Antony Canning (Debtor and Appellant) v Irwin Mitchell LLP (Creditor and Respondent)
| Jurisdiction | England & Wales |
| Judge | Mr Jeremy Cousins |
| Judgment Date | 06 April 2017 |
| Neutral Citation | [2017] EWHC 718 (Ch) |
| Docket Number | Appeal ref: CH-2016-000191 |
| Court | Chancery Division |
| Date | 06 April 2017 |
[2017] EWHC 718 (Ch)
Mr Jeremy Cousins QC,
SITTING AS A DEPUTY JUDGE OF THE CHANCERY DIVISION
Appeal ref: CH-2016-000191
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
HIGH COURT APPEAL CENTRE ROYAL COURTS OF JUSTICE
On appeal from the Truro County Court
Order of Deputy District Judge Healey dated 28th June 2016
County Court Case number: 54 of 2016
Rolls Building, Fetter Lane,
LONDON EC4A 1NL
Miss Alice Hawker (instructed by Wilson Barca LLP, of Carlisle Buildings, 18, Carlisle Street, LONDON W1D 3BX) for the Appellant
Miss Catherine Doran (instructed by Irwin Mitchell LLP, of Riverside East, 2, Millsands, SHEFFIELD S3 8DT) for the Respondent
Hearing date: 17 th March 2017
JUDGMENT APPROVED
Mr Jeremy Cousins QC:
Background
This is an appeal, brought with the permission of Mann J, granted on 24th November 2016, from the decision of deputy District Judge Healey ("the District Judge"), sitting at the Truro County Court on 28th June 2016, whereby the District Judge extended the hearing of the bankruptcy petition presented by the Respondent, Irwin Mitchell LLP ("Irwin Mitchell"), and transferred the same to the Southend County Court, and granted leave for the petition to be amended. The order made by the District Judge recited that it was made upon the Court's finding that Irwin Mitchell had not done all that was reasonably required to bring the statutory demand (upon which the petition was founded) to the attention of the Debtor (the Appellant, "Mr Canning"), but that, in the circumstances in which the demand was based upon a court order of which Mr Canning knew and with which he had failed to comply, Mr Canning had suffered no prejudice such that it would be disproportionate to set aside the statutory demand, even if an application to do so were before the court. Mr Canning's case is that since the District Judge accepted that there was a failure on the part of Irwin Mitchell properly to serve the statutory demand, he erred in principle in refusing to set it aside and dismiss the petition; he also says that the petition should have been dismissed on the basis that it was brought in the wrong court.
The background to the case is that on 7th May 2014, Irwin Mitchell commenced proceedings in respect of unpaid fees for legal services which it had provided to Mr Canning, against whom a default judgment was entered on 9th July 2014 in the sum of£11,729.57 plus interest. On 27th October 2014, by consent, it was ordered that Irwin Mitchell's bills of costs should be assessed. On 3rd August 2015, Master Rowley ordered that Mr Canning pay assessed costs of £14,347.42 plus interest. Irwin Mitchell issued a statutory demand ("the First Demand") in respect of the sums due to it on 21st March 2016; this was hand-delivered to Rosehill Barn, Bodmin, Cornwall, on 10th April 2016, and following this, on 6th May 2016, Irwin Mitchell presented the bankruptcy petition ("the Petition"). Mr Canning applied to the Southend County Court to vary the judgment debt so that he could make instalment payments. Before that application was heard, the matter came before the District Judge, who made the order now under appeal. Before considering that order further, it is convenient to mention later developments which are said to be relevant to the issues now before me. By order of District Judge Foss of 21st July 2016, the application to vary the judgment debt was listed to be determined on 13th September following. On 29th July 2016, Mr Canning applied for permission to appeal the order of the 28th June. Then on 16th August 2016, District Judge Foss, in the Southend County Court dismissed the application to pay by instalments, and vacated the hearing listed for 13th September. Following an application for that order to be reconsidered, and directions being given that Mr Canning should supply documents in support of his application to vary the judgment debt, on 17th February 2017, and subsequent to the grant of permission to bring this appeal, Deputy District Judge Cooksey, having heard from the parties, dismissed Mr Canning's application to pay the judgment debt by instalments, further ordering that Mr Canning should pay the costs of that application.
Given the importance of the issue of service in this case, it is necessary now to deal rather more fully with the manner in which Irwin Mitchell handled the task of serving the First Demand upon Mr Canning. The steps taken are described in the witness statement, dated 23rd June 2016, of Miss Sarah Marshall, a paralegal employed by Irwin Mitchell. This statement was made in support of an application for an order for substituted service of the Petition, and for related orders. She stated at para 6 of her evidence:
"In the course of [Mr Canning's] original dealings with [Irwin Mitchell] (pursuant to which the Petition debt is due), [Mr Canning] had resided at 16, Hospital Road, Shoeburyness, Southend. … However, as the last correspondence sent to that address was in July 2014, [Irwin Mitchell] instructed a Trace Agent to locate [Mr Canning] on 4th March 2016. The trace results confirmed that [Mr Canning] resided (as at 4th March 2016) at Rosehill Barn. … A statutory demand was therefore served on [Mr Canning] by process servers of Elliott Davies … by way of substituted service by posting the same in a sealed envelope marked for the attention of [Mr Canning] through the letterbox at the address of Rosehill Barn …"
Miss Marshall's evidence referred to an exhibit which included a witness statement from Mr Glen Butler, a process server with Elliott Davies. Mr Butler's evidence was that on 4th April 2016 he had attended at Rosehill Barn to find that Mr Canning was not present. Mr Butler said that he spoke to a man who confirmed that Mr Canning lived at Rosehill Barn, but was not there at that time, with the result that Mr Butler posted a letter of appointment to Mr Canning at Rosehill Barn; when he attended at Rosehill Barn for the appointment on 10th April, Mr Canning was not present, so that Mr Butler posted the First Demand through the letterbox.
Miss Marshall's evidence continued at para 7, saying that no response to the First Demand was received from Mr Canning, following which the Petition was issued, and Elliott Davies were instructed to serve it. However, she referred to an e-mail, dated 16th June 2016, to her from Elliott Davies. This reported that Mr Canning had contacted Elliott Davies to say that he did not reside, and never had resided, at Rosehill Barn; he requested that the statutory demand be reserved on him (as he had never received it) at the address of his solicitors, Wilson Barca, of Carlisle Street, London W1, on the following Thursday. Thereupon Irwin Mitchell requested Elliott Davies to serve a statutory demand, this time dated 17th June 2016 ("the Second Demand") personally upon Mr Canning care of Wilson Barca at their offices. Miss Marshall's evidence does not elaborate upon what happened with regard to the Second Demand subsequently; it is upon the First Demand alone that the Petition is based, the Second Demand not even having been generated at the time that the Petition was presented. However, Miss Marshall's evidence goes on to state that Irwin Mitchell is of the view that the First Demand is "deemed served" pursuant to Rule 6.3(2) of the Insolvency Rules 1986 ("the 1986 Rules") as Irwin Mitchell took all reasonable steps to bring the First Demand to Mr Canning's attention.
Mr Canning made two witness statements which were before the District Judge. He disputed that he had ever been served with the Petition, or the First Demand; he produced correspondence between solicitors, in which Irwin Mitchell asserted that the First Demand had been served by substituted service. He denied that he had ever lived in Cornwall. He confirmed that he had attended at his solicitors' offices on 23rd June 2016 in order to be served, but that the process server did not serve him then. He produced ample evidence that he lived in Essex. He explained that he had been a director of a company, Wardcentral Developments Limited ("Wardcentral") whose registered office was at Rosehill Barn, which is the address of Mr Robin Parry who is an accountant.
Mr Parry also provided a witness statement explaining that he had set up Wardcentral for another client, and confirming that it had not traded. Mr Parry disputed Mr Butler's evidence concerning the attempts made to serve Mr Canning, saying that Mr Canning had never lived at Rosehill Barn and contradicting the suggestion that he had said that Mr Canning lived at that address. He said that he returned the papers delivered for Mr Canning to Irwin Mitchell.
The District Judge's decision
Having referred to the facts, the District Judge accepted that Mr Canning was not served on 4th April. As to what happened on 10th April, the District Judge said that "… service, if that is what it was, was effected by posting the demand through the letterbox [at Rosehill Barn]". He then reminded himself, by reference to Muir Hunter on Personal Insolvency at paras 7–170 to 172, and the commentary contained therein upon the decision of the Court of Appeal in Regional Collection Services Ltd v Heald [2000] BPIR 661 that the test, as to whether a creditor had done all that was reasonable to bring the statutory demand to the debtor's attention so as to effect valid service, was a high one. The District Judge expressly found, and this is not challenged, that there was, on every view, an open channel of communication between Irwin Mitchell and Mr Canning's solicitors such that a request could, and should, have been made to them to co-operate over service. He inferred from the fact that Mr Canning and his solicitors did co-operate over service at their offices, although in...
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