Mond v Hyde and Another
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BELDAM,LORD JUSTICE ALDOUS,LORD JUSTICE WARD |
| Judgment Date | 16 July 1998 |
| Judgment citation (vLex) | [1998] EWCA Civ J0716-10 |
| Docket Number | CHANI 97/0930/3 |
| Court | Court of Appeal (Civil Division) |
| Date | 16 July 1998 |
[1998] EWCA Civ J0716-10
Lord Justice Beldam
Lord Justice Aldous
Lord Justice Ward
CHANI 97/0930/3
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(SIR RICHARD SCOTT V-C)
Royal Courts of Justice
Strand
London WC2
MR J POWELL QC with MS L HILLIARD (Instructed by Messrs Halliwell Landau, Manchester M2 2JF) appeared on behalf of the Appellant
MR R KAYE QC with MR R RITCHIE (Instructed by the Treasury Solicitor) appeared on behalf of the Respondent
Thursday, 16 July 1998
The principal question raised in this appeal is whether an Official Receiver in Bankruptcy is, on grounds of public policy, immune from an action for damages at the suit of the trustee who has suffered financial loss by relying upon a negligent statement made to him by the Official Receiver in the course of the bankruptcy proceedings.
The Facts.
On 8th October 1993 the appellant, Mr Mond, accepted appointment as trustee in bankruptcy of Mr David Hood who had been adjudicated bankrupt on 12th October 1984. The 1st defendant, Mr Hyde, was an assistant official receiver in bankruptcy, appointed by the 2nd defendant, the Department of Trade and Industry. Until Mr Hood ("the bankrupt") was automatically discharged from bankruptcy on 29th December 1989 by virtue of the provisions of sch.11 of the Insolvency Act 1986, Mr Hyde ("the O.R.") continued as trustee of the bankrupt's estate by virtue of s.93(4) of the Bankruptcy Act 1914 ("the Act"). The estate, however, contained no assets. On 29th July 1989 the bankrupt entered into an agreement with Mr John Walton and Mr Rupert Webb by which they agreed to provide £100,000 for the implementation of a scheme for marketing time shares in property in Tenerife. The bankrupt claimed that he had been misled and that Mr Walton and Mr Webb were in breach of agreement. He wished to take proceedings against them but by virtue of s.38(a) of the Act his right of action vested in the O.R. According to the bankrupt, on 5th February 1990 he spoke to the O.R. on the telephone asking whether he wished to pursue the claim for the benefit of his creditors but, he said, the O.R. disclaimed all right to the claim. There were no funds in the estate with which to finance an action. Having obtained legal aid on 14th September 1990 the bankrupt launched proceedings against Mr Walton and Mr Webb in the Manchester District Registry claiming damages. On 18th July 1993 judgment was given in favour of the bankrupt for damages to be assessed. In the course of subsequent negotiations, on 16th September 1993 Mr Walton and Mr Webb offered to settle the bankrupt's claim by payment of a sum of £50,000 and his costs of the action on an indemnity basis provided the O.R. confirmed that he disclaimed all right to the £50,000. This led the bankrupt's solicitors to approach the O.R. to confirm that he made no claim to any part of the £50,000. The O.R.'s reaction was to seek a contribution for the benefit of the estate and at this stage he approached the appellant to act as trustee. The appellant contacted the bankrupt's solicitor who told him that the O.R. had waived all claims in respect of the action some years earlier. The appellant then telephoned the O.R. who told him that he:
"… knew of no waiver"
and that:
"As far as I am concerned the estate is entitled to the benefit of the proceeds of the judgment."
On 14th October 1993 the O.R. sent the appellant a copy of a letter written to the bankrupt's solicitors in which he stated:
"In any event I cannot conceive of any circumstances in which I would have given, on the strength only of information provided by the debtor in a telephone conversation, an assurance that the trustee in bankruptcy would not have a claim in a right of action which vested prior to the discharge."
To resolve the position, on 3rd December 1993 the bankrupt issued proceedings claiming a declaration that the appellant as trustee in bankruptcy had no interest in the action which Mr Walton and Mr Webb had offered to settle or in any moneys payable arising from the action, that any such moneys were not vested in him as trustee and that he was, by succession to the official receiver as trustee ex officio, estopped from making any such claim. In reliance on the statements made by the O.R., the appellant retained solicitors to defend the proceedings brought by the bankrupt. The O.R. confirmed to the appellant's solicitors in a letter dated 27th January 1994 that he could not conceive of any circumstances in which he would have given on the strength only of information provided by the bankrupt in a telephone conversation an assurance that the trustee in bankruptcy would not have a claim in a right of action which vested prior to the bankrupt's discharge. Later, for the purposes of the proceedings, the O.R. in an affidavit said:
"As stated in my letter dated 14th October 1993 I have absolutely no recollection of any conversation with Mr Hood as alleged or at all. Notwithstanding this, under no circumstances would I have given any such assurance that a Trustee in Bankruptcy or the Official Receiver would have no claim to the benefits of the action based upon merely a telephone conversation with the bankrupt."
The bankrupt's claim for a declaration was heard by Mr Recorder Leeming Q.C. On 22nd November 1994 he made the declaration he sought, stating he was quite satisfied that the O.R. in his capacity of trustee had disclaimed all right to the proceeds of the bankrupt's claim. He also held that the evidence he had heard satisfied him that the O.R. was at the time very much overburdened with his general caseload of insolvency work and that his overriding attitude to the bankrupt's particular administration was that it was a very old one with no funds in hand and scant prospect of creditors wishing to contribute to the cost of fighting to pursue the claim asserted by the bankrupt.
Accordingly he gave judgment against the appellant who was ordered to pay the bankrupt's costs of the proceedings. As trustee, the appellant was personally liable for the costs he had incurred on behalf of the estate subject to the valueless right of indemnity from the estate.
The bankrupt's costs came to the very considerable sum of £113,855. The estate's costs amounted to £79,880. When in reliance on the O.R.'s assurances the appellant undertook to defend the proceedings brought against him by the bankrupt, he did not expect that the costs of deciding this simple issue would escalate to these levels. The explanation, we were told, was that the bankrupt instructed specialist leading counsel, resulting in an extended hearing lasting seven days.
In these proceedings the appellant in his personal capacity as trustee claims that the statements made to him by the O.R. were negligent, misleading and wrong and that he has suffered loss in consequence. He measures the loss in the amount of the costs he has had to pay both to his own solicitors and to the bankrupt. In his capacity as trustee for the estate of the bankrupt he claims damages equivalent to the value of the claim against Mr Walton and Mr Webb on the ground that the official receiver ought not to have disclaimed the trustee's right to the benefit of that chose in action. On receipt of the appellant's statement of claim and before serving a defence, the 2nd defendant, the Department of Trade and Industry ("the D.T.I.") on its own and the O.R.'s behalf applied to the court by summons for an order under O. 18, r.19 of the Rules of the Supreme Court that the claims be struck out as disclosing no reasonable cause of action or as being frivolous and vexatious and an abuse of the process of the court; further that they were brought without the leave of the Bankruptcy Court.
The defendants' applications were heard by the Vice-Chancellor who on 22nd January 1997 ordered that the appellant's actions be dismissed and that he should pay the costs.
The Vice-Chancellor's Decision.
The respondents argued that the appellant's personal claim for damages should be dismissed on several grounds. In the forefront of the application they argued that the statements made by the O.R. were made in his capacity as a potential witness and as a witness in the legal proceedings brought by the bankrupt against the appellant. The O.R. was entitled to immunity from suit in respect of such statements. The Vice-Chancellor held that the O.R. was only entitled to such immunity in respect of the statement he supplied to the appellant's solicitors and the statement he had made in his affidavit. He was not entitled to immunity in respect of the first two statements made to the appellant before the bankrupt's proceedings began or were contemplated for they were not made as a witness or potential witness in the proceedings.
The respondents also argued that the O.R. owed no duty to the appellant in respect of the statements. They were made in the performance of a public duty which could not give rise to a private law cause of action. The O.R. was under a public duty under the Bankruptcy Rules 1952 ("the rules") to supply information in respect of the bankrupt, his estate and affairs and any statements made by him were made pursuant to those rules. In the context of the statutory framework, it would be unfair to hold that any duty of care arose which could give rise to an action at common law. The Vice-Chancellor held that there was nothing unfair in imposing such a duty. A retiring trustee of a private trust handing over to his successor would be expected to answer the successor's requests for...
To continue reading
Request your trial
-
R (Howard) v Official Receiver
...which he did, was acting as an officer of the Court, and was as such entitled to absolute protection from any action for libel." 136 In Mond v Hyde [1989] QB 1097 the Court of Appeal held that the getting in of a bankrupt's estate for the purpose of being distributed to the creditors is par......
-
Al Jaber and Others v Mitchell and Others
...immunity in the context of the section 236 examinations solely because of his status as a party. 29 The judge also considered the case of Mond v Hyde [1999] QB 1097 (CA), on which the Sheikh Parties placed considerable reliance. The case concerned various statements made by an official rec......
-
Greig William Alexander Mitchell v Sheikh Mohamed Bin Issa Al Jaber
...judicial proceedings by a witness who is entitled to immunity. In further support of this proposition, Ms Stanley relies upon the case of Mond v Hyde [1999] QB 1097 (CA) (“ Mond v Hyde”) to which I shall return in due course. Ms Stanley also relies on Taylor in support of the proposition t......
-
Re Longmeade Ltd ((in Liquidation))
...of the immunity from suit of the Official Receiver (such as Burr v Smith [1909] 2 KB 306, Re John Tweddle & Co. Ltd [1910] 2 KB 698, Mond v Hyde [1999] QB 1097, and R (Howard) v Official Receiver [2013] QB 930) as well as the recent decision of Edis J in relation to Companies House: see Seb......