Trustee In Bankruptcy of Louise St John Poulton v Ministry of Justice

A breach of statutory duty does not ordinarily create a private damages action. The question depends on the true construction of the legislation and its context, including whether the duty protects a limited class and whether Parliament intended a private remedy. The absence of another sanction may support such an inference, but carries less weight where the duty is imposed on a court and is routinely performed. The duty under Insolvency Rules 1986, rule 6.13, was not privately actionable. Its statutory context, including the separate indemnity scheme under the Land Registration Act 1925, indicated no intention to confer a damages remedy. Nor could the same obligation generate a common-law duty of care where no independent relationship or assumption of responsibility existed.

A bankruptcy petition was presented against Louise St John Poulton, but the Guildford County Court failed to notify the Chief Land Registrar as required by rule 6.13 of the Insolvency Rules 1986. The debtor then sold registered land. After a bankruptcy order and the appointment of a trustee, the sale proceeds could not be recovered for creditors.

On a preliminary issue, the High Court held that the trustee could claim for breach of statutory duty but not for breach of a common-law duty of care: [2009] EWHC 2123 (Ch). The Ministry appealed against the statutory-duty conclusion. The trustee challenged the common-law conclusion. The central issues were whether rule 6.13 created a private right of action and, if not, whether the obligation could nevertheless found a common-law claim.

The Ministry’s appeal was allowed. The trustee’s challenge to the conclusion on common-law liability failed.

1. Statutory-duty test. The question whether breach of a statutory duty gives rise to a private action is one of construction of the legislation as a whole and its surrounding context. The ordinary position is that breach alone is not actionable. A private action arises only where the duty protects a limited class and the legislation objectively indicates an intention to confer that remedy. The presence or absence of another sanction is relevant but not decisive, applying Cutler v Wandsworth Stadium Ltd [1949] AC 399 and X v Bedfordshire County Council [1995] 2 AC 633.
2. Rule 6.13. The obligation to notify the Chief Land Registrar formed part of a continuous statutory scheme originating in 1926. Its purpose was to protect creditors and persons dealing with the debtor, but the context did not show an intention to create a private damages remedy. The absence of a sanction was less significant because the obligation was imposed on the court, was expected to be performed routinely, and the petitioning creditor could itself seek registration. The indemnity under section 61(7) of the Land Registration Act 1925 addressed distinct risks in identifying affected registered estates and did not support a private action under the bankruptcy rule.
3. The trustee would have been the appropriate claimant if a cause of action existed. The loss was suffered by the trustee or the bankrupt’s estate, rather than directly by individual creditors. That conclusion did not, however, establish an actionable duty.
4. Common law. Where a statutory obligation carries no private remedy, it cannot itself generate a common-law duty of care. A duty may arise from independent conduct, a relationship or an assumption of responsibility. This case involved a pure omission to perform a statutory obligation. Gorringe v Calderdale MBC [2004] UKHL 15 and HM Customs & Excise v Barclays Bank [2006] UKHL 28 supported that conclusion. Ministry of Housing and Local Government v Sharp [1970] 2 QB 223 concerned negligent performance of an undertaken search and certificate, and was materially different.

The statutory-duty claim was therefore dismissed, and the respondent’s notice on common-law liability failed.

• Court of Appeal (Civil Division) [2010] EWCA Civ 392: allowed the Ministry’s appeal and rejected the trustee’s challenge on common-law liability.
• High Court of Justice, Chancery Division [2009] EWHC 2123 (Ch): held that the statutory-duty claim lay, but that no common-law duty of care claim lay.