Gate Gourmet Luxembourg IV Sarl and Another (Petitioners) v Gary Kenneth Morby
| Jurisdiction | England & Wales |
| Judge | Mr. Registrar Briggs |
| Judgment Date | 07 May 2015 |
| Neutral Citation | [2015] EWHC 1203 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: 3009 OF 2014 |
| Date | 07 May 2015 |
[2015] EWHC 1203 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
IN BANKRUPTCY
Royal Courts of Justice
The Rolls Building,
London, WC4A 1NL
Registrar Briggs
Case No: 3009 OF 2014
Steven Thompson QC (instructed by Memery Crystal) for the Petitioners
Shuvra Deb (instructed by Mundays) for the Respondent
Hearing dates: 13 April 2015
Before the court is the final hearing of a bankruptcy petition (the " Petition"). The making of a bankruptcy order is resisted by the Respondent on three grounds. In broad terms the Respondent challenges jurisdiction, says that service of the petition was not effective and that the petitioning creditor is secured.
The Background
The majority of the background is not contentious. In September 2007 the Petitioners entered into a share purchase agreement with Mr. Morby for a group of 13 companies known as the Fernley Group. The share purchase price was £12million. The price was made up of £6.6m in cash and shares in the ultimate parent of Gate Gourmet Luxembourg IV Sarl (" GG"). In July 2009 GG issued proceedings against Mr. Morby and Fernley Group for breach of warranty and breach of a tax covenant contained in the sale purchase agreement. Although the proceedings were initially defended a settlement agreement was entered into on 24 June 2011 (the " SA"). The SA provided for Mr. Morby to pay GG £1.1m (the " Payment"). The Payment was to be made in two tranches of £550,000. Mr. Morby paid the first tranche on 24 June 2011. The second tranche was due on 30 March 2012.
Mr. Morby owns a house in France (the " French Property"). The SA provided that if the French Property was sold before 30 March 2012 the second tranche would be payable within 5 working days of the sale completing. The French Property has not been sold. Nevertheless the second tranche was said to be secured by Mr. Morby by the grant of a second charge dated 20 July 2011. The prior charge is made in favour of Credit Foncier De Monaco.
The Petition is based upon a statutory demand served on 15 August 2013. Mr Morby applied a month later to set aside in the Kingston County Court, on the bases that the debt was secured and the statutory demand was not properly served. In respect of the security issue, the security was estimated to have a value of £0. Mr. Morby contended that the estimate was incorrect. On 7 February 2014 the County Court gave a direction that there be a single joint expert appointed for the purpose of valuing the French Property in order to ascertain the value of the security. The order provided that Mr. Morby provide the single joint expert with all necessary information and grant full access for the purpose of undertaking the valuation. It was further ordered that "unless the Debtor grants the single joint expert access to the French Property ………the Debtor will be debarred from relying on any valuation evidence …at the hearing and the Creditors will have permission to adduce property valuation evidence from their own property valuation expert notwithstanding that the expert will not have had access to the French Property."
In breach of that order Mr. Morby refused access to the French Property and the matter came on for final determination before Deputy District Judge McConnell, sitting in the Kingston County Court, on 21 July 2014. I have not seen the judgment of the Deputy District Judge but it is apparent, from the order he made, that he found the onus of proving the security issue lay with Mr. Morby and that there was no ground to support his contention that the security was not properly specified in the demand or that the value of the security equaled or exceeded the debt. I am not aware what happened to the service issue, but the application to set aside the statutory demand was dismissed and permission was given to present a bankruptcy petition on or before 11 August 2014.
Mr. Morby was present in the Kingston County Court on 21 July 2014. Also present at court that day was Mr. Gary Beecham, a process server. Mr Reynolds, a solicitor acting for GG pointed out Mr. Morby to him. Directly after the hearing a trainee at the solicitors' acting for the Petitioner attended the High Court of Justice at the Rolls Building to file the Petition for bankruptcy. The Petition was accepted and court stamped 21 July 2014. The next part of the background becomes contentious. I therefore quote from the various different parties' evidence. Mr. Reynolds says:
"I understand from enquiries I made with Court staff that it was necessary for a registrar in bankruptcy of the High Court to review the petition because the Statutory Demand in support of the Petition was served by way of substituted service. I understand from Ms Evans that the Court confirmed to her on 28 July 2014 that the Petition was approved by the registrar on 25 July 2014 and the Petition was endorsed by the Court with this date"
As regards the service of the Petition Mr Reynolds has sworn a witness statement saying that:
"I was in email contact with Mr Morby and we made arrangements for him to meet with a process service for the purpose of effecting personal service of the Petition which he did. I instructed Mr. Beecham to meet with Mr. Morby at 10:00am on 7 August 2014 in Terminal 3 at Heathrow Airport."
Mr. Beecham provides a witness statement in which he says:
"I confirm that I personally handed the Petition to Mr. Morby. I recognized Mr. Morby because I had seen him previously on 21 July 2014 at Kingston County Court when he was pointed out to me by Mr. Reynolds….Nevertheless it is my practice to ask people to confirm their identity when serving documents, and prior to handing the Petition to Mr. Morby I asked him to confirm that his name was Gary Morby, which he did. Once I handed the Petition to Mr. Morby he immediately passed the Petition to the other gentleman. After taking a couple of minutes to read the Petition the other gentleman said that they were not accepting the Petition because it contained the wrong address and that Mr Morby had never lived at the Surrey address on the Petition. …. I immediately confirmed the above events had taken place in an email to my colleague Ben Mansell timed 10:12 on 7 August 2014."
Mr. Beecham has signed a certificate of personal service. Mr Morby says:
"I was accompanied to Heathrow by a witness, Mr. Bezhad Malik, so that he could check the Petition was correct before I accepted service. I wanted to ensure that I was not accepting service of incorrect court proceedings. The agent arrived at Terminal 3 and handed the Petition to Mr. Malik……As the information contained within the Petition is incorrect, Mr. Malik requested that this information be amended by the agent so that I could accept service The agent telephoned Memory Crystal and, I assume, was instructed not to amend the Petition as the agent confirmed to Mr. Malik that he could not do so. Consequently, Mr. Malik attempted to hand the Petition back to the agent, who refused to accept it, despite repeated requests to do so from Mr. Malk. As the agent would not accept the incorrect Petition back, Mr Malik put the Petition in the bin."
The property address on the Petition was Brook Place, Bagshot Road, Cobham Surrey (the "Property"). The complaint at the airport was that Mr. Morby had 'never lived at the Property' and in any event Chobham was misspelt. Mr. Morby accepts that the Petition was also e-mailed to him by Mr. Reynolds on 8 August 2014 and that he received the e-mail with the Petition attached. Nevertheless Mr. Morby argues that he has not been served with the Petition.
Mr Morby says that the Property identified on the Petition is owned not by him but his wife. He says it has not been occupied by them since 2007 and is uninhabitable. His evidence is that he took a job in Belgium in 2001. At the beginning his wife remained in England with their children. When the children went to boarding school his wife joined him. He initially rented property but then purchased a residence in Belgium. He says that he continued to reside there until July 2013:
"I moved to Dubai from Belgium in July 2013 to take up permanent consultancy roles which was a good opportunity for me to utilize the vast experience I have gained over the years…..I work as a consultant on a permanent basis for YQ Meet and Assist….YQ Meet and Assist provide permanent accommodation….for me and my family in Dubai….We intend to permanently reside in Dubai and have done so for the last 14 months. Dubai is my domicile of choice."
In his third witness statement Mr. Morby says that he previously put forward arguments regarding security, and an appeal of a different case (but having a related issue) will impact on his position. In fact that appeal had been dismissed by the time of this hearing. Accordingly this element of his defence does not assist him.
The notice of intention to oppose the bankruptcy petition dated 26 September 2014 may now been seen in context of the facts set out above.
Jurisdiction
Section 265 of the Insolvency Act 1986 (" IA 1986") provides that a bankruptcy petition shall not be presented unless the debtor is:
i) Domiciled in England and Wales;
ii) Personally present in England and Wales on the date on which the petition is presented; or
iii) At any time in the period of 3 years ending with the day of presentation of the petition:
a) …
b) Has carried on business in England and Wales.
It is argued by GG that although these are alternatives all headings are satisfied in this case. First I consider whether or not Mr. Morby was present in England and Wales on the date on which the Petition was presented. The argument against his presence is that the Petition...
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Gary Kenneth Morby v Gate Gourmet Luxembourg Iv Sarl and Another
...this case. Background 3 The relevant background is set out in some detail in paras 2 to 12 of the judgment of Mr Registrar Briggs ( [2015] EWHC 1203 (Ch)). For present purposes I will set out the background as briefly as I can. In September 2007 the Gate Gourmet and SASL, as purchasers, ent......
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