Islandsbanki HF and Others v Mr Kevin Stanford

JurisdictionEngland & Wales
JudgeLady Justice Asplin,Lord Justice Henderson,Lady Justice King
Judgment Date02 April 2020
Neutral Citation[2020] EWCA Civ 480
Date02 April 2020
Docket NumberCase No: A2/2019/1902
CourtCourt of Appeal (Civil Division)

[2020] EWCA Civ 480

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT (Chancery Division)

Business and Property Courts

Mr Justice Fancourt

[2019] EWHC 1818 (Ch.)

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lady Justice King

Lord Justice Henderson

and

Lady Justice Asplin

Case No: A2/2019/1902

Between:
Islandsbanki HF and Others
Appellant
and
Mr Kevin Stanford
Respondent

Mr Joseph England (instructed by Harrison Drury and Co Ltd) for the Appellant

The Respondent was unrepresented and did not appear before the court

Hearing date: 11th March 2020

Judgment Approved by the court

Lady Justice Asplin
1

This appeal raises two closely related questions of law: whether purported execution of a foreign judgment registered in the High Court pursuant to the terms of the Lugano Convention can be execution issued in respect of the judgment debt, for the purposes of section 268(1)(b) of the Insolvency Act 1986, if the execution occurred before the period for appealing the registration of the judgment has expired and, if not, whether the defect can be cured.

2

The Appellant, Islandsbanki HF (“IB”) appeals against the order of Fancourt J, dated 19 July 2019, dismissing IB's appeal against the order of Insolvency and Companies Court Judge Jones, dated 22 February 2019 (as varied on 13 March 2019). By that order, ICC Judge Jones dismissed IB's bankruptcy petition in respect of the third respondent, Mr Kevin Stanford, which had been presented on 6 April 2017 (the “IB Petition”) in respect of a debt of approximately £1.3 million, and instead adjudged Mr Stanford bankrupt upon a petition which was second in time, having been presented by Her Majesty's Revenue and Customs (“HMRC”) on 22 August 2017 in respect of a debt of around £7 million. Unusually, in this case, three bankruptcy petitions had been presented in relation to Mr Stanford, the third in time having been presented by Shineclear Holdings Limited, a company registered in the British Virgin Islands which is controlled by Kaupthing Bank, in respect of debt for around £6 million.

3

IB is the only party represented before the court on this appeal. Mr Stanford's trustees in bankruptcy, Messrs Mark Wilson and Robert Armstrong of RSM Restructuring Advisory LLP, were appointed with effect from 15 March 2019. In a letter from their solicitors, DLA Piper UK LLP, dated 6 March 2020, they confirmed, amongst other things, that they did not intend to appear or be represented before the court but would abide by its decision.

4

Although a bankruptcy order has already been made against Mr Stanford, IB appeals for two main reasons. First, had an order been made on the IB petition, the presentation of which preceded HMRC's petition by some four months, the powers contained in sections 339 – 342 of the Insolvency Act 1986, (setting aside transactions at an undervalue and preferences) would have been available to his trustees in bankruptcy in respect of transactions which post-dated the presentation of the IB petition, rather than HMRC's petition on 22 August 2017, and section 284 (dispositions of property made by the bankrupt rendered prima facie void) would have taken effect from the presentation of the IB petition. It appears from the evidence filed on behalf of Kaupthing Bank, the largest supporting creditor, and by Mr Stanford himself, that there may be a number of substantial transactions prior to August 2017 which would be susceptible to challenge. They are of particular significance in this case as the three petition debts total in excess of £14 million and Mr Stanford currently has insufficient funds to pay them. Secondly, the costs of the IB petition are considerable.

Background

5

The IB petition is based on an unpaid Icelandic judgment debt from 2013 which together with interest, is now in excess of £1.5 million sterling equivalent. The judgment was given against Mr Stanford in the Reykjanes District Court in Iceland on 26 June 2013 for ISK 74,095.630.000 plus legal costs of ISK 132,900.00 (the “Icelandic judgment”). A certificate was issued by the Icelandic court on 16 October 2013, pursuant to Articles 54 – 58 of the Lugano Convention. IB applied to register the Icelandic judgment in England and Wales on 16 March 2016. A registration order was sealed on 23 March 2016 (the “Registration Order”).

6

The Registration Order included the following:

“…

2. The defendant has permission within one month…after service on him of notice of registration of the judgment to appeal against the registration and execution on the judgment will not issue until;

(a) after the expiration of that period, or

(b) in the event of an appeal, after the appeal has been determined.”

Nevertheless, a writ of control was issued on 30 March 2016 in the Queen's Bench Division of the High Court, pursuant to CPR Part 74, purportedly to enforce the Icelandic judgment which was the subject of the Registration Order (the “Writ of Control”).

7

In fact, the Writ of Control states that it is in respect of a judgment of the Reykjanes District Court dated 18 January 2013 in the sum of ISK 7,542,463.00 rather than the Icelandic judgment. This point, amongst others, was taken by Mr Burkitt, on behalf of Mr Stanford, before ICC Judge Jones and is recorded, along with other matters in what the ICC Judge describes as “a troubling catalogue of errors”, at [30] of his judgment. The ICC Judge concluded, however, as follows:

“31. So far as the validity of the Writ of Control is concerned, I observed during the hearing on 20 December 2018 that this could be investigated by reviewing the court file in the Queen's Bench Division pending the next return date. That would have been the appropriate course but on 22 February Mr Burkitt accepted that no further enquiries have been made. In those circumstances, I conclude that Mr Stanford has not satisfied the burden upon him of challenging the authenticity of the Writ of Control.”

None of the matters contained in the ICC Judge's catalogue are the subject of this appeal.

8

Following the issue of the Writ of Control, a notice of enforcement was issued to Mr Stanford dated 1 April 2016 under which Mr Stanford was required to pay or agree a payment arrangement with the enforcement officer in respect of £447,875.71 plus interest accruing at the rate of £78.10 daily thereafter, by 11.59 pm on 14 April 2016. In a box entitled “If you do not pay” it was stated that: “[I]f you do not pay or agree a payment arrangement by the date above, an enforcement agent will visit you and may seize your belongings – this is called ‘taking control’. These belongings may then be sold to pay the money you owe. …”

9

On 13 April 2016, the High Court Enforcement Officers engaged by IB attended Mr Stanford's home in order to take control of property in purported compliance with the Writ of Control. They were unable to access the house but entered a garage containing several valuable cars, including a number of Ferraris. Mr Stanford's solicitors had written to the High Court Enforcement Officers prior to attendance and did so again on 13 April 2016, having been provided with a copy of the Writ of Control. The solicitor's letter enclosed a copy of an agreement confirming the sale of a large number of assets within the property and stated that there was, therefore, nothing to execute against.

10

In May 2016, Mr Stanford and IB entered into a standstill agreement in relation to the enforcement proceedings until 13 October 2016 in which Mr Stanford acknowledged that he owed IB ISK 165.804.818 pursuant to a judgment of the Reykjanes District Court.

11

After various attempts to enforce, the High Court Enforcement Officer certified that the Writ of Control was “unsatisfied in whole” on 14 February 2017. The IB petition was presented thereafter. IB accepts that the purported execution pursuant to the Writ of Control was premature in the sense that it took place before the period for appealing the Registration Order had expired. However, Mr England, on behalf of IB, submits that the requirements of section 268(1)(b) Insolvency Act 1986 were satisfied, nevertheless, or in the alternative, it was open to the court to remedy the defect.

The Decisions Below

12

As I have already mentioned, ICC Judge Jones dismissed the IB petition. He held that in this case, “the time specified for an appeal [against the Registration Order] was extant because there had been no service of the Registration Order.” He went on to state that the question was “whether the foreign judgment [the Icelandic judgment] relied upon by the Writ of Control was capable of being enforced” and that the answer to that question had to be applied to the requirements of section 268(1)(b) of the Insolvency Act 1986 for the purposes of the bankruptcy proceedings. See [22] of the ICC judgment. Having already set out articles 47(3) and 43(5) of the Lugano Convention 2007 and section 4A of the Civil Jurisdiction and Judgments Act 1982 as amended (the “1982 Act”), the ICC Judge concluded as follows:

“25.Section 4A(3) [of the 1982 Act] makes enforcement of a judgment once registered subject to Article 47(3) [of the Lugano Convention]. The reference to section 4A(2) being subject also to “ Article 47(3) … section 7 … and… . rules of court as to the manner in which and conditions subject to which a judgment registered under the Lugano Convention may be enforced” is not to be construed as enabling Rules of Court to override or otherwise alter the agreement between signatories to the treaty. The power to make rules is to give effect to the revised Lugano Convention. This is...

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