St John Poulton's Trustee in Bankruptcy v Ministry of Justice

The Court of Appeal held that Insolvency Rule 6.13 (the court's duty to send notice of a bankruptcy petition to the Chief Land Registrar) did not, when viewed in its statutory context, give rise to a private cause of action for damages. The court analysed the historical statutory scheme (including the Land Charges Act 1972, Land Registration Acts and the Insolvency Act 1986) and concluded that Parliament did not intend to create a private remedy for breach of the rule. The court further held that, because no private statutory cause of action exists, no independent common law duty of care arose from the statutory obligation and therefore there could be no negligence claim based solely on the court's failure to send the notice.

Key legal principles:

• Cutler v Wandsworth and subsequent authorities provide indicators for implying private causes of action from statutory duties, but the default rule is that a breach of statutory duty does not give rise to a private law right unless Parliament's intention so indicates.
• Where the statutory scheme and context (including alternative remedies, indemnity or immunity provisions) point away from a private remedy, courts should not imply one.
• A statutory duty that does not give rise to a private right of action will not, merely by its existence, generate a common law duty of care.

Background and parties: The Trustee in bankruptcy of Louise St John Poulton sued the Ministry of Justice (vicariously responsible for Her Majesty's Courts Service) for the proceeds of a pre-bankruptcy sale of registered land. The Trustee alleged that Guildford County Court staff failed to comply with Insolvency Rule 6.13 by not sending notice of a bankruptcy petition to the Chief Land Registrar, with the consequence that no entry appeared in the register of pending actions and no notice was entered against the registered title. The sale in March 2004 proceeded and the trustee could not recover the proceeds for the estate.

Nature of the claim and relief sought: The Trustee sought damages for loss suffered by the estate, asserting (i) breach of a statutory duty under Insolvency Rule 6.13 (and related land registration/land charges provisions), and alternatively (ii) a common law duty of care. The Ministry of Justice appealed the judge's conclusion that a statutory cause of action existed; the Trustee cross-appealed on the judge's rejection of a common law duty.

Procedural posture: The appeal came from a preliminary issue decision of Her Honour Judge Marshall QC in the Chancery Division ([2009] EWHC 2123 (Ch)). Permission to appeal was granted. The Court of Appeal (Lloyd, Pill and Pitchford LJJ) heard argument and delivered a single judgment.

Issues framed by the court:

• Whether the statutory duty under Insolvency Rule 6.13 (read with the Land Charges Act 1972 and the Land Registration Acts) gives rise to a private cause of action for damages when breach causes loss to the trustee in bankruptcy.
• Whether, if no private statutory cause of action exists, a common law duty of care arises from the statutory obligation.

Court's reasoning (concise):

• The court surveyed the historical and statutory context dating back to 1925 and considered how rule 6.13 and its predecessors interacted with the Land Charges Act and the Land Registration Acts. The court emphasised continuity of the rule since 1926 and treated the question as one of objective statutory construction.
• The absence of an express sanction for failure by the court to give the required notice was recognised but not decisive. The court found the duty was of a kind that would ordinarily be performed by court staff as a matter of course and that petitioning creditors can themselves register the petition if necessary.
• Comparison with the land registration scheme (where the Land Registry enjoyed immunity but a statutory indemnity fund existed) supported the view that Parliament addressed risks differently in the land registration context; this did not imply a private right of action in relation to the court's duty under the Land Charges / Insolvency rules.
• Authorities on implying private rights (Cutler, X v Bedfordshire, Sharp) were considered; Sharp did not compel recognition of a private remedy in the present context. The court applied the Cutler/X v Bedfordshire indicators and concluded Parliament had not intended to confer a private remedy for breach of rule 6.13.
• On the cross-appeal, established authorities (Gorringe; HM Customs & Excise v Barclays Bank) preclude the derivation of a novel common law duty of care from a statutory duty that does not itself carry a private remedy. The court concluded that no independent common law duty arose.

Outcome: The appeal by the Ministry of Justice was allowed. The Trustee's Respondent's Notice (claiming a common law duty) failed.

Appeal allowed. The Court of Appeal held that Insolvency Rule 6.13 and its statutory context did not demonstrate an intention to confer a private cause of action for damages against the court for failure to send notice of a bankruptcy petition; having rejected a statutory private remedy, no independent common law duty of care arose from the statutory obligation, so the Trustee's negligence claim also failed.

Appeal from the Chancery Division (Her Honour Judge Marshall QC) [2009] EWHC 2123 (Ch) to the Court of Appeal (neutral citation [2010] EWCA Civ 392). Permission to appeal was granted and the Court of Appeal allowed the appeal.