Michael Wilson & Partners Ltd v Thomas Ian Sinclair
| Jurisdiction | England & Wales |
| Judge | Lord Justice Nugee,Lady Justice Simler,Lord Justice David Richards |
| Judgment Date | 16 April 2021 |
| Neutral Citation | [2021] EWCA Civ 505 |
| Docket Number | No: A4/2020/0820 |
| Court | Court of Appeal (Civil Division) |
| Date | 16 April 2021 |
[2021] EWCA Civ 505
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
HHJ Pelling QC sitting as a Judge of the High Court
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice David Richards
Lady Justice Simler DBE
and
Lord Justice Nugee
No: A4/2020/0820
and
Brian Doctor QC (instructed directly) for Michael Wilson & Partners Ltd
Mr Emmott in person
Hearing date: 30 March 2021
Approved Judgment
Introduction
The Appellant, Michael Wilson & Partners Ltd, ( “MWP”) is a judgment creditor with the benefit of a number of judgments against the 1 st and 2 nd Defendants, Mr Sinclair and Sokol Holdings Inc (“ Sokol”). MWP sought to enforce those judgments by way of a third party debt order ( “TPDO”) against the Third Party, Mr Emmott, on the basis that he owed monies to Mr Sinclair and/or Sokol. MWP obtained an interim TPDO, but both Master Kay QC and, on appeal, HHJ Pelling QC dismissed MWP's application to make it final on the grounds that the terms on which monies were lent to Mr Emmott were that he would repay Mr Sinclair 30 days after demand, and, there having been no such demand, there was no “debt due or accruing due” from him that could form the subject matter of a TPDO.
Permission for a second appeal was granted by Popplewell LJ on the basis that the argument that both lower courts were wrong not only had a real prospect of success but also raised an important point of principle. I respectfully agree with him on both points.
But shortly before the hearing of the appeal Mr Sinclair was made bankrupt, on a petition presented by MWP itself. In those circumstances we asked Mr Brian Doctor QC, who appeared for MWP, to explain how MWP could pursue its appeal, given the terms of s. 285(3)(a) and s. 346(1) of the Insolvency Act 1986 ( “ IA 1986”). I give the text of these provisions below but s. 285(3)(a) provides that after the making of a bankruptcy order no creditor of the bankrupt shall have any remedy against the property of the bankrupt in respect of a provable debt; and s. 346(1) that a creditor cannot retain the benefit of an attachment as against the official receiver or trustee unless the attachment was completed before the commencement of the bankruptcy.
Having heard argument from Mr Doctor, we decided (i) that the effect of these provisions made it impossible for MWP to pursue its appeal unless it could establish that it had a reasonable prospect of obtaining an order under s. 346(6) IA 1986 (which enables the Court to disapply the general rule under s. 346(1)); and (ii) that in the circumstances of this case MWP had no reasonable prospect of obtaining such an order. We therefore concluded that even if MWP were right on the point of law raised by the appeal it would not assist it, and that the appeal had become academic.
Mr Doctor asked us to hear the appeal in any event as it potentially affected the question of costs. We have a discretion whether to permit an appeal to proceed that has become academic save as to costs. We decided in the exercise of that discretion that this was not an appropriate case to hear the appeal solely on the question of costs.
In those circumstances we did not proceed to hear the substantive appeal. In this judgment I give my reasons for agreeing to that decision.
Background
The present application forms a very small part of what has been a vast campaign of litigation between Mr Wilson (the individual behind MWP) and Mr Emmott, into which Mr Sinclair and his company Sokol have been drawn. It is unnecessary for the purposes of this appeal to give any detailed account of the litigation – for which reference can be made if necessary to the numerous other judgments, including several of this Court, that are publicly available – so I will simply record that after a lengthy arbitration between MWP and Mr Emmott the arbitrators found overall in favour of Mr Emmott, and as long ago as 2014 issued an award ( “the Award”) under which MWP is liable to pay Mr Emmott £3,209,613 and $841,213. To that has to be added a further sum for costs which Mr Emmott told us would be in excess of £2.5m (and which Master Kay accepted would be likely to amount to at least £2m and might exceed £3m). In 2015 Burton J gave leave to enforce the Award as a judgment of the Court. All attempts to appeal that have failed. MWP has not however paid the Award, despite apparently being in a position to do so. Its application for a TPDO was sought as a means to reduce its liability to Mr Emmott under the Award by offsetting any sums ordered to be paid to it by Mr Emmott. I should add that in submissions received after our draft judgments were circulated (see below) MWP asserted that it had in fact paid some of the Award but it is not suggested that it has paid it all, and whether this is so or not makes no difference to the analysis.
MWP has the benefit of numerous judgments against Mr Sinclair and Sokol, many, if not all, for costs awarded against them of various proceedings not only in England but in other jurisdictions. There was no dispute that this is so and the precise sums do not matter: when MWP obtained the interim TPDO, it was based on there being a total due to it of £1,077,511 and $729,349.
Mr Emmott had borrowed various sums of money from Mr Sinclair to fund the arbitration. There was a dispute between MWP and Mr Emmott as to precisely how much was outstanding, but again this does not matter for present purposes. What is significant however, as will appear, is that in the present application MWP expressly accepted that these advances were governed by the terms of a deed between Mr Sinclair and Mr Emmott. Only an unsigned copy was available but Master Kay accepted that it was entered into on or about 21 May 2007. This deed ( “the 2007 Deed”) provided that Mr Sinclair might by 30 days' written notice require Mr Emmott to repay him sums advanced with interest.
That formed the background to MWP's application for a TPDO.
The TPDO proceedings
By application dated 17 April 2017 and amended on 18 May 2017 MWP applied for a TPDO against Mr Emmott, supported by a witness statement from Mr Wilson. The procedure for obtaining a TPDO is governed by CPR Part 72, and in accordance with CPR r 72.4 the application was initially dealt with on paper as an application for an interim TPDO. We have not seen the application, or Mr Wilson's witness statement in support, but on the basis of them Master Kay made an interim TPDO on 23 May 2017, fixing a hearing for 18 July 2017, and providing that Mr Emmott must not make any payment reducing the amount claimed by MWP below $729,349 and £1,077,511 plus fixed costs in accordance with CPR r 72.4(2) and (3). It is apparent from the terms of his Order that the application was presented to Master Kay as if the relevant judgment debtors were both Mr Sinclair and Sokol, and by paragraph 4 of the Order it was provided that they must not destroy or remove information necessary to disclose to MWP the extent and basis of Mr Emmott's liability to them.
It appears that the application to make the TPDO final was adjourned a number of times and finally came before Master Kay for hearing on 8 February and 21 and 22 May 2018. There were by then a number of applications before the Court, including not only MWP's application to make the TPDO final but also an application by Mr Emmott for its discharge on the basis either that there was no power to make a TPDO, or that the Court should decline to make the TPDO final in the exercise of its discretion.
Master Kay handed down a reserved judgment ( [2018] EWHC 1496 (Comm)) on 14 June 2018. Having referred at [9] to the 2007 Deed, he recorded at [14] that:
“It is accepted for the purposes of the application that advances to Mr Emmott were governed by the Deed.”
He then considered, and accepted, the submission for Mr Emmott that under the terms of the 2007 Deed there was no repayment due until Mr Sinclair demanded payment and then only in such sum as Mr Sinclair might require; and that that meant (in the absence of any relevant demand) that there was no debt “due or accruing due” from Mr Emmott to Mr Sinclair as required by CPR r 72.2(1) (at [17]).
That was sufficient to justify discharging the TPDO, but in case he was wrong he went on to consider whether the Court should in the exercise of its discretion allow the TPDO to be made final (at [19]). He held that it should not, having regard to (a) non-disclosure of various matters, including the Award, the order of Burton J giving leave to enforce it, and the exhaustion of any appeals against it; (b) the lack of any explanation as to why the Award had not been paid, and his conclusion that MWP's failure to comply with decisions of the Court was “contumelious, inexcusable and probably amounts to a contempt of court”; (c) the fact that there appeared to have been a breach of a freezing order made against MWP; and (d) the fact that on the evidence the sums owed by MWP to Mr Emmott significantly exceeded the amount that might become due to Mr Sinclair and/or Sokol from Mr Emmott. He considered that each of these would be sufficient for the Court to conclude that it would be inappropriate to continue...
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