Wilkinson & Anor v West Bromwich Building Society

Factual and Procedural Background

This appeal concerns the application of the Limitation Act 1980 (the 1980 Act) to proceedings initiated by Company A in the county court to recover the balance of an advance made on a mortgage, plus interest. Company A sought to pursue a personal claim against the mortgagors to recover the shortfall remaining after the sale of the mortgaged property, over which it held a legal charge securing repayment.

The mortgagors, Appellants, owned the property subject to a legal charge in favour of Company A. They fell into arrears on repayments, leading to possession proceedings and eventual sale of the property in 1990. The proceeds were insufficient to cover the debt, leaving a deficit. Company A did not commence personal recovery proceedings until 2002, raising the key issue of when the limitation period began to run.

Procedurally, Company A applied for summary judgment, which was initially dismissed by a District Judge. On appeal, summary judgment was granted in favour of Company A. The mortgagors appealed, and Company A cross-appealed on the issue of interest entitlement.

Legal Issues Presented

1. When does the limitation period under the Limitation Act 1980 begin to run in respect of a personal claim by a mortgagee for recovery of a shortfall following sale of the mortgaged property?
2. Whether, in the absence of an express covenant to repay the whole balance on a specified date or event, such a covenant should be implied in the mortgage deed.
3. Whether the shortfall sum remains "secured by a mortgage on property" within the meaning of section 20(1) of the 1980 Act after sale of the property.
4. The proper construction and application of sections 5, 8, and 20 of the Limitation Act 1980 to the facts of this case.
5. The appropriate limitation period applicable to the claim: 6 years (simple contract) or 12 years (specialty).
6. The entitlement of the mortgagee to recover interest for the full period since the sale of the property.

Arguments of the Parties

Appellants' Arguments

• The limitation period began to run from the date of the last repayment of monthly instalments (31 July 1989), which was more than 12 years before the commencement of proceedings.
• The claim was therefore statute barred.

Company A's Arguments

• The mortgagee’s liability continued under an express covenant to repay monthly instalments until full repayment of the advance.
• The limitation period for each instalment runs from the date each instalment becomes due, entitling recovery of instalments unpaid within the 12-year period preceding the claim.
• Alternatively, the limitation period began to run from the date the shortfall was ascertained upon sale of the property (14 November 1990), triggering an implied term that the whole balance became due at that time.
• The shortfall sum was not "secured by a mortgage on property" after sale and thus section 20(1) did not bar the claim.
• Company A was entitled to recover statutory interest for the entire period since the sale.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analysed the interplay of sections 5, 8, and 20 of the Limitation Act 1980 and the terms of the legal charge. It considered whether an express or implied covenant to repay the whole balance existed and when the cause of action accrued.

The court concluded that although the mortgage deed lacked an express covenant to repay the entire principal on a specified date or event, such a covenant was implied. The parties contemplated that the mortgagee could recover the entire advance either by instalments or by accelerated repayment on default. The sale of the property did not create a new cause of action or reset the limitation period.

Applying the "one and the same sum" principle from precedent, the court held that the shortfall sum remained secured by the mortgage at the time the cause of action accrued. The limitation period began to run from the date of the last payment made by the mortgagors (31 July 1989), when the right to receive the money accrued to Company A.

The claim brought in 2002 was therefore statute barred, having been commenced more than 12 years after the accrual of the cause of action. The court rejected Company A’s alternative arguments that limitation periods ran separately for each instalment or from the date of sale.

Regarding interest, the court declined to interfere with the lower judge’s discretion limiting interest recovery to three years, noting the unexplained delay in bringing proceedings.

Holding and Implications

The court ALLOWED the appeal by the mortgagors and DISMISSED the cross appeal by Company A.

As a result, the personal claim by Company A to recover the shortfall was held to be statute barred under the Limitation Act 1980 because the cause of action accrued more than 12 years before proceedings commenced. No new precedent was established; the decision applies established principles regarding limitation periods on mortgage shortfall claims and the implication of covenants in mortgage deeds.