Mr John Aidiniantz (Applicant/Respondent to appeal) v The Sherlock Holmes International Society Ltd (Respondent/Appellant)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Henderson |
| Judgment Date | 14 October 2015 |
| Neutral Citation | [2015] EWHC 2882 (Ch) |
| Docket Number | Case No: CH/2015/0158 |
| Court | Chancery Division |
| Date | 14 October 2015 |
[2015] EWHC 2882 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
IN THE MATTER OF THE SHERLOCK HOLMES
INTERNATIONAL SOCIETY LIMITED
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
Rolls Building,
Royal Courts of Justice
Fetter Lane, London, EC4A 1NL
Mr Justice Henderson
Case No: CH/2015/0158
(4695 of 2014)
Christopher Brockman (instructed by Gordon Dadds LLP) for the Applicant
Tony Beswetherick (instructed by Pinder Reaux) for the Respondent
Hearing date: 5 October 2015
Introduction
The Sherlock Holmes International Society Limited ("the Company") is a company limited by guarantee, which until 2012 was involved in running the Sherlock Holmes Museum ("the Museum") in Baker Street, London. It is common ground that the Company ceased trading in September 2012, and that it has no assets apart from various actual or potential claims against third parties, including the founder of the Museum, John Aidiniantz ("Mr Aidiniantz").
On 1 July 2014, Mr Aidiniantz presented a petition to wind up the Company on the ground that it was insolvent and unable to pay its debts when they fell due. The petition debt was the unpaid sum of £112,449.73 due to Mr Aidiniantz under a default costs certificate dated 16 June 2014. The petition was vigorously opposed, on the basis that the petition debt was genuinely disputed on substantial grounds, and that the Company also had a valid cross-claim against Mr Aidiniantz which exceeded the petition debt. The contested hearing of the petition took place before Registrar Derrett on 15 January 2015, with each side represented by leading and junior counsel. On 11 March 2015, Registrar Derrett handed down a reserved judgment in which she held that the Company should be wound up. By her order of the same date, she ordered Mr Aidiniantz's costs of the petition to be paid as an expense of the liquidation, to be assessed on the indemnity basis in default of agreement.
The petition proceedings formed part of a wider and bitter family dispute, in which the protagonists are Mr Aidiniantz, his elderly mother Mrs Grace Aidiniantz ("Grace"), and his three half-siblings, Linda Riley ("Linda"), Jennifer Decoteau ("Jennifer") and Stephen Riley ("Stephen"). The Company's opposition to the petition was authorised by Stephen in his capacity as a director of the Company, but was funded by Jennifer, who made a sum of £230,000 available to the Company for the payment of legal costs. This sum was itself derived from a payment of £300,000 which Mr Aidiniantz had made to her in the context of an agreement (or alleged agreement) which lay at the heart of another set of proceedings, to which the Company was not a party.
The respective roles of Jennifer and Stephen in the conduct and funding of the Company's defence of the petition proceedings became clearer after they were joined as respondents to the petition for the purpose of costs only, pursuant to CPR Rule 46.2, by the Registrar's order of 11 March 2015. On 29 April 2015, each of them filed a witness statement in response to Mr Aidiniantz's application that they should be ordered to pay his costs of the petition. The application was listed to be heard on 30 June 2015, but by a consent order dated 15 May 2015 the application was stayed until further order of the court to await the outcome of the Company's application for permission to appeal the winding up order, which it had made by an appellant's notice filed on 1 April 2015.
The Company's appeal included an application for a stay of the winding-up, which I granted on paper on 11 May 2015 until after the Company's application for permission to appeal had been determined. On 19 June 2015, I granted the Company's application for permission to appeal, again on paper and without a hearing. The reasons which I gave for granting permission were as follows:
"[D]espite the extraordinary background to this case, and the clear terms of the consent order for costs upon which the petition was based, I am satisfied that the grounds of appeal, as explained and supported in the skeleton argument on behalf of the Appellant dated 14 May 2015, are arguable and have a real prospect of success."
I also continued the stay of the winding-up until after determination of the appeal or further order in the meantime.
Mr Aidiniantz did not exercise his right to apply to set aside or vary either of my orders for a stay, nor did he ask for the grant of permission to appeal to be reconsidered at an oral hearing; but on 10 July 2015 he filed a respondent's notice which included an application to vary the grant of permission to appeal so as to make it conditional upon the payment, either to him (or his companies) or into court, of various sums in respect of costs totalling nearly £213,000. The application also asked for an extension of time for filing his skeleton argument in support of the respondent's notice until 14 days after such conditions as the court might order had been satisfied.
The application was supported by a draft order, and the third witness statement of Mr Aidiniantz, which made it clear (although the application itself did not) that he was also asking the court, in the alternative, to order security for costs of the appeal. In other words, Mr Aidiniantz was invoking both:
(a) the jurisdiction of the court to impose conditions upon which an appeal may be brought, contained in CPR Rule 52.9; and
(b) the jurisdiction of the court to order security for costs of an appeal, under Rule 25.15.
Mr Aidiniantz hoped to obtain a hearing date for his application before the Long Vacation, but for various reasons (for which he cannot in my view be held responsible) this was not practicable. The application therefore came on for hearing before me on Monday, 5 October 2015, only four weeks before the beginning of the three day window (on 3 November 2015) within which the appeal itself has been fixed to be heard. This means that my decision on the application is needed as a matter of considerable urgency. Given the complexity of the background to the case, however, I found it necessary to reserve my judgment after I had heard over three hours of wide-ranging submissions from junior counsel on each side (Mr Christopher Brockman for Mr Aidiniantz, and Mr Tony Beswetherick for the Company).
One advantage of my reserving judgment for a short period is that it enabled counsel (at my request) to reach agreement, for the purposes of the present application only, on a factual chronology setting out the background to the proceedings. I was provided with this document during the afternoon of 7 October. Since an understanding of the background is in my view essential in order to place the application in its wider context, and to inform consideration by the court of exercise of its powers under the relevant rules, I will now summarise the background facts, drawing for this purpose on the document produced by the parties.
The background facts
Mr Aidiniantz is a director of Rollerteam Limited ("Rollerteam") which owns a freehold property at 239 Baker Street, London, the site of the Museum. He is also a director of The Sherlock Holmes Museum Limited and Sherlock Holmes Limited (together with Rollerteam, "the Museum Companies").
Mr Aidiniantz caused the Company to be incorporated in July 2004. Immediately thereafter, the Company was granted a right by Rollerteam to receive admissions income from the operation of the Museum, subject to the deduction of various items of operating expenditure. This right was terminated by Rollerteam on or about 7 September 2012. The Company is a not-for-profit company and was incorporated to take the benefit of a VAT cultural exemption scheme.
Various sets of proceedings were begun in 2012 and 2013 involving Mr Aidiniantz, the Museum Companies, Grace, and three of his half-siblings, namely Jennifer, Stephen and Linda. In summary:
(1) On 15 October 2012, Rollerteam brought a claim against Linda, Jennifer and Stephen in respect of the sum of £175,000 alleged to have been taken from Rollerteam's bank account by Linda.
(2) On 14 December 2012, the Company began proceedings in the High Court under case number HC2012E04866 against Mr Aidiniantz and the Museum Companies ("the 2012 Company Proceedings"). In these proceedings, the Company alleged that it was entitled to the fees for entrance to the Museum and that a large sum of money had been misappropriated from that fee income by Mr Aidiniantz, either in cash or through the Museum Companies. Among other relief, the Company claimed an account of the fee income to which it said it was entitled.
(3) On 15 March 2013, Grace brought a claim against Mr Aidiniantz and Rollerteam claiming a declaration that she owned the entire share capital of Rollerteam.
(4) On 5 February 2013, Linda brought proceedings against Mr Aidiniantz for possession of 1 Albion Mews, London W2 ("1 Albion Mews"), a property owned by Linda in which Mr Aidiniantz resided.
By a consent order dated 29 May 2013 ("the Consent Order"), the 2012 Company Proceedings were brought to an end. The Consent Order was entered into as part of a package of settlements of the various sets of proceedings that was principally negotiated by Mr Aidiniantz, Linda and (to a lesser extent) Jennifer. Two other consent orders were made in relation to the proceedings brought by Grace and Rollerteam, on 19 April and 29 May 2013 respectively.
The Consent Order was in Tomlin form. Paragraphs 1 and 2 dealt with the discharge of the freezing injunction which the Company had obtained against Mr Aidiniantz and the Museum Companies earlier in the proceedings, and paragraph 3 provided that monies totalling £535,000 which...
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