Mohamed Dewji v Amarjit Singh Banwaitt
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Andrews |
| Judgment Date | 29 November 2013 |
| Neutral Citation | [2013] EWHC 3746 (QB) |
| Docket Number | Case No: QB/2013/0364 |
| Court | Queen's Bench Division |
| Date | 29 November 2013 |
[2013] EWHC 3746 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mrs Justice Andrews
Case No: QB/2013/0364
Andrew Hunter QC (instructed by Pinsent Masons) for the Appellant
Edmund Cullen QC (instructed by SNR Denton LLP) for the Respondent
Hearing date: 15 th November 2013
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This is an application by Dr Dewji for permission to appeal against Orders made by Master Cook, with the appeal to follow if permission is granted. On 26 th June, 2013, the Master exercised his discretion to permit the Respondent, Mr Banwaitt, to continue execution of a judgment against Dr Dewji for a sum of just under US$2 million (inclusive of interest) or approximately £1,428,000, notwithstanding the fact that an Interim Order under s.252 of the Insolvency Act 1986 was in force. The Master then made final the interim charging orders that had been granted in favour of Mr Banwaitt on 1 st May 2013 over three properties which Dr Dewji owns or in which he is beneficially interested, to which I shall refer as "Whitworth Lane", "Hilltops" and "Dale Street".
The purpose of an Interim Order under s.252 is to impose a moratorium on proceedings against an insolvent debtor so as enable the debtor's proposal for an Individual Voluntary Arrangement ("IVA") to be considered by his creditors. When an Interim Order is made, it precludes any creditor of the applicant debtor from presenting or proceeding with any bankruptcy petition against him and, by s.252(2)(b), no other proceedings, and no execution or other legal process, may be commenced or continued against the debtor of his property except with the leave of the Court (the statute does not use the word "permission," though it amounts to the same thing). There is therefore a judicial discretion to permit a creditor to continue to execute a judgment in his favour, despite the existence of an Interim Order.
The jurisdiction to grant such leave is not confined to the Court that granted the Interim Order — see e.g. Hall & Another v Van Der Heiden [2010] EWHC 537 (TCC). One of the key issues arising in this case relates to the circumstances in which leave to continue with execution can properly be granted under s.252(2)(b). Perhaps surprisingly, there appears to be no authority directly in point. Obviously any Court considering whether or not to exercise the judicial discretion to lift the prohibition on a particular creditor doing what he wishes to do, must take proper account of the underlying objectives of the statutory moratorium. This is a matter of some importance, to which I shall return later in this Judgment.
Mr Cullen QC, who appeared for Mr Banwaitt, took the preliminary objection that the three Appellant's Notices filed by Dr Dewji are confined to appealing against the making of the final Charging Orders, whereas in substance the complaint of Dr Dewji is about the exercise of the discretion to lift the prohibition on execution, and there is no appeal against the order that effected that. Thus, he submitted, the application for permission to appeal falls at the first hurdle, because if the discretion to grant leave to continue with execution was properly exercised, there was no arguable basis upon which to challenge the exercise of the discretion to make the charging orders final. In support of that submission Mr Cullen pointed to the fact that section 5 of each Appellant's Notice stated that " the order [being appealed] is one of three orders over the Appellant's properties, each of which is being appealed under separate Appellant's Notices issued on the same day".
Mr Hunter QC, who appeared for Dr Dewji, submitted that this was an unduly technical argument and that it lacked any merit. As is apparent from section 5 of each Appellant's Notice, the orders of the Master had not been drawn up at the time when the Appellant's Notices were served. Mr Hunter explained that the application to lift the prohibition on execution had been made orally to the Master at the hearing itself. When the orders were drawn up, for some inexplicable reason the grant of leave under s.252 was not recorded in them or in a separate order, and there is still no order recording the grant of leave. Plainly this omission should be remedied, and as it is too late to do anything to rectify the orders that have already been perfected, I shall direct that a separate order be drawn up to record the grant of leave.
The Grounds of Appeal recite, in paragraph 4, that at the hearing on 26 th June 2013, Master Cook (1) gave Mr Banwaitt permission pursuant to s.252(2)(b) of the Insolvency Act and then proceeded (2) to make the Interim charging orders final. In the next paragraph, it is stated that Master Cook's decisions (plural) were "wrong" because he proceeded under what are alleged to have been two important misconceptions. Mr Hunter submitted that the "decisions" referred to in paragraph 5 were obviously the two decisions recited in paragraph 4; Mr Cullen riposted that in context the "decisions" were the decisions to make each of the three charging orders final, because those were the decisions under challenge, referred to earlier in the Grounds of Appeal.
In my judgment, Mr Hunter is right about this, and reading the Appellant's Notices as a whole it is obvious that the substantive cause for complaint is the exercise of the Master's discretion to grant leave to Mr Banwaitt to pursue his application for the charging orders to be made final. The alleged "misconceptions" stated in the Grounds were matters that went directly to the validity of the exercise of that discretion. In any event, the decision to grant permission is inextricably linked with the exercise of the discretion to make the charging orders final, because once leave was granted, there was no other reason to refuse to accede to Mr Banwaitt's substantive application. Mr Cullen's arguments may have had more force if the orders had all been drawn up by the time the Appellant's Notices were lodged, and if it had been clear that leave under s.252(2)(b) was the subject of a separate order. However, if the orders had been drawn up in their present form before the Appellant's Notices were lodged, no doubt Dr Dewji's legal team would have spotted that none of them recorded that leave had been granted under s.252. They would either have gone back to the Master under the slip rule to get the orders amended, or amended the Appellant's Notices to encompass any separate order dealing solely with the grant of leave.
I therefore treat the application before me as an application for permission to appeal both against the exercise of the Master's discretion to grant leave under s.252 and against the exercise of his discretion to make the charging orders final, decisions which were founded upon the same underlying premises and subject to the same reasoning. In this case, the consideration of the merits of the application for permission inevitably involves the determination of the substantive grounds of appeal, to the extent that they challenge the exercise of the Master's discretion. However, a determination in Dr Dewji's favour to that extent would only get him over the permission threshold, because the Court would then be faced with the task of exercising its discretion afresh.
Mr Hunter proposed at the outset of the hearing that I should approach the matter in two discrete stages; first, by determining the merits of the challenge to the exercise of the Master's discretion, and then, if and only if the question of exercising my own discretion arose, considering the evidence and making that decision. The second stage would also involve consideration as to whether I should admit further evidence. Mr Cullen did not oppose the pragmatic suggestion that I should hear legal argument from both Counsel solely on the challenge to the Master's decisions and then take stock of the situation and decide how to proceed. Having heard both Counsels' submissions, I adjourned the hearing to consider whether I should go on to hear argument on the question of how I should exercise my own discretion in substitution for that of the Master, or whether I should deliver judgment refusing permission to appeal. For the reasons that will appear in this judgment, and despite the attractive manner in which the arguments for Dr Dewji were presented by Mr Hunter, I have decided to take the latter course.
As the proposed appeal is against the exercise of judicial discretion, and is by way of review, Dr Dewji faces a high hurdle, as Mr Hunter fairly acknowledged. There was no dispute as to the test in Tanfern Ltd v Cameron McDonald [2000] 1 WLR 1311 per Brooke LJ in para 32. The Master must have " exceeded the generous ambit within which a reasonable disagreement is possible". Mr Hunter, however, prayed in aid the equally well-established alternative test for challenging the exercise of a discretion, namely, whether the Master erred in principle in his approach, took into account factors he should not have taken into account, omitted to take into account factors he should have taken into account, or failed to give the competing factors appropriate weight in the balancing exercise when reaching his decision.
Before turning to the competing submissions I should briefly set out the chronology of key events. On 13 th April 2013, Mr Banwaitt obtained judgment from Sir Raymond Jack in proceedings he had brought against Dr Dewji for fraudulent misrepresentation pertaining to an agreement to invest in land in Cambodia. I shall...
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