Wilkinson & Anor v West Bromwich Building Society [2004] EWCA Civ 1063

Neutral Citation Number: [2004] EWCA (Civ )1063Case No B2/2003/2123
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HHJ CRAWFORD LINDSAY QC
CENTRAL LONDON COUNTY COURT
(Case Number CL 211028)
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 30 th July 2004
Before
LORD JUSTICE MUMMERYLORD JUSTICE JONATHAN PARKERLORD JUSTICE DYSON
Between
MR & MRS WILKINSONAppellantsWEST BROMWICH BUILDING SOCIETYRespondent
MR NIGEL MEARES (instructed by Peter H Rollin) for AppellantMR JOHN McGHEE QC & MISS S TOZER (instructed by Rosling King) for RespondentHearing Hearing date : 27 th May 2004
Judgment

Introduction

[1]This appeal is about the application of the Limitation Act 1980 (the 1980 Act) to proceedings brought by the West Bromwich Building Society (the Society) in the county court to recover the balance of an advance made on mortgage, plus interest. The Society is attempting to pursue a personal claim against the mortgagors in order to recover the amount of the deficit or shortfall, which occurred when the Society sold the mortgagors’ house, over which it had a legal charge securing repayment of the advance.[2]Two recent decisions of this court have dealt with shortfall claims in the context of the effect of the 1980 Act on the exercise of the cumulative and concurrently exercisable proprietary and personal rights and remedies of a mortgagee. Situations like the present usually arise from a calamitous combination of high borrowing levels by homeowners, rising interest rates charged by lending institutions and volatile housing markets, such as occurred in the late 1980’s and early 1990’s and have affected the parties in this case. Experience shows that, for a variety of reasons, it can take many years for mortgagees to work their way through all of the rights and remedies available to them for the recovery of the advance.[3]This court ruled on the interpretation and interrelation of s8 (“Time limit for actions on a specialty”) and s20 (“Time limit for actions to recover money secured by a mortgage or charge”) of the 1980 Act in Bristol and West plc v. Bartlett [2003] 1 WLR 284 and Scottish Equitable plc v. Thompson [2003] HLR 48.[4]It was held in Bartlett that, where the mortgagee has sold the mortgaged property, but the proceeds of sale are insufficient to cover the balance of the advance still owing, 12 years is the relevant limitation period applicable to a personal action by the mortgagee on an express covenant by the mortgagors in the mortgage deed to repay the advance on the mortgagors’ failure to keep up agreed instalment payments. That is the result of reading ss8 and 20(1) together and applying them to actions against the mortgagors to recover the balance of the principal sum.[5]In this case the Society sold the mortgagors’ house many years ago (1990). It knew then that there was a shortfall, but it did not take any further recovery proceedings until recently (2002). The crucial issue is the date from which the relevant limitation period began to run. It is not easy. Although the mortgage deed expressly provides for the payment of monthly instalments, it does not include any express covenant by the mortgagors to repay the whole of the balance of the advance on a specified date or in a specified event, such as default in the payment of the instalments. The surprising omission (which led Jonathan Parker LJ to comment in the course of argument that the Society should consider tearing up this particular form of mortgage deed) has given rise to some difficult questions on the construction of the mortgage deed, the extent to which personal repayment obligations, which were not expressed, should be implied, either by way of covenant or contract, and the construction and application of ss5, 8 and 20 of the 1980 Act.

Summary of Parties’ Positions

[6]The mortgagors (Mr & Mrs Wilkinson) contend that time began to run from the date of the last repayment of the monthly instalments towards the discharge of the mortgage debt (31 July 1989). That was more than 12 years before the date on which the Society began its action against them personally for the recovery of the shortfall (12 November 2002).[7]The primary contention of the Society is that the realisation of its security by the exercise of its power of sale over the house did not affect the continuing liability of Mr & Mrs Wilkinson, under the express covenant in the legal charge, to make monthly repayments of the advance to the Society until the Society was repaid in full. The Society has still not been repaid in full. The limitation period in respect of each covenanted instalment only starts to run against the Society from the date on which each monthly instalment becomes due. It is contended that the Society is entitled to recover all the past instalments, which should have been paid, but were not paid, by the Wilkinsons during the 12 year period preceding the commencement of the action; and that it is entitled to payment of future instalments until repayment of the advance has been completed.[8]The Society’s alternative case is that time did not start to run against it until the amount of the shortfall was actually ascertained. That occurred when it sold the house (14 November 1990). The sale of the house triggered an implied term that only then did the whole of the balance of the advance become due to the Society. That sum was not “secured by a mortgage on property” within s20(1) of the 1980 Act, as the property had been sold and so was not subject to the prohibition in that section on actions for the principal sum more than 12 years after the right to receive the sum has accrued to the Society. The action for the recovery of the shortfall was started just two days before the expiration of the 12-year period running from the sale date and is not therefore statute barred.

The Facts

[9]Mr Mark Wilkinson and his wife Lynne, the appellants, were the owners of 5, The Terrace, Scole, Norfolk (the house), subject to a Legal Charge dated 26 October 1988 in favour of the respondent Society. The amount of the advance was £34,895.16. The monthly repayments were initially £484.23, but were subject to adjustment.[10]In January 1989 the Wilkinsons fell into arrears with the monthly repayments. The Society took the usual steps to enforce its security. On 25 July 1989 it obtained an order for possession of the house. It appears from evidence filed in these proceedings that the amount of the arrears at that point was £43,648.44. 31 July 1989 was the last date on which the Wilkinsons made an instalment payment to the Society. On 9 October 1989 the Society took possession of the house. On 14 November 1990 the house was sold for £34,000. The proceeds of sale were credited to the Wilkinsons’ mortgage account and used to reduce the sum due under, and secured by, the charge in accordance with s105 of the Law of Property Act 1925. There still remained owing to the Society the sum of £23,921.92, which it claimed with interest at 8% from 15 November 1990.[11]However, it was not until 12 November 2002 that the Society issued its claim form “for the recovery of the sum of £24,010.12 (later amended to £23,921.92) together with interest and costs in respect of monies outstanding under a Legal Charge dated 26th October 1988.” It was seeking to enforce its personal remedy against the Wilkinsons for recovery of the balance of the advance due to it. The Amended Particulars of Claim referred to the default in maintaining payments due, the proceedings for possession and the sale of the house, leaving a deficit due of the sum claimed, together with interest. No particulars were given of monthly payments due, but unpaid.[12]In their Defence the Wilkinsons pleaded that the Society’s cause of action accrued when they defaulted in paying the instalments. As that occurred more than 12 years before the commencement of proceedings, the claim was statute barred. No other defence was pleaded. The limitation issue fell to be determined when the Society applied on 24 January 2003 for summary judgment under Part 24.2(a) CPR.

The 1980 Act

[13]The parties agreed in the court below that(a) the relevant provisions of the 1980 Act are sections 8 and 20 and(b) the length of the applicable limitation period is 12 years. Section 5 should also be mentioned.[14]Section 8 of the 1980 Act contains the general rule for actions upon a specialty. An action to enforce an express or implied covenant in a mortgage deed is an action upon a specialty. “(1) An action upon a specialty shall not be brought after the expiration of twelve years from the date on which the cause of action accrued. (2) Subsection (1) above shall not affect any action for which a shorter period of limitation is prescribed by any other provision of this Act.”[15]Under s5 a claim founded on simple contract shall not be brought after the expiration of 6 years from the date on which the cause of action accrued.[16]Under s5 and s8 the relevant questions are:(a) what is the Society’s cause of action in these proceedings; and(b) when did it accrue?[17]Section 20(1) of the 1980 Act restricts the right to bring proceedings to recover money “secured by a mortgage on property.” It contains a prohibition on the bringing of an action to recover the principal sum of money secured by a mortgage on property after the expiration of the specified 12 year period :
“ (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.”
Under section 20 the relevant questions are (a) when did “the right to receive” the balance of the principal sum of money accrue to the Society ; and (b) at that time, was the balance of the principal sum sought to be recovered by the Society in these proceedings “ secured by a mortgage on property”?”

The Proceedings Below

[18]On 8 April 2003 District Judge Wigfield dismissed the Society’s application for summary judgment under CPR Part 24.2(a). The only issue before him was when the cause of action accrued. He granted permission to appeal.[19]On 11 July 2003 HHJ Crawford Lindsay QC, sitting at the Central London County Court, allowed the Society’s appeal and granted summary judgment in the sum of £23,921.22, together with £5,741.26 statutory interest and the costs of the appeal and of the action. The discretionary statutory interest awarded under s 69 of the County Courts Act 1984 was limited to the period of three years to 13 November 1993. It was not granted for the whole period from 14 November 1990 on the ground that there had been an unexplained failure by the Society to bring the proceedings within a reasonable time.[20]The judge held that there was an implied term that the whole sum due under the mortgage became due to the Society at the date of the sale of the house. The amount of the balance of the advance was ascertained at the sale date. Time for the recovery of the shortfall on the sale ran from that date, 14 November 1990. It was common ground that the length of the relevant limitation period was 12 years. The action was not statute barred. It also appears to have been accepted or assumed before him that there was no intention that the payment of the monthly instalments should remain an obligation of the mortgagors once the house had been sold.[21]The judge rejected the Wilkinsons’ contentions that there was an implied term that the principal sum became due and that time began to run from(a) the default in the monthly repayments; or(b) the commencement of the possession proceedings; or(c) when the Society obtained possession of the house, all being dates more than 12 years before the commencement of the action.[22]Overlooking the fact that he had no power to do so, the judge granted permission for a second appeal. On 17 November 2003 Jonathan Parker LJ granted permission to appeal and extended the time for appealing. A respondent’s notice was filed on 13 January 2004 seeking to uphold the decision on additional grounds.[23]There is a cross appeal against the decision allowing the Society to recover only three years interest.

The Legal Charge

[24]In consideration of the advance of £35,895 the Wilkinsons charged the house to the Society with payment of “all moneys intended to be secured or herein covenanted to be paid.”(clause 1). Under clause 4 the Wilkinsons (“the Borrowers”) covenanted with the Society (“the Lender”) “ (a) to repay to the Lender the Advance together with any other advance made, under the provisions of clause 5 (k) hereof, with interest at the Interest Rate (as well after as before any judgment) by the Repayments or the Reduced Repayments the first of which shall become due at the date hereof and subsequent repayments on the same date in each succeeding calendar month.”[25]“The Repayments” were defined as the monthly repayments mentioned on page 1 of the deed (£496.23), as amended pursuant to clause 5(n) to reflect increases in the “Base Interest Rate.”[26]Clause 5 (c) (d) and (e) were concerned with the exercise of the power of sale under s 101 of the Law of Property Act 1925. “(c) The moneys hereby secured shall be deemed to become due within the meaning of Section 101 of the Law of Property Act 1925 and all powers conferred on a mortgagee by the said Act or by this Legal Charge shall in favour of a purchaser be deemed to be conferred on and exercisable by the Lender at the expiration of one calendar month from the date hereof, (d) After the expiration of such period of one calendar month as between the Lender and the Borrower the Lender may exercise such powers on the happening of any of the following events(i) on the giving to the Borrower by the Lender of a notice in writing requiring payment forthwith of the moneys hereby secured.(ii) if default shall have been made for one calendar month in the payment of some Repayment Reduced Repayment fine or other moneys hereby secured or that the Borrower ought to pay to the Lender as a member thereof.(iii) if the Borrower shall fail to observe or perform any of the rules and regulations of the Lender or any of the covenants and conditions herein contained….” (e) The restrictions on exercising the power of sale contained in Section 103 of the Law of Property Act 1925 shall not apply to the charge hereby created or the Security. (i) on the giving to the Borrower by the Lender of a notice in writing requiring payment forthwith of the moneys hereby secured. (ii) if default shall have been made for one calendar month in the payment of some Repayment Reduced Repayment fine or other moneys hereby secured or that the Borrower ought to pay to the Lender as a member thereof. (iii) if the Borrower shall fail to observe or perform any of the rules and regulations of the Lender or any of the covenants and conditions herein contained….”

The Authorities

[27]Encouraged by some remarks from the Bench when this appeal first came on for hearing on 3 March 2004 counsel have thoroughly researched the authorities on the impact of the previous Limitation Acts on the cumulative rights and remedies of mortgagees. While it is important never to lose sight of the provisions of this particular legal charge or of the 1980 Act, the general principles derived from authorities on the earlier Limitation Acts are relevant to the approach to the construction of the mortgage deed and to the interpretation of the 1980 Act and its application to the facts of this case. This is one of those areas of the law in which, without some reference to the earlier legislation and the decisions on its interpretation, it is not easy to understand the interaction of the current statutory provisions. A. Sutton v. Sutton (1882) 22 Ch D 511[28]Mr Meares, appearing for the Wilkinsons, cited the judgments of the Court of Appeal in Sutton. Thedecisionwason s8 of the Real Property Limitation Act 1874, the precursor of s20(1) of the 1980 Act. The effect of s8 of the 1874 Act was to reduce the length of the limitation period for actions to recover money charged on land from 20 years, as specified in s40 of the Real Property Limitation Act 1833, to 12 years; but the length of the limitation period for actions on a specialty remained unchanged at 20 years, as specified in s3 of the Civil Procedure Act 1833.[29]The deed in Sutton contained an express covenant to repay on demand the amount advanced. The principal sum and interest were secured by a mortgage of real property. A demand for payment was made, but not satisfied. An action at law was brought on the covenant (not on a simple contract debt) for the sum due under the covenant. No attempt had been made to enforce the lender’s security rights against the land charged.[30]The limitation defence was pleaded, alleging that more than 12 years had passed since any payment had been made under the deed. That defence was upheld. The court rejected the contention that the period for recovery under an action at law on the personal covenant was 20 years, that being the period still allowed by the Civil Procedure Act 1833 for actions on a specialty. It was held that, subject to questions of payment and acknowledgement of the debt, the reduced 12 year period in s8 of the 1874 Act embraced both the personal remedy on the covenant against the mortgagor and the proprietary remedy against the land, on which the debt is secured, so that, if the remedy in respect of the land itself was barred, so also was the right of action on the covenant.[31]Sutton decided two important general points.(1) It was recognised in the judgments (see pp515-516, 520), that, even if the mortgage deed did not contain an express covenant and there was no accompanying or collateral bond for payment, the court could, depending on the circumstances and as a matter of construction, imply a covenant to repay the amount advanced. Although a covenant is not implied from the mere fact of a charge on the land, it can be implied from, for example, the fact that the money is to be repaid on a certain day. In the case of an express or implied covenant to repay the principal the limitation period is 12 years. It was, however, held in a later case that, if the action was brought to recover a simple contract debt, which is also charged on the land, the limitation period was still the shorter period of 6 years specified for contract claims in s3 of the Limitation Act 1623 (now contained in s5 of the 1980 Act). The 6 year period for simple contract was not enlarged to 12 years by s 8 of the 1874 Act. That provision was prohibitory and was enacted to limit, not to enlarge, existing limitation periods relating to the recovery of debts charged on land: Barnes v. Glenton [1899] 1 QB 885.(2) It treated the sum secured by a mortgage on the land and also secured by a covenant in the deed as one and the same sum “so that when the right of suit or action in respect of the land is gone, the right on the covenant ceases also:” per Fry J in Fearnside v. Flint (1882) 22 Ch D 579 at 581 (rejecting the contention that the limitation period was still 20 years in the case of an action on a collateral bond). B. Re McHenry [1894] 3 Ch 290[32]The “one and the same sum ” approach is relevant to the treatment of shortfall claims. It was applied by the Court of Appeal in McHenry in the context of the effect of the Limitation Acts on the rights of a secured creditor where there was an express shortfall provision. Sutton was not cited in McHenry, but that was because s8 of the 1874 Act only applied where the sum of money was secured on land or rent. In McHenry there was an express promise by a mortgagor to pay the difference on realisation of the security on personal property (a scrip certificate of bonds) between the proceeds of the realisation and the amount of the advance.[33]The issue was whether the limitation period ran from the date of realisation of the security, which was within the limitation period, or from the earlier date when the principal sum became repayable. The Court of Appeal rejected the contention that the time only began to run when the security was sold and the actual amount payable was ascertained and that there was a separate claim on the express promise to pay the difference. It was held that the cause of action arose when the original mortgage debt became due and that the promise to pay the difference did not create a new debt. Lord Herschell LC said at p. 293 “I cannot say that the right of realisation gave a new, separate and independent cause of action, so that the statute did not begin to run until from that date. The truth is that the debt is one debt only. The second clause of the document did not create a new debt, but only prescribed what should be done in the event of realisation and what should be made of the money realised. The words gave the creditor no right which would not equally have existed without them.”[34]Lindley LJ said at p 295 “ The promise to pay the deficiency does not create a new obligation to pay: it only applies the old obligation to a reduced sum. The realisation of the security does not add to the cause of action; the cause of action accrued long before.” C. Bartlett[35]In Bartlett and two related appeals, the mortgage deeds, on which the shortfall claims were founded, contained express covenants to pay the mortgage debt in full in the event of default in maintaining the payment of instalments. Defaults occurred. The whole debt became due in each case. The mortgaged properties were re-possessed and sold. There were shortfalls on the sales. It was contended that, on the discharge of the security, the covenant to pay became unenforceable, the claim was no longer under the mortgage deed and all that remained was an implied obligation to pay the shortfall, which was subject to the 6 year limitation period in s5 of the 1980 Act for a simple contract debt.[36]The Court of Appeal rejected that contention, holding that:-.(1) The whole of the balance of the advance became payable and the cause of action accrued under the mortgage deeds in question once there was a failure to make the instalment payments in breach of the covenant to pay.(2) At the time when the causes of action accrued the sums due were “secured by a mortgage” within s20(1) of the 1980 Act.(3) The accrued right of action on the express covenant to pay, for which there was a limitation period of 12 years, was not taken away by the exercise of the power of sale and the discharge of the mortgage or replaced by an implied obligation to pay the shortfall as a simple contract debt subject to the shorter limitation period of 6 years.(4) Even in cases where there was an antecedent contract of loan, for which the limitation period was 6 years under s5, such a contract merged in the mortgage deed.(5) In cases where there was an express provision in the mortgage deed to pay the shortfall, no separate cause of action arose for the deficiency as a sum not secured by the mortgage. The relevant cause of action was still that for the mortgage debt. That sum was secured by the mortgage at the time when “the right to receive” that sum accrued and the limitation period started to run. Section 20(1) applied and continued to apply to the cause of action for that sum, even if the sum later ceased to be secured by a mortgage on the realisation of the security and before the action was brought to recover it. D. Thompson[37]Bartlett was followed in Thompson, which was a case, like the present, in which the mortgage deed, which was a second mortgage, did not contain any express covenant to repay the principal sum. There were monthly instalments of interest only. They did not comprise any element of capital repayment. It was envisaged that the principal sum would be paid by the proceeds of an insurance policy. The mortgagor defaulted in making the payments of interest.The property was re-possessed and sold, leaving nothing for the second mortgagee after the first mortgage was repaid. The judge had held that in those circumstances the relevant cause of action for the shortfall, which occurred on the sale by the mortgagee, was not an action on a specialty within s8, but a simple contract debt governed by section 5 of the 1980 Act and that the claim was statute barred after 6 years from the accrual of the cause of action.[38]The Court of Appeal allowed the appeal, holding that the relevant period was 12 years from the accrual of the cause of action; that the principal sum became due and the cause of action accrued when the demand for payment was made (i.e. before the sale); and that the principal sum was “secured by a mortgage” within the meaning of s20(1) at the time of the accrual of the cause of action, as in Bartlett.[39]The court rejected the borrower’s contention that Bartlett did not apply, as there was no express covenant to pay in the mortgage conditions. The judge in the court below (HHJ Cowell) had heard and decided the matter on 10 January 2002, that is some time before the handing down of the judgment of the Court of Appeal in Bartlett (31 July 2002). It was common ground between the parties and the judge agreed that s20(1) was of no relevance, as the property had been sold and the principal sum was no longer secured by a mortgage on property. If the parties and the judge had had the benefit of the judgment in Bartlett, the judge would have held that s20(1) did not cease to apply on the sale of the property in a case where the right to receive the money had already accrued.[40]The judge also held that, in the absence of an express covenant in the mortgage deed to repay the whole of the principal sum on a particular date or in a specified event, no date for the actual repayment of the principal sum could be identified in the mortgage deed. He rejected the mortgagee’s contention that a covenant to repay the principal should be implied into the mortgage deed. He treated the claim for the shortfall as a simple contract debt, which became statute barred after 6 years.[41]On the appeal from HHJ Cowell I regret that my ex tempore judgment in Thompson did not expressly discuss the question whether the judge was correct in treating the case as one of a simple contract debt and in holding that there was no implied covenant in the mortgage deed to pay the principal sum. The mortgagor appeared in person. The court did not therefore have the benefit of full argument from each side.[42]It was, however, clear that the court was following and applying the judgment in Bartlett and the 12 year limitation period to a case in which there was no express covenant to pay the principal sum. As was explained in Bartlett (para 18) where there was no express covenant there would be an implied obligation to pay arising from the fact of the loan and (para 22) antecedent contracts of loan merge with the formal mortgage deed, as it would be pointless to have two co-existing contracts. It was implicit in the judgments in Thompson that there was an implied covenant in the mortgage deed to repay the principal sum, so that the 12 year period applied, and that it was not a case of simple contract debt, to which the 6 year period applied. The acceptance of the advance implied an obligation to repay the advance. If there is a mortgage deed, into which any preceding loan contract has merged, the implication will usually be of a covenant, which can be enforced as a personal remedy during a period of 12 years from the date when the cause of action accrued, rather than simple contract debt, as in Barnes v. Glenton. E. This Case[43]Applying the established principles and the 1980 Act to this legal charge and the relevant facts of this case I have reached the conclusion that, before the commencement of this action, more than 12 years elapsed from the accrual of the right of the Society to receive the balance of the mortgage debt secured by the legal charge. The claim for the shortfall is statute barred and the appeal should be allowed.

Construction of legal charge

[44]Subject to the limitation point, the balance of the advance is plainly repayable by the Wilkinsons to the Society at some time. In my judgment, it is also plain from the terms of the legal charge and the surrounding circumstances that a covenant to repay the balance of the advance is to be implied into the legal charge, along with a term that the Society would not enforce its rights and remedies against the Wilkinsons in respect of the balance of the advance so long as they paid the agreed instalments, but, if they defaulted in the payment of instalments, then the whole of the balance of the advance would become immediately repayable to the Society. I do not read the provision for the payment of instalments as being the only method by which the borrowers could be required to or were entitled to repay the advance. There is no express provision to that effect and there are no sensible reasons for reading in such a provision.[45]I therefore reject the contention of Mr McGhee QC, appearing for the Society, that, as a matter of construction, the Wilkinsons were only under an obligation to repay the advance by the monthly instalments; and that, even after the sale of the house, a fresh cause of action for each instalment continued to accrue in favour of the Society month by month, so that the 12 year limitation period under s 8 only began to run from the date when each instalment became due. Read as a whole it is clear from the legal charge that the parties contemplated that there were other ways in which the Society was entitled to recover the whole of the principal sum before the expiration of the period over which all the monthly instalments were repayable.[46]On their side, the Wilkinsons were entitled to redeem the mortgage on repayment of the principal sum due. On its side, the Society was entitled to recover the advance by giving a notice requiring repayment under clause 5(d)(i) and by then exercising its power of sale, if the sum was not repaid. The Society was also entitled to exercise its power of sale, if there was a default for 1 month in the payment of an instalment payment. Although there is no express provision for the acceleration of repayment of the advance in the event of a default, it has not been disputed that the Society was entitled to enforce its security by obtaining possession of the house and selling it on the default in the repayment of instalments and had the right to receive out of the proceeds of sale the balance of the principal sum and interest due under the legal charge.[47]The alternative submissions that there was an implied covenant to repay the principal sum, not on default, but only on the sale of the house; that “the right to receive” the money only accrued to the Society after the sale; and that the case therefore falls outside s20(1), as there was no longer any property on which the money could be secured, is rejected as inconsistent with the “one and the same sum” analysis of the character of shortfall in Bartlett and the other authorities.

The 1980 Act

[48]The combined effect of ss5, 8 and 20 of the 1980 Act is that the Society’s claim for the shortfall is statute barred on the basis that the cause of action of the Society to recover the whole of the advance, whether by way of covenant or simple contract, and the right to receive it out of the proceeds of sale of the house, arose on the default in payment of instalments after 31 July 1989. It was not necessary for the amount due to be ascertained on the sale of the house before the Society had a right to receive it: see Hornsey Local Board v. Monarch Investment Building Society (1889) 24 QBD 1 at p.11. There was a right to receive it at the earlier stage when there was a default in making the instalment payments, which entitled the Society to recover the advance by exercising its rights to take possession of the house and sell it.

Interest

[49]In those circumstances it is unnecessary to express a concluded opinion on the Society’s cross appeal against the judge’s decision that the Society was only entitled to recover three years interest on the balance due. The court had the benefit of submissions on the point. Mr McGhee submitted that the judge had failed to take into account the windfall to the Wilkinsons in not paying the Society the sums due to them as soon as they became payable and that it was wrong to deny the Society the interest for the whole of the period since the sale of the house. I would not regard these arguments as justifying interference by this court with the judge’s discretion under s35A of the Supreme Court Act 1981.[50]In summary, the legal position is that(a) the Wilkinsons’ obligation to repay the balance of the advance to the Society was one debt recoverable by the Society exercising its cumulative and concurrent rights and remedies against the house and by personal action against the Wilkinsons based on covenant or simple contract;(b) the Society’s cause of action against the Wilkinsons in its action to recover the shortfall was for “one and the same sum” already mentioned and was based on an implied covenant by the mortgagors in the legal charge to repay the sum advanced by the Society;(c) that cause of action was “upon a specialty” within s8, which provides for a limitation period of 12 years;(d) that cause of action was also within s20, as the shortfall sum which the Society seeks to recover in the action was part of the advance “secured by a mortgage on property“ within s20 (1)(a) at the date when the cause of action accrued to the Society;(e) the Society’s “right to receive” the full amount of the balance of the advance accrued to the Society when the Wilkinsons defaulted in the instalment payments and the Society’s rights and remedies for the recovery of the balance of the advance became exercisable;(f) the effect of the combined reading of s 20(1)(a) and s8 of the 1980 Act is to prohibit the action by the Society to recover the shortfall, as, before the commencement of this action on 12 November 2002, more than 12 years had expired from the 31 July 1989, that being the date on which the Wilkinsons last made an instalment payment and the date on which the “right to receive” the money claimed in the action accrued to the Society.

Result

[51]I would accordingly allow the appeal and dismiss the cross appeal.[52]I agree.[53]I also agree.

Cited in 3 later judgments