The process of execution can be long and arduous, not least due to the protracted negotiations that often take place between borrowers and lenders to come to agreement on repayment. For this reason, the question as to whether or not the Statute of Limitations applies to orders for possession and the renewal of execution orders is an important one.
This importance is even more pronounced where the Covid-19 pandemic has occurred 12 years after the global recession, leaving many orders coming up to their potential expiration date. It is unclear whether orders for possession can be enforced beyond 12 years from the date they were granted by the Court. This exact circumstance is what led Start Mortgages (represented by AB Wolfe & Co, the debt and enforcement division of Matheson) to seek clarification on this issue from the High Court in the recent case of Start Mortgages DAC v Barry Piggott.
An Order for Possession (the “Possession Order”) was obtained by the plaintiff over the defendant’s residential premises in Limerick on 30 June 2008 following a default on mortgage repayments. The Plaintiff obtained leave to issue execution of the Possession Order in November 2018 and an Order of Possession (the “Execution Order”) was obtained in July 2019. The Execution Order was valid until the 24 July 2020, some weeks after the period of 12 years would have passed since the making of the Possession Order. For that reason, a further application under Order 42 rule 20 of the Rules of the Superior Courts (“RSC”) was made seeking a renewal of the Execution Order or in the alternative a further Order for leave to issue execution on foot of the Possession Order under Order 42 rule 24 RSC.
The issue arose as to whether section 11(6)(a) of the Statute of Limitations 1957 (the “Act”) applies to an order for leave to execute a possession order. Section 11(6)(a) provides that “an action shall not be brought upon a judgment after the expiration of twelve years from the date on which the judgment became enforceable”. If the Act required the Possession Order to be executed within 12 years of the date on which it became enforceable, this would mean that any further proceedings or action would be statute barred within a fortnight ie. on the 29 June 2020. Naturally, Start was reluctant to take possession of the property during the global pandemic. Therefore, the issue that came to be determined was whether the order sought constituted an “action on a judgment” within the meaning of section 11 of the Act.
The judgment of the High Court considers the purpose of the Act, the underlying reasons for limitation of actions and the public policy considerations in applying an effective expiration date to the execution of such an order. The Court considered the case of Smyth v Tunney, which confirms that the Court has a discretion to grant leave to execute provided that the party seeking leave can show sufficient reasons why they have not executed the judgment. However, the Court noted that the Rules of the RSC are silent as to whether or not an order can be renewed beyond 12 years from the date of judgment.
Perhaps the most instrumental case in the area, and the one which the Court based much of its own reasoning, is that of Ulster Investment Bank Ltd v Rockrohan Estate Ltd. In that case, the now President of the High Court, Irvine J made a number of useful observations in the High Court which were later adopted with approval by the Supreme Court. The takeaway points from the judgment in Rockrohan were first, that the underlying rationales for limiting actions are certainty, evidentiary concerns and the promotion of diligence. Second, in the Supreme Court, Charleton J defined an action as being “a dispute between parties, where there is an assertion of fact or an argument of law, whereby one party seeks the benefit of some legal entitlement as against the other”. Execution, on the other hand, was stated to be supplementary. Third, the Court held that there are good policy reasons for the courts to distinguish between “actions” within the meaning of section 2 of the Act and procedures whereby an order or judgment may be executed. The Court therefore accepted in this case that an enforcement action was not a fresh action.
Gearty J adopted the reasoning in both the High Court and Supreme Court judgments (stating she was bound by the Supreme Court findings), indicating that “limitation statutes are intended to prevent stale claims and to relieve certain classes of defendants of the uncertainty of late claims being made against them”. The Court found that the policy considerations for the Act and the wording of the RSC confirm that section 11 did not apply to the proceedings before the Court. In particular, the Court found that an order renewing an execution order calls for no further consideration by the Court. Such an application can be properly seen as an application to enforce an order already made.
The Court stated that the practical effect of any other interpretation of section 11 would be to require a successful litigant, even where the debt has been acknowledged by payments, to sue again on the same principal sum and the same contract after 12 years had passed, in wholly avoidable litigation. A plaintiff would be required to execute an order for possession within 12 years, even where this would frustrate the wishes of all parties in such cases. For all these reasons, the Court held that the renewal of the Execution Order was not an “action on a judgment” as envisioned by section 11 of the Act. She found that there is no limitation on the renewal of the Execution Order and granted the renewal pursuant to Order 42, rule 20 of the RSC.
Uncertainty of Application?
Although a positive judgment which resulted in a successful outcome for both the plaintiff and defendant, the manner in which the Court made its findings is worth noting. Rather than applying the authority in Rockrohan and deriving conclusions therefrom, the Court approached its conclusions far more cautiously, stating that the interpretation of section 11 must be correct as to find otherwise would not make sense. Throughout the judgment, Gearty J stated that any other interpretation of the Act would lead to “absurd” results and she frequently cited “common sense”, “modern longevity and commercial reality” as supporting her interpretation of the Act.
For both borrowers and lenders, this case provides some comfort in that execution orders can be renewed for a period of time that stretches beyond 12 years after the order for possession has been granted. This has the potential to be beneficial for both parties as it provides them with additional time to attempt a less litigious route for resolution of disputes.
The judgment is also persuasive authority for the proposition that an application for leave to execute can be brought after 12 years have passed since an order for possession was obtained. While this issue was not directly before the Court, the judgment – in considering the purpose of the limitation of actions and the differentiation between an action and enforcement - does seem to indicate this to be the case. Gearty J states that, if a creditor dealing with a debtor who acknowledges a debt with repayment would have to execute a possession order within 12 years, this would be a “startling result” which “cannot be correct”.
Unfortunately, the judgment does not go so far as to make any findings in this regard. Although this could be attributed to the fact that the plaintiff’s predicament was resolved by securing leave to renew the Execution Order (and therefore such comments in respect of leave to issue execution could be considered to be obiter), it remains to be seen whether the indications given by the Court here will be adopted in future judgments where this issue will undoubtedly arise.
The Courts were more recently met with an opportunity to resolve this uncertainty in the case of Start Mortgages dac v Bernard Ward and Mary Ward. However, as the Court resolved this case by finding the 12 year timeframe had not yet expired (as the protection period under protective certificates pursuant to Personal Insolvency Act 2012 should not be counted), we still await a definitive view from the Courts. Notably however, Hyland J stated in Ward that further consideration or investigation by the Court is required when dealing with an application for leave to issue execution and its interaction with the Act. This obiter comment appears more cautious than that seen in Piggott.