The law in general, and Insolvency in particular, can move quite quickly, and as a result, parties intending to take action should always be aware of the issue of limitation.

Subject to certain caveats, any claim or proceedings relating to an order of the court must usually be brought within 6 years of the events in question, according to the provisions of the Limitation Act 1980. S.24 of the act states that: “an action shall not be brought upon any Judgment after the expiration of six years from the date on which the judgment became enforceable”.

Or so we thought….

The goalposts have now been moved significantly by the Court of Appeal case of Ridgeway Motors (Isleworth) Ltd. v ALTS Ltd., decided last month. The facts of the case were that ALTS had succeeded in obtaining a judgment against Ridgeway over six years ago and issued a Winding-up Petition against them. This led Ridgeway to make an application to the court to “strike out” the winding-up petition on the basis that Enforcement of a judgement over 6 years old is precluded by the Limitation Act, as described above. The Court, however, ruled against them, finding that S.24 (1) the Limitation Act was meant to restrain suing for a “judgment upon a judgment”, as opposed to this situation, which saw the Court dealing with an application to enforce a judgment through insolvency proceedings, which they were willing to treat differently. In the Court’s opinion, a winding-up or bankruptcy petition was not to be interpreted as an action upon a judgment, or a process of executing the original judgment or order, but as something else entirely - a “wider legal proceeding” to collectively enforce an admitted or proven debt.

So what does this mean? The decision is nothing short of revolutionary. Although it remains to be seen at the moment whether or not the case will be subject to appeal by the House of Lords, there is every possibility that Creditors who have previously been advised that a debt was irrecoverable may well now be able to pursue them. We have consulted with the Courts, in particular the Royal Courts of Justice, who have confirmed that they will allow any debts over 6 years to be included in either winding Up or bankruptcy proceedings. If you require further information regarding this decision or advice on how this may assist your recovery procedures, please do not hesitate to contact Mark Taylor.