Allendale Ltd v Moualem

LORD JUSTICE WALLER: I will ask Lord Justice Buxton to give the first judgment.

LORD JUSTICE BUXTON: This is a renewed application for permission to appeal from an order of His Honour Judge Townend made on 21 April 2004. He was hearing an appeal from a judgment of District Judge James delivered in November 2003. This is, therefore, a second appeal, which the court will not entertain unless there is some important point of principle involved in the case. The point that Mr McGee, who has argued this case throughout for the applicant, wishes to raise would indeed be an important point of principle were it open to him in this court. But I have clearly concluded, as did my Lord who considered the matter on paper, that the point that he wishes to pursue is not open to him in this court.

The facts of the matter can be stated extremely shortly. The case concerned a promissory note executed on 30 June 1988, payable on demand. The promissory note was executed as a deed and therefore was a speciality falling under section 8 of the Limitation Act 1980, with a limitation period of 12 years. No demand was made for payment under the note within the period of 12 years. It is, and has been recognised for nearly 200 years as the law, that a promissory note payable on demand is enforceable from the date of its execution, and not from the date of any demand. That was made clear by the high authority of Mr Baron Parke in Norton v Ellam (1837) 2 M & W 461, where he said at page 464 of that report:

That approach was adopted in the case that is usually recognised as central to this issue, the case of Re Brown's Estate [1893] 2 Ch 300 decided by Chitty J. In that case the judge had to consider this point again. It is not wholly irrelevant to note that the argument contrary to the view expressed in Norton v Ellam was presented to Chitty J by Mr George Farwell QC, then the intellectual leader of the Chancery Bar and subsequently a distinguished judge. It is therefore quite clear that every point that could have been made contrary to the view in Norton v Ellam would have been made.

Chitty J quoted the passage I have just set out from Norton v Ellam. He confirmed the view there adopted that, in respect of the promissory note itself, the right of action accrued on the beginning of the note and not on the making of the demand. Mr McGee says that that rule is open for reconsideration in this court, as it is plainly unreasonable and anomalous. The reasons for its original existence may have been the difficulty of the creditor finding his debtor (a circumstance plainly unreal in modern conditions). But as I have already indicated, in my judgment it is not open to this court to take that course.

Before I explain why I take that view I should say that I am far from persuaded that this rule is indeed anomalous or unreasonable. The facts of this case might be thought to raise questions about that. This is a case where a promissory note was given, and then absolutely nothing was done about it for a long period of time. The purpose of the limitation rules are partly to save the courts from having to try stale claims, but also to enable persons to arrange their affairs. I cannot think that it would be desirable for the possibility of bringing an action on a note of this sort to be extended ad infinitem, as the argument against Re Brown would entail.

Be that as it may, the reason why the rule in Re Brown should not be revisited by this court, as opposed to the possibility of legislative invention, is not merely that it has existed as an acknowledged rule of commercial law for well over hundred years, nor merely that it has been recognised by judges of the greatest eminence. The matter more directly involves events that have occurred much more recently, when the Law Commission had occasion to revisit the question of limitation of actions on debts in its 21st report in 1977. That report was followed by legislation in the shape of the Limitation Act 1980. Section 6 of that Act is directly revelatory of our present problem. It is quite clear that the draftsman's intention was to recognise, by his phraseology in section 6(2)(b), the continued existence of the rule in Re Brown but to make certain exceptions from it: exceptions that do not extend to the present case and, in particular, do not extend, any more than did the revision of the limitation period generally extend, to cases of a speciality such as the present. That is not merely my view, but the view taken unanimously in this court in the case of Boot v Boot 73 P & CR page 139 where Lord Justice Waite said:

In these circumstances, with there having been legislative intervention (admittedly 25 years ago, but that period in the context of the antiquity of this rule cannot be said to be significant), it is not open to this court to reconsider a rule recognised by Parliament and not changed by it. If it is indeed the case that further reform is required, that reform will have to be pursued through the good offices of the Law Commission.

I therefore would not grant permission in this case. I recognise that the effect of that order will mean that the issues cannot be further considered in this case. Therefore, the matter, at least in this case, cannot be taken to the House of Lords. However, I do not think that the House of Lords in any event would wish to become involved in this matter. The difficulty that Mr McGee has is not principally that there is binding authority in this court against him, although Boot v Boot very strongly tends in that direction, but rather that any court, be it the Court of Appeal or the House of Lords, would be severely inhibited in reviewing this rule by the legislative history to which I have referred.

Despite Mr McGee's careful and restrained arguments, I am therefore not able to grant permission. I would only add further that the judgment of the district judge in this case has been of great help to me, as it was to the county court judge, in following and understanding this case. The district judge admirably set out the issues in an unusual case.

LORD JUSTICE WALLER: I agree.