This matter arose out of a charge imposed over a bankrupt’s former property pursuant to s. 313 of the Insolvency Act 1986. The effect of the charge was that the bankrupt’s former property re-vested in the bankrupt, but subject to the s. 313 charge. Over 12 years passed after the granting of the charge before the trustee in bankruptcy sought to enforce it by making an application for possession and sale.

The bankrupt set up a limitation defence, relying on s. 20 of the Limitation Act 1980. The trustee succeeded in front of the Chief Registrar, who was reversed on appeal to the High Court. The Court of Appeal restored the Chief Registrar’s decision, holding that the bankrupt had no limitation defence to the enforcement of the charge. The Court held that the trustee’s right to receive the money secured by the charge did not accrue until an order for possession and sale of the bankrupt’s property was made. As such, notwithstanding the time delay of over 12 years, time for the purposes of the Limitation Act 1980 had not yet started to run.

The decision is welcome news for those trustees who have the benefit of s. 313 charges. Its effect is that no limitation period applies to such charges prior to the date on which an order for possession and sale is obtained. Trustees will, instead, have 12 years after obtaining an order for possession and sale to enforce the same.