Limitation of Actions Part IV [2001] EWLC 270(4) (09 July 2001)

BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just Â£1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!

[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]

The Law Commission

You are here: BAILII >> Databases >> The Law Commission >> Limitation of Actions Part IV [2001] EWLC 270(4) (09 July 2001)
URL: http://www.bailii.org/ew/other/EWLC/2001/270(4).html
Cite as: [2001] EWLC 270(4)

[New search] [Help]

PART IV

REFORM II: APPLICATION OF THE CORE REGIME

1. Introduction

As we have explained above, we envisage the core regime applying to the vast majority of claims in contract and tort, including claims for breach of a simple contract, claims for negligence resulting in personal injury, property damage or economic loss; or claims for other torts such as nuisance, breach of statutory duty or trespass to the person. We discuss in this part whether the core regime should be applied to claims in respect of other causes of action which fall under the Limitation Act 1980 (most of which have been accorded some form of special treatment under the current law and/or are regarded as problematic in some way). These claims are:

(1) claims to recover loans repayable on demand;

(2) claims on a specialty;

(3) claims under the Law Reform (Miscellaneous Provisions) Act 1934;

(4) claims under the Fatal Accidents Act 1976;

(5) claims by victims of child sexual abuse;

(6) claims under the Consumer Protection Act 1987;

(7) claims for defamation or malicious falsehood;

(8) claims for conversion;

(9) claims by a subsequent owner of damaged property;

(10) claims for restitution;

(11) claims for a contribution or an indemnity;

(12) claims for breach of trust and related claims;

(13) claims to recover land and related claims;

(14) claims in relation to mortgages and charges;

(15) claims on a judgment or on an arbitration award;

(16) claims on a statute; and

(17) claims against public authorities.

4.2

We also discuss in this Part:

(1) how the core regime should apply to claims under the Companies Act 1985;

(2) how the core regime should apply where one of the parties is subject to insolvency proceedings;

(3) whether the core regime should apply to equitable, as well as common law, remedies;

(4) the interrelationship between the core regime and the numerous specific limitation periods laid down in various statutes outside the Limitation Act 1980; and

(5) whether there should be a 'sweeping-up' or 'default' provision.

4.3

We should stress at the outset that nearly all our provisional proposals regarding the application of the core regime received strong support from consultees.

^[1]

2. Claims to recover loans repayable on demand

Under the common law, if there is no provision in a contract of loan specifying a date for repayment, the debt accrues due and is payable immediately the money is lent, whether or not the parties intended the loan to be repayable immediately.

^[2]

(1) does not provide for repayment of the debt on a fixed or determinable date and

(2) does not effectively make the obligation to repay conditional on a demand for repayment made by or on behalf of the creditor (or conditional on any other matter).

But section 6 does not apply where the debtor enters into a collateral obligation to pay the amount of the debt or any part of it on a fixed or determinable date or conditional on a demand for repayment (or other condition).

We noted in the Consultation Paper that we do not wish to undermine the policy behind section 6.

^[3]

We therefore recommend that the cause of action in relation to a claim for repayment of a 'qualifying loan' should not accrue until a written demand for repayment has been made. "Qualifying loan" for the purposes of this recommendation will have the same meaning as in section 6 of the Limitation Act 1980. (Draft Bill, Cl 32).

3. Claims on a Specialty

4.7

Under section 8 of the 1980 Act, claims on a specialty have a limitation period of twelve years. This applies to a contract executed as a deed. It also applies to claims on a statute (though its importance here has been considerably diminished by section 9 of the 1980 Act, which provides that the limitation period applicable to a claim to recover a sum recoverable by virtue of any enactment is six years).

4.8

We provisionally proposed in the Consultation Paper that specialties should be subject to the core regime.

^[4]

^[5]

^[6]

We recommend that specialties should be subject to the core regime.

4. Claims under the Law Reform (Miscellaneous Provisions) Act 1934

4.10

In the Consultation Paper we provisionally proposed that claims under the Law Reform (Miscellaneous Provisions) Act 1934 should be subject to the core regime, with a minor modification: namely that the limitation period should start on the later of either the date on which the cause of action is discoverable by the personal representative (who will be the claimant) or the date of death of the deceased.

^[7]

^[8]

These proposals attracted the support of a majority of consultees (over eighty per cent of those responding on this issue expressed complete agreement with our provisional views). It was however suggested by two consultees

^[9]

Starting the primary limitation period from the date of knowledge of the personal representative does allow the personal representative a longer limitation period than would have been available to the deceased. However, this seems justified, given the disruption which inevitably follows a death; and it would also reduce the risk that the limitation period may run against the estate when no one has the authority to bring proceedings on its behalf.

^[10]

^[11]

In addition, we have recommended that the court should have a discretion to disapply the limitation period in personal injury claims.

^[12]

Under the core regime, the long-stop limitation period will run from the date of the act or omission of the defendant giving rise to the cause of action. As we noted in the Consultation Paper,

^[13]

^[14]

^[15]

We recommend that claims under the Law Reform (Miscellaneous Provisions) Act 1934 should be subject to the core regime, save that (as under the present law in relation to the survival of personal injury claims) the primary limitation period should start from the later of the date the cause of action was discoverable by the claimant (that is, the personal representative) or the date of death of the deceased. (Draft Bill, Cl 10). As regards the survival of personal injury claims, where, as we have seen, we recommend no long-stop limitation period and a judicial discretion to disapply the primary limitation period, the court in exercising that discretion shall take into account the deceased's delay as well as that of the personal representative. (Draft Bill, Cl 12(4), (8)(b)).

5. Claims under the Fatal Accidents Act 1976

4.16

Under the Fatal Accidents Act 1976 a cause of action accrues for the benefit of the dependants of the deceased where the death was caused by conduct which would have given the deceased a right of action had he or she survived. The cause of action accrues only on the date of death, and is separate from any cause of action in respect of which the deceased might have brought a claim (and which survives for the benefit of the estate under the Law Reform (Miscellaneous Provisions) Act 1934). However, a claim under the 1976 Act may not be brought if a claim by the deceased would have been time-barred at the date of death. For limitation purposes the current law views a claim under the 1976 Act as being analogous to a personal injuries claim. It is subject to a limitation period of three years running from the later of the date of death or the date of knowledge of the dependants for whose benefit the claim is brought, and the limitation period may be disapplied at the discretion of the court under section 33 of the Limitation Act 1980.

4.17

We provisionally proposed that claims under the Fatal Accidents Act 1976 should be subject to the core regime, save that the date of knowledge should refer to the knowledge of the dependant for whom the claim is brought.

How our recommendations will operate in practice can be illustrated by reference to the following example: a man dies in January 2000, leaving a widow and three dependent children, aged 3, 6 and 12. A claim may be brought on behalf of the widow until January 2003 (assuming that the widow is aware of the cause of her husband's death when it occurs). Although a claim could be brought on behalf of the youngest child until 29 July 2017 (three years after the child reaches the age of 18 on 30 July 2014), this does not extend the limitation periods for claims on behalf of the older children (which expire in 2014, and 2008 respectively) or the widow. Indeed, since only one set of proceedings may be brought under the Fatal Accidents Act 1976,

^[21]

The remaining issue is whether a claim under the Fatal Accidents Act 1976 should continue to be treated analogously to a personal injury claim. If it is so regarded, it will not be subject to a long-stop limitation period,

^[22]

We have argued above

^[23]

We recommend that claims under the Fatal Accidents Act 1976 should be treated as analogous to personal injury claims under our core regime (so that proceedings in respect of such claims should not be subject to a long-stop limitation period and there should be a judicial discretion

^[24] to disapply the primary limitation period) save that the date of knowledge should refer to the knowledge of the dependants for whom the claim is brought.

6. Claims by Victims of Child Sexual Abuse

(1) Should any limitation period apply?

Claims by victims of child sexual abuse pose particular problems for any limitations regime. The acts giving rise to the cause of action will, by their nature, occur when the claimant is a child. Depending on the nature of the abuse, the claimant may suffer immediate physical injury. However the abuse may also cause extensive, and prolonged, psychiatric problems. This later injury may only manifest itself - or at least be recognised as such by the victim - several years after the abuse. This creates problems similar to those of latent disease.

4.24

The problem is compounded under the current law because of the anomalous distinction made between claims in respect of injuries which are deliberately inflicted, which are subject to a six year limitation period running from the date the injury was inflicted, and claims in respect of negligently inflicted injuries, which are subject to a limitation period of three years from the date on which the claimant knows the relevant facts.

^[25]

^[26]

There has been a developing awareness in recent years of the range of problems caused by child abuse and its psychological effects on victims, and it is possible that the rules on limitation of actions applying in Member States of the Council of Europe may have to be amended to make special provision for this group of claimants in the near future.^[27]

We considered in the Consultation Paper whether sexual abuse claims are so unique that they should not be subject to any limitation period.

However, two consultees

^[31]

^[32]

Where 'dissociative amnesia' (or a similar mental condition) is responsible for the claimant's inability to bring a claim within the limitation period, the claimant will be afforded some protection by our recommendations in respect of 'lack of capacity'.

^[33]

^[34]

(2) Do any further modifications need to be made to the core regime?

A majority of consultees (over sixty-five per cent of those replying to this question) agreed with our provisional proposal that the core regime should be applied to claims by sexual abuse victims. However, a number of consultees disagreed, arguing that the long-stop provisionally proposed for personal injury claims should not apply,

^[35]

^[36]

As we have explained above, we have decided to depart from our provisional proposals to apply a long-stop to personal injury claims, and to remove a discretion for personal injury claims.

^[37]

We do have some concerns that claims may be brought many years after the events on which the claimant's cause of action is based, at a time when it is difficult for a fair trial to be given to the claimant's allegations.

^[38]

^[39]

We recommend that claims by child abuse victims should be subject to the core regime as modified in relation to other personal injury claims.

4.33

It is worth emphasising that one beneficial effect of this recommendation is that the same limitation regime will apply whether the sexual abuse claim is based on a deliberate tort (trespass to the person) or on the tort of negligence. The anomaly created by Stubbings v Webb

^[40]

7. Claims under the Consumer Protection Act 1987

Under the current law there is a separate limitations regime for claims under the Consumer Protection Act 1987, encapsulated in sections 11A and 14(1A) of the Limitation Act 1980.

^[41]

^[42]

The Consumer Protection Act 1987 (and the associated provisions on limitation of claims contained in the Limitation Act 1980) implement the provisions of the Product Liability Directive.

^[43]

Member States shall provide in their legislation that a limitation period of three years shall apply to proceedings for the recovery of damages as provided for in this Directive. The limitation period shall begin to run from the day on which the plaintiff becomes aware, or should reasonably have become aware, of the damage, the defect and the identity of the producer (Article 10(1)).

The laws of Member States regulating suspension or interruption of the limitation period shall not be affected by this Directive (Article 10(2)).

Member States shall provide in their legislation that the rights conferred upon the injured person pursuant to this Directive shall be extinguished upon the expiry of a period of ten years from the date on which the producer put into circulation the actual product which caused the damage, unless the injured person has in the meantime instituted proceedings against the producer (Article 11).

This limitations regime cannot be altered by unilateral legislation by the United Kingdom. Its provisions are very similar to the main elements we propose as part of the core regime. The major difference is that, under the Product Liability Directive, there is a long-stop limitation period which applies to all claims, including claims in respect of personal injury claims, the expiry of which extinguishes the claimant's rights. The core regime will therefore require some modification in its application to claims under the Consumer Protection Act 1987 to ensure that there is no breach of the provisions of the Product Liability Directive. Further, for the avoidance of doubt, we consider that a new limitations statute should also specify the starting point for the long-stop limitation period for a claim under the Consumer Protection Act 1987. With these modifications, we consider that the application of the core regime to claims under the 1987 Act will be compatible with the Product Liability Directive.

4.37

We recommend that the core regime should apply to claims under the Consumer Protection Act 1987, subject to the following modifications:

(1) The starting date for the long-stop limitation period will be the date on which the defective product is supplied by the producer of the product, or by the person who imported the product into a Member State of the European Union. (Draft Bill, Cl 8(1), (2)).

(2) The long-stop limitation period will apply to all claims under the Consumer Protection Act 1987, including personal injury claims. (Draft Bill, Cl 8(2), (4)).

(3) The expiry of the long-stop limitation period will extinguish the claimant's right of action. (Draft Bill, Cl 8(3)).

(4) The court's discretion to disapply the limitation period in respect of personal injury claims will only apply to the primary limitation period. (Draft Bill, Cl 8(4)).

(5) The parties may agree to extend the primary limitation period applicable to a claim under the Consumer Protection Act 1987. Otherwise, the starting date of the initial and long-stop limitation period and the length of those periods so far as they apply to a claim under that Act may not be changed by agreement between the parties. (Draft Bill, Cl 31(2)).

8. Defamation and Malicious Falsehood

4.38

We provisionally proposed in the Consultation Paper that claims for defamation and malicious falsehood should be subject to the core regime. This would overturn the changes made by the Defamation Act 1996.

^[44]

^[45]

^[46]

Consultees have been almost equally divided on the issue, with just over fifty per cent of those responding on this issue expressing the view that the core regime should apply, and around forty-five per cent saying that the limitation regime provided in the Defamation Act 1996 should be retained. In support of our provisional recommendation, it has been suggested to us by claimants' representatives that the one year limitation period applying under the current law does not provide the claimant with sufficient time to prepare his or her case, and in particular to carry out all the factual investigations necessary to serve a fully detailed statement of claim.

4.40

The main sets of arguments put against our provisional recommendations were twofold: first, in relation to evidence, and secondly, in relation to free speech.

4.41

As regards evidence, the defence of justification plays a unique role in claims for defamation. The defendant bears the burden of proof that the publication is justified. The claimant does not have to prove that it is untrue. In consequence, it was argued by some consultees that the prejudice to the defendant when proceedings are commenced after a long period of time is much greater than for other causes of action, when the claimant has to prove his or her case to recover damages against the defendant.

4.42

It was argued that this factor is exacerbated by the fact that records are kept by potential defamation defendants for far shorter periods of time than might be expected in other cases,

^[47]

In defamation actions, much of the evidence depends upon personal impression rather than factual assertion. Inevitably, impressions fade and distort over time. As a practical matter ... the evidence becomes much more difficult to assemble if the action is delayed.

It was further argued that an additional complication is created by the possibility of claims based on 'fleeting publication upon the internet'.

^[48]

^[49]

Turning to the arguments on free speech, it was suggested by The Newspaper Society and the BBC that claimants often deliberately wait until the last possible moment to bring proceedings, to ensure that the defendant is placed at the maximum possible disadvantage. This is said to be particularly the case where the proceedings are being funded by trade unions and professional associations. It has been suggested that defamation claims are used to discourage coverage of particular issues. In our view, however, any chilling effect of libel claims is a consequence of the general law on defamation rather than specifically due to the limitation period applied to defamation claims.

4.45

We conclude that, though there is some resistance to any amendment of the limitation regime introduced by the Defamation Act 1996, the one year limitation period which is at the heart of that regime would not be acceptable or fair to claimants in the absence of any discretion for the court to disapply the limitation period. We are informed by solicitors with experience of acting for the claimant in defamation claims that the one year period does not give claimants sufficient time to prepare a claim properly. Moreover, there are additional reasons to reverse the one year limitation period adopted under the Defamation Act 1996. As we noted in the Consultation Paper, the limitation period applicable to claims for defamation in Scotland is three years from the date of knowledge.

^[50]

^[51]

Therefore, we recommend that claims for defamation and for malicious falsehood should be subject to the core regime.

9. Claims for Conversion

(1) Introduction

4.47

The limitation period prescribed generally for claims for conversion is six years from accrual of the cause of action. However, this rule is modified for successive conversions and conversions constituting, or relating to, theft. In the case of successive conversions, the limitation period does not restart on each conversion, but rather runs from the date of the first conversion only. And in the case of conversions constituting theft or relating to theft (that is following the theft), no limitation period applies until the stolen property passes into the hands of a purchaser acting in good faith.

^[52]

In the Consultation Paper we provisionally proposed that the core regime should apply to all claims for conversion, subject to the following modifications:

^[53]

(1) The definition of the date of knowledge applying to claims to recover converted property (and possibly for all claims for conversion) should require knowledge of the location of the property in addition to the other three elements (knowledge of the facts establishing the cause of action, the identity of the defendant and the significance of the claim) to start time running.

(2) In respect of claims for conversions which are not thefts or related to thefts, the long-stop limitation period should run from the date of the first conversion only.

(3) Where goods have been stolen the long-stop limitation period should not apply to claims for conversion brought against anyone other than bona fide purchasers of the goods and, where there has been more than one such purchase, the long-stop limitation period should commence on the date of the first purchase.

We also made provisional recommendations on the effect of the expiry of the limitation period.^[54]

(2) The Core Regime and Conversions unrelated to Theft

(a) The definition of the date of knowledge

We provisionally proposed that the definition of 'discoverability' should be modified for all claims for conversion to include knowledge of the location of the property in question.

^[55]

Over sixty-five per cent of consultees responding on this issue agreed with our provisional proposal that the date of knowledge should include knowledge of the location of the converted goods. However, several consultees put forward strong arguments against the proposal. First, it was suggested that, provided that the claimant can identify the defendant, knowledge of the location of the converted chattels is unnecessary to enable the claimant to commence proceedings against the defendant. Secondly, as noted in the Consultation Paper,

^[56]

In the light of these objections, we have reconsidered our proposal to modify the definition of the date of knowledge for all claims in conversion. Where the conversion is not related to theft, therefore, the claimant will not have to know of the location of his or her property to start the primary limitation period running.

^[57]

(b) The long-stop limitation period

We also provisionally proposed in the Consultation Paper that, where there had been successive conversions, the ten year long-stop limitation period should run from the date of the first conversion only.

^[58]

^[59]

Consultees overwhelmingly supported our provisional proposal that the long-stop limitation period should commence from the date of the first conversion only. Over ninety per cent of those responding on this issue agreed. We therefore confirm it as a final recommendation.

(3) The Core Regime and Conversions Constituting or Related to Theft

(a) Should the primary limitation period apply?

4.54

We argued in the Consultation Paper that there is no need to make specific provision for theft-related conversions, on the grounds that the claimant is adequately protected both by the date of knowledge starting point (in the case of the primary limitation period) and by the provisions on dishonest concealment (as far as the long-stop limitation period is concerned).

^[60]

The minority argued that the law should ensure that the thief could never benefit from his or her crime. The British Museum in particular stressed that while it may be acceptable to bar a claim by the victim of theft where he or she actually knows all the relevant facts, it is unacceptable to bar the claim where the victim merely ought to have known the relevant facts. The Museum suggested that to do so is to favour the thief over the victim, and where the victim's fault may only be indolence - as opposed to the active dishonesty of the thief - the result arguably looks wrong. A number of other consultees also felt that no limitation period should apply in the case of theft.

^[61]

Since the publication of the Consultation Paper, Mr Justice Moses has held, in City of Gotha v Sotheby's (No 2),

^[62]

^[63]

To permit a party which admits it has not acted in good faith to retain the advantage of lapse of time during which the plaintiffs had no knowledge of the whereabouts of the painting and no possibility of recovering it, is, in my judgment, contrary to the public policy which finds statutory expression in section 4.^[64]

We agree with Moses J that it would be wrong to allow a limitation period to extinguish the claimant's right to his or her stolen property in favour of the thief, if the claimant has had no opportunity to bring a claim against the thief. However, we believe that the interests of the claimant will be sufficiently protected by the operation of the primary limitation period proposed under the core regime. In contrast to the current limitation regime, where the limitation period runs from the date of the accrual of the cause of action, the primary limitation period of the core regime starts from the date of knowledge. This is designed to ensure that the limitation period does not start to run until the claimant has had an opportunity to discover the relevant facts. And we propose to modify the date of knowledge so that the primary limitation period does not start until the claimant knows (or should know) of the location of the property. Where goods have been stolen, we think that the arguments against this modification have less force, and it is necessary to provide the claimant with additional protection.

4.58

It has, however, been suggested by the British Museum that the burden of demonstrating that reasonable steps have been taken to discover the relevant facts will be difficult for the claimant to discharge. Is it sufficient for the victim to have reported the theft to the police, and left them to take any further action? Must the victim also take action on his or her own behalf, by, for example, advertising the loss of valuable property in trade magazines?

4.59

We believe, however, that this puts no greater burden on the claimant than would be the case for any other cause of action for which the claimant is required to show that he or she had no constructive knowledge of the relevant facts. In each case, the claimant will be expected to act reasonably in relation to his or her potential cause of action. What the court regards as reasonable behaviour will be influenced by the fact that there has been a theft, and that there may be very little the claimant can do in practice to obtain the necessary information. The nature of the enquiries the owner can reasonably be expected to make will depend on the nature (and the value) of the property which has been stolen.

^[65]

^[66]

^[67]

(b) Theft and the long-stop limitation period

^[68]

In the Consultation Paper we suggested that there was no need to modify the core regime, since the desired result could be achieved by reliance on our provisions for deliberate (or dishonest) concealment.

^[69]

^[70]

(4) The Effect of the Expiry of the Limitation Period

Under the present law, as an exception to the general rule that the expiry of the limitation period merely bars the claimant's remedy, once the limitation period for a claim for conversion has expired, the claimant's title to the property is extinguished.

^[71]

^[72]

(1) the limitation period (whether the primary limitation period or the long-stop limitation period) has expired in relation to the claimant's claim in conversion against a defendant; and

(2) at the time when that limitation period expired the goods remained in the possession of that defendant.

These provisional proposals were approved by over sixty-five per cent of consultees responding on this issue. Those consultees who disagreed felt that there should be no possibility of the thief or the mala fide purchaser ever benefiting from the expiry of the limitation period. The Council of Her Majesty's Circuit Judges argued that either a claimant whose goods had been stolen should never lose title to the goods (even where they are in the possession of a bona fide purchaser), or that title should only be extinguished after a period of at least thirty years.

4.64

The introduction of an exemption in relation to theft on the terms recommended above (paragraph 4.61) for the long-stop limitation period will go some way to meet the concerns of these consultees. However, we believe that a bona fide purchaser should be able to benefit from the expiry of a limitation period. Notwithstanding the comments of the Council of Her Majesty's Circuit Judges, it seems right to afford the bona fide purchaser some protection. The Council expressed particular concern about the trade in stolen antiquities and works of art. Here it is possible for the owner of stolen goods to seek to protect his or her position by registering the loss. It may well be difficult for a buyer who has not carried out searches in, for example, the Arts Loss Register, to demonstrate bona fides.

4.65

We remain of our provisional view that where goods have been converted the claimant's title should become extinguished when, because of limitation, he or she can no longer bring a claim against any defendant. However, we have reconsidered whether the modification to the general principle proposed in the Consultation Paper is necessary. We now think that, under the core regime, as under the present law, there should be one date on which all claims by the claimant (present or future) will be time-barred: the expiry of the long-stop limitation period. Our provisional proposals meant that the claimant would have lost the right to sue a second converter before the expiry of the long-stop limitation period (or the primary limitation period relevant to the claim against that defendant), because his or her title to the property would have been extinguished by the expiry of the primary limitation period governing a claim against the first converter. This seems wrong.

^[73]

The consequence of this recommendation, together with our recommendation that the long-stop limitation period should not apply to claims against a thief, means that a thief, or a male fide purchaser from a thief, will never be able to gain title to stolen goods as a result of the expiry of the limitation period. A bona fide purchaser of such goods and any subsequent purchaser could gain title to them following the expiry of the long-stop limitation period. This seems to be the correct approach. Given that any claim by the original owner for the return of the goods (or for compensation for their loss) would be time-barred after the expiry of the long-stop limitation period, it would be anomalous to regard him (or her) as being the true owner after that time.

4.67

In summary, we therefore recommend that:

(1) All claims for conversion should be subject to the primary limitation period of the core regime. For claims which are related to theft, that period will not start to run until the claimant knows, or ought to know, not only the facts giving rise to the cause of action, but also the whereabouts of the stolen property. (Draft Bill, Cl 14(2), (5)).

(2) In respect of claims for conversion which are not thefts or related to a theft, the long-stop limitation period should run from the date of the first conversion only. (Draft Bill, Cl 14(1)).

(3) In respect of claims for conversion which constitute thefts or are subsequent to a theft, the long-stop limitation period should not commence until the date on which the goods are purchased by a person acting in good faith. It will run from that date in favour of the good faith purchaser and anyone claiming through him. (Draft Bill, Cl 14(3), (5)).

(4) The claimant's title to goods which have been converted shall be extinguished on the expiry of the long-stop limitation period. (Draft Bill, Cl 14(4)).

10. Claims by a Subsequent Owner of Damaged Property

4.68

Property may change hands after a cause of action has accrued to the person owning the property at the time of the damage. We noted in the Consultation Paper that this raises two issues: first, whether the subsequent owner has a cause of action against the person responsible for the damage; and, secondly, whether the limitation period for a claim in respect of that cause of action starts running against the subsequent owner when the previous owner has or ought to have the necessary knowledge, or not until the subsequent owner has acquired an interest in the property.

^[74]

Under section 3 of the Latent Damage Act 1986, a fresh cause of action is treated as accruing to the subsequent owner on the date he or she acquires the property, if that precedes the date when the material facts became known, or ought to have become known, to a person with an interest in the property.

^[75]

We provisionally proposed in the Consultation Paper that (a) (contrary to the present law) a fresh cause of action should accrue to a subsequent owner of damaged property even where the previous owner had knowledge of the material facts; and (b) the core regime should apply subject to the minor modification that the primary limitation period should start on the date when the claimant acquires an interest in the property, where this is later than the date of knowledge.

^[76]

However, one issue caused particular concern to those consultees who disagreed. It was suggested that there is no justification for placing the purchaser of damaged property in a better position than the person who owned the property at the time when the cause of action accrued. More particularly, it was pointed out

^[77]

This is a serious problem. We have therefore looked again at the approach adopted under section 3 of the Latent Damage Act 1986. This limits the circumstances in which a new cause of action accrues to the subsequent owner to those cases where the previous owner has no knowledge (whether actual or constructive) of the defect in the property, or in other words, where the damage to the property remains wholly latent until it is discovered by the subsequent owner. This solution suffers from the weakness identified in the Consultation Paper, namely that it makes the cause of action of the subsequent owner dependent on the state of knowledge of the previous owner.

^[78]

However, the circumstances in which a cause of action accrues in negligence are part of the substantive law of tort, which does not (apart from section 3 of the Latent Damage Act 1986) afford a cause of action to the subsequent owner of defective property.

^[79]

^[80]

The claim by the subsequent owner will however still be subject to the core regime. The primary limitation period will run from the date on which the subsequent owner has (or ought to have) knowledge of the facts giving rise to the cause of action. The subsequent owner will have a cause of action in tort which does not accrue until he has suffered damage. The starting date, therefore, will be the date of the act or omission which gave rise to his claim, which (depending on the facts of the case), is likely to be the date on which the defective work was done to the property.

4.75

We therefore recommend that:

(1) A cause of action shall accrue to the subsequent owner of damaged property as provided for in section 3 of the Latent Damage Act 1986, that is where

(a) a cause of action has accrued to any person in respect of any negligence to which damage to any property is attributable (in whole or in part); and

(b) the subsequent owner acquires an interest in the property after the date on which that cause of action accrued, but before any person with an interest in the property has the knowledge relevant to the date of knowledge for a claim in respect of that cause of action.

(2) The claim by the subsequent owner shall be subject to the core regime. (Draft Bill, Sch 3, para 23).

11. Claims for Restitution

4.76

We provisionally proposed in the Consultation Paper that restitutionary claims should be subject to the core regime.

^[81]

^[82]

Since the publication of the Consultation Paper, Kleinwort Benson Ltd v Lincoln City Council

^[83]

I recognise that the effect of section 32(1)(c) is that the cause of action in a case such as the present may be extended for an indefinite period of time. I realise that this consequence may not have been fully appreciated at the time when this provision was enacted, and further that the recognition of the right at common law to recover money on the ground that it was paid under a mistake of law may call for legislative reform to provide for some time limit to the right of recovery in such cases. The Law Commission may think it desirable, as a result of the decision in the present case, to give consideration to this question indeed they may think it wise to do so as a matter of urgency. (Lord Goff of Chieveley).^[84]

The most obvious problem is the Limitation Act, which as presently drafted is inadequate to deal with the problem of retrospective changes in law by judicial decision. (Lord Hoffmann).^[85]

The problems referred to will be considerably alleviated by the implementation of the core limitation regime which we propose. The primary limitation period of three years will run from the date on which the claimant discovers, or ought reasonably to discover, the facts which give rise to the cause of action (including the fact that his view of the law was mistaken), the identity of the defendant and the fact that the defendant has received a significant benefit. This provides a similar starting point to that set out under section 32(1)(c) of the Limitation Act 1980, namely the date of the decision changing the law. However, the long-stop limitation period, of ten years, will run from the date of the accrual of the cause of action. In a claim to recover money paid under mistake of law this will be the date on which the defendant is enriched. No enrichment received by the defendant over ten years before the date of the judgment could therefore be recovered.

4.79

We recommend that the core regime should apply to restitutionary claims.

^[86]

12. Claims for a Contribution or an Indemnity

(1) Contribution under section 1 of the Civil Liability (Contribution) Act 1978^[87]

We provisionally proposed in the Consultation Paper that claims for a contribution under section 1 of the Civil Liability (Contribution) Act 1978 should be subject to the core regime, subject to the modification that, to avoid the problem of a chain of contribution claims, there should be a single long-stop limitation period running from the date of the judgment or settlement in the original proceedings to which the contribution claim relates.

^[88]

^[89]

^[90]

The benefits of ensuring that such claims are subject, as far as possible, to the same limitations regime as other causes of action appear to us to outweigh the suggested disadvantages. We appreciate that, if the long-stop is to start from the date of judgment or settlement the long-stop limitation period will be considerably extended from the date of the events giving rise to liability in the original proceedings. However, the relevant liability of the defendant to a contribution action is his or her liability to make contribution to his or her co-obligor and this is triggered not by the act or omission of the contributor vis-à-vis the claimant in the original proceedings but by the judgment or settlement giving rise to the contribution action (and for the avoidance of doubt we will retain the provisions of the 1980 Act in relation to the accrual of the cause of action under the Civil Liability (Contribution) Act 1978 to define the starting date for the long-stop limitation period). We believe that in practice the long-stop limitation period is unlikely to be relevant in many cases, because a person entitled to contribution will normally have the relevant knowledge to start the primary limitation period shortly after the judgment or settlement in the original proceedings.

4.82

We have however been persuaded to reconsider our original proposal that a single long-stop limitation period should apply to all claims for a contribution which arise out of the same facts, because of the significant problems that we discuss below in relation to claims for a contractual indemnity.

^[91]

We recommend that the core regime should apply to claims for contribution under section 1 of the Civil Liability (Contribution) Act 1978, and that the provisions of the Limitation Act, section 10 (which define the date on which the cause of action for such claims accrues) should be retained to define the starting date for the long-stop limitation period (Draft Bill, Cl 13).

(2) Contractual Indemnity

(a) Introduction

4.84

We provisionally proposed in the Consultation Paper that claims for a contractual indemnity should be subject to the core regime but with the modification that, to avoid the problem of a chain of indemnities, there should be a single long-stop limitation period running from the date of the judgment or settlement in the original proceedings to which the indemnity claim relates.

^[92]

(b) The primary limitation period

Although some consultees suggested that the reduction of the limitation period from six years to three years would impose considerable additional costs on reinsurers and lead to increased litigation,

^[93]

there is an argument for saying that reinsureds need to be more efficient in pursuing their reinsurance recoveries. ... A reduced initial limitation period may have the advantage of encouraging that.^[94]

A more significant concern was that the introduction of the three year limitation period without transitional provisions could have the effect of reducing the reinsurance assets of insurers and reinsurers. Excess Insurance noted that this could "wipe millions of pounds from balance sheets, potentially resulting in many insolvencies".

^[95]

The majority of consultees agree that the core regime should be applied to claims for a contractual indemnity. The use of the primary limitation period of three years generates little concern outside the reinsurance industry; and the concern of consultees from that industry would be considerably reduced if the new Act provides for a transitional period, which is sufficiently long to ensure that claimants are not deprived of an existing right to bring a claim. We accept that such a transitional period is needed. Our proposals for transitional provisions are discussed at paragraphs 5.33 to 5.40 below.

(c) A single long-stop limitation period

4.88

Our provisional proposal that where there are chains of indemnity contracts in respect of the same liability there should be a single long-stop limitation period starting from the date of the judgment or settlement in the original proceedings to which the claim relates has caused the greatest concern. Consultees have universally expressed the view that this would be unworkable in the context of the reinsurance industry. As Paisner & Co have noted, "Chains of indemnity in the form of contracts of reinsurance is the mechanism by which the reinsurance industry operates". All reinsurance consultees responding have made the point that the chains involved may be very lengthy, and that it is not unusual for claims to be paid several decades after the events which gave rise to them.

^[96]

Thus although over forty-five per cent of consultees who responded on this issue favoured the suggestion that claims for a contractual indemnity should be subject to a single long-stop, it is clear from the unanimous submissions we have received from representatives of the insurance and reinsurance industry that subjecting all reinsurance claims in a chain of reinsurance contracts to a single long-stop would have a very adverse effect on the London reinsurance market, and would probably prove to be unworkable.

4.90

One option would be to retain the proposed single long-stop limitation period but only in respect of contracts other than insurance or reinsurance contracts. Adopting this option could create additional problems in defining those contracts for an indemnity which would be exempt from the modification.

^[97]

It seems better to subject all claims for a contractual indemnity to the core regime. Where a chain of indemnity claims is in question, therefore, the long-stop limitation period for a claim by one party in the chain of indemnity claims against the party next in the chain would be determined entirely by the date of the breach of contract of that party, irrespective of when the liability covered by the indemnity actually arose. With a reinsurance claim (or other form of liability insurance) the long-stop limitation period would run from the date on which the liability of the reinsured in respect of the risk reinsured has been settled, by judgment or agreement.

^[98]

We have little evidence from our consultees that chains of indemnity are felt to be a real problem even in the other area in which they occur, the construction field.

^[99]

We recommend that the core regime should apply to claims for a contractual indemnity. This will mean that where there is a chain of indemnity claims, a new long-stop limitation period will arise in respect of each new claim in the chain.

13. Claims for Breach of Trust and Related Claims

4.94

Generally, a claim by a beneficiary to recover trust property in respect of any breach of trust is subject to a limitation period of six years from the date on which the cause of action accrued. But in two cases no limitation period applies: first, where the beneficiary's claim is in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy; and secondly where the beneficiary's claim is to recover trust property, or its proceeds, from the trustee.

^[100]

In the Consultation Paper, we provisionally proposed that the core regime should apply to all claims for breach of trust and claims to recover trust property, and expressed the view that the core regime, and in particular our proposals for deliberate (or dishonest) concealment, obviated the need for separate provisions in respect of fraudulent breaches of trust.

^[101]

^[102]

^[103]

These proposals have been widely supported by the majority of consultees. Over eighty-five per cent of consultees responding on this issue agreed with our provisional view that claims for breach of trust should be subject to the core regime. Over eighty per cent agreed with our provisional view with respect to fraud, and around seventy per cent with respect to 'fair-dealing' and 'self-dealing'. Over eighty-five per cent of consultees agreed that the core regime should apply to claims in respect of the personal estate of a deceased person. However, some opposition has been expressed to the proposal that claims for fraudulent breach of trust and claims to recover trust property should be subject to the core regime.

(1) Fraudulent Breach of Trust

4.97

It has been argued that, as a matter of public policy, trustees who have been guilty of a fraudulent breach of trust should never be able to claim the benefit of a limitation period.

^[104]

^[105]

We have previously taken the view that the only conduct of the defendant which should have implications for the limitation regime is conduct which directly affects the operation of the regime. For this reason, we have recommended that where the defendant has dishonestly concealed facts relevant to the cause of action the long-stop limitation period should be suspended until the concealed fact was or could have been discovered, but that neither the primary nor the long-stop limitation period should be disapplied merely because the claim is for fraud. Equally, we consider that the arguments against applying the primary limitation period to a claim for fraudulent breach of trust are not persuasive. If the claimant is aware (or ought to have been aware) of the facts necessary to bring proceedings in respect of his or her cause of action, such proceedings should be commenced promptly, even against a fraudulent trustee. Indeed it has been suggested that where an allegation of fraud has been made, it is particularly important in the interests of justice (not least to the defendant) to ensure that the claim is brought before the courts to be tried as soon as possible after the alleged fraud has been discovered.

^[106]

The case for disapplying the long-stop limitation period for claims for fraudulent breach of trust is stronger, but ultimately unpersuasive. We have previously taken the view that a fraudulent breach of trust will in most cases necessarily imply that the trustee has also been guilty of dishonest concealment, and that the date of knowledge requirement in the primary limitation period on the one hand, and the suspension of the long-stop on the other, in all cases where there has been dishonest concealment provides sufficient protection.

^[107]

We have considered whether the core regime should be modified to disapply the long-stop limitation period where the trust property has passed from the fraudulent trustee to a third person. There would be a claim against the third party if he or she was either a purchaser who was not acting in good faith, or a recipient of the goods who did not provide value for them. Under the present law, no limitation period would apply to such a claim.

^[108]

^[109]

Accordingly, we recommend that (subject to our recommendations in paragraph 4.112 below) all claims for breach of trust should be subject to the core regime.

(2) Claims to recover trust property

(a) Should there be a limitation period?

4.102

The justification for the exclusion under the present law of any limitation period in respect of claims to recover trust property from the trustee is that the trustee bears a special responsibility to the beneficiaries of his or her trust, and that it would be wrong to allow the trustee to benefit from the property which he or she holds for others. This is a variation of the argument that fraud and related civil claims should be given special treatment by the limitation regime to mark society's disapproval of the defendant's conduct. There is no suggestion that the fact that the defendant trustee has retained trust property makes it uniquely difficult for the claimant to discover the facts relating to his or her cause of action, or otherwise to bring proceedings against the defendant. We do not therefore believe that the fact that the claimant is bringing a claim to recover property against his or her trustee is sufficient ground to give the claim special limitation treatment.

(b) Should the long-stop limitation period run from the date of the first breach of trust?

4.103

It has been suggested that claims against third parties to recover trust property could create difficulties where there have been multiple substitutions and transfers of the property which the claimant seeks to recover. This could indeed give rise to a chain of potential claims. Under the current law, a fresh cause of action - and in consequence a fresh limitation period - will accrue on each occasion trust property is received by a third party in breach of trust. In relation to claims for conversion we have recommended that, where there has been a chain of successive conversions, the long-stop limitation period should commence on the date of the first conversion only.

^[110]

Although we have found this question difficult to answer, we do not believe that such a modification is necessary. This is for three principal reasons. First, no such protection is provided under the present limitation regime. Secondly, no consultee suggested that such a modification was required or that the present regime gave rise to any difficulty. Thirdly, unlike the position in relation to claims for conversion, a bona fide purchaser will have a defence to the claimant's claim for recovery of trust property. The recommencement of the long-stop limitation period is therefore far less likely to create risk of commercial insecurity over a long period of time in relation to claims for equitable, as opposed to legal, title.

(c) Bare trusts

4.105

In the case of a bare trust, it is arguable that a claim to recover the trust property will arise as soon as a declaration of trust is executed on terms that the trustee holds property on trust for the beneficiary absolutely. That is, the cause of action does not depend on the trustee acting inconsistently with the terms of that trust.

^[111]

Accordingly, we recommend that:

(1) claims to recover trust property should be subject to the core regime; but

(2) in the case of a claim for the recovery of trust property held on a bare trust, the cause of action shall not accrue unless and until the trustee acts in breach of trust. Draft Bill, Cl 22(2).

(d) Miscellaneous

(i) No benefiting from another beneficiary's claim

4.107

Section 21(4) of the Limitation Act 1980 incorporates the rule in equity that where a claim by one beneficiary has become time-barred, that beneficiary should not be permitted to benefit from a successful claim by another beneficiary which is not time-barred. Under the present limitation regime, this becomes relevant where the beneficiaries under a trust include both beneficiaries with an interest in possession and beneficiaries with a future interest. Time does not start to run against those with a future interest until their interest has fallen into possession.

^[112]

(ii) Limiting the liability of the trustee?

Section 21(2) of the Limitation Act 1980 provides protection for a trustee who wrongly distributes trust property to beneficiaries including him or herself. Provided that the trustee acted honestly and reasonably, his or her liability in any claim for breach of trust commenced after the expiry of the limitation period relating to claims brought to recover trust property against persons other than trustees is limited to the amount which he or she retained in excess of the rightful entitlement. This protection is provided in recognition of the fact that it will be too late for the trustee to commence any claim against the other beneficiaries to recover their wrongful distributions.

4.109

In contrast to the position under the current law, under our recommendations, all claims for the recovery of trust property will be subject to a limitation period. Where the trustee has honestly and reasonably but wrongly distributed trust property, the limitation period in respect of his or her action to recover that property from the overpaid beneficiaries will not commence until the trustee knows, or ought to know, of the wrongful distribution. If the trustee only becomes aware of the wrongful distribution when an action is brought for breach of trust against him or her, the trustee will therefore have sufficient time to commence proceedings against those other beneficiaries who have been overpaid. Though it is still possible that a beneficiary might bring a claim against the trustee just within the long-stop limitation period, so that the trustee only became aware of his potential liability after the period had ended, the same applies under the current law. We do not consider it necessary, therefore, to re-enact this provision.

(iii) Claims by persons other than beneficiaries

4.110

The present general six year limitation period applies only to claims by a beneficiary. A claim by the Attorney General against the trustees of a charitable trust is not therefore subject to any limitation period.

^[113]

^[114]

The application of the long-stop limitation period of ten years would also cause difficulties. In the case of charitable trusts it may be some time before evidence of any breach of trust reaches the attention of anyone in a position to take action against the trustees. Registered charities with an annual income or expenditure of over £10,000 have to send a report and accounts every year, and an annual return of specific information. However, we are informed

^[115]

Accordingly, we recommend that:

(1) Legislation should provide that where a claim by one beneficiary has become time-barred, that beneficiary should not be permitted to benefit from a successful claim by another beneficiary whose claim is not time-barred. (Draft Bill, Cl 22(4)).

(2) Pursuant to the application of the core regime, there is no need to provide a trustee with protection equivalent to that which is currently found in Limitation Act 1980, section 21(2).

(3) Neither the primary limitation period nor the long-stop limitation period should apply to claims for breach of trust or to recover trust property which are brought by either the Attorney General or the Charity Commissioners.(Draft Bill, Cl 22(3)).

(3) Exclusions from the Core Regime

4.113

It has been suggested to us that the core regime should not apply to applications to the court relating to the appointment, retirement or removal of trustees, judicial trustees or a vesting order, applications to vary the terms of a trust, or for directions relating to the administration of a trust by the trustees. Such applications relate purely to the administration of the trust and are not claims in which one party is claiming relief against another. It is foreseeable that these questions in relation to the administration of the trust may arise over ten years after the founding of a trust. The determination of such an application may be necessary for the continuation of the trust and a limitation period should not prevent this. We agree. Such applications will not be 'claims' within the definition which we propose, in that the claimant does not seek a remedy for a wrong, restitution or the enforcement of a right. They will, therefore, not be subject to the limitation regime which we recommend.

(4) Distinctions between Law and Equity

(a) Introduction

4.114

In principle, we believe that, since both common law title and equitable title are forms of ownership, the limitation regime should aim to apply the same treatment to each.

^[116]

^[117]

The core regime, as applied to claims for breach of trust under our provisional proposals, would have given rise to a further distinction between the limitation regime applying to common law and equitable ownership, in the treatment of future or contingent interests. This is discussed below.

(b) Future or contingent interests

4.116

Under the current law, no right of action can accrue to any beneficiary who is entitled to a future interest in trust property until that interest has fallen into possession.

^[118]

^[119]

Although we provisionally recommended that provision should be made for future interests in the context of claims to recover land

^[120]

The long-stop limitation period presents a further problem. It could expire before the beneficiary has an interest in possession. Our recommendations in respect of claimants under a disability will provide some protection where the beneficiary is a minor. But where the beneficiary is an adult it becomes considerably more likely that the long-stop limitation period will expire before there has been anything to put the beneficiary on notice of the existence of a breach of trust. It has been suggested to us by Lynton Tucker, responding on behalf of the Chancery Bar Association, that it would be excessively burdensome and wrong to require adult beneficiaries with future interests to scrutinise the affairs of the trust just in case there has been a breach of trust about which they should complain (particularly as the beneficiaries concerned may not appreciate that they are beneficiaries). The same applies to beneficiaries with a contingent interest. And there may be cases where no beneficiary is able to commence proceedings in respect of a breach of trust: most obviously where the beneficiary is unascertained. For this reason, and to ensure consistency with our recommendations for land-related claims, we propose that the long-stop limitation period for claims by a beneficiary with a future or contingent interest shall not start before the date on which the interest falls into possession.

4.119

We recommend that neither the primary limitation period nor the long-stop limitation period in respect of a claim for breach of trust or to recover trust property by a beneficiary with a future or contingent interest will start until that interest has fallen into possession. (Draft Bill, Cl 22(1)).

(5) Claims in respect of the personal estate of the deceased

4.120

The present limitation period in respect of any claim in respect of the personal estate of a deceased person is twelve years from the date on which the right to recover the share or interest accrues. The limitation period to recover arrears of interest in respect of any legacy is six years from the date on which the interest became due. However, no limitation period applies where the personal representative is acting as trustee and there is a fraud, or where the claim is to recover trust property or its proceeds from the personal representative.

^[121]

In the Consultation Paper we provisionally proposed that the core regime should apply to claims in respect of the personal estate of a deceased person (including any claims in respect of arrears of interest on legacies).

^[122]

Under the current law the limitation period commences on "the date on which the right to receive the share or interest accrued".

^[123]

^[124]

However, we have concluded that such modification is not necessary. It is not entirely clear when the cause of action will be treated as accruing for the purpose of the application of the core regime. That is, does the executor's year prevent the cause of action accruing until at the earliest the expiry of one year from the date of death, or can the cause of action accrue immediately, the executor's year merely representing a restriction on the claimant's right to sue? If the former is the correct interpretation, then the primary limitation period will not in any event commence until on or after this date. If the latter is correct, then although the claimant may have a right of action, his or her ability to commence proceedings is subject to a legal restriction. We recommend that special provision is made for such cases later in this paper.

^[125]

The long-stop limitation period for a claim to a share in the personal estate of the donor will start from the date on which the cause of action accrues, which is likely to be the last date on which the personal representative should have distributed the estate. Where the personal representative has simply been dilatory (so that the claimant is relying on an omission) it may well be unclear when the long-stop limitation period started. Providing that the long-stop for a claim against a personal representative shall always run from the last day of the executor's year would provide a definite and clearly ascertained starting point, but this may not be the appropriate date. Even in the case of an immediate legacy, the personal representatives do not necessarily become immediately liable to the beneficiaries under the will if they do not distribute the deceased's estate by the end of the executor's year. The consequence of the end of this period is that an onus falls on the personal representatives to show some valid reason for the delay.

^[126]

Accordingly we recommend that the core regime should apply to claims in respect of the personal estate of a deceased person (including any claims to arrears of interest on legacies).

14. Claims to recover land and related Claims

(1) The General Position

4.126

Generally, claims to recover land are subject to a limitation period of twelve years, which runs from the date on which the claimant's right of action accrued, or, if the right first accrued to some other person through whom the claimant claims, then the date on which the right accrued to that person. This date will usually be when the land first came to be in adverse possession, but special provision is made in certain cases, in particular when the claimant has only a future interest in the land.

^[127]

In the Consultation Paper we provisionally recommended that the primary limitation period of three years running from the date of knowledge should not apply to claims to recover land.

^[128]

Instead, therefore, we provisionally recommended that a long-stop limitation period commencing on the date of adverse possession should be the sole limitation period applying to such claims. We asked consultees whether that limitation period should be ten years (as under the core regime) or twelve years (the period applying under the current law).

^[129]

The suggestion that a single limitation period running from the date of adverse possession (as defined under the current law) should apply to claims to recover land received substantial support from consultees: over seventy-five per cent agreed. There was less agreement as to the length of that period. The largest proportion of consultees (around twenty-five per cent) would accept a limitation period of ten years. A smaller proportion argued in favour of a period of twelve years. Periods of fifteen years or twenty years were also suggested.

^[130]

It has been suggested that, as land-related claims need to be given special treatment, the attempt to bring them partially within the core regime by applying the long-stop limitation period to them is misguided. We accept that the regime applying to claims to recover land is substantially different to other claims within the core regime, not least because the effect of the expiry of the limitation period is to extinguish the claimant's title to the land rather than to provide the defendant with a defence to any claim made by the claimant. We propose therefore, instead of legislating for a defence to a claim to recover land, to retain the existing statutory formula that no claim to recover land may be brought after the expiry of the limitation period. This is however a change in emphasis rather than in substance. The limitation period applying to claims to recover land will be ten years - the length of the long-stop limitation period. It will start on the day on which the claimant's cause of action accrues (as would be the case with the long-stop limitation period), and we propose to re-enact the current provisions in relation to the accrual of the cause of action for a claim to recover land. In addition, the provisions of the core regime in relation to the extension of limitation period (namely in relation to agreements, concealment, acknowledgments and part payments and disability) will apply.

The proposals contained in the Consultative Document on Land Registration give the landowner significantly greater protection against the squatter where title to the land is registered. If the owner of unregistered land wishes to benefit from the same protection, he or she can apply for registration of his or her land. This removes much (if not all) of the cause for concern expressed over our provisional proposal that the general limitation period for claims to recover land should be reduced to ten years.

4.133

The general rule we recommend in this Report, of ten years running from the date of adverse possession, would, however, require modification where the claimant has only a future interest in the land. Such an interest might include not only the reversionary interest expectant on the determination of a life interest, but also the reversion of a lease. Under the present law, time does not generally run in such cases until the interest falls into possession.

^[135]

^[136]

^[137]

As we explained in the Consultation Paper, we do not think it appropriate, in the course of this review, to change the law so as to accelerate the running of time against future interests. We therefore recommend that the general rule is subject to an exception so that where the claimant's interest is a future interest, the limitation period should not begin to run until that interest falls into possession, where this is later than the date of adverse possession. This exception would itself be subject to the exceptions which currently allow time to run against a claimant with a future interest,

^[138]

We therefore recommend that:

(1) a long-stop limitation period of ten years commencing on the date that the claimant's right to recover the land accrued ^[139] (or, if later, the date on which the claimant's interest becomes an interest in possession) should apply to, and (subject to the recommendation in paragraph 4.147 below) be the sole limitation period for claims to recover land^[140] (Draft Bill, Cl 16(1), (2));

(2) that a claimant entitled to a future interest to land which was in adverse possession before that interest fell into possession should be subject to a limitation period of ten years from the date on which his or her interest fell into possession rather than a reduced period;

(3) the expiry of the limitation period will extinguish the claimant's rights to the land in question, and after that period, no claim may be made. (Draft Bill, Cl 18(1)). But we would emphasise that, if the Law Commission's proposals on adverse possession in registered land are accepted, the recommendation will only be applicable to interest in unregistered land and unregistrable interests in registered land.

Subject to the special rules in relation to claims by beneficiaries in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy and in respect of claims against trustees,

We consider that the same general position should apply under our recommended regime. However, we have recommended that those special rules in relation to claims by beneficiaries in respect of fraudulent breaches or against their trustees should no longer apply. We therefore recommend that the limitation period in relation to all claims to recover equitable interests in land should be the same as that which applies in relation to claims to recover legal interests in land. (Draft Bill, Cl 17(2), (3)). The further provisions presently contained in section 18(2) to 18(4) of the Limitation Act 1980 should be retained. (Draft Bill, Cl 18(2), (3), (4)).

(2) Special Protection: Claims by the Crown (other than in relation to foreshore)^[146] and by a Spiritual or Eleemosynary Corporation Sole

Under the present law, the limitation period for claims to recover land is extended to thirty years in the case of a claim brought by the Crown or by a spiritual or eleemosynary corporation sole ('the Church').

^[147]

^[148]

^[149]

The responses that we received from government departments noted that our proposals would oblige the Crown (a) to reduce public access to much of its land, and (b) to incur disproportionate costs in policing that land. In addition, the Ministry of Agriculture, Fisheries and Food ('MAFF') argued that it held extensive parcels of land, the husbandry of which is left to independent contractors, scientific institutions and other third parties. MAFF officials would therefore not very often be in a position to ascertain the factual position in relation to that land, let alone the legal position.

4.140

While we recognise the force of these arguments, we believe that much of this concern would be allayed by the adoption of the proposals contained in Land Registration in the Twenty First Century, A Consultative Document.

^[150]

^[151]

However, the Ecclesiastical Law Association noted in its submission to us that there are separate concerns affecting only the Church. The Association explained that our proposals would cause problems in respect of parsonage land, and churches and churchyards. Both categories of land are vested in the incumbent for the time being of the benefice, and thus in a spiritual corporation sole. However, there are often long periods during which a benefice is vacant (most often when presentation to the benefice has been suspended under the Pastoral Measure 1983).

^[152]

^[153]

We recognise this problem. However, we believe that it can, and should, be resolved without retaining the thirty year limitation period. A more satisfactory approach to extending the relevant limitation period would be to provide some mechanism to ensure that there is never a period during which no claim could in practice be commenced by the Church to recover the land. This could be achieved by providing that, in any case where the freehold is in abeyance because there is no incumbent, a claim may be brought in the name of, and on behalf of the spiritual corporation sole by

(1) the priest-in-charge of the benefice, or

(2) the sequestrators of the benefice.^[154]

Analogous solutions have been adopted in other contexts. For example, the Land Compensation Act 1961 provides: "Where the fee simple of any ecclesiastical property, not being property in Wales or Monmouthshire, is in abeyance, it shall be treated for the purposes of this Act as being vested in the Church Commissioners".

Accordingly we recommend that

(1) claims brought by, or by a person claiming through, the Crown (subject to paragraphs 4.145 to 4.147 below) or any spiritual or eleemosynary corporation sole to recover land should be subject to the same limitation period applying to a claim by any other party to recover land; and

(2) in any case where the land is vested in the incumbent from time to time of a benefice as a spiritual corporation sole but the benefice is vacant a claim to recover the land or any part of it may be made by

(a) the priest-in-charge of the benefice, or

(b) by the sequestrators of the benefice. (Draft Bill, Cl 17(5)).

(3) Special Protection: Claims by the Crown to Recover Foreshore

4.145

Special protection is given to claims by the Crown to recover foreshore.

^[159]

^[160]

The majority of consultees who considered this issue thought that special protection should be retained in relation to claims by the Crown to recover foreshore. They pointed to the difficulty of monitoring the boundaries of this land. The Crown faces particular difficulties as the Marine Department of the Crown Estate has to police almost all the foreshore in England and Wales. We have been persuaded by these arguments that special protection should be afforded to the Crown in respect of claims to recover foreshore. Accordingly we do not propose any reform to the general limitation period currently applying to claims to recover foreshore. Where the land has ceased to be foreshore, we believe that the ten year limitation period which we generally recommend in relation to claims to recover land (rather than the present thirty year period) should apply.

4.147

We therefore recommend that the limitation period applicable to claims by the Crown to recover foreshore should be

(1) sixty years from the date of accrual of the right of action or

(2) ten years from the date when the land ceased to be foreshore

whichever period first expires. (Draft Bill, Cl 16(4), (7)).

(4) Miscellaneous Provisions

(a) Squatters and the Crown

4.148

We discussed in the Consultation Paper whether any new Limitation Act should clarify the effect of successful adverse possession against the Crown of land which does not fall within the Crown's sovereign title but is owned by the Crown.

^[161]

^[162]

(b) The commencement of adverse possession

Subject to one point, we do not propose to change the present law as to the date on which the cause of action accrues in relation to a claim to recover land. As under the current law, this will depend on the date on which the defendant, or some person from whom he derived title, has taken adverse possession of the land in question, and the rules laid down in Schedule 1 to the Limitation Act 1980 will be re-enacted. The one change we wish to make relates to the position where there has been a series of adverse possessors of the land in question. Under the current law, a change in the identity of those in adverse possession of the land will not affect the running of the limitation period against the claimant. Even if a second squatter has dispossessed an earlier squatter, he or she is able to claim the benefit of the adverse possession by that squatter to allege that the limitation period has expired against the claimant.

^[163]

We therefore recommend that

(1) Where the identity of the person in adverse possession of the land changes, a new cause of action shall accrue to the claimant, unless anyone in adverse possession of the land before the change continues to be in adverse possession after that date. (Draft Bill, Sch 1, para 1(4), (5)(a))

(2) However, no new cause of action will accrue to the claimant

(a) where the second person in adverse possession claims possession through his or her predecessor (Draft Bill, Sch 1, para 1(5)(b)) and

(b) where the squatter coming into possession is recovering possession of the land from a squatter who had previously dispossessed him or her (Draft Bill, Sch 1, para 1(6)).

(5) Claims to recover the proceeds of the sale of land

4.151

Under the present law, no claim may be brought to recover the proceeds of the sale of land after the expiry of twelve years from the date on which the right to receive the money accrued.

^[164]

Accordingly, we recommend that claims to recover the proceeds of the sale of land should not be subject to the primary limitation period of three years from the date of knowledge but only to the long-stop limitation period of ten years running from the date when the vendor became entitled to recover the proceeds (by, for example, enforcing a lien over the land).

(6) Provisions of the core regime which modify the long-stop limitation period

^[165]

^[166]

Our recommendations in relation to the long-stop limitation period and dishonest concealment also apply in this area. We have recommended that where the defendant dishonestly conceals relevant facts from the claimant, the long-stop limitation period shall be suspended until the fact concealed by the defendant was or should have been discovered.

^[167]

(7) Claims to recover rent

Under the present law, no claim may be brought (or distress made) to recover arrears of rent, or damages in respect of arrears of rent, more than six years from the date on which the arrears became due.

^[168]

^[169]

This proposal was accepted by over ninety per cent of the consultees who responded on this issue. The Country Landowners' Association argued against this reduction on the grounds that, particularly in family situations, there may be good reasons for a landlord to delay suing for rent:

a landlord may hold back from suing for rent because a tenant has been making plans to give up the holding due to ill-health or age, in which case the outstanding rent could be offset against other claims, e.g. by compensation that will be due to the tenant. Similarly a landlord might refrain from demanding outstanding rent in times of financial hardship for the tenant, such as during the current economic climate.

4.156

We appreciate that in some cases a reduced limitation period may discourage the benevolence of landlords. However, even if the limitation period is reduced, there are alternative means by which a landlord who does not wish to sue a tenant may protect his or her entitlement to the outstanding rent. For example, a landlord could agree an extension of the limitation period with the tenant. Or, before the expiry of the limitation period, he or she could seek a written acknowledgment from the tenant of the amount of rent owed. Such acknowledgment would extend the limitation period. We therefore remain of the view that there are not sufficient grounds to afford special treatment to these claims.

4.157

Accordingly, we recommend that the core regime should apply to claims to recover rent, claims to recover damages in respect of arrears of rent, and the levying of distress for unpaid rent.

15. Claims relating to mortgages and other charges

(1) Introduction

4.158

We discuss below how we recommend that the core regime should apply to claims related to mortgages and other charges, that is a claim by the mortgagee or chargee to enforce the security, or to recover the debt secured, and claims by a mortgagor or chargor to redeem the security.

4.159

The provisions of the Limitation Act 1980 which relate to claims in respect of mortgages and charges under the current law only refer to claims to recover a principal sum of money or arrears of interest which are secured by a mortgage.

^[170]

^[171]

(2) Claims by a mortgagee or chargee

(a) Claims to enforce a mortgage or charge over land

Under the present law, no claim may be brought to recover any principal sum of money secured by a mortgage or charge over land after the expiry of twelve years from the date on which the right to receive the money accrues.

In the Consultation Paper we provisionally proposed that only the long-stop limitation period should apply to claims to enforce a mortgage or charge over land, and that the primary limitation period should not apply to such claims.

^[176]

The justification for excluding claims to enforce a mortgage or charge over land from the application of the primary limitation period is twofold. First, as a matter of principle, the underlying and primary remedy of a mortgagee or chargee is the realisation of security. Thus, a claim to enforce a mortgage or charge over land is a species of claim to recover land, and it would be anomalous if a different limitation regime were to apply from that which is generally applied to claims to recover land.

^[177]

^[178]

A number of consultees argued that allowing mortgagees or chargees a longer limitation period than the three year primary limitation period for claims to enforce a mortgage or charge over land would have equally adverse practical consequences. It was suggested that mortgagees will delay commencing proceedings until the amount outstanding on the mortgage is so large that the borrower has no opportunity to pay it within a realistic time-frame, so that the mortgagee has no alternative but to take possession. This argument was rejected by other consultees, most notably the Land Registry, which argued that reducing the limitation period could increase the number of occasions on which a lender will enforce its security.

4.164

Accordingly, notwithstanding the views of those consultees who argued that the core regime should apply to claims to enforce a mortgage or charge over land in its entirety, we adhere to our provisional proposal that these claims should be treated analogously to claims to recover land.

4.165

In the Consultation Paper we provisionally proposed that the long-stop limitation period should begin to run on the date when the principal sum of money repayable on a loan, or interest thereon, is due but not paid.

^[179]

Accordingly, we recommend that

(1) the primary limitation period should not apply to claims to enforce a mortgage or charge over land; and

(2) the long-stop limitation period should apply to claims to enforce a mortgage or charge over land, running from the date on which the mortgagee's or chargee's right to enforce the mortgage or charge accrues (Draft Bill, Cl 15(2)).

(b) Claims to enforce a mortgage or charge over personal property

4.167

Under the current law, the limitation period applying to a claim to recover any principal sum of money secured by a mortgage or charge over personal property is twelve years from the date on which the right to receive the money accrues.

We recommend that claims to enforce a mortgage or charge over personal property should be subject to the core regime.

(c) Claims to enforce a mortgage or charge over both land and personal property

4.170

Applying different limitations regimes to mortgages or charges over land and over personal property raises the question which regime should apply when the security in question covers both land and personal property. Under the current law, as we have seen,

^[183]

This position appears to us to be unsatisfactory and gives rise to such anomalous cases as Re Jauncey ([1926] Ch 471) where there was a mixed fund consisting of the proceeds of the sale of real and personal property and the mortgagee of the fund was held to be entitled to enforce his security against so much of the fund as consisted of the proceeds of the personalty, but to be statute-barred in respect of the proceeds of the realty.^[184]

Accordingly, they recommended that the limitation periods applicable to claims for the recovery of money charged on real property should also apply where money is charged on personal property.

We do not consider that it is unacceptable to have separate limitation periods applying to claims in respect of mortgages or other charges over real property and over personal property (as illustrated by our recommendations above). However, where the charge concerned is over a mixed fund comprising both land and personal property, it would appear to be more desirable for a single limitations regime to apply to any claim to enforce the mortgage. This would avoid the potential anomaly identified by the Law Revision Committee.

4.172

If a single limitation period is to apply to claims to enforce mortgages or charges over mixed funds, the relevant limitation regime must be that applying to claims in relation to securities over land. Applying the full core regime, including the primary limitation period of three years from the date of knowledge, to mortgages over mixed funds would increase precipitate litigation which might otherwise have been avoided, and, where the land in question included a dwelling house, could increase the number of repossessions (so potentially increasing homelessness).

^[185]

Accordingly, we recommend that

(1) the primary limitation period should not apply to claims to enforce a mortgage or charge over both land and personal property;^[186] and

(2) the long-stop limitation period should apply to claims to enforce a mortgage or charge over land and personal property, running from the date on which the mortgagee's or chargee's right to enforce the mortgage or charge, vis-à-vis the land, accrues (Draft Bill, Cl 15(2), (9).

(d) Claims to enforce an obligation secured by a mortgage or charge by suing on the covenant to repay.

In some cases, a mortgagee may bring a claim on a secured loan and seek a money judgment only, without relying in any way on the security. The position is not entirely clear, but it appears that the limitation period applying to such a claim under the current law is twelve years from the date on which the right to receive the money accrues.

^[187]

^[188]

This position can be contrasted with the treatment of claims on secured loans in other areas. It was held in National Westminster Bank v Kitch plc,

^[189]

^[190]

We have been asked by two consultees to clarify how our recommendations will apply to such claims.

^[191]

Accordingly, we recommend that only the long-stop limitation period should apply to claims to enforce an obligation secured by a mortgage or charge by suing on the covenant to repay. (Draft Bill, Cl 15(2)(b)).

^[192]

(e) Miscellaneous

In each of the claims discussed above, we have recommended that either the long-stop limitation period or the full core regime should apply. However, in the cases discussed below, we consider that further modifications are required to the core regime.

(i) Mortgages and charges over future interests or life insurance policies

4.179

Under the current law, where a mortgage or charge comprises any future interest or any life insurance policy, the right to receive any principal sum of money secured by the mortgage or charge is not treated as accruing until the future interest determines or the life insurance policy matures.

In each case, these provisions delay the start of the limitation period until the date on which a future interest has fallen into possession. As the Law Revision Committee noted in relation to life insurance policies:

It would be a hardship to the mortgagee, and outside the contemplation of the parties, that the mortgagee (if not in possession) should have to realise the security within the period of limitation or else lose his rights by default. In many cases he would prefer to keep the policy alive until it matures for payment.^[197]

We agree, and we intend, therefore, to retain these provisions in any new Limitation Act.

We therefore recommend that where a mortgage or charge comprises a future interest or a life insurance policy, the limitation period applying to claims to enforce the mortgage or charge should not begin to run until the future interest determines or the life insurance policy matures. (Draft Bill, Cl 15(4)).

(ii) Possession by a prior incumbrancer

4.182

Where a prior mortgagee or other incumbrancer has been in possession of mortgaged or charged property and a claim is brought within one year of the discontinuance of that possession by a subsequent incumbrancer, the subsequent incumbrancer may, under the current law, recover by that claim all the arrears of interest which fell due during the period of possession by the prior incumbrancer, or damages in respect of those arrears, notwithstanding that the period exceeds six years.

^[198]

The rationale underlying this provision, with which we agree, is that inasmuch as the possession of a prior incumbrancer prevents a subsequent mortgagee from entering into possession of the mortgaged property and obtaining the rents and profits therefrom, it would be unjust to limit the subsequent mortgagee to six years arrears of interest.

^[199]

We recommend that, where a prior mortgagee is in possession of the property which is subject to the mortgage, the limitation period applicable to a claim by the subsequent mortgagee to recover arrears of interest (or damages in lieu) should (if necessary) be extended so that it does not end before the date one year after the prior mortgagee ceases to be in possession. (Draft Bill, Cl 15(3)).

(iii) Possession by a mortgagee

4.185

Where a mortgagee is in possession of mortgaged property after the date on which the right to foreclose accrues, the right to foreclose on the property in his or her possession is not treated as accruing under the current law until the date on which his or her possession discontinues.

^[200]

Accordingly, we recommend that the limitation period applying to foreclosure proceedings should be suspended during the period that the mortgagee is in possession of the mortgaged property.

(3) Claims by a mortgagor to redeem mortgaged property

(a) Claims to redeem mortgaged land

Under the current law, the limitation period applying to claims to redeem mortgaged land is twelve years from the date on which the mortgagee takes possession of the land.

^[201]

^[202]

We have reconsidered our policy in this area. There are a number of objections to there being any limitation period on the mortgagor's right to redeem the mortgage. The limitation period in the Limitation Act 1980, section 16 was first enacted in the Real Property Limitation Act 1832, section 28, and then variously re-enacted in 1874

In addition, it is possible to envisage situations where the Limitation Act 1980, section 16, could lead to hardship. A mortgagee might take possession of property where there is a "negative equity" due to the decline in the value of the property since its purchase, and lease it under his statutory powers.

^[210]

^[211]

^[212]

Accordingly, we recommend that no limitation period should apply to a claim by the mortgagor to redeem a mortgage over land. (Draft Bill, Cl 15(1)).

(b) The rule in Edmunds v Waugh^[213]

Where a mortgagor brings a claim for redemption, the mortgagee is entitled to retain out of the sale proceeds any arrears of interest, even if a claim by the mortgagee to that interest is statute-barred.

^[214]

In the Consultation Paper we provisionally proposed that the rule in Edmunds v Waugh should be reviewed, if at all, as part of a review of mortgage law rather than the law on limitation periods.

^[215]

(c) Claims to redeem mortgaged personal property

Claims to redeem mortgaged personal property are not subject to any period of limitation. The Law Revision Committee, considering whether a limitation period should apply to such claims, said:

This would in our opinion give rise to serious practical difficulties, e.g., in a case where a customer of a bank charges bonds or other securities in favour of the bank as security for an advance. The bonds would be deposited with the bank and an equitable mortgage created. They would, in many cases, remain so charged for an indefinite period, to cover a more or less permanent overdraft, and unless the bank acknowledged the title of the mortgagor, the effect of section 7 of the Real Property Limitation Act, 1874, would be to extinguish the equity of redemption and give the bank an absolute title.^[216]

We recommend above that no limitation period should apply to a claim to redeem mortgaged land. We consider that the same should apply in relation to personalty. In contrast to the position in relation to mortgaged land, the mortgagee of personal property may well have possession of that property from the date of the original transaction: this possession does not imply any reduction of the mortgagor's rights under the transaction. To impose a limitation period on the mortgagor's right to redeem personal property would change the nature of the transaction between the parties, and in consequence limit the usefulness of mortgages of personal property. We therefore consider that claims to redeem mortgaged personal property should not be subject to a period of limitation.

4.194

Accordingly, we recommend that claims to redeem mortgaged personal property should not be subject to a limitation period. (Draft Bill, Cl 15(1)).

(3) Expiry of the limitation period

4.195

Under the current law, the expiry of the limitation period applying to claims to redeem a mortgage over land or to enforce a mortgage over land extinguishes the interest of the claimant in the land, in the same way as the expiry of the limitation period for a claim to recover land will extinguish the claimant's interest in the land.

^[217]

^[218]

Accordingly, we recommend that the expiry of the limitation period applying to claims to enforce a mortgage should extinguish the claimant's interest in the mortgaged property. (Draft Bill, Cl 15(6)).

16. Claims on a Judgment or on an arbitration award

4.197

We provisionally proposed that claims on a judgment,

^[219]

^[220]

^[221]

The limitation period for a claim on a judgment has no direct effect on the periods within which enforcement proceedings may be brought. We have expressly excluded reform of the time limits set by Rules of Courts from our review.

^[222]

The Law Society also noted that claimants might justifiably delay in bringing a claim on a judgment or an arbitration award because the defendant does not have the resources necessary to satisfy the judgment. However, the impecuniosity of the defendant is not a factor which we consider justifies allowing the claimant an extended limitation period under the core regime, and there seems to be no reason to make an exception in the case of claims on a judgment.

4.200

We therefore recommend that claims on a judgment and claims on an arbitration award should be subject to the core regime.

17. Claims on a Statute

4.201

We provisionally proposed that claims on a statute should be subject to the core regime.

We therefore recommend that claims on a statute should be subject to the core regime.

18. Claims Against Public Authorities

4.203

In the Consultation Paper we expressed the provisional view that no special protection in limitations law should be given to public authorities. Where the core regime would apply to any other defendant, it should therefore apply in same way to claims against public authorities.

^[227]

19. Proceedings under the Companies act 1985

In the Consultation Paper we did not consider how the core regime would apply to applications under the Companies Acts, other than claims under section 459 of the Companies Act 1985. A number of consultees have raised a number of issues in respect of the application of the core regime to such claims.

^[228]

(1) Derivative claims

In Estmanco Ltd v Greater London Council,

^[229]

^[230]

^[231]

The claimant in a derivative claim does not seek redress for a wrong done to him or her personally. Rather the claimant seeks redress for a wrong committed against the company of which he or she is a shareholder. The cause of action is vested not in the shareholder, but in the company. It follows that a minority shareholder cannot maintain a derivative claim where the expiry of the limitation period would prevent the company bringing proceedings in respect of the same cause of action on its own behalf: the derivative claim would seek to recover for the benefit of the company a remedy to which it is not entitled.

4.207

A derivative claim may potentially be brought by any of the shareholders of a company. This raises two issues for the application of the core regime:

(1) Whose knowledge is relevant for the purposes of the primary limitation period?

(2) How does the long-stop limitation period apply?

(a) The primary limitation period

4.208

Where a minority shareholder brings a derivative claim, he is acting on behalf of the company. It was noted in Dominion Cotton Mills v Amyot

(b) The long-stop limitation period

Under the core regime, the long-stop limitation period will start from the date on which the cause of action accrues to the claimant. As the minority shareholder is in practice acting as a representative of the company, this will be the date on which the cause of action accrued to the company. It will not be affected by the fact that the claim is brought by a minority shareholder.

4.210

We therefore recommend that derivative claims should be subject to the core regime, but that the start of the primary limitation period should be decided by reference to the knowledge of the shareholder who is bringing the claim (Draft Bill, Cl 24).

(2) Proceedings under section 459 of the Companies Act 1985

4.211

Section 459 of the Companies Act 1985 allows any member of a company to petition the court for relief on the grounds that the affairs of the company are being, have been or are about to be conducted in a manner which is unfairly prejudicial to the interests of some of its members (including at least the petitioner). Under the current law, such proceedings are not subject to any limitation period, though delay may bar relief.

^[237]

^[238]

^[239]

The growth in the number of applications for Part XVII relief, coupled with the opportunity for oppression of respondents which such applications offer, lends support for the view that a limitation period should be introduced to prevent stale allegations being relied upon in support of such applications.

The major difficulty seen in applying the core regime to section 459 applications is that the right to make such an application will frequently arise not from a single act or omission by the defendant, but as a result of a course of conduct. In some cases, no particular act can be identified as having caused prejudice to the claimant - the prejudice arises because of the cumulative effect of a series of incidents. It may therefore be more difficult to identify the facts which give rise to the cause of action which the claimant must know before the primary limitation period is triggered.

4.213

4.214

^[240]

Where it is only the cumulative effect of a whole series of incidents which gives rise to the claim for unfair prejudice, the primary limitation period will only start on the date on which the claimant knows (or should know) of the event which gives him or her grounds to bring a claim under section 459. This may be the last event in the series. Alternatively, there may have been a number of events which were each sufficiently prejudicial to the claimant's interests to ground an application under section 459. Providing that the claimant brings an application within three years of the date on which he should know of the latest such incident, the claimant will be within the primary limitation period. The claimant would not be able to rely on an earlier event as itself giving rise to unfair prejudice after the primary limitation period had expired. However, he or she will not be debarred from referring to earlier incidents to show why the later event has caused him or her unfair prejudice. There may, for example, be three events, one taking place in 1993, one in 1996 and one in 2000, none of which is sufficient on its own to support a petition under section 459 but whose cumulative effect does give rise to unfair prejudice against the claimant. The claimant knows of each event within days of its taking place. In this case the primary limitation period would not start to run until 2000. If, in contrast, the claimant would have enough to show unfair prejudice on the happening of the first and second event, the primary limitation period would start to run in 1996. If he delays for more than three years he or she will not be able to bring a claim relying on these two events. The third event in 2000, though insufficient by itself to ground a claim, is sufficient to support a fresh petition for unfair prejudice in the light of the earlier events, and the claimant has a fresh right to make such a claim.

4.216

It has been suggested that a limitation period of three years is too short, because it may take many years for a course of unfairly prejudicial conduct to become apparent, and, particularly in the context of the small family company, a potential claimant may be prepared to tolerate apparently 'prejudicial' conduct for a number of years before being goaded into taking action. Similarly, a claimant may prefer to rely on negotiations before bringing proceedings in court. However the fact that the primary limitation period starts from the date of knowledge provides considerable protection for the claimant who has difficulties in obtaining information on the management of the company from the management. Once the claimant has, or ought to have, knowledge of the facts which would support a claim for unfair prejudice under section 459, it does not seem unreasonable to oblige that claimant to take action within three years. A shareholder with a potential section 459 claim may well wish to try to resolve the dispute by negotiation without precipitate reference to the courts. However, this is not a problem unique to claimants under section 459. The same position will occur, for example, where there is a long running contractual relationship which breaks down (as where there are disputes within a partnership). Regardless of the length of the limitation period, potential claimants would need at some time to decide whether or not to issue proceedings against the defendant.

4.217

The application of the long-stop limitation period to claims under section 459 poses no greater difficulty than the primary limitation period. The long-stop limitation period will start from the date on which the cause of action accrues. Where the claimant is relying on a series of acts or omissions rather than a single act or omission, the long-stop limitation period will therefore start from the date of the first incident which gives the claimant grounds to bring the claim. So, where there is a succession of events, none of which individually is sufficient to found a cause of action, the long-stop limitation period will not start running. Only when something has happened which has given the claimant grounds to claim that he or she has been unfairly prejudiced will time start to run.

4.218

We are not therefore convinced that there will be substantial problems in the application of the core regime to applications under section 459 (a view shared by the Company Law Review Working Party at the Department of Trade and Industry).

^[241]

^[242]

^[243]

Accordingly, we recommend that applications under section 459 of the Companies Act 1985 should be subject to the core regime.

20. Insolvency Proceedings

The Consultation Paper did not discuss the impact of the core regime on insolvency claims. We received a number of responses from consultees suggesting that the core regime would need to be modified in its application to claims made by or against companies, partnerships and individuals subject to insolvency proceedings. We consider the issues raised by insolvency proceedings in this section.

(1) Arrangements and Compromises

4.220

An individual, company or partnership unable to pay its debts may be able to make an arrangement or compromise with its creditors to satisfy its outstanding debts. Here we consider the effect of the core regime in relation to schemes of arrangement under section 425 of the Companies Act 1985, and voluntary arrangements under the Insolvency Act 1986. Though there are other methods by which arrangements and compromises can be made and enforced, such as a deed of arrangement, we are of the view that such arrangements made by a contract between the parties do not pose specific issues for the core regime, and we do not consider them here.

(a) Section 425 of the Companies Act 1985

4.221

Section 425 of the Companies Act 1985 allows a company or a creditor to approach the court to sanction a scheme approved by the requisite majority of creditors (at least seventy-five per cent). Once approved the scheme binds all creditors intended to be bound, and the company.

^[244]

(b) Voluntary Arrangements

The individual voluntary arrangement exists to enable an insolvent debtor to arrange for a moratorium on his or her debts by entering into an arrangement with his or her creditors without becoming bankrupt. The company voluntary arrangement, and the voluntary arrangement for insolvent partnerships, serve the same purpose. The first stage in proceedings for an individual voluntary arrangement is the grant of an interim order, which acts as a moratorium preventing creditors from enforcing their rights against the individual, and lasts until a creditors' meeting has taken place which approves the proposal by the debtor, or the court revokes the order.

^[245]

^[246]

(i) Claims against a company, partnership or individual subject to a voluntary arrangement.

Once a voluntary arrangement has been made, any creditors who were given notice of the creditors' meeting to agree the arrangement and were entitled to vote at that meeting, are bound by it.

^[247]

The voluntary arrangement does not bind any creditors of the debtor who were not given notice of the arrangement, or whose claims post-date the arrangement.

(ii) Claims by a company, partnership or individual during the existence of a voluntary arrangement.

Once a voluntary arrangement has been agreed, a supervisor will be appointed to oversee its implementation. Those assets which are subject to the arrangement are held by the supervisor for the benefit of the creditors who are participants in the arrangement.

^[252]

^[253]

^[254]

We recommend that claims brought by a debtor who is subject to a voluntary arrangement should be subject to the core regime.

(2) Administrative Receivership and Administration Orders.

(a) Claims by a company or partnership

(1) the survival of the company, and the whole or any part of its undertaking, as a going concern;^[255]

(2) the approval of a voluntary arrangement;

(3) the sanctioning of a compromise or arrangement under section 425 of the Companies Act 1985;^[256] or

(4) a more advantageous realisation of the company's assets or of the partnership property than would be effected on a winding-up.^[257]

An administrative receiver is appointed by the chargee under a floating charge, to manage the whole (or substantially the whole) of a company's property.^[258]

In contrast to the position where a company or partnership is subject to a voluntary arrangement, in the case of both an administration and administrative receivership, the power to manage the company or partnership will have passed from the directors or partners to the administrator or the administrative receiver. An administrator is empowered to do all such things as may be necessary for the management of the affairs, business and property of the company or partnership,

^[259]

^[260]

^[261]

An administrative receiver is empowered to "carry on the business of the company",

Under the current law, neither the making of an administration order nor the appointment of an administrative receiver affects the limitation period which applies to claims by the company. It will continue to run. Under the core regime the primary limitation period would in each case start on the date when either a person with actual (or apparent) authority to initiate legal proceedings on behalf of the company or partnership, or an employee of the company or partnership who could be expected to report the information to someone with that authority (or another employee), acquires knowledge of the relevant facts. Where the primary limitation period has started before the appointment of an administrator or an administrative receiver, it would, prima facie, continue to run. After the appointment, as each has authority to bring proceedings on behalf of the company or partnership, the primary limitation period will start when either the administrator (or administrative receiver) or an employee of the company or partnership who is under a duty to report to the administrator (or administrative receiver) or another employee has actual or constructive knowledge of the relevant facts. Once the period has started, it will continue to run after the company or partnership comes out of administration or the administrative receiver is discharged.

4.230

The operation of the primary limitation period applicable to claims brought by the company or partnership could therefore create problems both for companies and partnerships in administration, and for companies in administrative receivership. The manner in which an administrator may exercise his or her powers is limited. The administrator is subject to an overriding duty to realise one of the objectives specified in paragraph 4.226 above. The initiation of legal proceedings in respect of a claim would not materially contribute to the realisation of those objectives. Indeed, to the extent that the costs attending such proceedings would deplete the company's or partnership's available assets, the initiation of legal proceedings would frustrate the objectives mentioned at paragraph 4.226 above. Therefore, it is unlikely that the company or partnership will be able to rely on the administrator to bring a claim on its behalf.

4.231

The extent of the duties owed by an administrative receiver to the company are limited by an overriding duty to protect the interests of the holder of the floating charge by whom he or she is appointed, and to realise the charged assets for the benefit of the chargee. An administrative receiver is under a duty to the company to obtain a proper price on a sale of any of the charged assets.

^[268]

In each case, the directors of the company or the partners will at the same time have lost the ability to bring proceedings themselves. Thus, there is a clear risk that the primary limitation period applying to a cause of action that has accrued to a company or partnership in administration or administrative receivership could expire because the management of the company or partnership are powerless to institute legal proceedings. To protect against this, we consider (subject to the exception mentioned in the following paragraph) that the primary limitation period should be suspended during the period in which a company or partnership is in administration or administrative receivership.

^[269]

We have already seen that the directors of a company in administrative receivership can institute legal proceedings in the name and on behalf of the company against the administrative receiver.

^[270]

Accordingly, we recommend that the primary limitation period should be suspended in respect of claims by a company or partnership during any period in which the company or partnership is in either administration or administrative receivership, except where the administrative receiver is the defendant to the company's claim. (Draft Bill, Sch 2, paras 1, 2).

(b) Claims against a company or partnership in administration

4.235

During the period beginning with the presentation of a petition for an administration order and ending with the making of such an order or the dismissal of the petition, no steps may be taken to enforce any security over the company's or partnership's property, or to repossess goods in the company's or partnership's possession under any hire-purchase agreement, except with leave of the court.

^[271]

^[272]

^[273]

These requirements amount to a legal restriction on the claimant's ability to commence proceedings against the company or partnership. We recommend below that both the initial and long-stop limitation periods should be suspended during the period when there is a legal restriction on the claimant's ability to commence legal proceedings.

^[274]

^[275]

^[276]

Our recommendation that the limitation period should be suspended where there is a legal restriction on the claimant's ability to bring proceedings should provide adequate protection for claimants where the defendant has gone into administration. We do not consider that any other modifications of the core regime are necessary in this case. We therefore recommend that claims against a company or partnership in administration should be subject to the core regime.

(c) Claims against a company in administrative receivership

4.238

The position is different where a company has gone into administrative receivership. There is no moratorium on claims against the company, so that the claimant can initiate legal proceedings and, if he substantiates his claim, obtain judgment. However, it has been suggested by Michael Crystal QC and Simon Mortimore QC that the limitation period should be suspended in respect of claims against a company which is in administrative receivership; and that the necessity for this suspension is well-illustrated by the decision in Re Joshua Shaw & Sons Ltd.

^[277]

It is true that they [the creditors] could have petitioned to wind up the company within the six-year period after their respective debts arose. But given the existence of the receivership, it is not totally surprising that they did not take that step. However, and it may be that there is a gap in the law, the appointment of a receiver does not stop time running for the purposes of limitation.^[278]

The assets of the company which are subject to the floating charge (which will cover the whole or substantially the whole of the company's property) will not be available for the payment of unsecured debts. If an unsecured creditor issues proceedings against the company and is successful, there will be no assets available to satisfy the judgment debt unless there are assets not covered by the floating charge. It has been argued therefore that it is unreasonable to expect creditors to bring proceedings and that the limitation period applying to their claims should be suspended.

4.240

The difficulty with this argument is that its logical conclusion is that the limitation period should be suspended throughout the period that a defendant is unable to satisfy a judgment debt.

^[279]

^[280]

Accordingly, we recommend that claims against a company in administrative receivership should be subject to the core regime.

(3) Winding-up Proceedings

(a) Claims by a company or partnership^[281] during the course of the winding-up procedure

Where a company is wound up, either voluntarily or by the court, the powers of its directors and officers are determined

Under the current law, where a limitation period in respect of a claim by the company has started it will continue to run after a winding-up order has been made. Under the core regime, the primary limitation period will start on the date when either an officer of the body (or a person with authority to initiate legal proceedings on behalf of the company), or an employee of the company who is under a duty to report the information to someone with that authority (or a fellow employee), acquires the knowledge of the relevant facts. When the date of knowledge occurs before the date of the winding-up order, the primary limitation period will not, prima facie, be affected by the making of the order: time will continue to run. After the making of the winding-up order the primary limitation period will be triggered by the knowledge of the liquidator, or of an employee of the company who is under a duty to report to the liquidator, or a fellow employee.

4.244

^[287]

It has been suggested that there should at least be an extended limitation period when a company has gone into liquidation. As the liquidator will be responsible for instituting any proceedings brought by the company, Simon Mortimore QC and Michael Crystal QC argue that sufficient time should be allowed for the liquidator to investigate the claim and bring proceedings. Where the primary limitation period for a claim by the company has started before the making of a winding-up order (because for example the necessary information reached one of the directors of the company) there may in practice be very little time between the appointment of the liquidator and the expiry of the limitation period.

^[288]

In addition, it should be considered that, where a company has gone into insolvent liquidation, the liquidator often has few funds with which to finance a claim against the directors. It takes time for the liquidator to arrange such funding by either realising the assets of the company or approaching the creditors for a contribution. In some cases a liquidator may consider that it is advisable to await the outcome of any disqualification proceedings before bringing such a claim. The net result is that, even when the liquidator acquires the relevant knowledge soon after the date of liquidation of the company, the primary limitation period may have expired before the liquidator is in a position to bring proceedings. We therefore consider that where the primary limitation period has started running against a company before that company went into insolvent liquidation but has not expired before that date it should be suspended for a year from the date of the liquidation. This will in practice allow the liquidator a further year within which to start proceedings. Where the primary limitation period in respect of a claim has not started before the date of liquidation, we consider that it should start on the later of the date of knowledge of the liquidator, or one year after the date on which the company went into liquidation. This will ensure that the liquidator has at least four years from the date of liquidation within which to start proceedings. In neither case will the long-stop limitation period be affected. Under our proposals, this protection will apply to all claims brought in this jurisdiction by a liquidator, or anyone who performs that function under the law of another jurisdiction, regardless of the domicile of the company in question.

4.247

Accordingly we recommend that claims brought by a liquidator on behalf of a company or partnership in liquidation should be subject to the core regime, subject to the modification that

(1) where the primary limitation period in respect of a claim has started running against the company or partnership before it went into insolvent liquidation but has not expired by that date, it should be suspended for one year from the date of liquidation;

(2) where the primary limitation period in respect of a claim has not started running before the date of liquidation, it should start on the later of

(a) the date of knowledge of the liquidator; or

(b) the date one year after the date of the liquidation. (Draft Bill, Sch 2, para 3).

4.248

In some cases, there may already be an administrative receiver in office on the date on which the liquidator is appointed. Under our recommendations in paragraph 4.234 above, the primary limitation period applying to claims made by the company will therefore already be suspended. This will not increase the length of the suspension of the limitation period applying to claims of the company as far as the liquidator is concerned. Where the appointment of the liquidator overlaps that of the administrative receiver, and the primary limitation period had started to run before the appointment of the administrative receiver (the date on which it would have been suspended), it will start running against the liquidator on the date one year after his appointment.

(b) Claims against a company or partnership during the course of the winding-up procedure

4.249

During the period beginning with the presentation of a petition for a winding-up order and ending with the making of such an order or the dismissal of the petition, a creditor can issue proceedings as of right in respect of any cause of action he or she has, or may have, against the company or partnership (even though the claim may thereafter be stayed).

^[289]

The court may appoint a provisional liquidator during the period beginning with the presentation of a petition for a winding-up order and ending with the making of such an order or the dismissal of the petition.

^[290]

^[291]

^[292]

Where a company is wound up, either voluntarily or by the court, claims against the company that fall within the winding-up procedure are converted into proprietary rights under a statutory trust.

A number of claims against a company fall outside the winding-up procedure. The paradigm case is a claim to enforce a proprietary right against property in the possession of the company.

^[298]

^[299]

Where a company is wound up by the court, section 130(2) of the 1986 Act provides that "no action or proceeding shall be proceeded with or commenced against the company or its property, except by leave of the court and subject to such terms as the court may impose".

^[300]

^[301]

We therefore recommend that claims brought against a company or partnership during the course of the winding-up procedure should be subject to the core regime.

(4) Bankruptcy

(a) Claims against an individual bankrupt during the course of the bankruptcy procedure

There is no restriction on a creditor issuing proceedings against an individual bankrupt during any time when a petition for bankruptcy is being considered (providing that an interim receiver has not been appointed) although the proceedings may be stayed.

^[302]

^[303]

During the period beginning with the presentation of a petition for a bankruptcy order and ending with the making of such an order or the dismissal of the petition the court may appoint an interim receiver.

^[304]

Once an individual is declared bankrupt, just as when a winding-up order has been made against a company, time stops running as against claims in the bankruptcy.

^[305]

^[306]

A number of claims against an individual bankrupt fall outside the bankruptcy procedure. For example, forfeiture of a lease for non-payment is not a "remedy against the property", but the determination of the lessee's right to remain in possession of the property following a breach of covenant. Accordingly a claim for possession relating to forfeiture of a lease does not require the leave of the court.

^[307]

Where an individual is declared bankrupt, section 285(3) of the 1986 Act provides that "no person who is a creditor of the bankrupt in respect of a debt provable in the bankruptcy shall (a) have any remedy against the property or person of the bankrupt in respect of that debt, or (b) before the discharge of the bankrupt, commence any action or other legal proceedings against the bankrupt except with the leave of the court and on such terms as the court may impose." The making of a bankruptcy order is therefore a legal restriction on the ability of the claimant to bring proceedings in the same way as the appointment of an interim receiver, and we do not consider that any additional protection is required for claimants. We therefore recommend that claims brought against an individual during the course of bankruptcy procedures should be subject to the core regime.

(b) Claims brought by a trustee in bankruptcy on behalf of an individual during the course of the bankruptcy procedure

4.259

Where the estate of an individual who has been declared bankrupt is being administered the trustee is empowered to realise and distribute the estate.

Currently where a limitation period in respect of a claim by the bankrupt has started it will continue to run after a bankruptcy order has been made. Under the core regime, the primary limitation period will start on the date when the bankrupt acquired the knowledge of the relevant facts. Where the primary limitation period has expired before the right of action vested in the trustee, the defendant will be able to rely on that defence against a claim brought by the trustee. Where the period has started to run, but has not expired, time will continue to run against the trustee in bankruptcy. After the making of the bankruptcy order the knowledge of the trustee will trigger the primary limitation period.

4.261

The position of the trustee is similar to that of a liquidator in a winding-up claim relating to a company. We have recommended that for a winding-up an extended primary limitation period should be applied to allow the trustee time to investigate claims and bring proceedings. The same concerns arise over the rights of a trustee to pursue proceedings for the estate of a bankrupt (and, as in the case of companies, and partnerships, we consider that this protection should be available for all claims brought in this jurisdiction by a trustee in bankruptcy, or anyone performing that function under the laws of a different jurisdiction, regardless of the domicile of the bankrupt). This does not, however, apply to claims made by the bankrupt in respect of rights of action which do not vest in the trustee in bankruptcy, and our recommendation does not cover such claims.

4.262

Accordingly we recommend that claims brought by a trustee on behalf of a bankrupt should be subject to the core regime, subject to the modification that:

(1) where the primary limitation period which would have applied to a claim brought by the bankrupt has expired before the date of the bankruptcy order, the defendant may rely on that defence against the trustee in bankruptcy (Draft Bill, Sch 2, para 6(2));

(2) where the primary limitation period in respect of a claim has started running against the bankrupt but has not expired by that date, it should be suspended for one year from the date of the bankruptcy order (Draft Bill, Sch 2, para 6(3));

(3) where the primary limitation period in respect of a claim has not started running before the date of bankruptcy, it should start on the later of

(a) the date of knowledge of the trustee; or

(b) the date one year after the date of the bankruptcy order. (Draft Bill, Sch 2, para 6(4)).

(5) Clawback claims: Corporate Insolvency

4.263

The Insolvency Act 1986 provides a number of claims allowing assets to be clawed back on behalf of an insolvent company.

^[313]

^[314]

^[315]

We recommend that applications under section 212 - 214, 238 - 239 and 423 of the Insolvency Act 1986 should be subject to the core regime, subject to the modification that:

(1) where the primary limitation period in respect of a claim under section 212 has started running against the company or partnership before it went into insolvent liquidation but has not expired by that date, it should be suspended for one year from the date of liquidation;

(2) where the primary limitation period in respect of any claim under these sections has not started running before the date on which the liquidator (or administrator) was appointed, it should start on the later of:

(a) the date of knowledge of the claimant; or

(b) the date one year after the date of the liquidation (or, where a claim is brought by the administrator, one year after the date of his or her appointment). (Draft Bill, Sch 2, para 4).

(6) Clawback Claims: Personal Insolvency

4.265

The Insolvency Act 1986 contains similar 'claw-back' provisions in relation to personal insolvency. Under sections 339 and 340 the trustee in bankruptcy may apply to the court for the adjustment of prior transactions where the bankrupt has entered into transactions at an undervalue, or has given a preference to any person. The court may, on such an application, restore the position to what it should have been if the transaction had not taken place. The transactions covered by these sections include gifts for no consideration, transactions in consideration of marriage, transaction at a value less than money's worth, and excessive pension contributions. Section 343 allows the trustee in bankruptcy to apply to the court for a remedy when the bankrupt has entered into a transaction prior to the bankruptcy for the provision of credit on terms which are judged to be extortionate. Under section 423, the trustee in bankruptcy can apply for relief where the bankrupt has entered into a transaction in order to defraud his or her creditors.

4.266

Under the core regime the primary limitation period for an application would begin to run on the date that the trustee acquires actual or constructive knowledge of the relevant facts. We have recommended above that the core regime should be modified in its application to 'claw-back' applications made in respect of an insolvent company,

^[316]

We therefore recommend that applications under sections 339 - 343 and 423 of the Insolvency Act 1986 should be subject to the core regime, subject to the modification that the primary limitation period should start on the later of:

(1) the date of knowledge of the trustee; or

(2) the date one year after the date of the bankruptcy order. (Draft Bill, Sch 2, para 7).

21. Equitable Remedies

(1) Equitable Remedies and Limitation Periods^[317]

We provisionally proposed that where the core regime applies to common law remedies for a cause of action, it should also apply to equitable remedies.

^[318]

There may be good reasons for having different limitation periods for different causes of action, but 125 years after the fusion of law and equity the historical origin of the remedy is not one of them.

However, we also provisionally proposed that no limitation period should apply to an application for specific performance where under the present law (as exemplified by Williams v Greatrex)

^[319]

^[320]

Over sixty-five per cent of consultees responding on this issue agreed with our provisional proposal that an exception should be made in the case of an application for specific performance where delay does not, under the present law, operate to bar the remedy. Some consultees saw no reason for any exception to be made.

^[321]

We appreciate that it would be more consistent to omit the exception which we provisionally proposed. However, we consider that the benefit of the exception would outweigh the minor inconsistency which it would require. The rationale for the position under the current law is that "equity treats as done that which ought to be done", so that the claimant is treated in equity, as having already obtained what was promised. In other words, the transfer of the legal title is treated as a technicality that should not be barred by delay. The most common situation where the exception would apply would be where the claimant has purchased either a leasehold interest or freehold interest in land, but the vendor has not completed the sale by executing a transfer. The exception would mean that no limitation period would apply. In addition, under the present law the equitable rule that delay bars the claimant's remedy does not apply as regards the enforcement of equitable mortgages, effected by the deposit of documents with the mortgagee. It would be unfortunate if this device was no longer available or was subject to a three year limitation period which would reduce its effectiveness. We therefore adhere to our provisional view that where delay does not operate to bar specific performance of a contract (as exemplified in Williams v Greatrex), then, as under the present law, no limitation period should apply to an application for specific performance.

4.272

We also asked consultees whether, if no limitation period applied to an application for specific performance in this situation, they would favour a limitation period being introduced for damages in lieu of specific performance.

^[322]

Specific performance is a discretionary remedy and it would produce an unjust result if the court, having exercised its discretion not to order specific performance but was minded in the alternative to award damages in lieu thereof, could not do so because, whilst the former claim was not statute-barred, the latter was.^[323]

We find this persuasive,^[324] and we do not therefore propose to limit this exception to the claim for specific performance as opposed to a claim for specific performance or damages in lieu.

We therefore recommend that:

(1) where the core regime applies to common law remedies available for a claim in respect of a particular cause of action, it should also apply to equitable remedies available for that cause of action (Draft Bill, Cl 1);

(2) but no limitation period should apply to applications for specific performance where under the present law (as exemplified by Williams v Greatrex) delay does not operate to bar such applications. (Draft Bill, Cl 34(1)).

(2) Limitation Periods and Delay in Claims in Equity^[325]

The remaining question we raised was whether the doctrine of laches (or delay) should continue to have any role under the core regime so as to bar an equitable remedy before the expiry of the limitation period. We expressed no provisional view on this point, but suggested the following three options to consultees:

^[326]

(1) Option 1: The equitable concept of delay should not apply to final equitable remedies where the relevant cause of action is governed by the core regime but should continue to be relevant to applications for interlocutory relief (for example, interlocutory injunctions).

(2) Option 2: The equitable concept of delay should not apply to (final) equitable monetary remedies where the relevant cause of action is governed by the core regime but should continue to apply to equitable specific remedies (for example, specific performance or injunctions) whether interlocutory or final.

(3) Option 3: The equitable concept of delay should continue to apply to all (interlocutory or final) equitable remedies (including specific performance, injunctions, an account of profits, equitable damages, equitable compensation, and rescission) as opposed to common law remedies.

Professor Andrew Tettenborn suggested that the distinction between final and interlocutory orders is in many cases fictitious. The grant of an interlocutory injunction will decide the case. It may also add unnecessary complexity to the law.

4.276

Around forty per cent of consultees responding on this issue favoured option one; over ten per cent favoured option two and over thirty-five per cent favoured option three. In favour of option three, it was argued that the court should be able to retain its discretion whether or not to grant equitable relief. It was suggested that total abolition of the equitable rule that delay bars the claimant's remedy would either have no effect, because the court would simply find another way of arriving at the desired result,

^[327]

^[328]

The effect of our recommendations will be that claims for equitable relief will be subject not only to the core regime we propose (being 'civil claims' within the meaning of clause 1(4) of the Bill) but also to the court's equitable jurisdiction to deny the claimant relief because of his delay. The expiry of the limitation period applicable under the core regime will bar the claimant's claim. In addition, the claimant may bring a claim within the limitation period, but after delay which would lead to the claim being barred under the current law for laches. Under our recommendations the court with retain the power to deny the claim on the grounds of delay even though the relevant limitation period has not expired.

4.278

We therefore recommend that nothing in the new Limitation Act should be taken to prejudice any equitable jurisdiction of the court to refuse an application for equitable relief (whether final or interlocutory) on the grounds of delay (or because of any other equitable defence such as acquiescence), even though the limitation period applicable to the claim in question has not expired. (Draft Bill, Cl 34(2)).

22. The Inter-relationship between our Proposed Core Regime and Statutory Limitation Periods outside the 1980 Act.

4.279 We provisionally proposed that, analogously to section 39 of the Limitation Act 1980, the core regime we are proposing should not apply where a limitation period is prescribed in another enactment.^[329] We also proposed that, as an exception to this general principle, the limitation periods in the following statutes should be brought within the core regime: the Rent Act 1977, section 94; the Vaccine Damage Payments Act 1979, section 3; the Compulsory Purchase (Vesting Declarations) Act 1981, section 10; the Copyright, Designs and Patents Act 1988, sections 113 and 203.^[330]

Over seventy-five per cent of consultees responding on this issue agreed that the core regime should not apply where a limitation period is prescribed in another enactment. There was also general agreement that the statutory limitation periods identified in the Consultation Paper (save for the limitation period in section 3 of the Vaccine Damage Payments Act 1979 and section 10 of the Compulsory Purchase (Vesting Declarations) Act 1981) should be subject to the core regime. It was also suggested that it should be made clear, for the avoidance of doubt, that claims under the Defective Premises Act 1972 should be brought within the core regime. We agree (though it should be noted that the starting date for the long-stop limitation period applying to claims under that Act will continue to be determined in accordance with section 1(5) of the Defective Premises Act 1972).

4.281

The majority of consultees agreed that claims under the Vaccine Damage Payments Act 1979 should be subject to the core regime. It has however been suggested by one consultee that the limitations regime applicable to such claims is an integral part of the scheme for payments under the Act, and that claims under the Act should be treated differently to other claims for compensation because of their nature (and in particular the fact that strict liability attaches to them). However, we do not consider that the distinctions between claims under the Vaccine Damage Payments Act 1979 and other claims are sufficient to justify excluding claims under the Act from the core regime. We are not, for example, excluding other strict liability torts from the core regime.

4.282

^[331]

^[332]

A three year claim 'window' would be unrealistically short and potentially prejudicial to claimants; in particular, it can often take longer than 3 years for the full physical effect of a scheme of public works to become known.

4.284

The Holborn Law Society went further, suggesting that such claims should be subject to the same limitation period as claims for land, or money secured on land:

It is difficult to see how the acquiring authority could be prejudiced by a long limitation period. Section 9 of the Compulsory Purchase Act 1965 is there to provide for the problem of the inactive or untraceable owner. The section gives the authority power to vest the property in itself by deed poll and pay the compensation money into court. Thereupon the owner's rights against the authority cease, and there is no limitation at all on the time within which the owner may apply for payment out of court. We see no attraction in a limitation period whose effect is to allow an authority to choose not to pay into court in the hope of enjoying a windfall at the expense of the owner whose claim may soon become statute-barred.

They therefore suggested that the relevant limitation period should be extended from six years to ten years.

4.285

There is a case for treating all claims for compensation for compulsory purchase in the same way, as we suggested in the Consultation Paper. However, in the light of the comments made by consultees we agree, with some hesitation, that claims under the Compulsory Purchase (Vesting Declarations) Act 1981 should be excluded from the core regime.

^[333]

There are a number of cases in which claims for statutory compensation are subjected to the Limitation Act 1980, but provision is made for the cause of action to accrue on the date on which the claimant has notice of particular facts. This applies to, for example, claims under the Law of Registration Act 1925 and the Law of Property Act 1969 for compensation or indemnity for loss suffered as a result of an error on the Land Register and claims under the Local Land Charges Act 1975 for the non-registration of a land charge or production of a defective official certificate. If these notice provisions are retained the claims will be subject to two conflicting 'knowledge' regimes. We believe this should be avoided. The concern which led to the provisions in question can be met by providing that the long-stop limitation period (which would run from the date on which the error was made, and might end considerably before the claimant had any opportunity to discover it) shall not apply to these claims. They will be subject only to the primary limitation period of three years from the date of knowledge.

4.287

We therefore recommend that the core regime should not apply where a limitation period has been prescribed in another enactment (Draft Bill, Cl 36), but that claims under:

(1) section 94 of the Rent Act 1977 (Draft Bill, Sch 3, para 18, 19);

(2) section 3 of the Vaccine Damage Payments Act 1979 (Draft Bill, Sch 3, para 20);

(3) sections 113(1), 203(2) and 230 of the Copyright, Designs and Patents Act 1988 and section 18 of the Trade Marks Act 1994; (Draft Bill, Sch 3, paras 25 - 29),

(4) section 34 of the Land Compensation Act 1973 (Draft Bill, Sch 3, para 14) and, for the avoidance of doubt

(5) section 1 of the Defective Premises Act 1972 (Draft Bill, Cl 3(4) and Sch 3, para 11)

should be brought within the core regime.

4.288

We also recommend that claims under section 83 of the Land Registration Act 1925, section 25 of the Law of Property Act 1969 and section 10 of the Local Land Charges Act 1975 should be subject to the primary limitation period running from the date of knowledge, but not the long-stop limitation period (Draft Bill, Cl 20; Sch 3, paras 3, 9, 16).

23. A 'Sweeping-up' or 'Default' Provision

4.289

We provisionally proposed that a new Limitations Act should include a 'sweeping-up' or 'default' clause stating that the core regime applies to all claims unless excluded by another provision in the Act (or any other enactment).

^[334]

^[335]

In order to achieve the certainty desired as a result of the new regime, this sweeping up clause is important. If it were found that a provision not previously considered had been adversely and unfairly affected, then it is possible for this oversight to be remedied by Parliament. This would be preferable to establishing a regime which was not universal and which gave rise to initial questions of whether the regime applied at all.

We therefore confirm as a final recommendation that the new Limitations Act will apply to all civil claims, namely claims in civil proceedings for a remedy for a wrong, restitution, or the enforcement of a right.^[336]

We asked consultees the question whether, contrary to the present law, a limitation period (and if so what limitation regime) should apply to proceedings by the Crown for the recovery of any tax or duty or to forfeiture proceedings under the Customs & Excise Acts. The possibility that proceedings by the Crown to recover tax might be subject to a limitation period caused particular concern to the Inland Revenue. The Inland Revenue argue that imposing a limitation period on such claims would seriously damage the current system of tax collection, which makes considerable use of settlements with taxpayers, by obliging the Inland Revenue to issue proceedings unnecessarily. They predicted that the cost of tax collection would increase substantially, and at the same time the level of recoveries would fall sharply.

4.291

Though it would increase the consistency of the core regime if claims by the Inland Revenue and HM Commissioners for Customs & Excise to recover tax were subject to the core regime, we appreciate that there are good reasons to exempt them. Such claims are sui generis, and if a limitation period were imposed we have been informed by the Inland Revenue that the revenues collected through the tax system may fall significantly. Further, the usual justifications for a limitation period are not as strong. There are adequate limitation periods applying to the Inland Revenue's right to assess tax, and a full appeal system allowing the tax-payer to dispute any assessment made by the Inland Revenue. The only claims to which a limitation period does not apply under the current law, and which would be affected by imposing the core regime, are claims to recover tax which has already been assessed. The taxpayer has an opportunity to challenge the assessment when it is made. Once any such challenge has been resolved the tax payer will know precisely what his or her maximum liability is. There is therefore no need to impose a limitation period to ensure certainty,

^[337]

We do not however propose to exempt forfeiture proceedings (or "condemnation proceedings", as they should more correctly be called)

^[338]

^[339]

We therefore recommend that:

(1) A new Limitations Act should include a 'sweeping-up' or 'default' clause. This will provide that the standard limitation defences which we propose apply to all civil claims. For these purposes, a civil claim means a claim in civil proceedings in which the claimant seeks

(a) a remedy for a wrong,

(b) restitution, or

(c) the enforcement of a right (Draft Bill, Cl 1).

(2) There should be an exception to this general rule where other provision is made in the Bill itself, or in any other enactment (Draft Bill, Cl 36).

(3) As under the present law, no limitation period should apply to proceedings by the Crown for the recovery of any tax or duty. (Draft Bill, Cl 35(2)).

Ý
Ü Þ

Note 1    The one major exception was our provisional proposal that there should be a single long-stop limitation period applicable to claims for an indemnity or contribution running from the date of the judgment or settlement in the original proceedings to which the claim relates. See paras 4.80 - 4.93 below.    [Back]

Note 2    Reeves v Butcher [1891] 2 QB 509.    [Back]

Note 3    Limitation of Actions, Consultation Paper No 151 (1998), para 12.24.    [Back]

Note 4    Limitation of Actions, Consultation Paper No 151 (1998), paras 13.4 - 13.6.    [Back]

Note 5    We discuss the parties’ power to change the applicable limitation period by contract at paras 3.170 - 3.175 above. We propose that agreements in the form of specialties which have been entered into before the new Act comes into force should be subject to special transitional provisions. See further para 5.36 below.    [Back]

Note 6    Limitation of Actions, Consultation Paper No 151 (1998), paras 7.10 - 7.20.    [Back]

Note 7    Limitation of Actions, Consultation Paper No 151 (1998), paras 13.7 - 13.10.    [Back]

Note 8    Limitation of Actions, Consultation Paper No 151 (1998), paras 3.77 - 3.80. See para 2.24 above.    [Back]

Note 9    Professor Andrew Tettenborn and Nicholas Underhill QC.    [Back]

Note 10    A problem noted by Pinsent Curtis, John Galt of T G Baynes and Nicholas Underhill QC.    [Back]

Note 11    As Limitation Act 1980, s 11(7) provides under the present law for personal injury claims brought under the Law Reform (Miscellaneous Provisions) Act 1934.    [Back]

Note 12    Discussed in more detail at paras 3.156 - 3.169 above.    [Back]

Note 13    Limitation of Actions, Consultation Paper No 151 (1998), para 13.9.    [Back]

Note 14    See paras 3.102 - 3.107 above.    [Back]

Note 15    Only two consultees expressed reservations on the application of the long-stop limitation period to claims under the Law Reform (Miscellaneous) Provisions Act 1934, and those reservations concerned the possible consequences for personal injury claims which, under the core regime we now recommend, are not subject to a long-stop limitation period.    [Back]

Note 16    Limitation of Actions, Consultation Paper No 151 (1998), paras 13.11 - 13.16.    [Back]

Note 17    Limitation of Actions, Consultation Paper No 151 (1998), paras 3.81 - 3.86.    [Back]

Note 18    By Stuart Brown QC.    [Back]

Note 19    See paras 3.115 - 3.121 above.    [Back]

Note 20    By the General Council of the Bar.    [Back]

Note 21    See the Fatal Accidents Act 1976, s 2(3).    [Back]

Note 22    See paras 3.102 - 3.107 above.    [Back]

Note 23    See para 3.160 above.    [Back]

Note 24    Slight modifications to the formulation of the discretion will be needed to deal with the relevant delay being potentially both that of the deceased and the dependants.    [Back]

Note 25    See Limitation of Actions, Consultation Paper No 151 (1998), paras 3.32 - 3.36.    [Back]

Note 26    [1993] AC 498.    [Back]

Note 27    Stubbings v United Kingdom (1997) 23 EHRR 213, 234.    [Back]

Note 28    See Limitation of Actions, Consultation Paper No 151 (1998), paras 13.19 - 13.25.    [Back]

Note 29    See Limitation of Actions, Consultation Paper No 151 (1998), para 13.25.    [Back]

Note 30    Professor Andrew Tettenborn, Michael Lerego QC and His Honour Judge John Griffith Williams QC (responding on behalf of the Wales and Chester Circuit).    [Back]

Note 31    Lee Moore and Pannone & Partners.    [Back]

Note 32    American Psychiatric Association (4th ed 1994), 300.12.    [Back]

Note 33    See paras 3.123 - 3.133 above.    [Back]

Note 34    And considerable academic controversy exists as to whether there is a “sexual abuse syndrome” with recognised symptoms which affects most, if not all, victims of sexual abuse. See para 3.125 above.    [Back]

Note 35    Elizabeth Palmer, John Grace QC (responding on behalf of the South Eastern Circuit), The Law Society, and Thompsons. In contrast the Holborn Law Society felt that the long-stop applicable to such claims should be shorter than thirty years.    [Back]

Note 36    The Law Society.    [Back]

Note 37    See paras 3.102 - 3.107 and 3.160 - 3.169 above. The decision to retain the court’s discretion to disapply the limitation period in cases of personal injury was influenced by the need to do justice to sexual abuse claimants.    [Back]

Note 38    A concern expressed by Professor Andrew Tettenborn, Michael Lerego QC and Nicholas Underhill QC.    [Back]

Note 39    See paras 3.102 - 3.107 above, where this issue is discussed.    [Back]

Note 40    [1993] AC 498. This anomaly is discussed in detail in Limitation of Actions, Consultation Paper No 151 (1998), paras 3.32 - 3.36. See also para 1.5 above.    [Back]

Note 41    See Limitation of Actions, Consultation Paper No 151 (1998), paras 3.101 - 3.104, and paras 2.35 - 2.36 above.    [Back]

Note 42    Limitation Act 1980, s 33(1) and (1A).    [Back]

Note 43    Council Directive 85/374/EEC of 25 July 1985.    [Back]

Note 44    Discussed in the Consultation Paper at para 13.38. See para 2.37 above.    [Back]

Note 45    Supreme Court Procedure Committee, Report of Practice and Procedure in Defamation, July 1991.    [Back]

Note 46    “We have canvassed opinion and found a wide measure of agreement (not surprisingly) among media representatives that the same reasoning would justify an even shorter period. Memories fade. Journalists and their sources scatter and become, not infrequently, untraceable. Notes and other records are retained only for short periods, not least because of limitations on storage”: Supreme Court Procedure Committee, Report on Practice and Procedure in Defamation, July 1991, p 81, para VIII 2.    [Back]

Note 47    The possibility that records might have to be kept for ten years post publication was described by Associated Newspapers Ltd as presenting “a near impossible task”.    [Back]

Note 48    The Newspaper Society.    [Back]

Note 49    A point made by Associated Newspapers Ltd, The Newspaper Society, and Lovells.     [Back]

Note 50    See Limitation of Actions, Consultation Paper No 151 (1998), para 13.41, n 61.    [Back]

Note 51    See Limitation of Actions, Consultation Paper No 151 (1998), para 13.42.    [Back]

Note 52    Limitation Act 1980, s 4. For detailed discussion of the current law, see Limitation of Actions, Consultation Paper No 151 (1998), paras 3.108 - 3.115.     [Back]

Note 53    Limitation of Actions, Consultation Paper No 151 (1998), paras 13.44 - 13.64.    [Back]

Note 54    Limitation of Actions, Consultation Paper No 151 (1998), paras 13.65 - 13.69.    [Back]

Note 55    Limitation of Actions, Consultation Paper No 151 (1998), paras 13.48 - 13.49.    [Back]

Note 56    Limitation of Actions, Consultation Paper No 151 (1998), para 13.49, n 75.    [Back]

Note 57    For our proposals for theft-related conversions, see para 4.57 below.    [Back]

Note 58    Limitation of Actions, Consultation Paper No 151 (1998), para 13.50.    [Back]

Note 59    Limitation Act 1980, s 3(1).    [Back]

Note 60    See Limitation of Actions, Consultation Paper No 151 (1998), paras 13.51 - 13.64.    [Back]

Note 61    John Grace QC (responding on behalf of the South Easter Circuit), Lovells, Holborn Law Society, and London Solicitors’ Litigation Association.    [Back]

Note 62    QBD, The Times, 8 October 1998.     [Back]

Note 63    QBD, The Times, 8 October 1998, transcript, case no 1997/G/185, 9 September 1998, p 57.    [Back]

Note 64    QBD, The Times, 8 October 1998, transcript, case no 1997/G/185, 9 September 1998, p 57.    [Back]

Note 65    In some cases (particularly where valuable art property is involved), the victim will be able to publicise the loss by entering details of the stolen property in the Arts Loss Register set up by insurance companies, dealer associations and auctioneers. This is a computerised information centre with offices in (inter alia) London and New York. All the main UK insurance companies subscribe to the Arts Loss Register, and when a theft is reported by an owner, the relevant information together with a picture of the stolen object is entered onto the register. The register is available for public searching, and is used by the major British auction houses to check provenance. See Patrick J O’Keefe, “The use of databases to combat theft of cultural heritage material” (1997) 2 AA&L 357, and DL Carey Miller, “Title to Art: Developments in the USA” [1996] SLPQ 115.    [Back]

Note 66    See paras 3.45 - 3.50 above.    [Back]

Note 67    QBD, The Times, 8 October 1998.    [Back]

Note 68    Limitation of Actions, Consultation Paper No 151 (1998), paras 13.58 - 13.64.     [Back]

Note 69    Limitation of Actions, Consultation Paper No 151 (1998), paras 13.58 - 13.64.    [Back]

Note 70    See paras 3.140 - 3.145 above.    [Back]

Note 71    Limitation Act 1980, s 3(2).    [Back]

Note 72    Limitation of Actions, Consultation Paper No 151 (1998), para 13.69.    [Back]

Note 73    It is only the expiry of the long-stop limitation period which extinguishes the claimant’s right to bring a claim under the Consumer Protection Act 1987. See para 4.36 above.    [Back]

Note 74    Limitation of Actions, Consultation Paper No 151 (1998), para 13.71 -13.72.    [Back]

Note 75    See Limitation of Actions, Consultation Paper No 151 (1998), para 3.100.    [Back]

Note 76    Limitation of Actions, Consultation Paper No 151 (1998), para 13.71 - 13.76.    [Back]

Note 77    By, in particular, Professor Andrew Tettenborn, the Construction Industry Council, the Construction Confederation and the Royal Institute of Chartered Surveyors.    [Back]

Note 78    This aspect of the current law was criticised by N J Mullany, “Reform of the Law of Latent Damage” (1991) 54 MLR 349.     [Back]

Note 79    See for example Murphy v Brentwood District Council [1991] 1 AC 398.    [Back]

Note 80    Murphy v Brentwood District Council [1991] 1 AC 398.    [Back]

Note 81    Limitation of Actions, Consultation Paper No 151 (1998), paras 13.77 - 13.83. For a summary of the current law, see paras 2.48 - 2.51 above.    [Back]

Note 82    Although Professor Birks preferred different terminology so as to make clearer the distinction between claims in (autonomous) unjust enrichment and restitution for wrongs. For this distinction and the meaning of autonomous unjust enrichment, see P Birks, An Introduction to the Law of Restitution (rev ed 1989) pp 22 - 25, 40 - 44, 346 - 355; A Burrows, The Law of Restitution (1993) pp 16 - 21, 376, 440. See also Limitation of Actions, Consultation Paper No 151 (1998), para 5.4.     [Back]

Note 83    [1999] 2 AC 349.    [Back]

Note 84    [1999] 2 AC 349, 389.    [Back]

Note 85    [1999] 2 AC 349, 401.    [Back]

Note 86    That is, claims in autonomous unjust enrichment and, in so far as independent from a claim for a wrong, a claim for restitution for wrongful enrichment.    [Back]

Note 87    See para 2.77 above for a summary of the current law.    [Back]

Note 88    Limitation of Actions, Consultation Paper No 151 (1998), paras 13.84 - 13.92.    [Back]

Note 89    The view of the Royal Institute of Chartered Surveyors and Ernst & Young.    [Back]

Note 90    A concern expressed by Professor Andrew Tettenborn, Victor Joffe QC, John Grace QC, responding on behalf of the South Eastern Circuit, Munich Reinsurance Company, Holborn Law Society, the Construction Federation and Ernst & Young.    [Back]

Note 91    See paras 4.88 - 4.93 below.    [Back]

Note 92    Limitation of Actions, Consultation Paper No 151 (1998), paras 13.93 - 13.98.    [Back]

Note 93    A point made by Unionamerica Insurance Company Ltd, Excess Insurance and Lovells.    [Back]

Note 94    Paisner & Co.    [Back]

Note 95    See paras 5.33 - 5.40 below in which we discuss commencement provisions.    [Back]

Note 96    We have been informed by the Institute of Actuaries, for example, that reinsurance claims in respect of Hurricane Alicia, which took place in 1983, are still being paid, and may continue to be paid for the next ten or fifteen years.    [Back]

Note 97    There does not appear to be a widely accepted statutory definition of ‘insurance’ or ‘reinsurance’. Instead, varying definitions, often surprisingly circular, are adopted according to the context of the particular legislation. The Insurance Companies Act 1982 itself defines ‘contract of insurance’ in s 96 as including “any contract the effecting of which constitutes the carrying on of insurance business by virtue of s 95 above.” Section 95 (also an inclusive definition) itemises the main forms of insurance business. No clearer definition is available from the authorities. Malcolm Clarke has remarked in The Law of Insurance Contracts (3rd ed, 1997) p 1, that “The English Courts know an elephant when they see one, so too a contract of insurance, and talk, for example, of ‘those who are generally accepted as being insurers’”. He also notes “Insurance contracts are best seen (and defined, if at all) according to the angle or line of approach, that is, the context or issue before the court” (ibid, p 2).    [Back]

Note 98    In the case of other forms of insurance, such as property insurance, the long-stop limitation period will run from the date of the breach of contract, which, as under the present law, will be the date of the occurrence of the insured event.    [Back]

Note 99    The Construction Industry Council noted that “In the great majority of instances all in an indemnity chain are aware of the likelihood of being required to meet their liability. Cascades of actions are rare.” IN Duncan Wallace QC commented: “Certainly in the construction industry, any such chain is not likely to be very long, and protective writs or notices of arbitration can, as stated, be expected at an earlier stage given the practical realities of multipartite construction disputes.”    [Back]

Note 100    Limitation Act 1980, s 21. See paras 2.39 - 2.45 above.    [Back]

Note 101    Limitation of Actions, Consultation Paper No 151 (1998), paras 13.99 - 13.102.    [Back]

Note 102    Limitation of Actions, Consultation Paper No 151 (1998), paras 13.103 - 13.104.    [Back]

Note 103    Limitation of Actions, Consultation Paper No 151 (1998), paras 13.105 - 13.108.    [Back]

Note 104    By the Country Landowners Association.    [Back]

Note 105    By the General Council of the Bar.    [Back]

Note 106    Lynton Tucker, responding on behalf of the Chancery Bar Association.    [Back]

Note 107    Limitation of Actions, Consultation Paper No 151 (1998), para 13.104.    [Back]

Note 108    G L Baker Ltd v Medway Building and Supplies Ltd [1958] 1 WLR 1216. See Limitation of Actions, Consultation Paper No 151 (1998), para 4.16.    [Back]

Note 109    The same problem is not as significant in relation to theft, as in the majority of cases the claimant merely has to show that there has been a theft, and does not have to identify the original thief.    [Back]

Note 110    See paras 4.52 - 4.53 above.    [Back]

Note 111    We are grateful to Lynton Tucker, responding on behalf of the Chancery Bar Association, for drawing our attention to this point.    [Back]

Note 112    Limitation Act 1980, s 21(3). See paras 4.116 - 4.118 below.    [Back]

Note 113    Attorney-General v Cocke [1988] Ch 414. See Limitation of Actions, Consultation Paper No 151 (1998), para 4.30.    [Back]

Note 114    On behalf of the Attorney General.    [Back]

Note 115    By the Charity Commission.    [Back]

Note 116    We are grateful to Professor Andrew Tettenborn for drawing our attention to the importance of this point.    [Back]

Note 117    See paras 4.52 - 4.53 and 4.103 - 4.104 above.    [Back]

Note 118    See Limitation Act 1980, s 21(3). See also Sch I, para 4 to the Act (relating specifically to future interests in land).    [Back]

Note 119    [1998] Ch 241, 261, per Millett LJ.    [Back]

Note 120    Limitation of Actions, Consultation Paper No 151 (1998), paras 13.118 - 13.121.    [Back]

Note 121    Limitation Act 1980, s 22 and s 21(3).    [Back]

Note 122    Limitation of Actions, Consultation Paper No 151 (1998), para 13.108.    [Back]

Note 123    Limitation Act 1980, s 22(a).    [Back]

Note 124    Administration of Estates Act 1925, s 44 provides that “Subject to the foregoing provisions of this Act, a personal representative is not bound to distribute the estate of the deceased before the expiration of one year from the death.” See Limitation of Actions, Consultation Paper No 151 (1998), para 4.36.    [Back]

Note 125    See paras 5.24 - 5.28 below.    [Back]

Note 126    See Williams, Mortimer and Sunnucks, Executors, Administrators and Probate (18th ed, 2000) p 116, citing Grayburn v Clarkson (1868) LR 3 Ch App 605.    [Back]

Note 127    Limitation Act 1980, s 15 and Sch 1. See further paras 2.52 - 2.59 above and paras 4.133 - 4.134 below.    [Back]

Note 128    Limitation of Actions, Consultation Paper No 151 (1998), para 13.121.    [Back]

Note 129    Limitation of Actions, Consultation Paper No 151 (1998), para 13.121.    [Back]

Note 130    Three per cent favoured each of the following options: fifteen years, twenty years, and a period between ten and fifteen years (unspecified).    [Back]

Note 131    Limitation of Actions, Consultation Paper No 151 (1998), para 13.113.     [Back]

Note 132    Law Com No 254 (1998).    [Back]

Note 133    If the registered proprietor failed to do so within this time, the adverse possessor could apply to be registered as proprietor as of right.    [Back]

Note 134    Such as a short lease, or a tenancy or licence at will of registered land.    [Back]

Note 135    See further, Limitation of Actions, Consultation Paper No 151 (1998), para 13.118.    [Back]

Note 136    Limitation Act 1980, Sch 1, para 4. The same general rule also applies to leases.    [Back]

Note 137    Limitation Act 1980, s 15(2). But this provision does not apply in the case of any estate or interest which falls into possession on the determination of an entailed interest and which might have been barred by the person entitled to the entailed interest. Here, time will run against a person entailed in remainder, even though he or she may have no entitlement to possession of the land during the limitation period: Limitation Act 1980, s 15(3). In addition, where the claimant has both a present and a future interest in land, and his or her right to bring an action to recover the present interest has become time-barred, he or she may not bring an action to recover the future interest unless in the meantime someone has recovered possession of the land under an intermediate interest: Limitation Act 1980, s 15(5).    [Back]

Note 138    Limitation Act 1980, s 15(3) and (5). See para 4.133 n 137 above.    [Back]

Note 139    We do not intend to change the date of accrual of the cause of action from that provided for under the present law. This will generally be the date of the commencement of adverse possession as provided under Part I of Schedule I to the Limitation Act 1980 (Draft Bill, Schedule 1). We also recommend that provision should be made to retain the special rules in respect of the relation back of actions to recover land by an administrator of an estate (Limitation Act 1980, s 26) and the cure of defective disentailing assurances (Limitation Act 1980, s 27) (Draft Bill, Cl 17(4) and 21).    [Back]

Note 140    Subject to the exceptions presently set out in Limitation Act 1980, s 15(3) and (5).    [Back]

Note 141    See Limitation of Actions, Consultation Paper No 151 (1998) paras 4.14 - 4.16.    [Back]

Note 142    Limitation Act 1980, s 18.    [Back]

Note 143    Limitation Act 1980, s 18(2).    [Back]

Note 144    Limitation Act 1980, s 18(3).    [Back]

Note 145    Limitation Act 1980, s 18(4).    [Back]

Note 146    See paras 4.145 - 4.147 below.    [Back]

Note 147    Part II of Schedule I to the Limitation Act 1980. A special limitation period of sixty years applies in the case of actions by the Crown to recover foreshore: see further paras 4.145 - 4.147 below.    [Back]

Note 148    Limitation of Actions, Consultation Paper No 151 (1998), para 13.126.    [Back]

Note 149    The Ministry of Defence, the Ministry of Agriculture, Fisheries and Food and the Treasury Solicitor’s Department.    [Back]

Note 150    Law Com No 254 (1998).    [Back]

Note 151    Although at present the Crown is unable to register its title to land it holds in demesne as paramount lord under the Land Registration Act 1925, this will change under the proposals made by the Law Commission in relation to Land Registration.    [Back]

Note 152    This may, we are informed, apply at any one time to over a quarter of the benefices in England.    [Back]

Note 153    Although it is possible that the sequestrators of the benefice could commence proceedings for trespass in respect of parsonage land: Church of England (Miscellaneous Provisions) Measure 1992.    [Back]

Note 154    As defined in section 1(1) of the Church of England (Miscellaneous Provisions) Measure 1992.    [Back]

Note 155    Land Compensation Act 1961, s 34.    [Back]

Note 156    Commons Registration Act 1965, s 19.    [Back]

Note 157    Town and Country Planning Act 1990, s 318.    [Back]

Note 158    Water Resources Act 1991, s 67.    [Back]

Note 159    That is “the shore and bed of the sea and of any tidal water, below the line of the medium high tide between the spring tides and the neap tides.” (Limitation Act 1980, Sch 1, para 11(3)).    [Back]

Note 160    Limitation of Actions, Consultation Paper No 151 (1998), para 13.126.    [Back]

Note 161    Land which falls within the Crown’s sovereign title cannot be the subject of adverse possession.     [Back]

Note 162    That is, held independently of any ultimate lordship. Similarly, the Land Registration Act 1925, s 75(1) can be construed so that the statutory trust in favour of the squatter is a trust of the whole of the Crown’s registered interest.    [Back]

Note 163    See Mount Carmel Investments Ltd v Peter Thurlow Ltd [1988] 1 WLR 1078, CA.    [Back]

Note 164    Limitation Act 1980, s 20(1).    [Back]

Note 165    See para 3.121 above.    [Back]

Note 166    See para 3.145 above.    [Back]

Note 167    See para 3.145 above.    [Back]

Note 168    Limitation Act 1980, s 19.    [Back]

Note 169    Limitation of Actions, Consultation Paper No 151 (1998), para 13.136.    [Back]

Note 170    Limitation Act 1980, s 20. See paras 2.62 - 2.66 above.    [Back]

Note 171    See, generally, Land Registration for the Twenty-First Century: A Consultative Document, Law Com No 254 (1998), paras 9.1 - 9.3.    [Back]

Note 172    Limitation Act 1980, s 20(1).    [Back]

Note 173    Limitation Act 1980, s 20(5). Foreclosure actions in respect of land are specifically excluded from the operation of this provision: Limitation Act 1980, s 20(4). Thus, it would appear that no period of limitation applies to the recovery of interest where a mortgagee forecloses on a mortgage of land.    [Back]

Note 174    Limitation Act 1980, ss 20(4) and 15(1). Generally, the mortgagee’s right to foreclose accrues when the mortgagor is in default on the proviso for redemption and the mortgagee’s estate is, at law, absolute.    [Back]

Note 175    Limitation Act 1980, ss 38(7) and 15(1). Generally, the mortgagee’s right to possession accrues immediately the mortgage is executed: Four Maids Ltd v Dudley Marshall [1957] Ch 317, 320, per Harman J. However, where the mortgage provides for quiet enjoyment by the mortgagor until default, the mortgagee’s right to possession accrues on the date of default: Wilkinson v Hall (1837) 3 Bing NC 508, 132 ER 506.    [Back]

Note 176    Limitation of Actions, Consultation Paper No 151 (1998), para 13.131.    [Back]

Note 177    Our recommendations in respect of actions to recover land are set out at para 4.135 above.    [Back]

Note 178    As one consultee suggested.    [Back]

Note 179    Limitation of Actions, Consultation Paper No 151 (1998), para 13.131.    [Back]

Note 180    Limitation Act 1980, s 20(1)(a). The 1980 Act does not define “personal property”, other than providing that “personal property” does not include chattels real (s 38(1)).    [Back]

Note 181    Limitation Act 1980, s 20(5).    [Back]

Note 182    Limitation Act 1980, s 20(2).    [Back]

Note 183    See paras 4.160 and 4.167 above.    [Back]

Note 184    Law Revision Committee, Fifth Interim Report (Statutes of Limitation) (1936) Cmd 5334, p 15.    [Back]

Note 185    As we note in para 4.162 above.    [Back]

Note 186    Where a floating charge is capable of applying to both real and personal property, the applicable limitation period will depend on the property which is subject to the charge at the moment of crystallisation.    [Back]

Note 187    Limitation Act 1980, s 20(1); Sutton v Sutton (1882) 22 Ch D 511; Fearnside v Flint (1883) 22 Ch D 579; Re Powers (1885) 30 Ch D 291, 297, per Bowen LJ: “An action against the mortgagor for the debt is an action to recover money which is charged on land.” However, it has also been held that the expiry of the limitation period applying to a personal action to enforce an obligation secured by a mortgage or charge does not operate to bar an action to enforce the security: Hugill v Wilkinson (1888) 38 Ch D 480; London & Midland Bank v Mitchell [1899] 2 Ch 161.    [Back]

Note 188    Limitation Act 1980, s 20(5). A court may grant arrears of interest by way of damages where the instrument creating the mortgage or charge does not contain any provision for payment of interest after the legal date of repayment: Re Roberts (1880) 14 Ch D 49; Mellersh v Brown (1890) 45 Ch D 225, 228-229, per Kay J.    [Back]

Note 189    [1996] 1 WLR 1316.    [Back]

Note 190    Schedule 1 to the Civil Procedure Rules, which assigns ‘mortgage actions’ to the Chancery Division.    [Back]

Note 191    Michael Lerego QC and the Holborn Law Society.    [Back]

Note 192    Though once a debt is no longer secured (as where the amount realised by the mortgagee on sale of the property which secured the mortgage is insufficient to repay the full amount owed), the primary limitation period will apply to any claim to recover the remainder of the debt.    [Back]

Note 193    Limitation Act 1980, s 20(3).    [Back]

Note 194    Limitation Act 1980, s 20(7).    [Back]

Note 195    Limitation Act 1980, s 20(3).    [Back]

Note 196    Limitation Act 1980, s 15 and Sch I, para 4. In fact, there is scope for argument as to whether foreclosure actions in respect of land fall within the terms of these provisions: see Hugill v Wilkinson (1888) 38 Ch D 480; Wakefield and Barnsley Union Bank v Yates [1916] 1 Ch 452; Re Witham [1922] 2 Ch 413.    [Back]

Note 197    Law Revision Committee, Fifth Interim Report (Statute of Limitation) (1936) Cmd 5334, p 16.    [Back]

Note 198    Limitation Act 1980, s 20(6).    [Back]

Note 199    Chinnery v Evans (1864) 11 HLC 115, 136, 11 ER 1274, 1283, per Lord Westbury LC.    [Back]

Note 200    Limitation Act 1980, ss 15 and 20(2) and Sch I, para 1.    [Back]

Note 201    Limitation Act 1980, s 16.    [Back]

Note 202    Limitation of Actions, Consultation Paper No 151 (1998), para 13.134.    [Back]

Note 203    Real Property Limitation Act 1874, s 7.    [Back]

Note 204    Limitation Act 1939, s 12.    [Back]

Note 205    See the Law of Property Act 1925, ss 85 - 86.    [Back]

Note 206    See Palk v Mortgage Services Funding plc [1993] Ch 330, 336.    [Back]

Note 207    Lord Cranworth’s Act, 23 & 24 Vict c 145, s 32. The present provisions are found in the Law of Property Act 1925, ss 101(1) and 103.    [Back]

Note 208    See Law of Property Act 1925, s 103.    [Back]

Note 209    Law of Property Act 1925, s 91(2); see Twentieth Century Banking Corporation v Wilkinson [1977] Ch 99.    [Back]

Note 210    See Law of Property Act 1925, s 99.    [Back]

Note 211    This is not wholly fanciful, given that the last recession in property prices lasted for 9 years.    [Back]

Note 212    It was held in Palk v Mortgage Services Funding plc [1993] Ch 330 that a sale could be ordered under the Law of Property Act 1925, s 91(2), even where the proceeds would not discharge the indebtedness. However, the facts of that case were exceptional and, for reasons connected with the county court’s jurisdictional limits, there are considerable difficulties which lie in the path of a mortgagor who wishes to seek a sale under that subsection if proceedings are brought against him for possession in the county court: see Cheltenham and Gloucester plc v Krausz [1997] 1 WLR 1558.    [Back]

Note 213    (1866) LR 1 Eq 418, 421.    [Back]

Note 214    (1866) LR 1 Eq 418, 421, per Kindersley V-C.    [Back]

Note 215    Limitation of Actions, Consultation Paper No 151 (1998), para 13.135.    [Back]

Note 216    Law Revision Committee,Fifth Interim Report (Statutes of Limitation) (1936) Cmd 5334, p 15.    [Back]

Note 217    Limitation Act 1980, s 17.    [Back]

Note 218    See para 4.135 above.    [Back]

Note 219    Limitation of Actions, Consultation Paper No 151 (1998), paras 13.137 - 138. See paras 2.67 - 2.68 above for a summary of the current law.    [Back]

Note 220    Limitation of Actions, Consultation Paper No 151 (1998), para 13.139. See paras 2.69 - 2.70 for a summary of the current law.    [Back]

Note 221    Such as the issue of a writ of execution under CPR, Sch 1, RSC, O 46, r 2.    [Back]

Note 222    See Limitation of Actions, Consultation Paper No 151 (1998), para 1.40.    [Back]

Note 223    Limitation of Actions, Consultation Paper No 151 (1998), paras 13.140 - 13.141.    [Back]

Note 224    Limitation Act 1980, s 9. See Limitation of Actions, Consultation Paper No 151 (1998), paras 7.10, and 7.12 - 7.14, and paras 2.71 - 2.76 above.     [Back]

Note 225    Limitation Act 1980, s 8. See Limitation of Actions, Consultation Paper No 151 (1998) paras 3.1 and 7.10 - 7.11.    [Back]

Note 226    Limitation of Actions, Consultation Paper No 151 (1998), paras 7.17 - 7.21.    [Back]

Note 227    Limitation of Actions, Consultation Paper No 151 (1998), para 13.153.    [Back]

Note 228    We received responses from consultees both directly in response to Limitation of Actions, Consultation Paper No 151 (1998), and in answer to the Department of Trade and Industry’s consultation exercise on Shareholder Remedies (1998).    [Back]

Note 229    [1982] 1 WLR 2.    [Back]

Note 230    [1982] 1 WLR 2, 10.    [Back]

Note 231    Prudential Assurance Co Ltd v Newman Industries Ltd (No. 2) [1982] 1 Ch 204, 210.    [Back]

Note 232    [1912] AC 546, PC.    [Back]

Note 233    It is interesting to note that although the cause of action which a minority shareholder seeks to enforce is vested in the company, the company is, in fact, a defendant to the shareholder’s action.    [Back]

Note 234    See paras 3.81 - 3.91 above.    [Back]

Note 235    An action by the company is not inconceivable. A liquidator, administrator or administrative receiver might be appointed; or a majority shareholder might sell his shares to a minority shareholder or an independent third party.    [Back]

Note 236    This is analogous to the rule, relating to beneficiaries under a trust, that the expiry of the limitation period against one beneficiary does not bar an action by another beneficiary in respect of the same cause of action: see para 4.107 above.    [Back]

Note 237    See Re DR Chemicals Ltd [1989] BCC 39, 53 per Peter Gibson J.    [Back]

Note 238    Noted by the Institute of Credit Management.    [Back]

Note 239    Argued by the Association of Investment Trusts Companies.    [Back]

Note 240    Limitation of Actions, Consultation Paper No 151 (1998), para 13.157.    [Back]

Note 241    As expressed in a letter dated 17 December 1999 from Jonathan Rickford, Project Director of the Company Law Review to Sir Robert Carnwath, Chairman of the Law Commission.    [Back]

Note 242    As noted above in relation to proceedings under the Companies Act 1985, we received responses from consultees both directly in response to Limitation of Actions, Consultation Paper No 151 (1998), and in answer to the Department of Trade and Industry’s consultation exercise on Shareholder Remedies (1998).    [Back]

Note 243    Letter of 24 February 1999 to Company Law Investigations Division, Department of Trade and Industry.    [Back]

Note 244    Companies Act 1985, s 425(2).    [Back]

Note 245    Insolvency Act 1986, ss 252 and 254.    [Back]

Note 246    Insolvency Act 2000, s 1, and Sch 1, which insert the moratorium procedure into Part I of the Insolvency Act 1986. By virtue of the Insolvent Partnerships Order 1994, SI 1994 No 2421 (“the 1994 Order”), Art 4, this procedure also applies to insolvent partnerships.    [Back]

Note 247    See Insolvency Act 1986, s 5(2)(b) and s 260(2)(b), and the 1994 Order, Art 4 and Sch 1.    [Back]

Note 248    And the meeting agreeing the voluntary arrangement may have agreed that it should not include certain creditors.    [Back]

Note 249    It appears that, for example, where the debtor becomes bankrupt subsequent to the agreement of the voluntary arrangement, the voluntary arrangement remains in existence, and the assets of the debtor which are covered by the arrangement are impressed with a trust for the benefit of the creditors participating in the voluntary arrangement, and are not available to the trustee in bankruptcy, or the liquidator, though the point is not free from doubt. See In re Bradley-Hole [1995] 1 WLR 1097 and Doorbar v AllTime Securities Ltd [1996] 1 WLR 456.    [Back]

Note 250    Insolvency Act 1986, ss 4(3) and 258(4), and the 1994 Order, Art 4 and Sch 1.    [Back]

Note 251    See para 3.27 above.    [Back]

Note 252    The debtor must do everything necessary to put the supervisor in possession of the assets covered by the arrangement: Insolvency Rules 1986, SI 1986 No 1925, r 1.23.    [Back]

Note 253    The supervisor is effectively in the position of a trustee. See Insolvency Act 1986, s 1(2) and 253(2) and the 1994 Order, Art 4 and Sch 1, Re Leisure Study Group Ltd [1994] 2 BCLC 65; In re Bradley-Hole [1995] 1 WLR 1097. In Re McKeen [1995] BCC 412, though not finding that there was a trust in favour of the creditors, the court held that the assets covered by the arrangement were held subject to the rights of the creditors to have them applied in accordance with the agreement.    [Back]

Note 254    Though the terms of the agreement may do so. Any such restriction would be a contractual restriction which would not, under our recommendations, operate to suspend the primary limitation period. See para 5.28 below.    [Back]

Note 255    Or in the case of an insolvent partnership, “the survival of the whole or any part of the undertaking of the partnership as a going concern”: the 1994 Order, Sch 2, para 2.    [Back]

Note 256    An objective which does not apply to insolvent partnerships.    [Back]

Note 257    Insolvency Act 1986, s 8(3), and the 1994 Order, Art 6 and Sch 2, para 2. An administration order can only be made where a debtor is unable to meet a judgment given against it and the amount of its total indebtedness is less than £5,000; County Courts Act 1984, s 112.    [Back]

Note 258    Insolvency Act 1986, s 29. In practice this will affect very few partnerships. Only agricultural partnerships are able to grant floating charges over their property, and the 1994 does not extend the provisions relating to administrative receivers in the Insolvency Act 1986 to partnerships generally.    [Back]

Note 259    Insolvency Act 1986, s 14(1)(a); the 1994 Order, Art 6, and Sch 2, para 8.     [Back]

Note 260    Insolvency Act 1986, Sch 1, para 5; the 1994 Order, Art 6, and Sch 2, para 10.    [Back]

Note 261    This is applied to insolvent partnerships by the 1994 Order, Art 6 and Sch 2, para 8.    [Back]

Note 262    Insolvency Act 1986, s 42 and Sch 1, para 14.    [Back]

Note 263    Insolvency Act 1986, s 42(2)(b).    [Back]

Note 264    In most cases, the receiver will control all the company’s property. In Moss Steamship Ltd v Whinney [1912] AC 254, 263, Lord Atkinson observed that the appointment of a receiver “entirely supersedes the company in the conduct of its business, deprives it of all power to enter into contracts in relation to that business, or to sell, pledge, or otherwise dispose of the property put into the possession, or under the control of the receiver and manager. Its power in these respects are entirely in abeyance.” See further Re Emmadart Ltd [1979] Ch 540, 544, per Brightman J; Gomba Holdings UK Ltd v Homan [1986] 3 All ER 94, 98, per Hoffmann J.    [Back]

Note 265    Tudor Grange Holdings Ltd v Citibank NA [1992] Ch 53, 62, per Browne-Wilkinson V-C.    [Back]

Note 266    The decision in Newhart Developments Ltd v Co-operative Commercial Bank Ltd [1978] QB 814 casts some doubt on the validity of this proposition. However, the correctness of that decision was doubted by Browne-Wilkinson V-C in Tudor Grange Holdings Ltd v Citibank NA [1992] Ch 53, 62-63.    [Back]

Note 267    Watts v Midland Bank plc [1986] BCLC 15.    [Back]

Note 268    See for example American Express International Banking Corporation v Hurley [1985] 3 All ER 564.    [Back]

Note 269    This will apply when a claim is brought within this jurisdiction by any company or partnership which is subject to an insolvency procedure which is equivalent to administration or administrative receivership, wherever the body in question is domiciled.    [Back]

Note 270    See para 4.228 above.    [Back]

Note 271    Insolvency Act 1986, s 10(1)(b); the 1994 Order, Art 6 and Sch 2, para 4.    [Back]

Note 272    Insolvency Act 1986, s 10(1)(c); the 1994 Order, Art 6 and Sch 2, para 4.    [Back]

Note 273    Insolvency Act 1986, s 11(3); the 1994 Order, Art 6 and Sch 2, para 5.    [Back]

Note 274    See para 5.28 below.    [Back]

Note 275    See para 5.28 below.    [Back]

Note 276    See Re Atlantic Computer Systems plc [1992] Ch 505.    [Back]

Note 277    [1989] BCLC 362.    [Back]

Note 278    [1989] BCLC 362, 363.    [Back]

Note 279    An argument we have rejected elsewhere. See para 3.27 above.    [Back]

Note 280    See our recommendation at para 3.175 above.    [Back]

Note 281    Parts IV and V of the Insolvency Act 1986 (the winding up of registered and unregistered companies) apply, with certain modifications, to insolvent partnerships by virtue of Arts 7 - 10 of the 1994 Order. In paras 4.242 - 4.253 we refer only to companies in the text for reasons of clarity, but it should be remembered that these paragraphs apply equally to insolvent partnerships.    [Back]

Note 282    Insolvency Act 1986, ss 91(2) and 103; the 1994 Order, Arts 7 - 10. Madrid Bank v Bayley (1866) LR 2 QB 37.    [Back]

Note 283    Insolvency Act 1986, ss 165 - 167, and Sch 4, para 5; the 1994 Order, Arts 7 - 10 and Sch 3, para 10. In certain circumstances this power is subject to the approval of the court or the liquidation committee.    [Back]

Note 284    Insolvency Act 1986, ss 165 - 167, and Sch 4, para 4; the 1994 Order, Arts 7 - 10 and Sch 3, para 10. This power is also subject to the approval of the court or the liquidation committee.    [Back]

Note 285    Insolvency Act, s 145(2); the 1994 Order Arts 7 - 10.    [Back]

Note 286    L S Sealy, Annotated Guide to the Insolvency Legislation (5th ed 1999), p 185.    [Back]

Note 287    See para 4.234 above.    [Back]

Note 288    The position is of course exacerbated by the fact that the majority of claims available to an insolvent company will be for breach of contract. In practice the limitation period for most claims for breach of contract will be reduced from six years to three years.    [Back]

Note 289    Insolvency Act 1986, s 126; the 1994 Order, Arts 7 - 10; Re Cases of Taffs Well Ltd [1992] Ch 179, 193, per Judge Baker QC, sitting as a judge of the High Court.    [Back]

Note 290    Insolvency Act 1986, s 135; the 1994 Order, Arts 7 - 10.    [Back]

Note 291    This is applied to insolvent partnerships by virtue of the 1994 Order, Arts 7 - 10.    [Back]

Note 292    Re Cases of Taffs Well Ltd [1992] Ch 179, 193, per Judge Baker QC.    [Back]

Note 293    Re Cases of Taffs Well Ltd [1992] Ch 179, 191, per Judge Baker QC.    [Back]

Note 294    Re Cases of Taffs Well Ltd [1992] Ch 179, 189, per Judge Baker QC.    [Back]

Note 295    See Ex parte Lancaster Banking Corporation; Re Westby (1879) 10 Ch D 776, 784, per Bacon CJ.    [Back]

Note 296    Re Art Reproduction Co Ltd [1952] Ch 89, 93 - 94, per Wynn-Parry J; Government of India, v Taylor [1955] AC 491, 509, per Viscount Simonds; Re Overmark Smith Warden Ltd [1982] 1 WLR 1195, 1202, per Slade J; Re Cases of Taffs Well Ltd [1992] Ch 179, 190, per Judge Baker QC.    [Back]

Note 297    Re General Rolling Stock Company (1872) LR 7 Ch App 646, 649 - 650, per Mellish LJ; Re Cases of Taffs Well Ltd [1992] Ch 179, 189, per Judge Baker QC.    [Back]

Note 298    Re Aro Co Ltd [1980] Ch 196, 207, per Brightman LJ.    [Back]

Note 299    Re Benzon [1914] 2 Ch 68, 75, per Channell J; Cotterell v Price [1960] 3 All ER 315, 320 - 321, per Buckley J.    [Back]

Note 300    This is applied to insolvent partnerships by virtue of the 1994 Order, Arts 7 - 10. The 1986 Act does not make any provision in respect of a voluntary winding-up. However, it would appear that the same principles apply: “... if a winding-up order has been made, proceedings are automatically stayed but the court may on application by the creditor allow them to be continued; while in a voluntary winding-up, or where a petition has been presented but not adjudicated on, there is no automatic stay but the court may on application by an interested party restrain proceedings.” (Re Aro Co Ltd [1980] Ch 196, 204, per Brightman LJ).    [Back]

Note 301    Re David Lloyd & Co (1877) 6 Ch D 339, 344-345, per James LJ; Re Aro Co Ltd [1980] 1 Ch 196, 204, 207, per Brightman LJ; Re Coregrange Ltd [1984] BCLC 453, 456-457, per Vinelott J.    [Back]

Note 302    Insolvency Act 1986, s 285(1) and (2).    [Back]

Note 303    A bankruptcy petition can only be presented on debts which are enforceable. Debts which are time-barred will not support a petition.    [Back]

Note 304    Insolvency Act 1986, s 286.    [Back]

Note 305    Re Benzon [1914] 2 Ch 68.    [Back]

Note 306    Re Benzon [1914] 2 Ch 68.    [Back]

Note 307    Ezekiel v Orakpo [1977] QB 260.    [Back]

Note 308    Insolvency Act 1986, s 305(2).    [Back]

Note 309    Insolvency Act 1986, s 306.    [Back]

Note 310    See Beckham v Drake (1849) 2 HL Cas 579; 9 ER 1213.    [Back]

Note 311    Insolvency Act 1986, s 314 and Schedule 5, para 2.    [Back]

Note 312    Insolvency Act 1986, Schedule 5, para 14.    [Back]

Note 313    These claims are also available in the administration and winding up of insolvent partnerships by virtue of the 1994 Order, Arts 6 - 10.    [Back]

Note 314    It provides that if, during the course of a winding-up, it appears that an officer, liquidator, administrator, administrative receiver or any other person concerned in the company’s management, misapplied, retained or became accountable for any money or other property of the company, or was guilty of any misfeasance or other breach of duty, the official receiver, liquidator or any creditor or contributory may apply to the court for relief.    [Back]

Note 315    Section 213 of the Insolvency Act 1986 provides that if it appears “in the course of the winding-up of a company … that any business of the company has been carried on with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose”, the court, on the application of the liquidator, may declare that any persons who were knowingly parties to the carrying on of the business in that manner are liable to make such contributions (if any) to the company’s assets as the court thinks proper. Section 214 of the Insolvency Act 1986 provides that if it appears “in the course of the winding-up of a company” that a director, who knew or ought to have concluded that there was no reasonable prospect that the company would avoid going into insolvent liquidation, failed to take every step with a view to minimising the potential loss to the company’s creditors as he or she ought to have taken, the court, on the application of the liquidator, may declare that that person is liable to make such contribution (if any) to the company’s assets as the court thinks proper.    [Back]

Note 316    See paras 4.263 - 4.264 above.    [Back]

Note 317    See paras 2.100 - 2.102 above for a statement of the current law.    [Back]

Note 318    Limitation of Actions, Consultation Paper No 151 (1998), para 13.165.    [Back]

Note 319    [1957] 1 WLR 31.    [Back]

Note 320    Limitation of Actions, Consultation Paper No 151 (1998), para 13.167.    [Back]

Note 321    Victor Joffe QC, Henriques J (responding on behalf of the Northern Circuit), Dr Peter Handford, The London Solicitors Litigation Association and Lovells.    [Back]

Note 322    Limitation of Actions, Consultation Paper No 151 (1998), para 13.167.    [Back]

Note 323    Lovells.    [Back]

Note 324    Though it is unlikely that a court would reject an application for specific performance in this situation.    [Back]

Note 325    See paras 2.97 - 2.99 above for a summary of the current law.    [Back]

Note 326    Limitation of Actions, Consultation Paper No 151 (1998), para 13.176.    [Back]

Note 327    As noted by Mrs EJ Cooke and Kim Lewison QC.    [Back]

Note 328    The Chancery Bar Association.    [Back]

Note 329    Limitation of Actions, Consultation Paper No 151 (1998), paras 13.177 - 13.184.    [Back]

Note 330    Limitation of Actions, Consultation Paper No 151 (1998), para 13.183 - 13.184. We consider that the same applies to claims under Copyright, Patents and Designs Act 1988, s 23 and Trade Marks Act 1994, s 18.    [Back]

Note 331    [1999] Ch 139.    [Back]

Note 332    Notably the Court of Appeal also held in that case that making a reference to the Lands Tribunal to assess the compensation due would be sufficient to stop time running against the claimant. Claims on a statute are discussed at para 4.201 above. See also Limitation of Actions, Consultation Paper No 151 (1998), paras 7.10 - 7.21.    [Back]

Note 333    The Law Commission has published a preliminary study on the simplification and consolidation of compulsory purchase and compensation legislation. It does not seem appropriate to make recommendations in relation to the law on compulsory purchase in advance of the completion of that review. We do however propose to bring claims under Land Compensation Act 1973, s 34 under the core regime.    [Back]

Note 334    Limitation of Actions, Consultation Paper No 151 (1998), paras 13.185 - 13.187.    [Back]

Note 335    Seven per cent of consultees responding on this issue did not express a final view.    [Back]

Note 336    See further paras 3.2 - 3.4 above, for a discussion of what we mean by “civil claims” in this context.    [Back]

Note 337    If tax-payers wish to have the certainty that no further claim can be made against them, they need only pay the tax due.    [Back]

Note 338    Under sections 88 - 91 of the Customs and Excise Management Act 1979, HM Customs & Excise may bring proceedings for the forfeiture of a ship, aircraft or vehicle on the ground that, for example, a ship in United Kingdom waters has been adapted for the purpose of concealing goods.    [Back]

Note 339    Moylan v Commissioners of Customs & Excise [1963] CLR 347.    [Back]

Ý
Ü Þ

BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII
URL: http://www.bailii.org/ew/other/EWLC/2001/270(4).html

	[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	The Law Commission
You are here: BAILII >> Databases >> The Law Commission >> Limitation of Actions Part IV [2001] EWLC 270(4) (09 July 2001) URL: http://www.bailii.org/ew/other/EWLC/2001/270(4).html Cite as: [2001] EWLC 270(4)

The Law Commission

PART IV REFORM II: APPLICATION OF THE CORE REGIME

PART IV

REFORM II: APPLICATION OF THE CORE REGIME