Adams v Mason Bullock (A Firm)
| Jurisdiction | England & Wales |
| Judge | Deputy Judge of the High Court |
| Judgment Date | 17 December 2004 |
| Neutral Citation | [2004] EWHC 2910 (Ch) |
| Date | 17 December 2004 |
| Court | Chancery Division |
| Docket Number | No 211 of 2004 |
[2004] EWHC 2910 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
ON APPEAL FROM
THE NORTHAMPTON COUNTY COURT
IN BANKRUPTCY
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr B Livesey QC
(Sitting as a Deputy Judge of the High Court)
No 211 of 2004
Mr Sebastian Prentis (instructed by EMW Law, Northampton) for the Appellant.
Mr David Nicholls (instructed by Shoosmiths, Reading) for the Respondent.
This is an appeal by the debtor from the decision of District Judge Venables sitting in Northampton CC on 8 th September 2004 at the hearing of a bankruptcy petition. At that hearing the debtor opposed the making of a bankruptcy order on two grounds, only one of which is the subject matter of this appeal. The debtor contended that there was a genuine triable issue as to whether the creditor was entitled to charge interest on the invoices ("the interest argument").
District Judge Venables held that the interest argument had been an issue on which District Judge McHale had adjudicated on the 27 th February 2004, when he dismissed an application to set aside the statutory demand, and that by virtue of Turner v Royal Bank of Scotland [2000] BPIR 683 it was not open to the debtor to argue the point again.
As will appear from a detailed examination of the facts, this case falls between Turner on the one hand and Barnes v Whitehead [2004] BPIR 693 and the question is on which side of the line it falls.
The debt arises out of a retainer made during 1997 between the debtor and his solicitors (Mason Bullock—"the creditor") for representation in a number of disputes and pieces of litigation both on his own personal account and on the account of a limited company (Resiliente Limitada) which he controlled. On the 12 th June 2003 the creditor served a statutory demand in the total sum of £78,323.53, expressed as £66,455.13 of unpaid invoices and £11,819.30 of "interest … pursuant to [the] Creditor's Terms and Conditions".
On 30 th June 2003 the debtor made an application to set aside the statutory demand on the grounds that the debt was disputed on substantial grounds and that he had a counterclaim or set off which equalled or exceeded the amount of the debt. In support of his application he filed an affidavit which set out four arguments in support of his contention. None of these raised the interest point. By a witness statement dated the 15 th July 2003 Mr Mason, the solicitor in the firm who dealt with the debtor, put in a response to each of the points which the debtor had raised.
In a witness statement dated 13 th August 2003 the debtor responded to Mr Mason and raised a number of further points of dispute, the last of which was the interest point, in respect of which he stated
"Finally, I dispute the Respondent's claim to interest as set out in the statutory demand. I have not been notified by the Respondent that interest is payable upon outstanding invoices and there is no indication of the interest rate to be charged on the face of the invoices."
In a witness statement dated 5 th September 2003 Mr Mason (for the creditor) responded to each of the points made by the debtor. To the interest point he responded
As to interest, the Terms of Business contain the right to interest on unpaidbills.
A copy of the relevant Terms of Business was exhibited to the statement.
On 27 th February 2004 a hearing of the debtor's application took place before District Judge McHale. Prior to the hearing the solicitor representing the debtor served a short skeleton submission which set out only two of the many grounds of objection which had been raised. Under the heading " Grounds of Dispute" the skeleton set out two grounds as follows " (A) Invoices addressed to Resiliente Limitada", which was then argued point by point, and " (b) Respondent's Breach of Practice Rule 15"—which was argued in like fashion.
Counsel who appeared for the creditor on that application informed me that in the light of the fact that only two points were taken by the debtor in his skeleton, he supplied a skeleton submission which dealt only with those points.
At the hearing there was oral argument limited to the two points. In an extempore judgment, District Judge McHale included the observation that
The applicant has moved the goalposts in relation to what was in the original application and a large number of the matters which are raised in the affidavit are no longer proceeded with today. In essence, the matters that are raised before me today are, firstly, that the bills or the invoices, amounting to some £25,923.08 are to Resiliente Limitada and not to the applicant … The second aspect is that there is an on-going application to the OSS in relation to alleged breaches of regulation 15 by the respondent."
By his judgment he upheld the 'Resiliente Limitada' point and dismissed the 'breaches of Regulation 15' point. The Order however merely stated "Application dismissed." What is quite clear is that there was no adjudication on the 'interest point'.
In the result the Petition was presented stating the amount of the debt in the reduced sum of £40,532.50 plus interest of £8,667.18. Between service of the Petition and the hearing the debtor paid the amount of £40,532.50 and the Petition was amended to record the further payment. That left the amount of interest unpaid and the debtor sought at the hearing to take the interest point, which he had first raised in his statement dated 13 th August 2003, as set out in para [6] above.
As I have indicated, the hearing was before District Judge Venables on 8 th September 2004. There was argument as to the entitlement of the debtor to take the interest point at that stage. A transcript of the judgment of District Judge McHale was not available. I am told that District Judge Venables would have liked one to be obtained but was prevailed upon by the parties to proceed without because they felt that an adjournment to obtain one would involve excessive delay, waste of time and expense. That meant that there was an argument as to what District Judge McHale had, or could properly be taken to have, decided or taken into account.
In a short extempore judgment District Judge Venables observed that it was accepted that there was not any specific finding in relation to the interest point; she recorded that there were references to the interest point in the papers before District Judge McHale and said
It seems to me that Judge McMcHale, when looking at whether or not the Statutory Demand should be set aside back in February 2004, had sufficient information before him to be clear and fully aware that the question of the Creditor's entitlement to interest was an issue for the Debtor and took this into account in determining how the Statutory demand should be dealt with. …. It is my view that that matter was properly considered by the learned Judge when it was dealt with on 27th February.
After considering the impact of Turner v Royal Bank of Scotland she said
In this particular case there was an application which was adjudicated upon on 27th February which properly took into account the matters raised by the Debtor and by the Creditor, both parties appraising the Court of the issue of interest. The Court, having considered it on that occasion, allowed the demand to stand. That demand forms the basis of the petition itself which I … (inaudible).
The debtor has appealed to this court on the grounds that the District Judge was wrong to interpret the decision in Turner as precluding her from looking into matters on which there had been no explicit adjudication on the application to set aside the statutory demand. His argument can be put shortly in two propositions. First, that the authority of Turner establishes the proposition that it is only in the event of an actual prior adjudication that the debtor is prevented from taking the point at the petition stage. Since there was no actual adjudication by District Judge McHale there is nothing to prevent the point being raised at the hearing of the petition.
Alternatively, s 271 of the Insolvency Act and rule 6.25 of Rules as explained by Chadwick LJ in the subsequent case of West Bromwich Building Society v Crammer gives the court a discretion to look into the matter which ordinarily ought to be exercised in favour of the debtor in circumstances such as the...
To continue reading
Request your trial
-
Hardell Entertainment Ltd v Minister of Telecommunications and E-Commerce
...... and Supplies LtdUNK [1991] 4 All ER 65 Adams v Mason Bullock [2004] EWHC 2910 Re Bank of ......
-
Metalloyd Ltd Applicant v Burwill Resources Ltd Respondent
...than substantive grounds. 32 The English position is set out in the cases of Commissioners of Inland Revenue v Lee-Phipps 6 and Adams v Mason Bullock. 7 The principle emanating from these judgments is that in bankruptcy cases, where there has been a hearing on the merits at a statutory dema......
-
Metalloyd Ltd v Burwill Resources Ltd
...Court BVI, Judgment on 18 June 2003. 3. Commissioners of Inland Revenue v Lee Phipps [2003] BPIR 803, paras 16–21 of judgment. 4. Adams v Mason Bullock [2005] BPIR 241, paras 20–32 of judgment. 5. Brillouet v Hachette Magazines Ltd, Re a Debtor (No. 27 of 1990) [1996] BPIR 518, ChD. 6. Dav......
-
John Spencer Harvey v Dunbar Assets Plc
...EWCA Civ 1924 (for a second round see [2012] EWCA 517); Atherton v Ogunlende [2003] BPIR 21; Barnes v Whitehead [2004] BPIR 693; Adams v Mason Bullock [2005] BPIR 241; Ahmed v Mogul Eastern Foods [2007] BPIR 975; Roseoak Investments Ltd v Network Rail Infrastructure Ltd [2010] BPIR 646; Hay......