Nigel Charles Bennett and The Govenor and Company of The Bank of Scotland ; Bank of Scotland v Bennett
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mummery,Lord Justice Scott Baker,Mr Justice Lawrence Collins |
| Judgment Date | 23 July 2004 |
| Neutral Citation | [2004] EWCA Civ 988 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2003/2510 |
| Date | 23 July 2004 |
[2004] EWCA Civ 988
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
CHANCERY DIVISION
MR JUSTICE PATTEN
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Justice Mummery
Lord Justice Scott Baker
Mr Justice Lawrence Collins
Case No: A3/2003/2510
MR NICHOLAS YELL (instructed by Trevor Jenkin & Co) for the Appellant
MISS KAREN WALDEN-SMITH (instructed by Wragge & Co) for the Respondent
Introduction
This is another chapter in the history of the long-running litigation between the Bank of Scotland (the Bank) and Mr & Mrs Bennett. For the last 10 years the Bank has been trying, so far without much success, to enforce its security in order to recover money lent by it in 1991 to the company (Galloway Seafood Co Limited), through which Mr & Mrs Bennett carried on a business until it failed.
The latest development has occurred in the course of the Bank's efforts to enforce a personal guarantee given to the Bank by Mr Bennett in respect of the loan to the company. It has thrown up an unusual procedural point: is it an abuse of process for the Bank, as a judgment creditor of Mr Bennett under an existing, but possibly unenforceable, judgment, to pursue a second action based on the first judgment in order to obtain and enforce a second judgment against Mr Bennett by, for example, bankruptcy proceedings?
Section 24 of the Limitation Act 1980 is relevant:
"(1) An action shall not be brought upon any judgment after the expiration of six years from the date on which the judgment became enforceable.
(2) No arrears of interest in respect of any judgment debt shall be recovered after the expiration of six years from the date on which the interest became due."
The general principles regarding actions on an existing judgment as an abuse of process were stated by Leggatt LJ in ED & F Man (Sugar) v. Haryanto (Court of Appeal Transcript 17 July 1996) and agreed by Morritt and Brooke LJJ:
"Suing on a judgment, at all events for the first time, cannot be said to defeat legislative policy. That is plain from the very language of s24…..Here the second action was, of course, brought within that limitation period. There are two relevant ways of enforcing a judgment: by execution and by action. It is plain that the Court will not give judgment in an action on a judgment unless satisfied that the action does not constitute an abuse of process, having regard, amongst other things, to the availability of execution. It would, in my judgment, be for a defendant (or a person in the position of defendant) to show that a second action did constitute an abuse of process; the primary obligation is not that of a plaintiff to justify the bringing of further proceedings. Because, in the event of abuse of process, the Court may intervene and refrain from giving judgment in the second action, it cannot be said that a second action proceeds without judicial scrutiny, even if the second action is a matter of right and not discretion. Of course, it favoured the applicant in the present proceedings that it was a matter of discretion, even though, when he came to exercise it, he exercised it against the applicant.
The authorities to which our attention has been drawn show that the Courts have always held the bringing of the second action to be a matter of right, and in my judgment that is what it is…"
Before the judge below (Patten J), who held that the Bank's second action was not an abuse of process, it was common ground,
"… having regard to the decision in Re A Debtor [1977] Ch 310 that s 24(1) of the 1980 Act bars after six years rights of action including proceedings in the form of bankruptcy proceedings, based on an earlier judgment." (paragraph 12) .
Re A Debtor, a first instance decision by HHJ Paul Baker QC, sitting as a High Court Judge, is authority for the proposition that insolvency proceedings (in that case corporate insolvency) based on a statutory demand for monies due under a previous judgment are an "action on a judgment" within s 24 rather than a method of enforcing or executing the judgment. They are barred by s 24 if brought more than six years after the judgment was obtained.
After the close of oral argument on this appeal another case was decided, contradicting what was previously common ground. In Ridgeway Motors (Isleworth) Ltd v. Altis LTL 21 May 2004 HHJ Rich QC, sitting as a High Court Judge, held that, in the light of the House of Lords' ruling in Lowsley v. Forbes [1999] AC 329 that s 24(1) only applies to the bringing of a fresh action and does not include proceedings by way of execution of a judgment in the same action, Re A Debtor was wrongly decided. We have received from the parties further written submissions, from which it appears that the law on the s24 point is no longer common ground. I shall refer later to the effect, if any, of the shift of ground on the decision under appeal.
General Background
The Bennett litigation has already been to the House of Lords on an "O'Brien point" as one of the conjoined appeals reported under the name Royal Bank of Scotland v. Etridge (No 2) [2002] 2 AC 773. Mrs Jane Bennett, the wife of the appellant, succeeded in the House of Lords in defending possession proceedings by the Bank to enforce a second charge taken over the Bennetts' matrimonial home 15 Elthiron Road, Fulham SW6 (the House) to secure their guarantee liability.
The House of Lords upheld the findings of the trial judge (Mr J Munby QC) [1997] 1 FLR 801- 7 February 1997) that (a) Mr Bennett had exercised actual undue influence over his wife in respect of the giving of the guarantee and (b) the Bank had constructive notice of his impropriety. Until the House of Lords gave their decision on 11 October 2001 the Bank had continued to act on the basis that, as was held by the Court of Appeal (on 21 December 1998) on the Bank's successful appeal from the decision of Munby J ([1999] FCR 641), it had an enforceable charge over the property. As it now finds itself with no enforceable charge against the property, the Bank wishes to enforce its personal claims against Mr Bennett, including, if possible, bringing bankruptcy proceedings.
Mr Bennett's appeal, brought with the permission of the judge, is from an order of 11 November 2003. Patten J dismissed Mr Bennett's application dated 9 June 2003 to strike out, either under CPR Part 3.4 or Part 24, as an abuse of process the second action begun against him by the Bank on 10 May 2001. A default judgment was obtained by the Bank on 26 September 2001 in the sum of £187,753.30 (the 2001 Judgment) . The Bank's claim was for the sum of £124,039.60, which was due under an earlier order of Master Gowers dated 11 May 1995 (the 1995 Judgment), together with just under £60,000 interest.
On 24 April 2003 the Bank served a statutory demand on Mr Bennett based on the 2001 Judgment. Mr Bennett issued an application dated 6 June 2003 to set aside the statutory demand. The Bank has made no progress with the bankruptcy proceedings, as Patten J set aside, under CPR 13.3, the 2001 Judgment at the same time as he refused to strike out as an abuse the proceedings in which a default judgment had been obtained. The judge held that the interest included in the default judgment was incorrect, as it was more than six years interest contrary to s 24(2) . The Bank has not appealed against the setting aside of the 2001 Judgment. This appeal is only concerned with the judge's refusal to put an end to the proceedings altogether by striking them out as an abuse of process.
The 1995 Judgment
In order to explain the abuse of process point it is necessary to say more about the circumstances and history of the 1995 Judgment. On 27 October 1993 the Bank made a written demand under the guarantee. The Bank had already made a formal claim for payment from the company and had appointed receivers over it on 8 October 1993. No repayment was made.
On 11 April 1994 the Bank began proceedings (Ch 1994 G 2043) against Mr & Mrs Bennett under the guarantee dated 12 August 1991.The guarantee was up to a limit of...
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Ridgeway Motors (Isleworth) Ltd v ALTS Ltd
...by a judgment creditor upon a judgment in order to obtain a second judgment for the debt established by the first judgment. Bennett v. Bank of Scotland [2004] EWCA 988 is a recent example of the circumstances in which a judgment creditor may have, or thinks that he may have, a valid reason ......
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...ED & F Man (Sugar) Ltd v Yani Haryanto, CA (unreported, 17 July 1996 The Times Law Reports 491); Bennett v Bank of Scotland [2004] EWCA Civ 988. It would therefore appear that bringing a second action in this way was a matter of right, subject only to the court’s discretion to decline to gi......
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Tang Yong Kiat Rickie v Sinesinga Sdn Bhd (transferee to part of the assets of United Merchant Finance Bhd) and others
...BPIR 636; and there is or has been an abuse of the bankruptcy process by the creditor: see, for instance, Bank of Scotland v Bennett [2004] EWCA Civ 988. Even if one were to rely on section 123(1)(a) alone without reference to section 65(2)(e) of the Bankruptcy Act, precedence is still not ......