Darren Neil Masters v Barclays Bank Plc
| Jurisdiction | England & Wales |
| Judge | Mr Justice Norris |
| Judgment Date | 19 July 2013 |
| Neutral Citation | [2013] EWHC 2166 (Ch) |
| Docket Number | Case No: 710 OF 2012 |
| Court | Chancery Division |
| Date | 19 July 2013 |
[2013] EWHC 2166 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Leeds Combined Court Centre
1 Oxford Row
Leeds
LS1
Mr Justice Norris
Case No: 710 OF 2012
Hugo Groves (instructed by Shulmans) for the Appellant/Debtor
Mark Harper (instructed by Squire Sanders) for the Respondent/Petitioner
Hearing dates: 11 July 2013
On the 11 December 2007 Darren Masters ("Mr Masters") contracted to purchase a Bombardier Challenger aircraft. On the 14 December 2007 Coldstream S.a.r.l. ("Coldsream") was incorporated under the laws of Luxembourg. Coldstream had a share capital of €12,500 the whole of which was legally and beneficially owned by Mr Masters. On about the 8 April 2008 the contract for the purchase of the aircraft was novated so that all the rights and obligations under it were transferred from Mr Masters to Coldstream. On the 9 April 2008 Coldstream entered into a loan agreement ("the Loan Agreement") with Barclays Bank Plc ("Barclays") under which Coldstream borrowed 80% of the purchase price of the aircraft. The Loan Agreement was signed by Mr Masters (apparently in Sheffield) acting under the authority of Coldstream.
Under the terms of the Loan Agreement Coldstream was obliged to appoint Executive Jet Charter Limited to manage and to charter the aircraft. It is accordingly clear that the aircraft was, when acquired by Coldstream, to be operated for business purposes. Under the terms of the Loan Agreement Coldstream was also obliged to keep its place of business in Luxemburg and not (without the consent of Barclays) to establish a place of business in any other country.
As part of the security to support the loan Coldstream was obliged to obtain a guarantee from Mercury Tax Group Limited ("MTG"), an English company based in Leeds. MTG was a company associated with Mr Masters through which tax advice was provided to clients, Mr Masters himself being a tax specialist. As well as the MTG guarantee Mr Masters himself had to provide a personal guarantee of all of the financial and other obligations entered into by Coldstream ("the Guarantee"), and to evidence the worth of the Guarantee by serving a statement of means as a condition precedent to drawdown, and then to update it annually. The Loan Agreement recorded that Mr Masters' principal residence was in Monte Carlo. A further guarantee was to be provided by Mr Brook whose principal residence was in Sheffield. The Loan Agreement provided that Coldstream's address for service was MTG's address at Leeds and stated "Items served at this address must be marked for the personal attention of D N Masters".
The Guarantee was signed by Mr Masters, apparently in Miami after its terms had been explained to him by a US Licensed Attorney. The Guarantee was an unconditional and irrevocable guarantee of all of Coldstream's obligations under the Loan Agreement, and in addition declared that Mr Masters would be liable as if he were a principal and independent debtor. Paragraph 10.2 of the Guarantee declared that Mr Masters was resident in England; and by clause 11.8 he promised to maintain his residency in England. Clause 16.1 provided that any notice under the Guarantee was to be sent to MTG's address in Leeds, marked for the attention of Mr Masters. Clause 20.1 of the Guarantee said that Mr Masters' address for service of process was MTG's address at Leeds.
Coldstream defaulted under the Loan Agreement. Barclays called upon the Guarantee. On the 11 May 2011 Barclays obtained default judgment in the sum of $16,945,705 plus costs. On the 10 April 2012 Barclays served a Statutory Demand on Mr Masters by substituted service by leaving it with his personal assistant at SN Advisory LLP in Leeds: SN Advisory LLP was another entity linked to MTG. On the 16 May 2012 Barclays presented a bankruptcy petition in the Leeds County Court founded on that default judgment debt.
The petition sought the making of a bankruptcy order against
"Mr Darren Neil Masters of SN Advisory LLP Marian House… Leeds… Occupation Unknown".
Paragraph 1 of the standard form petition deals with the EC Regulation; but all of its alternatives were deleted. Instead the petition recited
"The debtor is not resident in England and Wales. I am presenting this petition to this County Court because Rule 6.9A[(3)][(5)][(6)] applies and within the 6 months immediately preceding its presentation the debtor has carried on business in England and Wales and for the longest part of the period during which the debtor carried on business within that period of 6 months the place of business has been situated in the district of this County Court".
By section 265(1) of the Insolvency Act 1986 a bankruptcy petition shall not be presented to the court unless the debtor :-
a) Is domiciled in England and Wales; or
b) Is personally present in England and Wales on the day when the petition is presented; or
c) Has at any time in the period of 3 years ending with the day on which the petition is presented
i) Been ordinarily resident or had a place of residence in England and Wales; or
ii) Carried on business in England and Wales.
Of those options Barclays elected for (c)(ii). Accordingly the burden lay on Barclays to establish that Mr Masters had carried on business in England and Wales sometime after the 16 May 2009.
Mr Masters challenged the jurisdiction so claimed. In a witness statement dated 1 March 2013 he recorded that he had been advised that there did not appear to be jurisdiction to make a bankruptcy order against him. He said:-
"…the Petition is based on an assertion that I have carried on business in England for the longest part of 6 months preceding the Petition. To be more precise that I have carried on such a business in the district of the Leeds County Court. This is just wrong…for the avoidance of doubt I am a member of SN of Marian House…SN is an LLP which was established in August 2011. Its members are Richard Simon Wilson who resides in Ireland and myself… I personally do not carry on any business in England nor was I carrying business on in England at any time in the 3 years preceding the presentation of the petition. It is true that I have been from time to time a director or member of a number of companies or LLPs that have been registered in the UK but I am advised that does not constitute the carrying on of business by me…I left the UK in 2007 after the breakup of my marriage and I established a company in Monaco and I was based there as a resident since 2007… I am now in the process of moving my business base to Florida where I have my permanent family home…It is common knowledge that I was a director of an English company [MTG] until it went into administration on 8 September 2009. In order to realise the assets of MTG…at the request of the administrators… SN was formed…"
This led Barclays to propose an amendment to the petition. They proposed to substitute for the words "occupation unknown" the words "Tax Advisor" and to assert that Mr Masters had been carrying on business as:-
"A Tax Advisor either through SN Advisory LLP or independently of that partnership".
This proposed amendment reflected the evidence that had been placed before the court when Barclays had applied for permission to serve the petition out of the jurisdiction. In a witness statement of the 20 November 2012 Mr Debbage of Barclays had said (in paragraph 28) that Mr Masters had in the last 3 years conducted business in England and Wales working for both MTG and SN Advisory LLP, both of which were based in Leeds. But in the course of that evidence (and by way of explaining the circumstances out of which the bankruptcy petition arose) in a section of his witness statement entitled "Background to the claim" Mr Debbage had referred to the Loan Agreement, the Guarantee, the claim on the Guarantee and the legal proceedings to which that claim had led. But Mr Debbage did not say that this background material illustrated that Mr Masters was carrying on the business of acquiring aircraft for charter. He was asserting that the business which Mr Masters carried on in England was that of a tax adviser.
In a further witness statement made on the 7 March 2013 Mr Debbage returned to the jurisdiction question and addressed the challenge that Mr Masters had made. Mr Debbage's response to Mr Masters' assertion that he had not carried out any business in England since the 16 May 2009 was
a) To refer to the website of SN Advisory LLP (which said that Mr Masters worked out of the Monaco office but was in London and Leeds usually at least once a week):
b) To refer to the circumstances of the service of the statutory demand (where the recipient had said that Mr Masters worked from time to time at the office in Leeds but that it was not his main business trading address):
c) To refer to a number of UK appointments which Mr Masters held with MTG, SN Advisory LLP and associated companies:
d) To refer to the Guarantee (but only to the governing law and exclusive jurisdiction clauses, rather than to the provisions dealing with residence):
e) To note the fact that Mr Masters held a current solicitors' practicing certificate.
No reliance was placed on Mr Masters having any involvement with the business of acquiring aircraft for the purposes of commercial charter.
Mr Masters contested each of these alleged bases on which it was said he carried on business in England. So far as the Guarantee went he said:-
"I do not see how the jurisdiction and venue clauses of the Guarantee prove that I was carrying on business at the relevant time."
The hearing of the petition was set for the 29 April 2013. The burden lay on Barclays to prove the facts which they alleged in the petition or the proposed amended petition (the amendment not having been...
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