Limitation of Actions Consultation - Law Commission

seriously cutting down the effectiveness of the mortgagor’s equity of redemption. 181
As with a mortgagee’s action to enforce its security a redemption action can be
seen as analogous to an action to recover land from a third party. We
provisionally recommend that the long stop period under the core regime
should apply to a redemption action brought by a mortgagor who is not in
possession of the property, so that the limitation period for such an action
would be 10 years (or, under our alternative proposal for land-related
actions, 12 years) running from the date on which the mortgagor ceased to
be in possession. We ask consultees whether they agree.
13.135 Where a mortgagor brings a redemption action, it is established that the
mortgagee is entitled to retain arrears of interest from the sale proceeds which
would have been statute barred if the mortgagee had sued the mortgagor for
them. 182
This is because the mortgagee receives the arrears of interest, not as a
result of an action brought by the mortgagee, which would fall within section
20(5), but rather as a result of the conditions which general equitable principles
impose on the exercise by the mortgagor of the equity of redemption. We consider
that the question whether this should remain the state of affairs belongs properly
to a review of mortgage law rather than one of the law of limitation periods. 183
Accordingly we make no provisional recommendation as to whether a
mortgagee should continue to be entitled to deduct from the proceeds of
sale of the mortgaged property arrears of interest whose recovery is
statute barred. We ask consultees whether they agree that we should make
no such recommendation in this project.
13.136 What about actions to recover rent? There seems less reason to depart from the
core regime in respect of such actions as opposed to other land-related actions. If
the core regime were applied this would reduce the limitation period from six
years to three years in normal cases. We appreciate that this could, in some
circumstances, accelerate action by landlords to enforce their rights by forfeiting
leases, but the availability of relief from forfeiture would mitigate this effect. We
take the provisional view that, on balance, the disadvantages of such a change are
less than the disadvantages of the alternatives, which would be either to apply a ten
or twelve year long-stop alone to the recovery of rents, which we would regard as
excessively long, or to create a special exception to the core regime (for example,
by retaining the current limitation period of six years), which would reduce the
uniformity of the core regime’s applicability. Consultees are asked whether
they agree with our provisional view that actions to recover arrears of rent
should fall within our core regime (that is, there would be an initial
limitation period of three years from discoverability with a long-stop of 10
years from when the rent should have been paid).
181 See the Law Reform Commission of Western Australia’s Report on Limitation and Notice of
Actions, Project No 36 - Part II (1997), para 15.31.
182 Holmes v Cowcher [1970] 1 All ER 1224. See also, eg, Edmunds v Waugh (1866) LR 1 Eq
418; Dingle v Coppen [1899] 1 Ch 726; Re Lloyd [1903] 1 Ch 385.
183 Although if (contrary to our provisional view: see para 14.21 below) the law were reformed
so that the expiry of the limitation period barred not only the remedy but the plaintiff’s
right this question would not arise because the mortgagee would lose all rights to the
arrears.
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