Ridgeway Motors (Isleworth) Ltd v ALTS Ltd

Section 24(1) of the Limitation Act 1980 bars only a fresh action upon an existing judgment to obtain a second judgment. It does not impose a six-year limit on a judgment creditor’s presentation of a winding-up or bankruptcy petition.

Insolvency proceedings are neither an action upon a judgment in that technical sense nor individual execution. They are collective proceedings for the benefit of creditors. A judgment creditor therefore remains a creditor after six years and may petition and prove for the judgment debt. By contrast, an ordinary contractual creditor whose cause of action is statute-barred lacks standing to petition as a creditor.

ALTS Ltd, as assignee of an unpaid costs judgment against Ridgeway Motors (Isleworth) Ltd, presented a winding-up petition more than six years after the judgment became enforceable. Ridgeway applied to strike out the petition under section 24(1) of the Limitation Act 1980.

HHJ Rich QC, sitting as a Deputy High Court judge, dismissed the application. He held that section 24(1) governed only a fresh action brought to obtain a second judgment and did not extend to insolvency proceedings. Ridgeway appealed.

The central issue was whether a winding-up petition founded on a judgment debt is an “action upon any judgment” subject to section 24(1)’s six-year limitation period.

1. Appeal dismissed unanimously. Mummery LJ gave the leading judgment. Brooke and Scott Baker LJJ agreed.

2. The expression “an action upon any judgment” in section 24(1) of the Limitation Act 1980 has a special legal meaning derived from its legislative history. Following WT Lamb & Sons v Rider [1948] 2 KB 331 and Lowsley v Forbes [1999] 1 AC 329, it means a fresh action brought upon an existing judgment to obtain a second substantive judgment. The extended definition of “action” in section 38(1) does not displace that meaning.

3. A winding-up petition is a proceeding in a court of law, but it is not an action upon a judgment in the relevant technical sense. Nor is it individual execution of the judgment. It is a sui generis collective proceeding through which admitted or proved debts are enforced for the general body of creditors on a pari passu basis. A bankruptcy petition is treated in the same way. Re a Debtor [1997] Ch 310, which held otherwise, was wrongly decided.

4. Limitation statutes principally address stale causes of action. The considerations underlying such statutes do not operate in the same way after liability has been conclusively established by judgment. Accordingly, a judgment creditor may present an insolvency petition more than six years after the judgment became enforceable.

5. By way of guidance, an ordinary creditor whose contractual cause of action is already statute-barred is no longer a creditor with standing under section 124 of the Insolvency Act 1986. A judgment creditor, however, remains a creditor despite section 24(1) and may prove for the judgment debt in a subsequent liquidation. The section prevents only a fresh action for a second judgment; it does not extinguish the creditor’s status or the company’s liability.

1. Court of Appeal (Civil Division): The appeal was dismissed. The court affirmed the refusal to strike out the winding-up petition.
2. High Court, Chancery Division: HHJ Rich QC, sitting as a Deputy High Court judge, dismissed Ridgeway’s strike-out application on 21 May 2004 and stayed further action on the petition pending appeal. No citation is stated.