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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Yorkshire Bank Finance Ltd v Mulhall & Anor [2008] EWCA Civ 1156 (24 October 2008)
Cite as: [2009] CP Rep 7, [2009] BPIR 200, [2008] 3 EGLR 7, [2008] 43 EG 195, [2009] 1 P & CR 16, [2008] 50 EG 74, [2009] 2 All ER (Comm) 164, [2008] EWCA Civ 1156

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Neutral Citation Number: [2008] EWCA Civ 1156
Case No: A2 2008/0850


Royal Courts of Justice
Strand, London, WC2A 2LL
24 October 2008

B e f o r e :



Claimant Respondent
- and -

Defendant Appellant


Dan Stacey (instructed by Howes Percival LLP) for the Appellant
Robert Howe Q.C. and Robert Weekes (instructed by Addleshaw Goddard LLP)
for the Respondent

Hearing date: 13 October 2008



Crown Copyright ©


    Lord Justice Lloyd:

  1. This appeal raises the question of the application of the Limitation Act 1980 where a creditor has the benefit of a judgment against the debtor, supported by a charging order, but has not taken steps to enforce the judgment or the charging order for more than 12 years. Is the debtor entitled to have the charging order set aside on the basis that it can no longer be enforced?
  2. In May 1990 Mrs Mulhall, the Appellant, joined with her husband in guaranteeing the payment of sums owed by Oak House Holdings Ltd to the Respondent, Yorkshire Bank Finance Ltd ("the Bank"). The company defaulted and in March 1991 the Bank demanded payment by Mrs Mulhall of just over £40,000 under the guarantee. Immediately afterwards the Bank issued proceedings against her and her husband. The Bank obtained judgment in default in April 1991, in the case of Mrs Mulhall for the sum of £40,590.29 and some costs. The Bank then applied for a charging order, in respect, among other things, of Mrs Mulhall's interest in a property, Southfield, Ferry Lane, Bishopthorpe, York, of which she is the registered proprietor. A charging order nisi was made on 25 April 1991 and in due course a charging order absolute on 25 June 1991. No sums have been paid in respect of the judgment or the charging order, though the Bank was able to recover one asset in about 1992 which was realised and the net proceeds credited to the debtor's account. No doubt the charging order is protected by a suitable entry against the title to the property at HM Land Registry.
  3. The next relevant event occurred in January 2007, when Mrs Mulhall applied to set aside the judgment and the charging order against her. She contended that she had never signed a guarantee, so that the judgment had been obtained on a false basis. It took the Bank a long time to respond effectively, but eventually it was able to produce a copy of the guarantee. On this basis Deputy District Judge Whitfield, before whom Mrs Mulhall's application came on 19 September 2007, was satisfied that the judgment ought not to be set aside. In the alternative she argued that the charging order should be set aside because of the Bank's failure to take any steps to enforce it since 1991. The Deputy District Judge refused that application as well.
  4. Mrs Mulhall appealed against that order. The appeal came before His Honour Judge Grenfell sitting as a judge of the Queen's Bench Division in Leeds, on 8 February 2008, by which time Mrs Mulhall had the benefit of representation by Mr Dan Stacey of Counsel instructed by Messrs Howes Percival, as she had before us. In his reserved judgment delivered on 19 March 2008 the judge dismissed Mrs Mulhall's appeal. Permission to appeal was given by Lord Justice Mummery.
  5. The argument before us ranged wide, with citation of successive versions of the legislation governing limitation of actions, reports of several committees which have considered the position in that respect over the years, and decided cases from 1843 to 2008. We were much assisted by Mr Stacey's written and oral arguments and by those of Mr Robert Howe Q.C., leading Mr Robert Weekes, for the Bank.
  6. The starting point is the relevant legislation now in force. I must refer to some provisions of the Charging Orders Act 1979. Section 1(1) is as follows:
  7. "Where, under a judgment or order of the High Court or a county court, a person (the "debtor") is required to pay a sum of money to another person (the "creditor") then, for the purpose of enforcing that judgment or order, the appropriate court may make an order in accordance with the provisions of this Act imposing on any such property of the debtor as may be specified in the order a charge for securing the payment of any money due or to become due under the judgment or order."
  8. Such an order is called a charging order. Its effect is provided for by section 3(4):
  9. "Subject to the provisions of this Act, a charge imposed by a charging order shall have the like effect and shall be enforceable in the same courts and in the same manner as an equitable charge created by the debtor by writing under his hand."
  10. Section 3(5) gives the court power to make the order sought by Mrs Mulhall:
  11. "The court by which a charging order was made may at any time, on the application of the debtor or of any person interested in any property to which the order relates, make an order discharging or varying the charging order."
  12. The ground on which Mrs Mulhall contends that the charging order should be discharged is that it is no longer enforceable, and the Bank has no continuing right under it, by reason of the lapse of time with no enforcement, and no acknowledgement or part payment, in the meantime. This turns on the Limitation Act 1980. I will need to refer to several provisions of that Act.
  13. Those most directly relevant are section 20(1) and (5) and section 24(1) and (2). Section 20(1) and (5) are as follows:
  14. "(1) No action shall be brought to recover—
    (a) any principal sum of money secured by a mortgage or other charge on property (whether real or personal); or
    (b) proceeds of the sale of land;
    after the expiration of twelve years from the date on which the right to receive the money accrued.
    (5) Subject to subsections (6) and (7) below, no action to recover arrears of interest payable in respect of any sum of money secured by a mortgage or other charge or payable in respect of proceeds of the sale of land, or to recover damages in respect of such arrears shall be brought after the expiration of six years from the date on which the interest became due."
  15. Section 24 is as follows:
  16. "(1) An action shall not be brought upon any judgment after the expiration of six years from the date on which the judgment became enforceable.
    (2) No arrears of interest in respect of any judgment debt shall be recovered after the expiration of six years from the date on which the interest became due."
  17. We were also shown some earlier provisions of the Act. Section 15(1) is as follows:
  18. "(1) No action shall be brought by any person to recover any land after the expiration of twelve years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person."
  19. Section 16 precludes a redemption action by a mortgagor if the mortgagee has been in possession of the land for 12 years. Section 17 extinguishes the title to land where these time limits have expired:
  20. "Subject to [an irrelevant provision] at the expiration of the period prescribed by this Act for any person to bring an action to recover land (including a redemption action) the title of that person to the land shall be extinguished."
  21. Under a modern legal mortgage or (which is the same thing in effect) a charge by way of legal mortgage, the mortgagee has a right to possession of the mortgaged property. On that basis it was held in National Westminster Bank v Ashe [2008] EWCA Civ 55 that where the mortgagor had been in possession of the mortgaged property for 12 years without any payment or acknowledgement of the mortgage debt, the mortgagee's right to possession of the land was barred under section 15 and its title to the mortgaged property was also extinguished by section 17. I do not need to go into the detail of the arguments relevant to the debate in that case. The case is not of direct relevance to the present because it is clear that a charging order gives to the judgment creditor only the rights of an equitable chargee, which do not include a right to possession.
  22. Mr Stacey's argument is based on section 20(1). He contends that the Bank could not now take any steps to recover the sum secured by the charging order, because it is "a principal sum of money secured by a mortgage or other charge on property", the right to receive which accrued more than 12 years before Mrs Mulhall's application. On that basis he argues that the charging order cannot now be enforced, and that it should therefore be discharged.
  23. Mr Howe argued, both on principle and on authority, that this section does not apply so as to extinguish his client's rights under the charging order. He pointed out that, unlike the position under an ordinary mortgage or charge created by a consensual transaction, the sum for which the charging order provides security is a judgment debt, which necessarily predated the charging order. Moreover judgment debts are governed by separate provisions of the 1980 Act, namely section 24 quoted above. Only in the exceptional case of an action on a judgment is there any statutory time limit on enforcing a judgment debt. Otherwise, and apart from the separate provision as to interest in section 24(2), judgment debts are outside the scope of the limitation legislation. There are constraints on enforcement by writ of execution after six years: see RSC Order 46 rule 2(1)(a) in Schedule 1 to the Civil Procedure Rules, and remedies such as charging orders and third party debt orders are subject to a judicial discretion, but these have nothing to do with the Limitation Act 1980. He argued that the fact that a charging order has been made to secure the debt cannot bring the underlying judgment debt within the ambit of the Limitation Act.
  24. The application (or not) of limitation provisions to charging orders has been the subject of more than one recent decision of the courts. A decision of central importance to this case is that of the Court of Appeal in Ezekiel v Orakpo [1997] 1 W.L.R. 340. In that case a charging order had been made in 1982 to secure a debt under a judgment given in 1979. The judgment creditor did not seek to enforce the charging order until almost 12 years had elapsed since the making of the charging order. An order for possession was made so as to enforce the order. The debtor tendered a sum sufficient to pay the principal debt but not interest on it. The judge held that the creditor was entitled to interest, but only for six years. Both parties appealed. The Court of Appeal held that the creditor was entitled to interest not limited to six years. Mr Howe submitted that this case is binding authority to the effect that section 20 of the 1980 Act does not preclude the Bank from taking steps to enforce the charging order even after more than 12 years. Mr Stacey submitted that the case was wrong in allowing more than six years' interest, and was decided per incuriam in that respect. He accepted that unless he could show that it was wrong, the case binds us to decide the present case in favour of the Bank.
  25. The judgment was given by Millett LJ, with whom Neill and Phillips LJJ agreed. The case was argued by the Defendant in person, and the judgment appears not to have been reserved. Nevertheless there was quite extensive citation of relevant authority, including by the Defendant, and Millett LJ discussed the most important cases in his judgment.
  26. Early in his judgment he referred to the point having been decided at an earlier stage that the proceedings to enforce the charging order were not barred by section 24(1). Referring to the debtor's appeal to the High Court against the Master's order that possession be given to the creditor with a view to sale, he said:
  27. "The main ground of the appeal was that the claim to enforce the charging order was barred by section 24(1) of the Limitation Act 1980, which provides that no action shall be brought upon any judgment after the expiration of six years from the date on which the judgment becomes enforceable. Leave to appeal was refused on the ground that the application was not to enforce the judgment, but to enforce the charging order, which, as Staughton L.J. commented, "had a life of its own"."
  28. The debtor then argued that, if interest was secured by the charging order, it was no more than 6 years of interest because of section 24(2). The judge accepted that proposition. Millett LJ said this on that point (I have corrected an obvious error of date):
  29. "The question here is whether the effect of section 20(5) or possibly section 24(2) of the Limitation Act 1980 is to limit the plaintiff to six years' interest prior to the application to enforce the charge.
    It is important to recognise at the outset what was the true nature of the plaintiff's application in 1993. He was not bringing an action upon the judgment debt which he had obtained in 1979. He was not even seeking to enforce execution of that judgment. He did that when he applied for and obtained the charging order in 1982. In 1993 he was a secured creditor with the statutory equivalent of an equitable charge. He was taking action to recover what was due to him, not as a judgment creditor, but as a secured creditor. He was in the same position as any other creditor with an equitable charge which had been created in 1982 and which he wished to enforce in 1993. Of course he had to apply to the court for orders for possession and sale, not because he was executing a judgment — as I say, so far as this property was concerned, that process had come to an end when he obtained the charging order — but because he needed an order for possession in order to effect a sale. Because he had no power of sale unless and until the court ordered it, the question was not: "What does the charge secure?" but, "How much interest must the defendant pay to redeem the charge so as to prevent the sale from taking place in order to bring himself within R.S.C., Ord. 50, r. 7?" Or, to put it another way, "How should the account be taken after the sale if the plaintiff realises his security; should the plaintiff account to the defendant for the surplus after deducting principal and six years' interest or after deducting the principal and the whole of the interest due to him since the judgment debt?""
  30. Millett LJ then referred to a number of cases, starting with Edmunds v. Waugh (1866) L.R. 1 Eq. 418 and including In re Lloyd; Lloyd v. Lloyd [1903] 1 Ch. 385, a decision of this court, concerning the mortgagee's entitlement to require the mortgagor to pay all arrears of interest as a condition of redemption, even if some of the arrears would be statute-barred if the mortgagee were seeking to recover them by action, or to retain all such arrears on accounting to the mortgagor for the proceeds of a sale by the mortgagee. In either of those cases, the mortgagee is held not to be affected by the statute because it is not seeking to recover the interest by bringing an action. At that time the latest case on the point was Holmes v Cowcher [1970] 1 W.L.R. 834, in which Stamp J held in favour of the submissions of Mr John Mummery of Counsel for the mortgagee that on an application by the mortgagor to redeem the mortgage, all the arrears of interest (amounting to almost 10 years) had to be paid as a condition of redemption, not just interest for the last 6 years. Millett LJ also referred to the Law Reform Committee's Twenty-First Report (Final Report on Limitation of Actions) (1977) (Cmnd. 6923), which led to the Limitation Amendment Act 1980, then consolidated into the Limitation Act 1980. Paragraphs 3.67 and 3.68 dealt with this proposition and recommended no change in the law; no such change was made by the Act. Millett LJ then examined a previous decision of this court, Poole Corporation v. Moody [1945] K.B. 350, which had led the judge below to limit the interest to 6 years He held that, as regards interest, that decision was wrong and per incuriam, and should not be followed. He also referred to the then very recent decision of the Court of Appeal in Lowsley v Forbes, in which it had been held that, on the making of a charging order, the amount to be secured by it was not limited to 6 years' interest up to that date. He distinguished that decision, which turned on section 24(2) of the 1980 Act.
  31. "In my judgment neither section 24(2) of the Act of 1980 nor that case is relevant to the question which we have to decide, which is whether a secured creditor who holds a charging order can recover more than six years' interest out of the proceeds of enforcing his security. By doing so, he is not bringing an action on the judgment; nor is he seeking to enforce the judgment, whether by a process of execution or otherwise. He is enforcing his rights as a secured creditor under the equitable charge which was created by the charging order. The application is of a different kind from that considered by this court in Lowsley v. Forbes; the relevant period of six years is different; so is the statutory provision in point."
  32. He proceeded as follows:
  33. "The question we have to consider is not concerned with the effect of section 24(2) of the Act of 1980 but the effect of section 20(5), which has replaced section 18(5) of the Act of 1939 and was the section under consideration in Poole Corporation v. Moody [1945] K.B. 350. For my part, I do not find the decision in that case easy to understand. Morton L.J. began by being prepared to assume that the action was an action to recover a sum of money, at a stage when the assumption made no difference to the result; but, when he came to consider interest, he replaced his earlier assumption by a concluded finding that it was an action to recover arrears of interest. Having reached that conclusion, Morton L.J. then telescoped the three stages involved in (i) an application for a declaration that the plaintiff was entitled to a statutory charge; (ii) an application for an order for sale to enforce the charge; and (iii) the question of the amount of interest which the chargee can retain out of the proceeds of sale.
    Because these three stages were not kept separate as they should have been, the cases on redemption and the mortgagee's duty to account (i.e. the line of authorities beginning with Edmunds v. Waugh, L.R. 1 Eq. 418) were not cited to the Court of Appeal, appear to have played no part in the argument, and are not referred to by Morton L.J. In my judgment the case proceeded in an unfortunate way on a number of erroneous assumptions, and is inconsistent with an established line of authority which included a decision of this court: In re Lloyd [1903] 1 Ch. 385. In so far as the case is authority for the proposition that a mortgagor can redeem without tendering the full amount of the interest, however old, or that a mortgagor can retain as part of the surplus due after sale sums due in respect of interest which has become statute-barred, in my judgment, it was decided per incuriam and ought not to be followed. In my judgment the judge ought to have declined to follow Poole Corporation v. Moody [1945] K.B. 350. I would allow the appeal."
  34. Lowsley v Forbes was taken to the House of Lords, where it was decided that on the making of a charging order, section 24(2) does limit the arrears of interest to be secured by the order to the last 6 years' interest, because the section is not cast in terms of limiting the recovery of interest by bringing an action: see [1999] AC 329. It was also held, however, that section 24(1), which is expressed in such terms, does not preclude the enforcement of a judgment debt by making a charging order although more than 6 years had passed (in that case, almost 12 years) since the date of the judgment. Lord Lloyd of Berwick, with whom all the other members of the House of Lords agreed, said on that point, at [1999] AC 342D, that:
  35. ""Action" in section 24(1) means a fresh action, and does not include proceedings by way of execution."
  36. Accordingly it did not apply to the making of a charging order or of what would now be a third party debt order. On the other hand he said that the more general wording of section 24(2), "no arrears of interest in respect of any judgment debt shall be recovered …" did not only apply to recovery of interest by a fresh action, but "limits recovery by way of execution on all judgments to a period of six years, including the judgment in this case": [1999] AC 343B. Thus, if a charging order is made more than 6 years after the date of the relevant judgment, it will secure arrears of interest on the judgment debt, but only for the period of 6 years up to the date of the charging order. It will also secure continuing interest, until the principal is paid, but that is a different matter.
  37. Thus, the House of Lords held that no provision of the 1980 Act applies to the enforcement of a judgment debt by making a charging order, which may, accordingly, be made at any time while the judgment debt is outstanding, but it will not carry more than six years' arrears of interest to the date of the order. It was held in Ezekiel v Orakpo that the enforcement of a charging order was not affected by section 24(1), and that if the charging order were enforced all arrears of interest could be recovered, not merely 6 years' arrears, despite section 20(5) and section 24(2). The distinction in the present case is that more than 12 years have passed since the entry of the judgment and the making of the charging order. That makes no difference as regards section 24(1) or section 20(5), both of which have 6 year limits, but on Mr Stacey's submissions it brings section 20(1) into play. However, he rightly accepts that the language of section 20(1) is precisely comparable with that of section 20(5), so that, if the Court of Appeal's decision that full arrears of interest are recoverable notwithstanding section 20(5) is right, then the same must follow as regards the irrelevance of section 20(1) after 12 years have passed.
  38. Mr Stacey sought to demonstrate that the decision about section 20(5) was wrong by showing that it proceeded on a misapprehension that the rule about redemption was limited to cases where the mortgagee had the legal title to the mortgaged property, so that the mortgagor only had the equity of redemption, and could properly be subjected to terms imposed by equity for the recovery of his property. He argued that this was clearly the basis of the early decisions, and that cases of equitable charges, where the chargee did not have title to the property, were expressly held to be different. He showed us Hughes v Kelly (1843) 3 D & War 482, a decision of Lord St Leonards as Lord Chancellor in Ireland, and also referred to Re Owen [1894] 3 Ch 220, decided by Stirling J who, as Stirling LJ, delivered the judgment of the court in Re Lloyd. He pointed out that, in that judgment, at [1903] 1 Ch at 404, it was said that the proposition that the mortgagor should only be allowed to recover the fund on the same terms as if he had brought a redemption action, including paying all arrears of interest, did not conflict with Hughes v Kelly where the incumbrancer was not a mortgagee whose title to the mortgaged property had become absolute, but only an equitable chargee with no right of foreclosure.
  39. Of course, at the time of those cases, a mortgage of freehold property was effected by an apparently absolute conveyance or assignment, so that the mortgagee did have the title to the relevant property and, once the legal date for redemption had passed, the mortgagor only had his equitable right to redeem, on terms imposed by equity. Since 1926 no mortgagee owns the title to the mortgaged property, but the mortgagee nevertheless has a very real and substantial proprietary interest in the relevant property, which is likely to be protected by registration, and needs to be cleared off the title if the mortgagor is to be able to deal with or dispose of the property free of the incumbrance. The same is true of an equitable mortgagee, and of a chargee, whether legal or equitable. It is therefore not clear why, in the current system for the creation of mortgages or charges, any distinction should be drawn between the rights of a legal or equitable mortgagee, on the one hand, and those of an equitable chargee, on the other, in this respect. To be fair to him, Mr Stacey did not seek to identify a rational basis for such a distinction, but he said that, as a matter of authority, the Edmunds v Waugh line of cases only applied to mortgages, not to equitable charges, and that therefore Millett LJ had been wrong to apply the rule to the case of the holder of a charging order, because it never had applied in favour of the holder of an equitable charge.
  40. Two distinct questions arise in relation to that submission: was Millett LJ wrong, and is it open to this court to decline to follow the decision in Ezekiel v Orakpo? Mr Stacey argued that the decision was per incuriam, because the judgment overlooked that fact that the Edmunds v Waugh line of cases did not apply to equitable charges, and also that the decision was inconsistent with the prior decision of this court in Re Lloyd. We did not have any detailed submissions on the per incuriam exception to the rule that this court must follow prior decisions of its own. So far as I am aware, the latest judicial discussion of that exception is in a judgment of my own in Desnousse v Newham London Borough Council [2006] EWCA Civ 547, [2006] QB 831, at paragraphs 70 to 77. Given that Millett LJ referred (twice) to Re Lloyd, in which the point is made that Mr Stacey said had been overlooked, namely the distinction between a mortgage and an equitable charge, with express reference to Hughes v Kelly, I do not see how this case can be brought within the per incuriam exception.
  41. As for the decision being inconsistent with Re Lloyd, Mr Stacey pointed out that Poole Corporation v Moody [1945] 1 KB 351, which the Court of Appeal held was per incuriam as regards interest (because of the failure to cite Edmunds v Waugh or any other cases in that line), was itself a case of a statutory charge. Although, under the Private Street Works Act 1892, the chargee was given the rights and remedies of a mortgagee, the remedy sought was the same as in the case of a charging order: as Morton LJ said at 355 "the very ordinary equitable remedy of having the land sold and the proceeds applied in payment of the sum charged on the land". It seems to me that in Ezekiel v Orakpo the Court of Appeal had to decide whether Poole Corporation v Moody was consistent with Re Lloyd or not. If Mr Stacey's argument were correct, the Court of Appeal should have held that the two decisions were not inconsistent, because of the different position of a chargee as compared with a mortgagee. The court having addressed that point and come to its conclusion, it is not open to us now to say that it should have decided the other way.
  42. On that basis, it is not open to us to decide, and unnecessary to consider, whether Millett LJ's analysis was correct. But I do not wish it to be thought that I disagree with Millett LJ's reasoning or conclusion. Given that, in Ezekiel v Orakpo, the owner of the relevant property sought to have the property freed from the charging order, I see no reason why the principles applying to cases where a mortgagor seeks to redeem mortgaged property should not also apply even though the incumbrance is only an equitable charge. It creates an interest in the property (see Croydon (Unique) Ltd v Wright [2001] Ch 318 ) and is registrable, so that the owner of the property has just the same need to have the incumbrance discharged or satisfied, so as to be removed from the register, if he or she is to be able to deal freely with the property. It seems to me logical that the same principles should apply whether the incumbrance in question is legal or equitable and whether it is a mortgage or a charge.
  43. Accordingly, applying Ezekiel v Orakpo by analogy to a case in which the period in question is more than 12 years, rather than between 6 and 12 years, I would hold that, despite that lapse of time since the making of the charging order, section 20(1) does not apply to the enforcement of the charging order, any more than section 20(5) does if the period is between 6 and 12 years. It is accepted that section 24(1) does not apply either. There is therefore no provision in the Limitation Act 1980 which affects the enforcement of the charging order on the part of the Bank, and Mrs Mulhall is not correct in contending that the charging order cannot now be enforced because of the lapse of time.
  44. Mr Howe pointed out that section 20 would not apply in any event because the Bank is not in fact seeking to enforce its charging order in any way. However, if Mr Stacey had been correct in arguing that section 20(1) prevented the Bank from taking any steps to enforce its charging order in future, then it could have been appropriate to make an order discharging the charging order under section 3(5), just as in National Westminster Bank v Ashe the court declared that the relevant property was not subject to the incumbrance created by the mortgage, because of the lapse of time. That, however, was based on the extinction of the mortgagee's title by virtue of section 17, once the 12 year period had expired under section 15. That provision is of no relevance to the present case since the holder of a charging order has no right to possession, and Mrs Mulhall has not therefore been in adverse possession.
  45. We had some debate as to whether section 20 applies at all to a charging order, and if so what is the date on which the right to receive the principal sum first accrued, for the purposes of section 20(1). Gotham v Doodes [2006] EWCA Civ 1080, [2007] 1 WLR 86 concerned a very different kind of charging order, created under section 313 of the Insolvency Act 1986 in favour of a trustee in bankruptcy. The Court of Appeal held that section 20 did apply to such a charging order, but that the right to receive the money in such a case was a future right, because of the particular nature of the obligation secured. In the case of an ordinary charging order to secure a judgment debt that argument is not available. On the face of it, the judgment creditor's right to receive the debt accrued either at the date of the original cause of action, or at latest on the entry of the judgment. If either of those is correct, and if section 20(1) did apply to the enforcement of a charging order, the position could be absurd, because enforcement could be precluded even before the grant of the charging order. However that should be resolved, it seems to me that Mr Howe is right to argue that this supports his contentions, namely that, even if section 20 does in theory apply to a charging order, in practice it does not apply to any step that the creditor is likely to want to take by way of the enforcement of the charging order. It is clear that it does not apply to the making of the charging order, nor does it apply to any of the normal steps by way of enforcement of the charging order, normally by an application (albeit in new proceedings) for an order for sale, and for possession for the purposes of the sale.
  46. Mr Stacey submitted that the Bank's position sought to have the best of both worlds: its rights under the charging order were those of a secured creditor, self-contained and governed by the terms of the order and the provisions of the 1979 Act, but when it suited the Bank it relied on the distinct proposition that the secured debt is a judgment debt, though not accepting that it was limited to 6 years' arrears of interest despite section 24(2). I do not find anything illogical or inconsistent with the legislation in that. Lowsley v Forbes shows that section 24(2) does apply so as to limit the arrears of interest that can be secured by a charging order, when first made, to 6 years. Even if there were anything in Mr Stacey's implicit argument that, if the Bank took steps to enforce its charging order (which it has not yet done), it could not recover more than 6 years' arrears up to the date of enforcement (or of the application to enforce), that would be of no assistance to Mrs Mulhall who seeks to have the whole charging order discharged as being barred by limitation.
  47. In any event, as it seems to me, a conclusion adverse to Mrs Mulhall is the inevitable result of the application by analogy of the decision in Ezekiel v Orakpo. The enforcement of the charging order by normal means is not barred by section 20(1), and unlike the position under a legal mortgage, the creditor's rights are not barred after 12 years because the holder of a charging order does not have a right to possession such that time can run against it under section 15, and extinction of title cannot therefore occur under section 17.
  48. Mr Stacey also submitted that it would be anomalous to conclude that the holder of an equitable charge, and in particular of a charging order, was in a position less vulnerable to a limitation defence than the holder of a legal mortgage. I do not agree. Differences arise because of the different incidents of the respective rights. An equitable charge carries no right to possession, so section 15 does not apply. On the other hand, in the case of a consensual equitable charge, section 20 might well apply to a claim for principal or for interest at the time when the creditor first took proceedings against the debtor. The main differentiating factor in the case of a charging order is that the creditor has already brought, and succeeded in, his proceedings on the debt. It is not at all illogical that time limits should apply differently where the creditor already has a judgment. In such a case it is unnecessary to protect the defendant from stale claims on the basis that it may be difficult for him to collect together the relevant evidence. The parties' rights have been established by court proceedings, and it is only then a question of enforcement. The lapse of time may be relevant to that, but the legislative policy, as explained in Lowsley v Forbes, is not to use the 1980 Act, for the most part, but rather to rely on the exercise of the court's discretion in relation to remedies such as a charging order, and a different requirement for the court's intervention if ordinary execution is sought to be carried out after more than 6 years have elapsed. I see no anomaly in the contrast between the position of the Bank in the present case and, for example, that of the claimant in National Westminster Bank v Ashe.
  49. In dismissing Mrs Mulhall's appeal Judge Grenfell focussed on the date when the right to receive the debt arose, and held that it did not arise until the enforcement of the charging order. As indicated above I have difficulties with that proposition, but I find it unnecessary to resolve those difficulties. I consider that his conclusion was correct, for the different reasons which I have set out above, and I would dismiss the appeal.
  50. Lord Justice Etherton

  51. I agree.
  52. An equitable charge is not extinguished after expiry of the limitation period in s. 20(1) of the Limitation Act 1980. Section 17 of that Act has no application, and the contrary was not argued by Mr. Stacey.
  53. The proprietor of the land subject to an equitable charge may take the initiative to clear the title by redemption on or prior to sale of the land. Ezekiel v Orakpo is, for the reasons given by Lloyd LJ, binding authority that redemption by the chargor is not an "action brought to recover any principal sum of money secured by a … charge on property" within s.20(1). Ezekiel v Orkakpo concerned s.20(5) but the analysis of Millett LJ applies equally to section 20(1), the relevant part of the wording of which is, for practical purposes, identical.
  54. Ezekiel v Orakpo is also binding authority that the chargor will only be permitted to redeem an equitable charge on terms of payment of all principal and interest outstanding under the charge, irrespective of any limitation period in s. 20. Contrary to the able submissions of Mr. Stacey, and for the reasons given by Lloyd LJ, it is impossible to contend that the decision in Ezekiel v Orakpo was per incuriam on that point insofar as it made no distinction between redemption of a legal mortgage and redemption of an equitable charge.
  55. Further, I agree with Lloyd LJ that there is no sound reason of policy or principle for distinguishing between legal and equitable mortgages and charges in this respect. Even if Parliament has prescribed a time limit in s.20 for the bringing of proceedings by the chargee, there is no reason why the proprietor of the land who seeks to take the initiative to clear the title should not do so on payment of all that is due under the charge.
  56. Accordingly, there is no basis for discharging the charging order in this case since the Respondent Bank continues to enjoy rights as a secured creditor.
  57. Finally, the obvious anomalies in seeking to apply the limitation period in s.20(1) to charging orders give reason to reflect whether, on the proper interpretation of that provision and the Charging Orders Act 1979, charging orders fall within its terms at all. Under s.20(1) the limitation period is by reference to "the date on which the right to receive the money accrued". The various possible dates are the date of the original cause of action leading to the judgment debt, the date of the judgment in respect of which the charging order was made, the date of the charging order, and the date on which the security of the charging order is realised by sale. The first two produce absurd results, since the limitation period would have begun even before the charging order is obtained and would be contrary to the policy, described by Lloyd LJ, that there is no limitation period for execution of a judgment by the making of a charging order. The third would produce the anomaly that a judgment creditor could wait more than 12 years before obtaining a charging order and would then have a further 12 years before expiry of the limitation period, whereas a judgment creditor who obtained a charging order immediately after judgment would be subject to a limitation period which expired 12 years later. HH Judge Grenfell considered the fourth possibility is the right one, but Mr. Stacey's case is that is not correct, and, like Lloyd LJ, I find it difficult to reconcile that decision with the wording of s. 20(1). These difficulties of interpretation and application are against the background of the policy, described by Lloyd LJ, of there being no limitation periods for execution of a judgment other than under s. 24 of the 1980 Act, which does not apply to enforcement of a charging order. They are also against the background that the legislative history of charging orders (Law of Property Act 1925 s. 195, Administration of Justice Act 1956 ss 34 and 35, Charging Orders Act 1979) can be traced to a date more recent than the statutory provisions which have now become section 20(1) of the 1980 Act (Real Property Limitation Act 1833 s. 40, Real Property Limitation Act 1874 s.8, Limitation Act 1939 s. 18(1)). It is not necessary, however, to decide this issue in the present case.
  58. The President of the Queen's Bench Division

  59. I agree that this appeal should be dismissed for the reasons given by Lloyd LJ.

  60. Yorkshire Bank Finance Ltd v Mulhall
    A2 2008/0850
    Order to be made on hand-down 24 October 2008

    Appeal dismissed

    As to costs:

    Appellant to pay Respondent's costs of the appeal, to be the subject of detailed assessment if not agreed
    Unless and until paid such costs to be added to the security created by the charging order
    Appellant to pay to the Respondent on account of the costs of the appeal the sum of £15,000 by 4pm on Friday 7 November 2008

    Appellant's application for leave to appeal to the House of Lords refused

    Appellant's application for a stay of enforcement of the charge and of execution of the order refused.

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