Allendale Ltd v Moualem

A promissory note payable on demand is enforceable from execution, so limitation runs from execution rather than demand. That rule applies to a note executed as a deed and subject to the 12-year period in section 8 of the Limitation Act 1980. Section 6(2)(b) recognises the rule while creating limited exceptions for certain loan contracts; it does not extend those exceptions to specialities. The Court of Appeal will not reopen such an established rule on a second appeal where Parliament has considered the issue and enacted only limited reform. Further change is a matter for legislation.

Allendale Limited made a renewed application for permission to bring a second appeal against an order of His Honour Judge Townend dated 21 April 2004. That order followed an appeal from District Judge James's judgment delivered in November 2003. The dispute concerned a promissory note executed as a deed on 30 June 1988 and payable on demand, on which no demand was made within 12 years.

The central questions were whether limitation began on execution or demand, and whether the established rule should be reconsidered as unreasonable or anomalous.

1. Disposition. Lord Justice Buxton delivered the judgment, with which Lord Justice Waller agreed. The renewed application for permission to appeal was refused. Although the proposed issue would have been an important point of principle if it were open to the applicant, it was not open on a second appeal.
2. Accrual of the cause of action. A promissory note payable on demand is enforceable from the date of execution, without a demand. Limitation therefore begins to run from execution. That longstanding rule was stated in Norton v Ellam (1837) 2 M & W 461 and confirmed in relation to the note itself in Re Brown's Estate [1893] 2 Ch 300.
3. Statutory context. The note was executed as a deed and was therefore a speciality subject to the 12-year period under section 8 of the Limitation Act 1980. Following the Law Commission's 21st report in 1977, Parliament enacted section 6(2)(b), which tacitly recognised the rule in Re Brown's Estate while creating limited exceptions. Those exceptions concerned certain loan contracts and did not extend to a speciality. The same construction had been adopted unanimously by the Court of Appeal in Boot v Boot 73 P & CR 139.
4. Institutional limits. The court was not persuaded that the rule was necessarily unreasonable or anomalous. Limitation rules protect against stale claims and enable people to arrange their affairs; an indefinite extension of the right to sue would be undesirable. More importantly, the rule had been considered by Parliament and deliberately left unchanged for specialities. Any further reform must therefore be pursued legislatively, through the Law Commission or Parliament.

The reporting restriction was lifted.

1. Court of Appeal (Civil Division): On 6 July 2004, the court refused Allendale Limited's renewed application for permission to bring a second appeal.
2. Carlisle County Court: His Honour Judge Townend made an order on 21 April 2004 when hearing an appeal from District Judge James's judgment of November 2003.