Hall and another v Elia and another
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Proudman |
| Judgment Date | 12 July 2016 |
| Neutral Citation | [2016] EWHC 1697 (Ch) |
| Court | Chancery Division |
| Date | 12 July 2016 |
| Docket Number | Case No: 6931 of 2010 |
[2016] EWHC 1697 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
7 Rolls Buildings
Fetter Lane
London, EC4A 1NL
Mrs Justice Proudman
Case No: 6931 of 2010
Mr Jonathan Russen QC and Miss Catherine Addy (instructed by Fieldfisher LLP) for the Applicants in the proceedings
Mr Jonathan O'Mahony (Direct Access counsel) for the First Respondent in the proceedings
Mr Elias Elia ( the Second Respondent) in person
Hearing date: 3 May 2016
The first applicant to this application is Mrs Elia and the second applicant is Mr Elia, who are mother and son. Mr Elia was bankrupted on 27 April 2011 (based on a statutory demand of some £8.9 million) although he has been discharged, and his trustee in bankruptcy is now, by succession, the first applicant in the bankruptcy proceedings Mrs Michaela Hall, (whom with her predecessors I will call "the Trustee"). The proceedings have a long and procedurally complex history; there have been two claims and there have been many applications. They all arise out of the purchase in 2009 by Mr Elia of a long leasehold interest in 29 Rutland Court, Knightsbridge, SW7 ("the Property") for just under £4m with the help of a mortgage in the region of £2.8m from Coutts Bank PLC. Mr Elia remains the legal owner and the Property is now (say Mrs Elia and Mr Elia) worth about £7.5m. Mr Elia (but not Mrs Elia, who lives in Cyprus) continued to occupy the Property until a warrant of execution was enforced on 26 April 2016.
Mr Elia remained the registered proprietor of the long leasehold interest in the Property but he and Mrs Elia claimed that, prior to being made bankrupt, he had assigned his interest in the Property for £25,000 to Mrs Elia pursuant to a purported Deed of Assignment dated 30 July 2010, or alternatively a purported Deed of Assignment dated 28 February 2010, to which I shall refer compendiously as "the Deed of Assignment". The Registrar, correctly in my view, concentrated on the 30 July Deed of Assignment for the reasons he gave in [123]–[126] of his judgment. Mrs Elia was also a beneficiary of a prior charge over the Property ("the Charge"), which Mrs Elia and Mr Elia claimed secured a sum "well in excess of" £950k, in fact about £1.3m.
The Trustee brought what has been called "the Office Holder Claim", claiming that the Deed of Assignment was a sham or alternatively should be set aside pursuant to s. 339, s. 340 and/or s. 423 of the Insolvency Act 1986. She claimed that as the Trustee she was entitled to the entirety of the beneficial interest in the Property, subject to the company applicant's entitlement to 35.5% of the Property. The company was a joint applicant because of the s.423 application, in circumstances where the company claimed, as the Trustee accepted (by settlement of any such adverse claim upon the Property made by the company), that some of the moneys used by Mr Elia to purchase the Property emanated from the company.
Mr Elia was an additional defendant in circumstances where he claimed to occupy the Property under an arrangement with his mother. His personal role in the proceedings was, so Mr Registrar Jones found, limited to the issues of possession and sale, if the Trustee succeeded in her claim against Mrs Elia.
On 9 November 2015, having on 24 June 2015 found that Mrs Elia was debarred from defending the claim as she had failed to comply with various conditions, the Registrar refused the final one of her many applications for relief from sanction and found that the Deed of Assignment was a sham so that the beneficial interest was vested in the Trustee, subject to the company's interest. He also held that he would otherwise have set aside the Deed of Assignment even apart from sham as it constituted a transaction at an undervalue and was a preference. He further decided that on the balance of probabilities the £25,000 purported consideration was not paid for the reasons given in [66] and [133]–[141] of his judgment. He held that the Charge was valid, but that it only secured a loan of €50,000 plus interest.
His Order of 9 November 2015 was as follows,
• Neither Mrs Elia nor Mr Elia had any legal or beneficial interest in the Property ([2] and [3]),
• Subject to satisfaction and discharge by set-off against the costs liabilities owed to the applicants, Mrs Elia had the benefit of the Charge (which was, pending registration, an equitable charge) securing the sum of €50,000 together with interest at 5% from 17 February 2010, amounting at the date of the Order to a total sum of £45,752.18 ([4] and [5]),
• The Trustee be registered at HM Land Registry as proprietor of the Property forthwith ([6]),
• The Trustee do sell the Property and her solicitors Fieldfisher LLP ("Fieldfisher") have conduct of the sale ([7]),
• Mrs Elia and Mr Elia must deliver up vacant possession of the Property to the Trustee, notifying Fieldfisher that they have done so ([8]) (This part of the Order has already been dealt with—see below.)
• Mrs Elia and Mr Elia must make interim payments on account of costs of £693,572.82 (being the outstanding balance after the set-off) and £43,200 respectively (including VAT) by 4pm on 7 December 2015 ([11] and [13]).
I dismissed Mr Elia's applications for a stay on 10 March 2016 although I granted Mrs Elia and Mr Elia a short extension of time (until 5 April 2016) staying the warrant of execution of possession to allow them to remove their belongings from the Property. I am told that Hamblen LJ refused permission to appeal my order at an orally renewed application on 18 April 2016 but extended (by an order made on paper dated 5 April 2016) the time for Mr Elia to leave the Property until 26 April 2016.
The order dated 18 December 2015 of Mr Casement QC (sitting as a deputy judge of this Division) refusing a stay has also been the subject of an application for permission to appeal. It was erroneously filed in the High Court. I understand that Hamblen LJ granted permission to appeal out of time but refused an application to suspend the execution of the writ of possession until hearing of this application. He also, again I believe on 18 April 2016, refused permission to appeal the order of Mr Casement QC.
Mr Elia made certain applications directed at suspension of the execution of the writ of possession but they were unsuccessful and the writ has now been executed and Mr Elia has had to leave the Property. I should observe that Warren J dismissed such an application by Mr Elia on 25 April 2016 recording that it was "totally without merit" and on 26 April 2016 Hamblen LJ also dismissed Mr Elia's latest appellant's notice, seeking to appeal an order of Barling J dated 4 April 2016 (which I am told was also seeking a stay) recording that it was "totally without merit".
I also in March 2016 (I believe on or about 23 March 2016) refused to grant permission to appeal the Registrar's debarring orders, debarring Mrs Elia from defending the Office-Holder Claim. I also orally refused to grant her permission to re-open appeals under CPR 52.17 of Registrar Jones's Orders of 14 May 2015 and 29 July 2015.
At the time of the purported Deed of Assignment the Property was subject to a mortgage in favour of Coutts Bank, at that stage in the sum of around £3.1m, and an interim charging order in favour of the landlord for unpaid service charges. A possession order was made at Coutts's suit in the County Court in 2012 and this meant that the whole of the amount outstanding under the mortgage on the Property became due. By agreement the County Court required Mrs Elia to pay instalments towards this of £21,400. The Registrar however by an order of 3 February 2015 required Mrs Elia to pay only the contractual amount that would have been due under the mortgage, ignoring the larger instalments under the possession order. He did this in order to ensure that the mortgage was kept up to date according to its contractual terms.
The test for granting permission to appeal is set out in CPR 52.3(6), namely that the court considers either that the appellant has a real prospect of success or there is some other compelling reason why the appeal should be heard. The criterion for the first part of this is not one of probability (or otherwise the appeal would effectively be determined on the grant of permission to appeal) but of eliminating proposed appeals which have an absence of reality of sucess.
The applications before me today are the applications lodged (I believe—see below) on 30 November 2015 and 18 December 2015 respectively of each of the respondents for permission to appeal Registrar Jones's decisions,
(1) that the Deed of Assignment was a sham,
(2) that the Deed of Assignment should alternatively be set aside as a transaction under s.339, s.423 or s. 340,
(3) that Mrs Elia had not paid the £25,000 referred to in the Deed,
(4) that the Charge secured only €50,000 plus interest at 5% from 17 February 2010, to be set off against the sum required to be paid in costs, leaving the sum of £693,527.82 to be paid by her by 4 pm on 7 December 2015. Mr Elia was to pay £43,200 by the same date and time attributable to the claim against him for possession and sale of the Property and a failed recusal application.
It is accepted that if I were to accede to the applications for permission to appeal there would have to be a retrial.
Mrs Elia's position
Mr Russen QC submitted that the consequence of Mrs Elia being debarred from defending was that she was unable to make any submissions upon either the evidence or the law. He relies on the Court of Appeal's two decisions...
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