times for the purposes of section 313. As I have said, the only question before me has been one of limitation.
The provisions of section 3 (1), (2), (4)-(6) of the Charging Orders Act 1979 as referred to in section 313 (4) supra provide as follows:—
3—(1) A Charging Order may be made either absolutely or subject to conditions as to notifying the debtor or as to the time when the charge is to become enforceable, or as to other matters.
(2) The Land Charges Act 1972 and the Land Registration Act 2002 shall apply in relation to Charging Orders as they apply in relation to other orders or writs issued or made for the purpose of enforcing judgments.
(4) Subject to the provisions of this Act, a charge imposed by a Charging Order shall have the like effect and shall be enforceable in the same courts and in the same manner as an equitable charge created by the debtor by writing under his hand.
(5) The court by which a Charging Order was made may at any time, on the application of the debtor or of any person interested in any property to which the order relates, make an order discharging or varying the Charging Order.
(6) Where a Charging Order has been protected by an entry registered under the Land Charges Act 1972 or the Land Registration Act 2002, an order under subsection (5) above discharging the Charging Order may direct that the entry be cancelled.
The word "debtor" found in subsections (3) and (5) is defined in the 1979 Act section 6 (1) by reference to section 1 (1) of that Act. Section 1 (1) of the 1979 Act contemplates a debtor being a person required to pay a sum of money to another person by a judgment or order of the High Court or a County Court.
Section 20 of the Limitation Act 1980 , on which the Bankrupt relies, provides, so far as material for immediate purposes, as follows:—
"20 (1) No action shall be brought to recover –
(a) any principal sum of money secured by a mortgage or other charge on property (whether real or personal); or
(b) proceeds of the sale of land;
after the expiration of 12 years from the date on which the right to receive the money accrued."
Subsection (2) of section 20 makes special provision in relation to foreclosure and subsection (3) to cases where the property charged comprises any future interests or a life insurance policy that has not matured or been determined. Subsection (5), which relates to recovery of arrears of interest, speaks of "the expiration of 6 years from the date on which the interest became due". Similarly subsection (6), speaking of arrears, speaks of arrears "which fell due". Again, subsection (7) speaks of interest not being treated "as becoming due"...
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