Andrew Miles v Alan Price
| Jurisdiction | England & Wales |
| Judge | Mr Adam Johnson |
| Judgment Date | 15 February 2019 |
| Neutral Citation | [2019] EWHC 291 (Ch) |
| Docket Number | Case No: 412 of 2012 |
| Court | Chancery Division |
| Date | 15 February 2019 |
[2019] EWHC 291 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
RE: KULDIP SINGH BIRDI
Royal Courts of Justice
7 Rolls Building, Fetter Lane
London EC4A 1NL
Mr Adam Johnson Q.C.
(SITTING AS A DEPUTY JUDGE OF THE HIGH COURT)
Case No: 412 of 2012
BR-2012001362
The Applicants were not represented and appeared in person
Tina Kyriakides (instructed by Ashteds Solicitors) for the First, Second and Fourth Respondents
The Third Respondent did not appear and was not represented
Hearing dates: 22 and 23 January 2019
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Adam Johnson Q.C.
Mr Adam Johnson QC:
Introduction
A number of Applications are before the Court by which certain creditors in the bankruptcy of Mr Kuldip Singh Birdi seek the removal of Mr Birdi's Bankruptcy Trustee.
Although originally there were four Applicants, the proceedings by Mr Antoniades were compromised shortly before the matter came on for hearing. His application was dismissed by consent and he agreed to pay a sum of £12,000 towards the Respondents' costs.
Consequently, applications have been pursued by only three Applicants (“the Applicants”), namely Mr Andrew Miles, Mr Pierre Noah and Mrs Gurdip Birdi (the wife of Mr Birdi). They have all submitted proofs of debt in Mr Birdi's bankruptcy, and claim they alone are the “ legitimate proven” creditors of Mr Birdi. Together their claims total £189,983, broken down as follows: Mr Miles, £49,772; Mr Noah, £16,580; and Mrs Birdi, £123,631.
Mr Birdi was made bankrupt as long ago as 21 March 2012, on the Petition of HM Revenue & Customs. After a period of suspension his Bankruptcy was discharged on 4 July 2013, but on 21 January 2015 a Bankruptcy Restriction Order was made against him for a period of nine years beginning on 4 September 2014.
The First Respondent to the present Applications, Mr Price, was appointed as Mr Birdi's Trustee in Bankruptcy at a meeting of creditors held on 20 July 2012. In January 2014, Mr Price retired from practice, and by means of a Block Transfer Order dated 22 May 2014 he was removed as Trustee and the Second Respondent, Mr Pettit, was appointed in his place. Mr Pettit is a director of the Fourth Respondent, PBC Business Recovery and Insolvency Limited (“PBC”).
The business of realising the Bankrupt's estate has been a long and difficult one. Current figures show there are no funds available for distribution to creditors. What seems to be at the heart of the Applicants' complaints is the belief that the length and difficulty of the process, and the resultant cost, are all the fault of the two Trustees, Mr Price and Mr Pettit. Various complaints of dishonesty and mismanagement are made, both in relation to the process for appointment of the two Trustees and in relation to their conduct of the Bankruptcy proceedings. These include the allegation that some or all of the other creditors who have submitted proofs in the Bankruptcy are “ bogus creditors”. The upshot is that the Applicants say they have been cheated out of their distributions, in the sense that if the Trustees had done their work properly, the three of them as “ legitimate proven” creditors would have been paid out long ago, whereas now they stand to get nothing.
The Applicants' complaints are advanced in a series of Application Notices, issued between 20 August 2018 and 24 September 2018, and in the Applicants' witness statements. The precise forms of relief sought have been put forward in a number of different ways in different documents. I will not attempt a close analysis of the different formulations. Ultimately, it seems to me that aside from one point which is specific to Mrs Birdi, the Applicants are all pursuing the same criticisms of both Mr Price and Mr Pettit, and all wish to achieve the same basic objectives, which are either:
i) An Order under section 298(1) Insolvency Act 1986 (“ IA”) which removes Mr Pettit in favour of the Official Receiver, and which in light of both the alleged unlawfulness surrounding the appointments of Mr Price and Mr Pettit, and in light also of their alleged “ fraud/misfeasance”, reverses or rescinds their appointments and/or remuneration, and enables the distributions to be made to the Applicants which they say should have been made had the Bankruptcy been lawfully and properly managed from the outset, including as regards the exclusion of “ bogus creditors”; alternatively
ii) An Order under section 298(4) IA requiring Mr Pettit to convene a creditors' meeting to consider and approve a resolution for his removal as Trustee and the appointment of a new Trustee, whose role should be to investigate the alleged wrongdoing of Mr Price and Mr Pettit and to take steps to unwind the perceived effects of that wrongdoing, and again to make the distributions to the Applicants which they say should have been made had Mr Birdi's Bankruptcy been properly managed from the outset, including as regards the exclusion of “ bogus creditors”.
The specific point which affects Mrs Birdi is that in her Application Notice dated 10 September 2018, she seeks “ a declaration that the order to pay the Trustee £300,000 in Trustee's possession action against Gurdip Burdi be rescinded/revoked”. I will explain this further below.
In summary, therefore, the principal issues I have to decide are as follows:
i) Should an Order be made under IA section 298(1) for the removal of Mr Pettit, together with such ancillary Orders as may be necessary so as to allow distributions now to be made to the Applicants?
ii) Should an Order be made under IA section 298(4) requiring Mr Pettit to convene a creditors' meeting, for the purpose of considering his own removal?
iii) Is Mrs Birdi entitled to the declaration she seeks in relation to the £300,000 paid by her in January 2017 to the then Trustee, Mr Pettit?
The Course of the Bankruptcy Proceedings
It is useful to describe some features of the bankruptcy proceedings so far.
The Bankrupt, Mr Birdi is a skilled motor technician. He specialised in work on Italian supercars, particularly Ferraris. He owned premises at units 2, 8, 9 and 10 Hayes Metro Centre, Springfield Road, Hayes from which he carried on business as a sole trader until about December 2011. From about 2010, another business operated from the same premises: this was a company called Verdi Ferrari (After Sales) Limited (“Verdi Ferrari”), owned by Mr Birdi's son, Kabir Virdi. In the event, Verdi Ferrari was wound up by the Court on 11 December 2011 and Kabir Virdi was made bankrupt on 22 June 2012. As already noted, between these dates, Mr Birdi himself was declared bankrupt on 21 March 2012. Thus, there were three different bankruptcy and insolvency proceedings on foot at the same time, involving Mr Birdi, his son and Verdi Ferrari.
To complicate matters further, from late 2011 or early 2012, Precision Engineering Auto Ltd (“Precision”) also began trading from units 9 and 10 of the premises at Springfield Road, Hayes. The nature of the relationship between Mr Birdi and Precision has been the matter of considerable dispute, including as regards the use by Precision of certain equipment owned by Mr Birdi (“the Equipment”), particularly an MOT testing station and diagnostic equipment.
The initial meeting of creditors on 20 July 2012 which resulted in Mr Price's appointment was chaired by Janet Hallamore, Assistant Official Receiver. The documents supplied for these Applications include a “ List of Proofs & Proxies” considered at that meeting, bearing certain handwritten annotations. This shows that at the time, along with Mr Price, “ S Grant and K Stevens of Wilkins Kennedy” were also considered for appointment as Mr Birdi's trustee.
A further document has also been produced relating to this meeting, namely a set of handwritten notes, which Mr Pettit in his First Witness Statement says he and Mr Price consider may have been produced by Ms Hallamore. Both the handwritten notes and the annotations on the “ List of Proofs & Proxies” indicate that Mr Antoniades, originally one of the Applicants in this matter, supported the appointment of Mr Price.
Overall six creditors voted for Mr Price, and six for Messrs Grant and Stevens; but the majority by value were for Mr Price — £240,996, versus £221,472 for Grant and Stevens. According to Mr Pettit's evidence, there was also an issue as to whether representatives of Wilkins Kennedy could consent to act as Trustee, given that Wilkins Kennedy had acted for Mr Birdi and are one of his creditors. In any event, on 20 July 2012, Ms Hallamore served a Notice under Rule 6.120 of the then Insolvency Rules, confirming that Mr Price had been appointed as Trustee of Mr Birdi's estate.
Among those creditors whose votes were counted in favour of Mr Price were Max Donnelly, Randal Hockey, Sean Downes and Craig Swenden (or Sweden). The present Applicants complain about their claims (and possibly others) having been brought into account for voting purposes, because they say they are false or bogus creditors. I will return to this point below.
The Trustees' evidence is that on 29 May 2013, Mr Price sent an initial report to the then known creditors, and by the same letter gave notice of a meeting of creditors to be held on 26 June 2013, to consider the basis of the Trustee's remuneration and disbursements. The meeting was held on 26 June 2013, and the proposed resolutions were duly passed, as...
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