The Civil Division of the Court of Appeal handed down judgment in the case of Bolsover District Council and Another v Ashfield Nominees Ltd and Others [2010] EWCA Civ 1129 on the 19th October 2010. The case concerned council tax and whether winding up petitions were time-barred under s 9 of the Limitation Act 1980 (the 1980 Act).

The appellant companies owned several properties for which council tax was payable. Following non-payment, the respondents presented winding-up petitions to the magistrates’ court for which liability orders had been obtained. Some of these orders had been obtained earlier than six years beforehand. Those undisputed payments were paid, and only those time-disputed payments were left outstanding.

Council tax is governed by the Local Government Finance Act 1992 c. 14 and the Council Tax (Administration and Enforcement) Regulations 1992, SI 1992/613 (the 1992 Regulations). Where a liability order is made, its enforceability is in accordance with the 1992 Regulations. Under regulation 34(3) the normal six month time limit does not apply, and no application may be instituted for sums more than six years after their becoming due. S 9 of the 1980 Act applies to "any sums recoverable by virtue of any enactment".

Before the High Court, the respondents successfully argued that those liability orders obtained more than six years prior to the presentation of winding-up petitions could be included in petitions.

Appealing to the Court of Appeal, the principal issue was the applicability of section 9 of the 1980 Act. The appellant sought to argue that the payments were recoverable by virtue of the 1992 Regulations, and therefore were barred under s 9. The respondents argued that though the sums fell due by virtue of the 1992 Regulations, the payments for which the petitions were issued would be recoverable by virtue of the liability orders.

Considering Central Electricity Board v Halifax Corporation [1963] AC 785 and Re Farmizer (Products) Ltd [1997] 1 BCLC 589, these cases concerned the meaning of the term “by virtue of”. The court determined that liability was by virtue of the 1992 regulations and that limitation on unpaid council tax proceedings should run from the date of the liability order.

Finding that regulation 34(3) imposes an equivalent restriction on enforcement of liability, the court held that its presence either displaced or rendered s 9 superfluous. Further, referring to matters of policy, the court found that it was sensible that only one time bar applied to liability for unpaid council tax.

Dismissing the appeal, the court held that s 9 of the 1980 Act was not applicable to the presentation of winding-up petitions for sums due under council tax liability orders.