Yorkshire Bank Finance Ltd v Mulhall & anor [2008] EWCA Civ 1156

How long does a creditor who has the benefit of a charging order have to enforce that charge? In particular, if a creditor allows more than 12 years to pass after securing the charging order, can the debtor apply to have it set aside?

Mr & Mrs Mulhall had provided a guarantee to the bank in respect of some company borrowings. The company defaulted and the bank sought to enforce the guarantee. Judgment in default was obtained, followed by interim and final charging orders. The final order was made on 25 June 1991.

In January 2007, Mrs Mulhall applied to set aside the charging order. One of her arguments was based on the failure of the bank to take any steps to enforce the order for c.16 years. The Deputy District Judge and Circuit Judge both dismissed her application, but permission for a second appeal to the Court of Appeal was given Mummery LJ.

Her argument was based on s.20(1) Limitation Act 1980. This provides that “no action shall be brought to recover… any principle sum of money secured by a mortgage or other charge on property… after the expiration of 12 years from the date on which the right to receive the money accrued.” The right to the money had accrued, at the latest, when the final charging order was made.

The Court of Appeal disagreed. Section 20(1) did not apply to charging orders and, by analogy with Ezekiel v Orakpo [1997] 1 WLR 340, there was no limitation period for the enforcement of charging orders.

I know at least one other member of the NL team has come across creditors seeking to rely on ‘old’ charging orders, so this decision from the Court of Appeal does at least give us a clear answer. Shame about the result though.