Blight and Others v Brewster
| Jurisdiction | England & Wales |
| Judge | MR G MOSS QC |
| Judgment Date | 09 February 2012 |
| Neutral Citation | [2012] EWHC 165 (Ch) |
| Date | 09 February 2012 |
| Court | Chancery Division |
[2012] EWHC 165 (Ch)
Mr G Moss QC Sitting as a Deputy High Court Judge
IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION
Mr. Christopher Spratt, instructed by C.L. Clemo & Co for the Claimants/Appellants
Mr. James Weale, instructed by Crawfords for the Defendant/Respondent
Introduction
This is a reserved judgment in the Claimants' application for permission to appeal, and if granted, appeal against the order of District Judge Lynda Nightingale dated 24 th March 2011. In summary, the order provided that the Claimants' solicitor take all necessary steps to complete and finalise the sale of certain shares which formed the subject matter of a charging order in favour of the Claimants as part of the enforcement of a judgment. The order also discharged a third party debt order in relation to the right of the Defendant to draw down 25% of his Canada Life pension. This order had been sought also by way of attempted enforcement of the Claimants' judgment.
The shares in question were held by the Defendant through a broker, Savoy Investment Management Limited, who in turn used a nominee, Pershing Securities Limited, as registered owner of the shares.
For the reasons set out below, I consider that the orders below were incorrectly made, permission to appeal must be given and the orders below must be reversed in the manner indicated at the end of this judgment.
Background
The Claimants and the Defendant were apparently friends. The Defendant, who had no investment qualifications, persuaded the Claimants to part with money for him to invest on their behalf.
The investment was solicited and obtained on the basis of fraud and forgery, as was held by Deputy Master Hoffman in a summary judgment application in which he gave judgment on 19 th February 2008. This judgment is part of a long and detailed saga of steps and hearings which I need not go into for the purposes of this judgment. It is however important to remark that the money solicited from the Claimants included sums for the purchase of shares in a listed entity called Bowleven Plc, which the Defendant had not passed on to the Claimants.
Certain further issues, which need not be gone into here, were dealt with by Mr Bernard Livesey QC sitting as a Judge of the Chancery Division in a judgment of 29 th July 2009. He found that the Defendant had been "not entirely honest" (paragraph 4), that he had a "lack of honesty" and that he had "obtained money, even from his friend, Mr Blight, by fraud" (second paragraph given the number 4). At paragraph 6, Judge Livesey refers to the fact that at the summary judgment application before Deputy Master Hoffman, the Defendant consented to an order for delivery up of Mr Blight's share certificate in Bowleven Plc. It seems from Judge Livesey's judgment that Mr Blight had invested his £50,000-worth of life savings with the Defendant. I must mention by way of a small degree of balance that Judge Livesey also considered the Defendant to be "a person of some complexity" and "well meaning".
The Orders of District Judge Parkes
The Claimants' application for enforcement of their judgment against the Defendant came before Deputy District Judge Parkes, who gave judgment on 13 th May 2010. It appears from the transcript of the hearing that the Claimants had a charging order over certain Bowleven shares held by the Defendant and were seeking a sale after 14 days. The Defendant was not opposing a sale of those Bowleven shares but was seeking a deferral of 60 days in the hope that the Bowleven shares would rise in value in the meanwhile and would lead to a larger discharge of his judgment debt.
I note that in the context of a discussion about sale, the Claimants' solicitor referred to the fact that the shares were held in the indirect holding system via Savoy Investment Management Limited and referred to the question of how a "transfer" might be effected, clearly in the context of a potential sale (page 10, line 1 of the transcript). The Defendant argues at page 13 of the transcript that the Bowleven shares were at the lowest point they had ever been in their whole history being placed on the Stock Exchange and that is why he was pleading for a deferred sale of 60 days.
Deputy District Judge Parkes made two separate orders. One order, which she called the "first" order, was for the sale of the lease of a property in which the Defendant had an interest and gave conduct of the sale to the Claimants' solicitor (paragraphs 2 and 3). Paragraph 4 of the order dealt with the mechanics of sale.
The other order, which she called the "second" order contains a declaration that by virtue of the charging orders dated 13 th October 2010 the Claimants were entitled to an equitable charge on the Defendant's interest in 80,000 Bowleven shares. Paragraph 8 of this order says that it is to be read subject to the "first" order. Whereas the first order refers to a judgment debt of £225,630.16, the amount ordered to be paid from the proceeds of sale of the shares to the Claimants is said in paragraph 5(2) to be £146,963.30, which I was told by Counsel for the Defendant represented the likely balance after the realisation of the lease. However, this has to be read in the context of clause 1 of the second order which provided that the remainder of the order would not take effect "if the Defendant by 4.00pm on 14 June 2010 pays to the Claimant [sic] the judgment debt of £146,963.30 secured by the charges". It seems impossible that anyone thought that the lease would be sold under the first order within a month and in fact the Defendant only had to give possession under paragraph 5 of the first order on 14 June 2010, yet the amount of the relevant judgment debt for the purposes of the second order deducts the prospective proceeds of sale of the lease. This suggests to me that the use of the sum of £146,963.30 does not assume that the sale of the lease will necessarily occur first. As will be seen below, the use of this sum arose from a fear of double counting.
It is also clear from the transcript of the hearing before District Judge Parkes that there was no intention to defer the sale of the shares until after the lease. The Claimants argued for a 14 day delay on sale and the Defendant argued for 60 days. He sought a delay of the sale of the shares because he thought they would rise in value and he also sought a delay in the sale of the lease, on the grounds that there were elderly sitting tenants with health problems who had to be given notice and rehoused.
District Judge Parkes ruled that he would delay the sale of both the lease and the shares for 30 days and that delay is laid down in both orders. The Transcript contains no suggestion that District Judge Parkes intended the share sale to be delayed beyond the sale of the lease and the orders have no such provision.
The Defendant however argues that the orders taken together provide that the property was to be sold first and the shares should only be sold secondly. Both orders operate successfully without any implication of such a term and it has to be borne in mind that despite the use of £146,963.30 as the sum payable from the shares in the second order, paragraph 7 of the second order allows either party to apply to the Court to vary the order "or for further direction about the sale of [sic] the application of the proceeds of sale or otherwise", so the amounts specified in the orders could be adjusted in the light of subsequent events.
The Defendant, like the District Judge, relies on the provision in paragraph 8 of the second order that it is to be read "subject to" the first order. However, the transcript of the hearing before District Judge Parkes (page 25) shows that this was inserted to avoid "double accounting" [sic]. There is no suggestion at all that it has anything to do with the timing of the sale of the shares.
The basic approach is that a mortgagee or chargee of two different assets can choose which he wishes to sell first. It is difficult to see why a court order of sale to assist an equitable chargee should subject the recovery of the debt to the kind of delay suggested by requiring one asset to be sold after another. In particular, where one of the charged assets is land, which has a relatively stable value, and the other shares, which can go up or down rapidly, it would be very odd to suppose that the sale of the shares should wait until the after the sale of the property, which could take a substantial amount of time, during which there was a risk that the shares would become considerably less valuable. The fact that the value of the shares has now plummeted illustrates the improbability of the court in ordering a sale of shares requiring the chargee to wait until after the sale of a property.
One also sees from the transcript of the hearing before her, that District Judge Parkes was acutely aware of the potential for a drop in share price during the 60 days the Defendant was asking for and she rejected the 60-day plea by giving a delay of only 30 days. It cannot sensibly be supposed that having chosen to delay the sale of the shares (as well as the lease) for only 30 days, rather than the 60 days sought, she then subjected the sale of the shares to a potentially even longer delay by postponing it beyond the sale of the lease.
Was there a "sale" within the meaning of the second order?
The principal issue debated on this application relates to the correct legal characterisation of what happened after the orders. Paragraphs 2, 3 and 4 of the second order provided:—
"2. The right to transfer the said shares and to receive the dividends now due or to accrue thereon vest [sic] in the Claimant;
3. The sale shall be conducted by...
To continue reading
Request your trial
-
Nihal Mohammed Kamal Brake v Geoffrey William Guy
...obtain what the judgment debtor could honestly give him”: Re General Horticultural Co, ex p Whitehouse (1886) 32 Ch D 512, 516. 45 In Blight v Brewster [2012] EWHC 165 (Ch), the claimants had obtained summary judgment for a money sum against the defendant, and were seeking to execute that ......
-
Ankita Goyal v Amit Goyal
...would have been in support of an existing legal right (i.e. the right to receive the annuity part of the periodical payments order). In Blight v Brewster [2012] 1 WLR 2841 the High Court held, following the Privy Council in Tasarruf Mevduati Sigorta Fonu v Merrill Lynch Bank and Trust Compa......
-
David Bacci v Matthew Green
...Lifetime Allowance Excess Lump Sum and/or any other pension, by providing notice in writing to [the trustees of the Pension Scheme]”. Blight v Brewster 10 The Creditors relied in support of their application on the decision of Mr Gabriel Moss QC, sitting as a Deputy High Court Judge, in Bli......
-
Sean Lindsay v Jared Michael O'Loughnane
...there is no order than can be made in such a situation, as has been held in particular in two cases dealing with pension plans. 28 In Blight v Brewster [2012] EWHC 165 (Ch), Mr Gabriel Moss QC (sitting as a Deputy High Court Judge) identified that in such a circumstance the Court can use i......
-
Creditors Could Have Access To Bankrupt Individuals' Undrawn Pensions
...will be entitled to request. The decision in Raithatha is consistent with an earlier decision in March 2012 in Blight v Brewster [2012] EWHC 165 (Ch), in which the High Court upheld a third party debt order in relation to a judgement debt where the debtor was not in bankruptcy. The order ha......
-
How Safe Is Your Pension From Creditors
...is likely to face challenges in the future. The decision is in line with another recent High Court decision of Blight v Brewster [2012] EWHC 165 (Ch), in which a debtor (rather than a bankrupt) was ordered to take his tax-free lump sum from his pension pot to meet the claims of his creditor......
-
Table of Cases
...Group plc, Re [1998] 1 BCLC 677 563 Blaker v Herts and Essex Waterworks Co (1889) 41 Ch D 399 200 Blight and Others v Brewster [2012] EWHC 165 (Ch), [2012] 1 WLR 2841 259 Blights Builders Ltd, Re [2006] EWHC 3549 (Ch), [2007] BCC 712 116 Bluebrook Ltd, Re [2009] EWHC 2114 (Ch), [2010] BCC 2......
-
Receivership
...Fonu v Merrill Lynch Bank and Trust Co (Cayman) Ltd [2011] UKPC 17, [2012] 1 WLR 1721 at [56]–[57]. 385 Blight and Others v Brewster [2012] EWHC 165 (Ch), [2012] 1 WLR 2841. 386 Bourne v Colodense Ltd [1985] ICR 291. 387 Webb v Stenton (1882–83) LR 11 QBD 518. 388 [2008] EWCA Civ 303, [2009......