Joel Inbakumar (Appellant/Claimant) v United Trust Bank Ltd (Respondent/Defendant)
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE VOS |
| Judgment Date | 23 February 2012 |
| Neutral Citation | [2012] EWHC 845 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CH/2011/0396 |
| Date | 23 February 2012 |
[2012] EWHC 845 (Ch)
IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Justice Vos
Case No: CH/2011/0396
MR G TEE appeared on behalf of the Appellant
MR P GALE appeared on behalf of the Respondent
Approved Judgment
This is an application for permission to appeal the order made by Mullis DJ in the Romford County Court, on 30 June 2011, whereby he refused to set aside a statutory demand served by the respondent, United Trust Bank Limited ("the bank"), on the appellant, Mr Joel Inbakumar, who is a practising management accountant. Mr Inbakumar also seeks an extension of time within which to appeal.
I can say at once that I am prepared to extend Mr Inbakumar's time for making his application for permission to appeal, since he was, as it seems to me, confused about the procedure and mistakenly applied first to the County Court rather than directly to the Chancery Division of the High Court. I can therefore turn to deal with the substantive matters raised by his application for permission to appeal, having extended time for the application to be made.
The brief chronological background to Mr Inbakumar's appeal can be summarised as follows
On 13 June 2007 the bank offered to lend a company called Copperfield Developments Limited ("Copperfield") the sum of £964 million to develop a property at The Old Anchor, Barton upon Humber, which I shall call "the land". On 10 July 2007, a valuation of the land was prepared on the instructions of the bank by valuers called Lambert Smith Hampton Group Limited ("LSH"), in the sum of £1.81 million. That valuation was prepared on the instructions of the bank, not on the instructions of the directors of Copperfield, or on the instructions of Mr Inbakumar personally. Nonetheless, on 12 July 2007, according to Mr Inbakumar, in reliance upon that valuation, he and his three co-directors, Mr Mann, Mr Smith (now sadly deceased), and Mr Hanna signed a guarantee in favour of the bank in respect of the loan obligations of Copperfield, limited to the sum of £500,000.
On 11 September 2009, the bank demanded payment under the guarantee from Mr Inbakumar alone, the development apparently not having been successful. On 20 November 2009 the bank sued Mr Inbakumar alone in respect of the sums allegedly due under his guarantee. The other three co-guarantors were not joined as parties. Nonetheless, on 1 March 2010, Mr Inbakumar issued Part 20 proceedings against the three co-guarantors (Messrs Mann, Smith and Hanna) and the valuers LSH.
On 14 May 2010, the bank appointed Law of Property Act receivers over the land. On 16 July 2010 Master Eyre in the bank's proceedings ordered the claims by the bank against Mr Inbakumar to proceed separately from the Part 20 proceedings by Mr Inbakumar against the co-guarantors and the valuers. On 30 November 2010, judgment was awarded by consent against Mr Inbakumar at the trial of the claim by the bank against him for the sum of £515,497.78 plus costs of £24,600. On 18 January 2011, the bank obtained a final charging order against Mr Inbakumar over his matrimonial home, which he shares with his wife, at 28 Lyndhurst Gardens, Ilford ("Lyndhurst Gardens").
On 28 April 2011 the bank issued a statutory demand against Mr Inbakumar in respect of the judgment debt of £515,497.78 plus £24,600 costs. The statutory demand included the following passages:
"9. By way of security for the outstanding debt the creditor made an application to the court for a charging order over the property of the debtor, being [Lyndhurst Gardens]. On 18 January 2011, Master Eyre granted the creditor a final charging order over [Lyndhurst Gardens] in the sum of £540,097.78, together with any further interest becoming due and £254 for the cost of the application.
10. The creditor has estimated the value of [Lyndhurst Gardens] in the sum of £275,000 and there is a first charge on [Lyndhurst Gardens] amounting to approximately £195,000. According the equity in [Lyndhurst Gardens] amounts to £80,000 and the same is value of the creditor's security in [Lyndhurst Gardens]. The report and mortgage valuation for the creditor is enclosed …"
On 6 June 2011 the statutory demand was served on Mr Inbakumar. On 21 June 2011 Mr Inbakumar issued an application to set aside the statutory demand. His application to set aside was comprehensive. It included a number of paragraphs explaining why the statutory demand was inappropriate, including the following:
"2. I do not accept the value given to me property at [Lyndhurst Gardens] in the demand. Even though the demand states that a report and valuation for the creditor is enclosed, this was not given to me. Moreover, the property is jointly owned with my wife, who has no dispute with the creditor, and Master Eyre granted a final charging order over my half share of [Lyndhurst Gardens] only. I do however accept that the equity in it I own is not such that it would secure the entire judgment debt.
3. The debt, however, was one for which I was jointly and severally liable. Along with Paul Franklin Mann, Michael Anthony Hanna and the now deceased Barry Smith. These three gentlemen were, along with me, the directors of the company called [Copperfield] to which the creditor made a loan, which we jointly and severally guaranteed to an extent of £500,000.
4. Although the other three guarantors were as liable for the loan as I am, the claimant elected to seek a judgment against me alone.
5. The loan which formed the subject matter of the judgment debt was taken out to enable [Copperfield] to purchase a large plot of land for development (the land). The land was overvalued by the bank appointed surveyors, [LSH], and the resulting failure of the company to realise has resulted in the company calling in the guarantee I gave along with the other three guarantors.
6. The creditor has taken possession of the land on 14 May 2010, as it was entitled to under the terms of the loan agreement. This land is partially a security for my indebtedness. The creditor has failed to provide any valuation for what this land is now worth …
7. I have commenced a claim against the other guarantors and against LSH in the same action as the judgment debt was obtained against me.
8. The creditor has not yet formally made a claim against LSH, although its managing director, Mr Roger Tidyman indicated in discussions with the surveyor instructed by me to provide expert evidence in those proceedings (Mr Tim Clark of Lovelle Bacons), that he was considering doing so. I am most surprised that the creditor has not already done so. The only reason it would have needed to claim against me under my guarantee is because the land is not worth what it was said by LSH to be worth. LSH has raised a defence against me that it did not owe me a duty of care as it was only acting for the creditor. I dispute that defence, but it is not a defence that could conceivably be available to the creditor against LSH …
12. The trial of my third party claims is due to be heard on 28 November 2011. I attach hereto a court order, dated 28 March 2011 …
13. If I succeed against LSH, I will be in a position to satisfy the claim by the creditor. LSH are a large, well-known firm of chartered surveyors who have engaged properly with the claim against them. There can be no doubt at all that they or their insurer would satisfy my judgment, any judgment given against them. I would be willing to enter into an assignment to the appropriate extent of the fruits of judgment to the creditor.
14. I also have, I would suggest, overwhelming cases for an indemnity against the other directors. I appreciate that the claims against Mr Smith's estate and Mr Hanna may not be satisfied in full.
15. In the original proceedings I wanted the third party claims heard along with the claim against me by the creditors. It is prejudicial to me to expose me to judgment in favour of the creditor when, so long as my contentions are accepted by the court in the third party claim, I would have an effective and full indemnity.
16. It was always going to be possible to bring the creditors claim to trial earlier because the issues were simpler and did not require any expert evidence, and little factual evidence beyond the bare assertions of the parties. Accordingly on 16 July 2010, at the case management conference Master Eyre ordered that the creditor's claim be heard separately. However, he did indicate that he thought it would be appropriate that there would be some stay on enforcement of any judgment that the creditor might obtain, pending resolution of my third party claims.
17. I would suggest that in those circumstances it is right that the demand be set aside under rule 6.5.4(d). Alternatively that this application be adjourned until, say 21 days after the outcome of the trial of the third party claims."
On 30 June 2011, Mullis DJ refused Mr Inbakumar's application on the grounds that: "There is a judgment in the High Court which the debtor has not challenged." On 16 July 2011, the bank presented a bankruptcy petition against Inbakumar. On 26 July 2011 Mr Inbakumar issued an appellant's notice, seeking an injunction restraining the presentation of a bankruptcy petition and stating the following grounds of appeal:
"The learned district judge … erred in determining the matter (1) without a hearing; (2) without providing a reasoned judgment; (3) merely stating that: "There is a judgment in the High Court that the debtor has not challenged",...
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