Ridgeway Motors (Isleworth) Ltd v ALTS Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mummery,Lord Justice Brooke,Lord Justice Scott Baker |
| Judgment Date | 10 February 2005 |
| Neutral Citation | [2005] EWCA Civ 92 |
| Docket Number | Case No: A2/2004/1207 |
| Court | Court of Appeal (Civil Division) |
| Date | 10 February 2005 |
[2005] EWCA Civ 92
Lord Justice Brooke
Vice-President of the Court of Appeal (Civil Division)
Lord Justice Mummery and
Lord Justice Scott Baker
Case No: A2/2004/1207
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
CHANCERY DIVISION
HIS HONOUR JUDGE RICH QC
Royal Courts of Justice
Strand, London, WC2A 2LL
MR JEREMY CALLMAN & MR CHRISTOPHER MANN (instructed by Messrs Owen White & Catlin) for the Appellant
MR ROGER BARTLETT (instructed by Messrs Kenneth Elliott & Rowe) for the Respondent
The Limitation Issue
Does the Limitation Act 1980 (the 1980 Act) have any impact on the right of a judgment creditor to present a winding up petition? HHJ Rich QC, sitting as a Deputy High Court judge, held that a judgment creditor of a company is not statute-barred from presenting a winding up petition after the expiration of 6 years from the date on which the judgment became enforceable. The company against whom the petition was presented challenges the ruling. It appeals to this court for an order striking out the petition.
Limitation periods are prescribed by statute, not by the common law. The 1980 Act is the current statute of limitations. It does not contain any provisions specifically setting time limits for the commencement of winding up (or bankruptcy) proceedings by a creditor. The company does not invoke the inherent jurisdiction to prevent an abuse of legal procedure. It relies solely on s 24 of the 1980 Act ("Time limit for actions to enforce judgments"), which provides:
"(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."
Section 38(1) ("Interpretation") defines an action, "unless the context otherwise requires", as including "any proceeding in a court of law including an ecclesiastical court."
Ridgeway Motors (Isleworth) (Ridgeway) Limited invoked s24(1) and s38(1) in its application to strike out a winding up petition presented against it by ALTS Limited on 3 February 2004. ALTS presented the petition in its capacity as assignee of a judgment for costs obtained by a Mr Martyn Charles against Ridgeway on 13 June 1996. A certificate was issued on 14 January 1998 to the effect that the costs had been duly taxed at £58,406.29. At that point the costs judgment became enforceable against Ridgeway. The judgment debt together with interest now stands at over £94,000. Ridgeway has not paid the judgment debt or any part of it.
Apart from the plea of limitation, Ridgeway has not supplied its creditor or the court with any reason for refusing to pay. Its attitude to the indisputable debt is that it was for the creditor to take the proper legal measures to enforce the judgment within the limitation period set by s24(1), rather than for Ridgeway to satisfy the judgment; and that it is now too late to seek to have the company wound up on the ground that it is deemed unable to pay its debts within s123 of the Insolvency Act 1986.
Ridgeway's limitation argument is short and simple: the winding up petition is a "proceeding in a court of law"; it is therefore an "action" within the meaning of the 1980 Act; the action is brought upon the costs judgment, which became enforceable more than six years before the date on which the winding up petition was presented; the petition is statute-barred under s24(1); it should be struck out.
HHJ Rich QC was unconvinced. On 21 May 2004 he dismissed Ridgeway's application to strike out the winding up petition. He stayed further action on the petition pending an appeal, for which he granted permission. At a late stage the Commissioners of Inland Revenue applied to intervene in the appeal as an interested party, contending that, as frequent petitioners in insolvency proceedings in relation to unpaid tax, including petitions based on judgments, they had a clear interest in the outcome of the appeal. They did not, however, contend that they were creditors of the company. This Court declined to make an order allowing them to intervene, but received written submissions from them and allowed the parties to make observations on the submissions at the hearing.
The judge held that he was bound by authority to hold that an "action upon any judgment" in s24(1) does not include insolvency proceedings brought by a judgment creditor. The six-year limitation period in s24(1) does not apply to bankruptcy or winding up proceedings based on judgment debts. The section only applies to the comparatively rare action brought 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 for seeking another judgment based on an existing judgment.
The Legal Position
The interpretation of "an action upon any judgment" within s24(1) involves consideration of three matters: (a) judicial interpretation of the provisions in the Limitation Act 1939 (the 1939 Act), in which s2(4) was in terms similar to s24(1) of the 1980 Act, save that it stipulated for a limitation period of 12 years, reduced to 6 years by the Limitation Amendment Act 1980, and in which s31 contained an extended definition of "action" similar to s38(1) of the 1980 Act; (b) the Report of the Law Reform Committee on Limitation of Actions(1977) (Cmnd 6923), which preceded the Limitation Amendment Act 1980 (schedule 1, paragraph 2 (d)) amending s2(4) of the 1939 Act by substituting 6 years for 12 years in accordance with the Committee's recommendation (paragraph 4.16 of its report); (c) the authorities on s24(1).
A. Interpretation of 1939 Act: the case of Lamb.
The expression "an action upon any judgment" in s 2(4) of the 1939 Act was interpreted by the Court of Appeal in WT Lamb & Sons v. Rider [1948] 2 KB 331 as applying only to suing for a judgment upon a judgment. It did not apply to execution of a judgment. The Court of Appeal rejected the contention that the provision in the Rules of the Supreme Court (O 42 r23(a)), which required a judgment creditor, after the elapse of 6 years from the date of the judgment, to obtain the leave of the court to levy execution, was rendered invalid by s2(4) of the 1939 Act, which allowed 12 years for bringing an action upon any judgment as of right.
In that case the judge had rescinded the master's order giving leave to the judgment creditor to proceed to levy execution notwithstanding that six years had elapsed since the date of the judgment. On appeal the judgment creditor challenged the validity of the rule of court dating from 1883 requiring leave to proceed to levy execution. It was contended that the rule was in conflict with s2(4). It subjected the right of execution, if not exercised within 6 years, to the discretion of the court. The judgment creditor argued that it was entitled by statute to bring an action upon the judgment and to issue execution, which was "a proceeding in a court of law" and therefore an "action upon a judgment." Such an action could be brought, without obtaining the leave of the court, within 12 years from the date on which the judgment became enforceable.
The reserved judgment of the Court of Appeal read by Scott LJ concluded (on p338) that the 12 year limitation period set in the 1939 Act (and the periods set in the earlier Acts) dealt only with the "substantive right to sue for and obtain a judgment, and with that alone;" the period did not apply to the "procedural machinery for enforcing a judgment when obtained." The broad definition of "action " in the 1939 Act did not have the effect of merging what had formerly been the two "quite independent and distinct" subjects of (a) the substantive right to sue for and obtain a judgment and (b) the procedural machinery for enforcing a judgment when obtained (see p338). It did not cover an application to the court for leave to levy execution on the judgment after the expiration of 6 years.
As has been frequently done in other cases of difficult points arising on the Limitation Acts, the court adopted an historical approach. It surveyed briefly the legislative history of s2(4). It started with the execution of judgments at common law and the treatment of actions on a judgment in the Real Property Limitation Act 1833, which rendered an action on a judgment statute barred after 20 years. The Common Law Procedure Act 1852 reformed the common law on the execution of judgments by introducing a statutory leave procedure for executing a judgment. In doing so it relaxed the common law practice for executing a judgment in cases where more than a year and a day had elapsed since judgment without execution and without scire facias. (The writ of scire facias, which was not finally abolished until 1947, was based on a judgment. It was used in earlier times in a number of different ways: as an original action, as a continuation of an earlier action and as a means of execution. It directed the sheriff to warn the person against whom it was directed to show cause why the person bringing it should not have the benefit of the judgment). The Court then considered the Real Property Limitation Act 1874, which reduced the limitation period for actions on a judgment from 20 years to the period of 12 years preserved in the 1939 Act.
In the light of the conclusions reached by the court on its historical survey Lamb is authority for the proposition that the limitation period set by...
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