England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
(Mr Justice Lawrence Collins)

		Royal Courts of Justice Strand London WC2 Wednesday, 16th January 2002

Wednesday, 16th January 2002

1. LORD JUSTICE ONE: I shall ask Lady Justice Arden to give the first judgment.
2. LADY JUSTICE ARDEN: This is an appeal with the leave of Jonathan Parker LJ from the order of Lawrence Collins J dated 4th May 2001. By his order the judge dismissed an appeal from the order of Master Price, who on 2nd January 2001 ordered the first defendant to deliver up to the claimant possession of his leasehold interest in 215 Brompton Road, London SW3 ("the Property").
3. The background is as follows. On 17th November 1982 the respondent served four notices on the appellant in relation to the Property requiring him:

(1) pursuant to section 9(1A) of the Housing Act 1957 to execute works on the grounds that substantial repairs were required to bring the premises up to a reasonable standard;

(2) pursuant to section 14(1) of the Housing Act 1961 to execute works so as to comply with the Housing (Management of Houses in Multiple Occupation) Regulations 1962;

(3) pursuant to section 15(1) of the Housing Act 1961 to execute certain works on the basis that the premises were unsuitable for multiple occupation; and

(4) pursuant to the Housing Act 1980, Schedule 24, paragraph 2 to carry out fire escape works.

4. The appellant did not comply with the notices, and in pursuance of its statutory power the respondent carried out work at a cost of about £100,000 including VAT, half of which aggregate sum the appellant paid in February 1987. The work was completed by about January 1987. On 13th July 1987 the respondent made a written demand for reimbursement of the balance of the expenses incurred by it, namely £49,963.57. The appellant challenged the demands in proceedings in the High Court, and subsequently in proceedings in the county court. Both sets of proceedings were struck out. It is common ground that the amount due to the respondent falls to be reduced by compensation in respect of a control order made in 1996 under the Housing Act 1985.
5. There is no issue as to the validity of the notices, and it is common ground that the limitation period for a money claim for the expenses would be six years by virtue of section 9 of the Limitation Act 1980.
6. The applicable section of the Limitation Act 1980 for the purposes of the present appeal is section 15, which provides:

"(1)No action shall be brought by any person to recover any land after the expiration of twelve years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person."

7. Our attention was also drawn to section 38(7) of the 1980 Act, which provides that references in the Act to a right of action to recover land should include references to a right to enter into possession of land.
8. The issues on the present appeal are:

(1) whether the respondent's charge is governed by the Housing Acts 1957 and 1961 or by the Housing Act 1985; and

(2) whether the cause of action to recover possession of the property under the charge accrued 21 days from the date of the demand for payment of the expenses or on the date on which the works carried out by the respondent were completed.

9. I turn to the statutory framework for the recovery of expenses in this situation.
10. The first notice served by the respondent is governed by section 10 of the Housing Act 1957. I will read the relevant provisions of that Act.

"10. Enforcement of notice requiring execution of works.-(I) If a notice under the last foregoing section requiring the person having control of a house to execute works that is not complied with, then, after the expiration of the time specified in the notice or, if an appeal has been made against the notice and upon that appeal the notice has been confirmed with or without variation, after the expiration of twenty-one days from the final determination of the appeal, or of such longer period as the court in determining the appeal may fix, the local authority may themselves do the work required to be done by the notice, or by the notice as varied by the court, as the case may be.

...

(3) Any expenses incurred by the local authority under this section, together with interest from the date when a demand for the expenses is served until payment, may, subject as hereinafter provided, be recovered by them, by action or summarily as a civil debt, from the person having control of the house or, if he receives the rent of the house as agent or trustee for some other person, then either from him or from that other person, or in part from him and as to the remainder from that other person. ...

(4) In all summary proceedings by the local authority for the recovery of any such expenses, the time within which the proceedings may be taken shall be reckoned from the date of the service of the demand or, if an appeal is made against that demand, from the date on which the demand becomes operative.

(5) The local authority may by order declare any such expenses to be payable by weekly or other instalments within a period not exceeding thirty years with interest from the date of the service of the demand until the whole amount is paid, and any such instalments and interest, or any part thereof, may be recovered summarily as a civil debt from any owner or occupier of the house, and, if recovered from an occupier, may be deducted by him from the rent of the house.

...

(7) The amount of any expenses and interest thereon due to a local authority under this section shall be a charge on the premises in respect of which the expenses were incurred, and the local authority shall for the purpose of enforcing that charge have all the same powers and remedies under the Law of Property Act, 1925, and otherwise as if they were mortgagees by deed having powers of sale and lease, of accepting surrenders of leases and appointing a receiver.

(8) The power of appointing a receiver under the last foregoing subsection shall be exercisable at any time after the expiration of one month from the date of the service under subsection (3) of this section of a demand for the expenses charged on the premises."

11. Section 11 deals with the right of appeal of a person who is aggrieved by a demand for the recovery of expenses incurred by a local authority in executing works specified in a notice. Any such person

"may within twenty-one days of the service of the notice, demand or order, appeal to the county court within the jurisdiction of which the premises to which the notice, demand or order relates are situate, and no proceedings shall be taken by the local authority to enforce any notice, demand or order in relation to which an appeal is brought before the appeal has been finally determined".

12. Section 37(1) of the same Act provides:

"Any notice, demand or order against which an appeal might be brought to a county court under this Part of this Act shall, if no such appeal is brought, become operative on the expiration of twenty-one days from the date of the service of the notice, demand or order, and shall be final and conclusive as to any matters which could have been raised on such an appeal, and any such notice, demand or order against which an appeal is brought shall, if and so far as it is confirmed by a county court judge, or the Court of Appeal, become operative as from the date of the final determination of the appeal."

13. Section 10(3) insofar as it refers to the summary recovery of expenses and subsection (4) were, as I understand it, subsequently repealed.
14. The judge held that the other notices were governed by section 18 of the Housing Act 1981 and section 64 of the Housing Act 1964, which provide in material part as follows:

"18. Carrying out of works by local authority.- (I) If a notice under section fourteen, section fifteen or section sixteen of this Act is not complied with, then, after the expiration of the time within which the works are to be executed or, if an appeal has been made against the notice and upon that appeal the notice has been confirmed with or without variation, after the expiration of twenty-one days from the final determination of the appeal, or such longer period as the court in determining the appeal may fix, the local authority may themselves do the work required to be done by the notice (with any variation made by the court).

...

(3) Any expenses reasonably incurred by the local authority under this section, together with interest from the date when a demand for the expenses is served until payment, may, except so far as they are by any direction of the court on appeal recoverable under an order of the court, be recovered by them, by action or summarily as a civil debt, from the person on whom the notice was served or, if he was only properly served with the notice as being an agent or trustee for some other person, then either from him or that other person, or as to part from him and as to the remainder from that other person."

15. The words "or summarily as a civil debt" were removed by the Housing Act 1964, to which I will now refer.
16. Section 64(1) of the Housing Act 64 states:

"Subject to this section, any expenses recoverable by a local authority under section 18(3) of the Act of 1961 ... together with interest accrued due thereon, shall, until recovered, be a charge on the premises to which the notice relates and on all estates and interests therein."

17. Turning back to section 18 of the 1961 Act, subsection (5) provides:

"The local authority shall for the purpose of enforcing the charge under the last foregoing subsection have the same powers and remedies under the Law of Property Act, 1925, and otherwise as if they were mortgagees by deed having powers of sale and lease, of accepting surrenders of leases and of appointing a receiver."

18. Then I turn back to section 64 of the 1964 Act:

"(2) On the date on which the local authority under the said section 18(3) serve a demand for the expenses incurred by them, they shall also serve a copy of the demand on every person who is to their knowledge an owner or lessee or mortgagee of the house or building; and within twenty-one days from that date any person may appeal to the county court against the demand.

(3) Until the demand becomes operative in accordance with this section the charge under subsection (1) of this section shall not take effect, and accordingly in section 18(5) of the Act of 1961 for the words from `date' to the end of the subsection there shall be substituted the words `date when the charge takes effect'.

(4) Any such demand shall, if no appeal is brought under this section, become operative on the expiration of twenty-one days from the date of the service of the demand on the person on whom the relevant notice was served; and any such demand against which an appeal is brought shall, if and so far as it is confirmed on appeal, become operative on the final determination of the appeal."

19. I should note that section 64(1) contained a further provision which made it clear that section 64(1) was in substitution for section 18(4) of the Act.
20. The judge noted that the relevant provisions of these two Housing Acts as amended had been consolidated in 1985 and that Schedule 10, paragraph 7 to that Act now provides that the charge does not take effect until the demand for expenses becomes operative. Under Schedule 10, paragraphs 2, 3, 4 and 6, this occurs 21 days after the date of the service of the demand or final determination of any appeal from the demand if the demand is confirmed by the court.
21. The judge held that the proceedings were to recover possession of property and not to recover sums recoverable under the Housing Act. Accordingly he held that section 9 and section 20 did not apply. He distinguished the decision of this court in Swansea City Council v Glass [1992] QB 844 in which it was held that a demand was not necessary for the start of the limitation period under section 9 of the Limitation Act 1980. The judge also distinguished the decision of this court in Hornsey Local Board v Monarch Investment Building Society (1890) 24 QBD 1 in which this court held that the cause of action of a local authority to recover paving expenses under the Local Government Act 1858 accrued at the date of the completion of the works and not from the later date, when the expenses were apportioned between frontagers. The Hornsey case turned on a provision similar to section 20(1) of the Limitation Act 1980.
22. The judge referred to paragraph 1005 of Halsbury's Laws of England, volume 28, which states that

"The limitation provisions relating to mortgages and other charges relate only to the recovery of money secured by a charge and do not affect any proceedings which a mortgagee has a right to take for obtaining possession of the property itself. Proceedings for possession are governed by separate provisions."

23. The judge also referred to Holmes v Cowcher [1970] 1 WLR 834 in which a passage from Megarry & Wade, Law of Real Property, was approved which stated that a mortgagee who exercised his power of sale could retain all arrears of interest "however old" out of the proceeds of sale.
24. On this basis the judge held that the only relevant provision was section 15 of the Limitation Act 1980.
25. The judge then turned to the second issue, namely the date on which the cause of action accrued. He held that under the 1961 Act the charge did not take effect until the demand became operative and, therefore, that time could not begin to run in an action for possession until 21 days after the date of the demand. He held that the case was not like Swansea City Council v Glass in which the service of the demand was held to be a purely procedural bar which did not affect the prior accrual of the cause of action for expenses. The judge held that it was implicit in the scheme of the 1957 Act that the enforceability of the charge was conditional on the demand becoming operative and did not take effect until that date. Accordingly he dismissed the appeal.
26. I now turn to the appellant's submissions.
27. On the first issue Mr Aditya Sen (for the appellant) submits that the notices served by the respondent and some of the work, indeed much of the work, was done before 1st April 1986 when the Housing Act 1985 came into effect. The 1957 Act therefore applied.
28. The consolidation of the Housing Acts was done with the benefit of recommendations by the Law Commission and the Scottish Law Commission. The two Law Commissions made a number of recommendations for amendments to sections 10 and 11 of the Housing Act 1957, section 18 of the Housing Act 1961 and section 64 of the Housing Act 1964: see their Report on the Consolidation of the Housing Acts (The Law Commission and the Scottish Law Commission Cmnd 9515 (May 1985) pages 33-36). The recommendations which the Law Commissions made included a recommendation that it should be an express requirement of the enforcement provisions of both the 1957 Act and the 1961 Act that copies of the demand should be served on every person known to be owners, lessees or mortgagees of the property.
29. The Law Commissions considered that service of a demand was implicit in both section 10 and section 18 of the 1961 Act. The Law Commissions also made a recommendation that the charge should take effect when the demand became operative and that the period after which a receiver might be appointed should run from the same date. The Law Commissions said this at pages 34-35:

"(vi) When the charge takes effect

The 1957 Act does not expressly state when the charge on the premises securing the local authority's expenses and interest takes effect and it provides that a receiver may be appointed at any time after the expiration of one month from the service of the demand. This is inconsistent with the provisions postponing the operation of the demand if it is appealed against. The 1961 Act as originally enacted was similar, but it was amended in 1964 to remove the inconsistency. No such inconsistency appears in the 1971 Act.

We recommend that the charge should in all cases not take effect until the demand becomes operative and that the period after which a receiver may be appointed should run from the same date. Effect is given to this recommendation in paragraph 7(2) and (4) of Schedule 11 to the Housing Bill."

30. The transitional provisions of the 1985 Act are to be found in the Housing (Consequential Provisions) Act 1985. Section 2 of that Act provides so far as relevant:

"(1) The re-enactment of provisions in the consolidating Acts, and the consequent repeal of those provisions by this Act, does not affect the continuity of the law.

(2) Anything done ..., or having effect as done under a provision reproduced in the consolidating Acts [as amended] has effect as if done under the corresponding provision of the consolidating Acts."

31. The transitional provisions are in Schedule 3. The material part provides as follows:

"1.-(1) The general rule is that the provisions of the consolidated Acts apply, in accordance with section 2 of this Act (continuity of the law), to matters arising before the commencement of those Acts as to matters arising after that commencement.

...

(4) The general rule does not apply so far as a provision of the consolidating Acts gives effect to an amendment (in pursuance of the recommendation of the Law Commission, and in some cases, the Scottish Law Commission)."

32. The Court of Appeal had to consider these provisions in the Glass case, and the report of the judgment of the Court of Appeal on this point is more fully reported in the All England report of the decision [1992] 2 All ER 680 at 682-683. In the Glass case the 1957 Act was in force at the time of the notices, works and demands. The 1957 Act was repealed on 1st April 1986. Taylor LJ, with whom Purchas and Ralph Gibson LJJ agreed, said this:

"The provisions which replace those contained in s10(3) of the 1957 Act are to be found in s193 of and Sch10 to the Housing Act 1985. In particular, if one compares the provisions relating to recovery of expenses in s10(3) of the 1957 Act with those in Sch10 to the 1985 Act it is clear that the whole scheme had been rewritten and amended in accordance with recommendations in the Law Commission's report on the Housing Bill, Housing Associations Bill, Landlord and Tenant Bill (Law Com no 144 (1985)). In those circumstances, the learned judge held that the provisions in the 1985 legislation did not apply in the present case which continued to be governed by the 1957 Act. In my judgment he was right. I should add that the outcome would have been no different even if the 1985 Act had applied since Mr Thomas concedes the time when the cause of action arises must be the same under both Acts."

33. Mr Sen submits that that part of the judgment applies also in the present case. Since Schedule 10 to the 1985 Act is new and incorporates recommendations made by the Law Commissions, the earlier Housing Acts must apply to the enforcement of the claims for expenses made by the respondent in this case.
34. On the second issue Mr Sen submits that time runs from the completion of the works. There is no provision in section 10 of the 1957 Act which states that the charge is to be effective from the date of the demand for expenses. The wording in section 10(4) providing for time to run in the case of summary proceedings from the date of demand (now repealed) suggests that in the case of an action for the recovery of monies and an action for possession time does not so run, with the consequence that time must run in the case of the charge from the date that the works were completed. Mr Sen relies on Hornsey Local Board v Monarch Investment Building Society above, especially on the following passages from the judgment of Lord Esher MR and Lindley LJ. Lord Esher said this at page 5:

"The section provides that `no action or suit or other proceeding shall be brought to recover any sum of money secured by any mortgage, judgment, or lien, or otherwise charged upon or payable out of any land or rent, in law or in equity, or any legacy, but within twelve years after a present right to receive the same shall have accrued to some person capable of giving a discharge for or release of the same.' It was strongly argued that the words `present right to receive the same' in this section are equivalent to `present right to enforce payment of the same'. If there were some overwhelming reason why that construction should be given to the words; if that were the only construction that would render the procedure sensible, I think possibly the words might receive that construction, but I do not think it would be their ordinary meaning in the English language. A present right to receive is not in ordinary English the same as a present right to enforce payment. Then is there any overwhelming reason why we should read the words otherwise than in their natural sense? So far from that, I think that in the present case to read the words in the way suggested for the plaintiffs would raise insuperable difficulties, whereas to read them in their natural sense makes the whole legislation sensible and easy of application. The difficulty that arises on the plaintiffs' construction has been pointed out, viz, that the board, who have to receive the money, and also to apportion the amount, would have the power to delay the application of the Statute of Limitations for any time they pleased. When that difficulty was presented, the plaintiffs' counsel endeavoured to meet it by the ingenious suggestion that, if the apportionment were not made within a reasonable time, the making of it might be enforced by mandamus; and other modes were suggested of meeting the difficulty. But why should we embark on such questions and invent means of overcoming this difficulty, when by reading the words in their ordinary sense no such difficulty arises?"

35. Lindley LJ put the matter powerfully thus at page 9:

"Who ever heard, with reference to any Statute of Limitations, that a creditor could enlarge the time for suing indefinitely by omitting to do that which it is his duty by statute or common law to do? It appears to me that he ought not to adopt a construction of the statute that leads to such a result, unless we are driven to it."

36. Lopes LJ gave a separate judgment, but he agreed with both judgments that had been given by Lord Esher MR and Lindley LJ.
37. Mr Sen continues in his submission to submit that if the applicable period of limitation is 12 years under section 15 of the Limitation Act 1980, this period also accrues from a date on which the right of action accrued to the respondent, which is also the date of the completion of the works. At that date the charge was created and the claimant had the right of action for possession of the premises. Where a legal mortgage has been created by demise or by a legal charge and no provision is made for the retention of possession by the mortgagor, the mortgagee is entitled, as against the mortgagor, to immediate possession at any time after the execution of the mortgage, and equity does not interfere notwithstanding there has been no default with the mortgagor's part: Halsbury's Laws volume 32, paragraph 603. In the present case the statutory charge does not prohibit the respondent's right to possession and accordingly that right accrued on the date of the creation of the charge, that is the date of the completion of the works.
38. Mr Sen also submits that, if the start of the limitation period depends on the making of the demand, the respondent could delay the limitation period as long as he wished by delaying the service of the demand. That cannot be allowed under the principles set out in the Glass and Hornsey cases. As the Hornsey case shows, the creation of a charge and the enforcement of a charge are different matters, and in Mr Sen's submission section 18 of the 1961 Act, Schedule 10, paragraph 7 of the 1985 Act, in the case of section 18 subsection (5), are dealing with the latter and not the creation of a charge. When Parliament speaks of a charge taking effect, Mr Sen's submission is that it is referring to the process of enforcement, not the creation of the charge. The taking effect of a charge is a mere procedural matter.
39. On Mr Sen's submission the judge erred in holding that the cause of action upon the charge and the debt arose at different times. They arose at the same time, namely upon completion of the works. He also erred in holding that the cause of action under the charge arose upon service of the demand for expenses. This is inconsistent with section 9 of the 1957 Act. The same is true of section 18 of the 1961 Act as amended on its true construction.
40. In Mr Sen's submission the debt cannot become statute barred and the cause of action under the charge survive. Further, on his submission, Holmes v Cowcher is distinguishable, because it concerned a redemption action. The judge erred in holding that, although a cause of action under section 20 might have arisen from the date of completion of the works, the position is different under section 16. The present proceedings were not proceedings for possession. If the debt to the respondent was statute-barred under section 9, the charge could not be used to obtain payment. There was no covenant for payment.
41. I now turn to the respondents' submissions. Mr Clive Jones, for the respondents, submits with respect to the first issue that since the 1957 Act was repealed before the works were completed, the applicable statute must be the 1985 Act. The notices of work are deemed to have been served under the corresponding provision of the 1985 Act; the completion of the works and service of the demand took place after the commencement of the 1985 Act. So on either party's case as to the appropriate date of accrual of the limitation period, the 1985 Act applies.
42. As respect to the second issue, Mr Jones submits that section 64(3) of the 1964 Act expressly provides that the statutory charge does not take effect until the demand becomes operative in accordance with section 64(4) of the 1964 Act. That section provides that a demand only becomes operative on the expiration of 21 days from the date of service of the demand, that is, unless it is subject to approval and confirmed on appeal, in which case the demand becomes operative on the final determination of the appeal. Mr Jones submits that the policy behind these provisions is to ensure that the local authority cannot enforce its charge until it has served a demand and those who have an interest in the property have had an opportunity to challenge the demand.
43. Mr Jones submits that the effect of the 1957 Act is the same. He relies particularly on section 37 of the 1957 Act. Section 10(7) of that Act creates a statutory charge. A cause of action for the recovery of expenses by an action pursuant to section 10(4) of the 1957 Act runs from the date on which the works were completed. Accordingly the charge pursuant to section 10(7) of the 1957 Act is created when the expenses were incurred. However, for the purposes of section 15 of the Limitation Act 1980, the question is not when the charge was created, but, when the right to recover the land accrued under section 37, the demand is not operative from 21 days from the service of the demand if no appeal is brought. Accordingly, while the demand may be a procedural step - see Glass - the charge cannot be enforced until the demands become operative, and thus the limitation period for the demand for the action to recover the land cannot accrue until those 21 days subject to appeal have expired. Any action brought earlier to recover the land would have been met successfully with the defence that the statutory charge was not operative and that the cause of action ever accrued.
44. The 1957 Act, on Mr Jones' submission, was not amended when the 1961 Act was amended. This may be because the 1961 Act was concerned with matters which did not arise with the 1957 Act. Section 18(4) of the 1961 Act created a charge on the estate or interest of the persons served with the demand and not on the premises themselves, whereas section 64(1) provided that the charge was on the premises to which the notice related. Section 18 of the 1961 Act did not provide for an appeal against the demand for expenses, but this was provided for by section 64(2) of the 1964 Act. On the other hand section 10(7) of the 1957 Act always created a charge on the premises and section 11(1)(B) of that Act always created a right of appeal against the demand.
45. I now turn to my conclusions.

Issue 1

46. Is the respondents' charge governed by the Housing Acts 1957 and 1961 (as amended) or by the Housing Act 1985?
47. On this question I am persuaded by the submissions of Mr Jones. The 1957 Act repealed by the Housing (Consequential Provisions) Act 1985 which, like the Housing Act 1985, came into effect on 1st April 1986. This was before the works were completed. The notices and some of the work had been carried out under the earlier Acts, but the provision for such notices and for the work to be done by the local authority were replicated, we are told, in the consolidating Act (The Housing Act 1985). On that basis paragraph 1(1) of schedule 3 to the Housing (Consequential Provisions) Act 1985 provides that the provisions of the consolidating Act apply to matters arising before the commencement of those acts as to matters arising after the commencement.
48. Neither side submits that the respondent had any right to recover any expenses or charge to secure the same before the conclusion of the works. This occurred after the 1985 Act took effect. As statute had deemed the notices served under the earlier Acts and the work done under the earlier Acts to have been done under the corresponding provisions of the 1985 Act, I see no reason why the provision of Schedule 10 that Act should not apply to the charge which then arose. However, the judge did not approach the matter in this way. He considered all the relevant statutory provisions and came to the same conclusion.
49. Mr Sen also initially addressed us on the 1957 Act. In those circumstances I will start with an analysis of the 1957 provisions on the basis that they are the applicable provisions.

Issue 2

50. Did the cause of action to recover possession of the property under the charge accrue 21 days from the date of the demand for the payment of the expenses or the date on which the works were completed?
51. Mr Jones has not submitted that there was any relevant suspension of the right to take possession of the property pending the appeals made by the appellant. I will proceed on the basis that there were no such appeals. They would be immaterial to the outcome of this case having regard to the dates.
52. As stated, I take first the 1957 Act. The starting point is the decision of this court in Swansea City Council v Glass. In his judgment, Taylor LJ considered a number of authorities, including two decisions of the House of Lords, Central Electricity Board v Halifax Corporation [1963] AC 785 and Jebcon Ltd v Lucas CAV Ltd [1986] 1 WLR 462. He then continued at page 852B to 853B, using the law report for this purpose, as follows:

"Although not on all fours with the present case, these decisions show that a cause of action may well accrue before, for procedural reasons, the plaintiff can bring proceedings. Where the cause of action arises from statute, the question as to what is merely procedural and what is an inherent element in the cause of action is one of construction.

In the present case, the judge carefully analysed the provisions of section 10(3) and (4) and in my judgment reached the correct conclusion as to when the cause of action arose. Section 10(3) gives a right to recover `any expenses incurred by the local authority under this section'. The local authority must therefore prove (1) that notice in accordance with section 10(1) was served on the person having control of the house to execute works, (2) that he failed within the time specified to execute them, (3) that the local authority have themselves carried out the works specified in the notice and (4) that they have incurred expenses in so doing. A statement of claim alleging those matters could not, in my view, be struck out as disclosing no cause of action.

The phrase `together with interest from the date when a demand for the expenses is served until payment' in section 10(3) shows that interest runs only from the date of the demand and, by implication, from the date when the cause of action arose.

Section 10(4) provides expressly that where the local authority opts to take summary proceedings to recover their expenses, the limitation period runs from the date of service of the demand or, if there is an appeal, the date when the demand becomes operative. Again, by implication, since no such provision is applied to proceedings in the High Court or county court, time in those proceedings does not run from the date when the demand is served or becomes operative. It will run from accrual of the cause of action which, ex hypothesi, is a different time.

The rationale of the distinction between summary and other proceedings probably lies in the respective limitation periods. In summary proceedings the period is six months. If time were to run from the accrual of the cause of action, i.e. when the expenses were incurred, summary proceedings might often be statute-barred before they could be brought, especially where there was an appeal against the demand. In other proceedings, however, a limitation period of six years gives, or should give, the local authority ample time to sue even after an appeal against their demand. In my judgment, the expression, special to section 10(4), that time runs from service of the demand or when it becomes operative, is intended to distinguish summary proceedings from other proceedings. Inclusio unius, exclusio alterius. In other proceedings, time runs from the accrual of the cause of action, i.e. when four elements identified above are complete. Thus, I conclude that the requirement to serve a demand is a procedural condition precedent to bringing proceedings. It is not part of the cause of action.

I am fortified in this view by consideration of what could result if the local authority were right. Upon their argument, the local authority could delay service of a demand indefinitely. then, having served their demand long after the works were complete, they would have a further six years in which to take proceedings in the High Court or the county court."

53. Section 10, which Taylor LJ analysed in his instructive judgment, does not state expressly that a local authority must serve a demand before it proceeds by action to recover the amount of its expenses. However, there is reference to a demand in section 10(3) and section 10(4) as Taylor LJ observed; and those provisions were critical to his conclusion that a demand was not necessary to the accrual of a cause of action for the expenses. Reading his judgment as a whole, it seems to me that the Court recognised that even where there was an action for a money sum without summary proceedings a demand was required: see, for example, the penultimate sentence of the penultimate paragraph cited, which reads:

"Thus I conclude that requirement to serve a demand is a procedural condition precedent to bringing proceedings."

54. In my judgment, the conclusion that a demand is required before a local authority can bring proceedings, even by way of action, is supported by the provisions of section 11 of the 1957 Act. These provide for a right of appeal by a person served with a demand. Obviously, that right of appeal could be rendered nugatory in practice if proceedings could be taken to enforce the claim for expenses before the appeal had been repealed. Accordingly, to prevent this happening section 11 expressly provides that no proceedings shall be taken while there is an appeal pending. In my judgment it is clear that the word "taken" in this provision means "instituted".
55. I then turn to the provisions of section 10 dealing with the enforcement of a charge out of court. Here again, in my judgment, section 10 recognises that a demand must be served. Thus, section 10(8) provides that the power of appointing a receiver shall not be exercisable until one months has expired after "the service under subsection (3) of this section of a demand for the expenses charge on the premises". There is no obvious reason why one month was chosen for this purpose, but it is not the same as, and is longer than, the period allowed after service of the demand under section 37.
56. Although section 10(8) refers only to postponement of the exercise of the power to appoint a receiver, it would be curious and illogical if other powers of the mortgagee to enforce the charge could be exercised before a demand had become effective. It would be illogical to distinguish between the power to take proceedings for possession and the power to appoint a receiver. It would be odd if the one required the service of a demand but not the other. It would also lead to the extraordinary result that a local authority, having incurred expenses could proceed to enter the premises or start proceedings for possession without ever having notified the owner of the property of the expenses it had incurred. In my judgment, that cannot be the true construction of section 10(7). In my judgment, and here I agree with the judge, it is implicit in the section that a demand will be served before the mortgagee exercises his power to take possession. As a result of section 37, that demand will not become effective until 21 days from the date of service of the demand.
57. Mr Jones accepts that the limitation period for the expenses is six years and that accordingly any demand made for payment of the expenses before exercising the power of sale must be served before that period expires.
58. When one turns to the 1961 Act (as amended) and to the 1985 Act then ignoring the question of any appeal, it is clearly stated that the charge does not take effect until 21 days after service of the demand (see section 64(4) of the Housing Act 1964 and paragraph 3(3) of Schedule 10 to the Housing Act 1985). In my judgment, the expression "takes effect" means in relation to the charge that it is then fully constituted and created. It is not a provision which merely refers to the procedure for enforcement or which constitutes a provision relating purely to the enforcement of the charge. It is one which relates to the very creation of the charge itself. In my judgment the words "take effect" are clear and this court must give effect to them in their clear meaning. There is thus no room for the principle in Hornsey that the respondent should not be in a position of being able to postpone the commencement of the limitation period for this purpose by reason of postponing the time for the demand. In consequence the limitation periods start at different dates for the purposes of the money claim and claim to possession - but it often happens in this field of law that limitation periods start from different dates or, indeed, are of different lengths.
59. On the above analysis the three acts - the 1957 Act, the 1961 Act and the 1985 Act - all provide that the local authority will not take possession under its charge until a demand has been served and 21 days has expired. Where they diverge is in the special provision made in the 1961 Act (as amended) and the 1985 Act for the postponement of that period pending the resolution of any other appeal. That provision does not apply to the 1957 Act but, as explained, that consequence is not material to the outcome of this case.
60. Applying the foregoing, I am satisfied that the local authority's right to recover possession accrued on the expiration of 21 days after it made demand for the expenses. Accordingly, if the proceedings were not statute-barred the judge was correct in the order which he made. Obviously, if the local authority had delayed beyond six years after completion of the works before serving a demand and did not even allow the necessary 21 days to expire before that six year period itself expired, the position may well have been different.
61. I am happy to find myself in agreement with the Law Commissions' conclusion as to the construction of the 1957 Act with respect to the implication of the demand and the non-postponement of the time when the power to appoint a receiver may be exercisable if there is an appeal.
62. In the circumstances I would dismiss this appeal.
63. LORD JUSTICE LATHAM: I agree.
64. LORD JUSTICE LATHAM: I also agree.
Order: Appeal dismissed with costs as agreed at £3,500. Permission to appeal to the House of Lords refused. Stay for 28 days to be lifted thereafter unless there is a petition to the House of Lords.