Anthony Leslie Hancock v Promontoria (Chestnut) Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Henderson,Flaux LJ,Floyd LJ |
| Judgment Date | 14 July 2020 |
| Neutral Citation | [2020] EWCA Civ 907 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2019/1938 |
| Date | 14 July 2020 |
[2020] EWCA Civ 907
Lord Justice Floyd
Lord Justice Henderson
and
Lord Justice Flaux
Case No: A2/2019/1938
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN LIVERPOOL
CHANCERY APPEALS
HIS HONOUR JUDGE HODGE QC
(SITTING AS A JUDGE OF THE HIGH COURT OF JUSTICE)
[2019] EWHC 2646 (Ch)
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Hugh Sims QC and Mr Graham Sellers (instructed by Joanna Connolly Solicitors) for the Appellant
Mr Jamie Riley QC and Mr James McWilliams (instructed by Addleshaw Goddard LLP) for the Respondent
Hearing date: 20 May 2020
Approved Judgment
Introduction
The basic issue on this appeal is whether the appellant, Mr Hancock, has shown a strong enough case to persuade the court to set aside a statutory demand dated 20 October 2016 (“the Statutory Demand”) requiring payment of an alleged debt of approximately £4.09 million, served on him by the respondent, Promontoria (Chestnut) Limited (“Promontoria Chestnut”), as long ago as 8 November 2016.
The alleged debt represented the unsecured balance due under loans originally made to Mr Hancock by Clydesdale Bank PLC (trading as Yorkshire Bank) (“the Bank”) under a series of facility letters dated between November 2006 and December 2011 as amended (“the Facility Letters”). The total amount said to be due under the Facility Letters at the date of the Statutory Demand was £10,898,772.54. Promontoria Chestnut claimed to have acquired title to the loans by assignment, and it was also the registered assignee of 21 legal charges over residential properties mostly in Liverpool (“the Legal Charges”) which Mr Hancock had originally granted to the Bank as security for the loans. Promontoria Chestnut estimated the value of the charges as at 12 October 2016 to be £6.809 million, leaving an unsecured balance of £4,089,772.54 due from Mr Hancock.
It follows that Promontoria Chestnut was in principle entitled to seek to enforce payment of this unsecured debt by service of a statutory demand, which (if unsatisfied) would lead in due course to the presentation of a bankruptcy petition, provided that Promontoria Chestnut had itself acquired good title to the debts owed by Mr Hancock under the Facility Letters.
In the Statutory Demand, Promontoria Chestnut claimed to be entitled to all of the Bank's rights under the Facility Letters by virtue of a Deed of Assignment dated 28 November 2014 (“the Deed of Assignment”). The parties to the Deed of Assignment were the Bank's parent, National Australia Bank Limited (“NAB”), defined as the “Seller”, the Bank itself, defined as “Clydesdale”, and Promontoria Chestnut, defined as the “Novated Buyer” or the “Buyer”.
It is no longer in dispute in these proceedings either (a) that the Deed of Assignment was duly executed by the parties to it, or (b), on the assumption that the debts due from Mr Hancock under the Facility Letters were the subject of a valid legal assignment to Promontoria Chestnut, that written notice of the assignment was given to Mr Hancock on 3 December 2014 by Promontoria Chestnut, acting through its managing agent Engage Commercial (the trading name of a company called Pepper (UK) Limited). Nor is it in dispute that the debts owed by Mr Hancock under the Facility Letters remain unpaid. We were told that the amount due including interest now exceeds £12 million. Furthermore, it is common ground that legal title to the Legal Charges was transferred by the Bank to Promontoria Chestnut on the same date as the Deed of Assignment, using the requisite Land Registry Form TR4 for that purpose, and that Promontoria Chestnut was then registered at HM Land Registry as the proprietor of the charges. In its capacity as legal chargee, Promontoria Chestnut appointed fixed charge receivers over the relevant properties in 2015, and since then the rental income from them has been paid to Engage Commercial.
Against this unpromising background, it is nevertheless Mr Hancock's contention that there is a genuine triable issue about the title of Promontoria Chestnut to the underlying debts which he admittedly owes under the Facility Letters. The argument depends, for such force as it may have, upon the fact that the copy of the Deed of Assignment put in evidence by Promontoria Chestnut in the proceedings brought by Mr Hancock to set aside the Statutory Demand has been heavily redacted, and upon the explanation for those redactions provided by the solicitor with conduct of the matter on behalf of Promontoria Chestnut, Mr Timothy Cooper, who is a partner and member of Addleshaw Goddard LLP based in Edinburgh.
Although that is now the issue which divides the parties, it was not the basis upon which Mr Hancock first applied to set aside the Statutory Demand. He made the application, through solicitors then acting for him, in the County Court at Liverpool on 24 November 2016. Under rule 6.5(4) of the Insolvency Rules 1986, as then in force, the court hearing such an application may set aside the demand if (relevantly):
“(b) the debt is disputed on grounds which appear to the court to be substantial.”
It is well established, by authority which I need not set out, that the burden lies on the applicant to establish the existence of a substantial dispute, and that the test which the court applies is similar to that on an application for summary judgment under CPR rule 24.2: see, for example, Collier v P & M J Wright Ltd [2007] EWCA Civ 1329, [2008] 1 WLR 643, at [9] and [38] per Arden LJ (as she then was).
In his first witness statement in support of the application, dated 24 November 2016, Mr Hancock set out the grounds upon which he then sought to rely. The grounds did not include any challenge to the right of Promontoria Chestnut to sue on the assigned debt arising from any alleged uncertainty about the scope or nature of the assignment, but rather contended (among other matters) that Mr Hancock was entitled to rely on various assurances which he said had been given to him by the Bank, and that his relationship with Promontoria Chestnut was unfair within the meaning of section 140B of the Consumer Credit Act 1974. Mr Hancock exhibited to his statement a series of letters from Engage Commercial which provided statements of account since the assignment of the loans. He complained about the way in which some of the figures had been calculated, but he appeared to accept that the assignment had taken place. He also referred, without comment, to Engage Commercial's letter of 3 December 2014 which had given him notice of the assignment.
The application was heard by District Judge Wright on 15 June 2017, when Mr Hancock was still represented by Clarions, Solicitors of Leeds. All of Mr Hancock's grounds were rejected by the District Judge, on the basis that he had failed to show the existence of a triable issue. In relation to the question of alleged unfairness, the District Judge said, at [52]:
“I do not believe that the applicant can make a valid complaint about any of the terms that the bank or the respondent have relied on. None of the terms seem unduly onerous or unfair. It seems quite normal for overdraft facilities and commercial mortgages to be payable on demand; for there to be a right to appoint a receiver on default; and, as I have said, so far as the complaint about assignment is concerned, I cannot see that that can succeed because the respondent has acted responsibly, and there have been demand letters, appointment of a receiver, the first statutory demand which was withdrawn, and then this second statutory demand after a long default, so I do not accept that there can be an arguable case of unfairness in relation to the behaviour of the respondent.”
Promontoria Chestnut's evidence before the District Judge had consisted principally of the first witness statement of Matthew Parr dated 21 February 2017. Mr Parr was a senior manager in the commercial loan servicing division of Engage Commercial. In his evidence, he briefly explained the commercial background to the Deed of Assignment:
“As to the background to the Deed of Assignment, the Bank was, along with Yorkshire Bank, one of the UK banking subsidiaries of NAB. As part of its process of “de-risking”, NAB invited bids to acquire its non-performing real estate loan portfolio known as Project Chestnut. Cerberus Capital Management L.P. (“Cerberus”) successfully secured the portfolio with the winning bid. The portfolio was then vested in Promontoria, Promontoria being a company within the operational group of Cerberus…”
Mr Parr had also exhibited a copy of the Deed of Assignment, but in a redacted form. He described it as “a commercially sensitive document” and said that the redacted parts were “not relevant to the issues in this matter”.
The next step was an application by Mr Hancock for permission to appeal to the High Court. New solicitors and counsel were instructed on his behalf, and seven proposed grounds of appeal were advanced. As Barling J later observed, in a careful and detailed judgment which he delivered on 1 August 2018 after two full days of argument on the permission application and related matters, Mr Hancock had now “jettisoned virtually all the points raised unsuccessfully in the court below”, and the set aside application had been recast “so as to raise a multiplicity of new arguments”: see [2018] EWHC 2934 (Ch) at [8]. The first of those grounds, and the only one for which Barling J...
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