Securum Finance Ltd v Ashton and another

JurisdictionEngland & Wales
Judgment Date21 June 2000
Judgment citation (vLex)[2000] EWCA Civ J0621-2
CourtCourt of Appeal (Civil Division)
Docket NumberCase No: 99/0878/3
Date21 June 2000
Ashton & Another
Securum Finance Ltd

[2000] EWCA Civ J0621-2


Lord Justice Chadwick and

Mr Justice Rattee

Case No: 99/0878/3





Royal Courts of Justice


London, WC2A 2LL

Mr James Guthrie QC and Mr P Knox (instructed by Messrs Coldham Shield & Mace for the Appellants)

Mr Anthony Mann QC and Mr A de Garr Robinson (instructed by Messrs Sheridans for the Respondents)

lord justice chadwick:


This is an appeal in proceedings brought by Securum Finance Limited against Mr Peter Ashton and his wife, Mrs Pauline Ashton, in relation to monies advanced more than ten years ago by Arbuthnot Latham Bank Limited to Trafalgar Holdings Limited, a company incorporated in the Turks and Caicos Islands. The appeal is against so much of an order made on 10 June 1999 by Mr Ian Hunter QC, sitting as a deputy judge of the High Court in the Chancery Division, as dismissed an application by Mr and Mrs Ashton that the proceedings be struck on the grounds that they are an abuse of the process of the court. The present proceedings can fairly be regarded as the sequel to the decision of this Court (Lord Woolf, Master of the Rolls, Lord Justice Waller and Lord Justice Robert Walker) on 16 December 1997 in Arbuthnot Latham Bank Ltd and others v Trafalgar Holdings Ltd and others [1998] 1 WLR 1426.

The claims in the present action


On 28 January 1987 Mr and Mrs Ashton signed a guarantee of the obligations of Trafalgar Holdings Limited to Arbuthnot Latham Bank Limited. In August 1989 the bank commenced proceedings against them to enforce their obligations under that guarantee. It was those proceedings which were struck out by this Court in December 1997. The present proceedings were commenced in September 1998. These proceedings are brought to enforce the rights of the bank under a legal charge dated 7 March 1989 given by Mr and Mrs Ashton to secure their obligations under the guarantee. The property charged – a dwelling house known as "St Just", at Buckhurst Hill in Essex – was and is the Ashtons' home. The claimant, Securum Finance Limited is the successor in title to the rights of the bank under the guarantee and the legal charge. In the present proceedings the claimant seeks payment under the covenant in the legal charge; and, further, seeks to enforce the security by orders for possession and sale of the mortgaged property.


The legal charge is dated 7 March 1989. It is made between Mr and Mrs Ashton (together described as "the Mortgagor") and Arbuthnot Latham Bank Limited ("the Bank"). Clause 1 contains both an all monies covenant and the charge to secure performance of that covenant. It is in these terms:

"The Mortgagor covenants to discharge on demand the Mortgagor's Obligations together with interest to the date of discharge and Expenses and as a continuing security for such discharge and as beneficial owner charges the Property to the Bank (to the full extent of the Mortgagor's interest in the Property or its proceeds of sale) by way of legal mortgage of all legal interests and otherwise by way of specific equitable charge"

In that context "the Property" means the property known as "St Just", Buckhurst Hill; "Expenses" means all expenses (on a full indemnity basis) incurred by the Bank or any receiver at any time in connection with the Property or the Mortgagor's Obligations or in enforcing any power under the mortgage (with interest thereon from the date on which they are incurred); and "the Mortgagor's Obligations" means:

"All the Mortgagor's liabilities to the Bank of any kind (whether present or future actual or contingent and whether incurred alone or jointly with another) including banking charges and commission"


Securum Finance Limited claims as successor in title to Arbuthnot Latham Bank Limited under (i) an assignment dated 2 May 1991 and made between the bank and Nordbanken London Branch, and (ii) an assignment dated 21 December 1992 and made between Nordbanken London Branch and Securum Finance Limited. For convenience (save where the context requires a distinction to be made) I will refer to Arbuthnot Latham Bank Limited and its assignees as "the Bank".


It is common ground that, in the context of the Mortgagor's Obligations in the legal charge, the only relevant liabilities (if any) that Mr and Mrs Ashton have, or have had, to the Bank are their liabilities as guarantors under the guarantee dated 28 January 1987. Clause 1 of the guarantee is in these terms, so far as material:

"In consideration of the Bank at the request of the Guarantor granting or continuing to make available banking facilities or other accommodation for so long as it may think fit to … the Customer, the Guarantor hereby guarantees on demand to pay to the Bank all monies and to discharge all obligations and liabilities whether actual or contingent now or at any time hereafter due owing or incurred to the Bank by the Customer … in any manner whatsoever …"

In that context "the Guarantor" means Mr Ashton and Mrs Ashton, and "the Customer" means Trafalgar Holdings Limited.


The Bank made demand on Mr and Mrs Ashton under the guarantee, in the sum of £737,928.40, by letters dated on 31 July 1989. It made a further demand under the guarantee, in the sum of £1,527,205.23, by letters dated 15 January 1998. The difference between the two sums represents accrued interest. The letters dated 15 January 1998 included a demand under clause 1 of the charge; but to meet any argument that a separate demand under the charge was required after a demand had been made under the guarantee, a separate demand under the legal charge was made by letters dated 16 January 1998.


In my view the Bank is plainly correct to assert, as it does, that its cause of action in the present proceedings is distinct from the cause of action which it was pursuing in the earlier proceedings. The elements which comprised the cause of action in the earlier proceedings may be summarised as (i) the debt owed by Trafalgar Holdings Limited to the Bank, (ii) the agreement to guarantee that debt, contained in clause 1 of the guarantee, and (iii) the demand made under the guarantee by letter dated 31 July 1989. The elements which comprise the cause of action in the present proceedings may be summarised as (i) the debt owed by Trafalgar Holdings Limited to the Bank, (ii) the agreement to guarantee that debt, contained in clause 1 of the guarantee, (iii) the demand made under the guarantee by letter dated 31 July 1989, alternatively by letter dated 15 January 1998, (iv) the covenant, contained in clause 1 of the legal charge, to discharge the obligations under the guarantee, and (v) the demand made under the covenant by letter dated 15 January 1998, alternatively by letter dated 16 January 1998. But it is important to appreciate that, although it is true to say that the cause of action in the present proceedings is not the same as that upon which the earlier proceedings were based, there are two common elements – (i) the debt owed by Trafalgar Holdings Limited to the Bank and (ii) the agreement to guarantee that debt, contained in clause 1 of the guarantee. In order to succeed in the earlier proceedings the Bank had to establish those two elements; the same is true in the present proceedings.


Each of those elements is in issue in the present proceedings – see paragraphs 12 and 13 of the amended defence and counterclaim. That was the position, also, in the earlier proceedings – see paragraph 4 of the amended defence and counterclaim:

The Defendants by their defence in the first proceedings served on 21st December 1989:

(1) Denied that Trafalgar owed any sum at all to Arbuthnot;

(2) Denied in any event the Guarantee was enforceable at all against them by virtue of various contractual warranties; and, also, in the case of the Second Defendant, by virtue of undue influence exercised over her by Arbuthnot.

The Ashton's counterclaim


By counterclaim in the present proceedings, as originally served, Mr and Mrs Ashton sought redemption of the legal charge. By amendment to their counterclaim, they seek an declaration that they are entitled to have their property discharged from the legal charge; and an order that the legal charge be delivered up for cancellation. The basis upon which that claim to relief is founded is that there is no Mortgagor's Obligation capable of being the subject of the covenant in clause 1 of the legal charge and so no obligation capable of being secured by the charge over the property. To put the point another way, if either (i) there was no debt owed by Trafalgar Holdings Limited to the Bank or (ii) the guarantee was unenforceable, there is nothing for which the legal charge can stand security and the Ashtons, as owners of the property, are entitled to have it discharged.

The Limitation Act 1980


The present action was commenced on 29 September 1998, some three years or more after the expiry of the six year limitation period applicable to a claim based on a simple contract debt under the guarantee. A claim to payment under the guarantee in the present action would be met by an insuperable defence of limitation. But a claim to payment under the covenant in the legal charge is made in an action upon a specialty to which the twelve year limitation period, prescribed by section 8(1) of the Limitation Act 1980, applies. Further, it is a claim brought in an action to recover money secured by a mortgage or charge, to which, also, a twelve year period of limitation applies – see section 20(1) of that Act. It is now common ground – at least for the purposes of...

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