Jones & Pyle Developments Ltd v Rymell

Discharge from bankruptcy does not release a bankruptcy debt incurred in respect of fraud to which the bankrupt was a party. Fraud for this purpose has the common-law meaning reflected in Derry v Peek.

Enforcement of an existing judgment by execution is not an action on the judgment for the purposes of the six-year limitation period in Limitation Act 1980. Where six years have elapsed, permission to issue execution ordinarily requires circumstances taking the case outside the ordinary. Bankruptcy, investigation of assets, acknowledgements of the debt and a subsequent improvement in the debtor’s ability to pay may together justify permission.

The claimant held a 2013 judgment for damages arising from fraudulent misrepresentation in the sale of land. The defendant subsequently became bankrupt and was discharged in 2014. The claimant later sought to enforce the judgment debt, while the defendant argued that discharge had released the debt and that enforcement was out of time.

The court determined the defendant’s application to set aside an order requiring examination of his means and the claimant’s application for permission to issue execution. The central issues were whether the judgment debt fell within the fraud exception to discharge and whether the circumstances justified enforcement more than six years after judgment.

1. Fraud exception. Section 281(3) of the Insolvency Act 1986 preserves a bankruptcy debt incurred in respect of fraud to which the bankrupt was a party. The underlying judgment expressly found that the defendant knowingly made false representations, without belief in their truth and, alternatively, recklessly. Those findings satisfied the common-law fraud test. The judgment debt therefore survived discharge and remained enforceable.
2. Limitation and execution. Enforcement of an existing judgment by execution is not an action bringing a claim upon a judgment under section 24 of the Limitation Act 1980, following National Westminster Bank v Powney. The relevant control is CPR rule 83.2(3)(a), which requires permission where six years or more have elapsed since judgment.
3. Following Patel v Singh, the court starts from the position that six years’ delay ordinarily justifies refusal, unless the creditor shows circumstances taking the case outside the ordinary. The bankruptcy period, the trustee’s investigation of the defendant’s property interest, the creditor’s continuing attempts to enforce, acknowledgements of the debt and the defendant’s potential access to pension assets were cumulatively sufficient.
4. Disposition. The defendant’s application was dismissed. The matter was remitted to the County Court at Yeovil to relist questioning on his means. Permission to issue execution was granted, with consequential matters to be dealt with on paper.

The judgment records that permission to appeal from the underlying 2013 judgment was refused by Teare J on 9 October 2013. The present decision was a first-instance determination of enforcement applications.