Bolsover District Council & Anor v Ashfield Nominees Ltd & Ors

Factual and Procedural Background

The dispute concerns unpaid council tax owed by the companies, appellants in this appeal, to two respondent councils. The councils sought payment through the statutory process involving liability orders issued by magistrates' courts, which are a prerequisite to enforcement actions such as insolvency proceedings. The companies did not pay the council tax, and the councils presented winding-up petitions for unpaid council tax amounts covered by liability orders, some of which were more than six years old. The companies sought to strike out these petitions, arguing the debts were disputed and time-barred. The judge held that petitions were valid for amounts due within six years before the petition but dismissed petitions relating to older debts, ruling winding-up proceedings were not the proper forum for time-bar disputes. The councils then initiated proceedings seeking a declaration that enforcement by winding-up petition was not barred by the passage of more than six years after the liability order. The judge ruled in favor of the councils, initially refusing permission to appeal, which was later granted.

Legal Issues Presented

1. Whether a council that has obtained a liability order for unpaid council tax must commence insolvency enforcement proceedings, specifically winding-up petitions, within six years after the making of the liability order.
2. Whether section 9 of the Limitation Act 1980, which imposes a six-year limitation period on actions to recover sums recoverable by virtue of any enactment, applies to winding-up petitions based on council tax liability orders.
3. Whether the statutory council tax enforcement regime under the Local Government Finance Act 1992 and its regulations displaces or coexists with the Limitation Act 1980 regarding enforcement time limits.

Arguments of the Parties

Appellants' Arguments

• Unpaid council tax is a sum recoverable by virtue of statute, thus falling within the scope of section 9 of the Limitation Act 1980.
• Winding-up petitions constitute an "action" under section 9 and must be presented within six years of the liability order.
• The six-year limitation period should run from the date of the liability order, not from when the council tax became due.
• Enforcement methods requiring court applications, such as winding-up petitions or charging orders, must comply with the Limitation Act's time limits.

Respondents' Arguments

• The sums recoverable under the petitions derive from the liability orders, not directly from the original council tax enactment.
• The limitation period under section 9 does not apply to enforcement proceedings following the making of a liability order.
• The statutory council tax regime, including regulation 34(3) of the 1992 Regulations, imposes a six-year limitation period running from when the council tax became due, which displaces the Limitation Act's section 9.
• Applying section 9 to winding-up petitions post-liability order would create anomalous results compared to other tax enforcement regimes.

Table of Precedents Cited

Court's Reasoning and Analysis

The court examined the statutory framework governing council tax under the Local Government Finance Act 1992 and associated regulations, emphasizing that a liability order is a prerequisite for enforcement but that the council tax debt exists independently of such an order. The court noted that the 1992 Regulations impose a six-year limitation period running from when the council tax became due, restricting applications for liability orders accordingly. The appellants argued that section 9 of the Limitation Act 1980, which limits actions to six years from the cause of action accrual, applies to winding-up petitions enforcing liability orders, thereby requiring enforcement within six years of the liability order date.

The court rejected this argument, reasoning that the statutory scheme provides a comprehensive limitation regime that displaces section 9 of the Limitation Act for council tax enforcement. The six-year limitation applies at the stage of applying for the liability order, not subsequently to enforcement actions such as winding-up petitions. The court drew analogies with other tax regimes, notably non-domestic rates, where different enforcement routes exist but limitation applies at the outset, not at enforcement. The court found it illogical to impose a second limitation period starting from the liability order date for enforcement proceedings.

Precedents were analyzed, including the interpretation of "cause of action" and "action" under section 9, and the nature of debts recoverable by virtue of enactments. The court distinguished cases where the cause of action accrues at the original debt date, not at intermediate procedural steps like liability orders. It also noted that once a liability order is made, the debt is enforceable without further limitation, consistent with the principle that limitation protects defendants from stale claims but does not apply to enforcement of established liabilities.

Ultimately, the court concluded that section 9 of the Limitation Act 1980 does not apply to enforcement proceedings by way of winding-up petition following a liability order for unpaid council tax, and that the statutory limitation period imposed by the 1992 Regulations governs the time limits for recovery.

Holding and Implications

The court DISMISSED the appeal, holding that the presentation of a winding-up petition to enforce unpaid council tax under a liability order is not subject to a six-year limitation period running from the date of the liability order under section 9 of the Limitation Act 1980. Instead, the statutory limitation period under the Local Government Finance Act 1992 and its regulations applies, restricting recovery to council tax that became due within six years before the application for a liability order.

This decision confirms that enforcement proceedings following a liability order are not time-barred by section 9, avoiding anomalous results and ensuring consistency with the comprehensive statutory enforcement regime. The ruling clarifies that limitation protections apply primarily at the stage of obtaining the liability order, not at subsequent enforcement stages. The court did not establish new precedent beyond applying existing statutory interpretation principles and prior case law to the council tax enforcement context.