Nihal Mohammed Kamal Brake v Duncan Kenric Swift (as trustee of the estates of Nihal Brake and Andrew Brake)
| Jurisdiction | England & Wales |
| Judge | Paul Matthews |
| Judgment Date | 11 May 2020 |
| Neutral Citation | [2020] EWHC 1156 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: 166 and 167 of 2015 |
| Date | 11 May 2020 |
[2020] EWHC 1156 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN BRISTOL
INSOLVENCY AND COMPANIES LIST (ChD)
Bristol Civil Justice Centre
2 Redcliff Street, Bristol, BS1 6GR
HHJ Paul Matthews
(sitting as a Judge of the High Court)
Case No: 166 and 167 of 2015
Stephen Davies QC (instructed by Seddons LLP) for the Applicants
Andrew Sutcliffe QC and William Day (instructed by Stewarts Law LLP) for the Second Respondent
The First Respondent was not present or represented
Hearing date: 7 May 2020
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.
INTRODUCTION
On 7 May 2020, I heard two applications made by the applicants (“the Brakes”), relating to a trial listed to start on 13 May 2020 (although in fact it will now begin on 14 May 2020). One was an application by notice dated 4 May 2020, asking me to recuse myself from trying the matter. The other was an application, by notice also dated 4 May 2020, asking for a stay, or alternatively an adjournment, of the trial either generally or pending final determination of appeals against earlier decisions of mine in this litigation. After hearing the arguments on both sides, I gave my decision, dismissing both applications there and then, so that preparation for the trial was not affected. But I also said that I would give my reasons in writing as soon as possible. These are those reasons.
Background to the applications
The background to this matter is complex, and is dealt with in a number of earlier judgments, of both Mr John Jarvis QC, sitting as a deputy judge, and myself. Some of these are available on BAILII under neutral citation numbers [2019] EWHC 3332 (Ch), [2020] EWHC 537 (Ch), [2020] EWHC 694 (Ch), and [2020] EWHC 1071 (Ch). In the hope of making this judgment more intelligible for those who have not time to look at those decisions, I will simply say this (although it is by no means a substitute for the full procedural history). The Brakes became bankrupt following the breakup of a partnership with a third party. The first respondent (Mr Swift) was their trustee in bankruptcy. The partnership itself went into liquidation. There were disputes about many aspects of the bankruptcies and the liquidation. In 2019 Mr Swift had entered into a transaction with the liquidators in relation to a property called West Axnoller Cottage (“the cottage”). The second respondent (“Chedington”) entered into back to back transactions with Mr Swift in order to acquire the cottage and a strip of land adjacent. Chedington is an investment vehicle for a Dr Geoffrey Guy, and he is the moving spirit behind that company.
The Brakes allege that Chedington and Mr Swift acted collusively, implementing “unlawful arrangements to create the false appearance that Chedington had acquired title to the cottage” (as Mr Christian Smith, their solicitor, puts it at paragraph 4 of his sixth witness statement; he refers to the allegations of such collusive conduct as “the Unlawful Conduct”). Chedington subsequently took possession of the cottage, the Brakes say unlawfully. As well as eviction proceedings against Chedington, on 12 February 2019 the Brakes commenced insolvency proceedings (the “Liquidation Application” and the “Bankruptcy Application”) against both the liquidators and the trustee.
The first purpose of these proceedings was to unwind the disputed transactions (based on the allegations of “the Unlawful Conduct”; Mr Smith calls this unwinding “Reversal”). The second purpose was (as against the trustee) to establish that the Brakes' pre-existing interests in the cottage and the strip revested in them on 12 May 2018 under the Insolvency Act 1986, section 283A, on the basis that they were the Brakes' sole or principal residence at the date of bankruptcy, and the trustee had not sold them three years later (Mr Smith calls this “the Vesting Issue”). In April 2019, by consent, Chedington was joined as second respondent to the proceedings against the trustee, because it claimed to be a successor in title to the trustee. In June 2019 Mr Jarvis QC made an order by consent removing the trustee from office, and another appointing his successors. In December 2019 Mr Jarvis QC gave directions for the trial of these insolvency proceedings before me in May this year.
The strike-out applications
In January this year Chedington applied to strike out the proceedings against the liquidators and most of those against the trustee and itself, on the basis that the Brakes lacked standing to bring them. I heard those applications in March 2020, and acceded to them: I struck out the whole of the Liquidation Application, and most of the Bankruptcy Application, for lack of standing (on application, I gave permission to appeal). The main matter left still to be tried in May, against the trustee and Chedington, was the revesting issue under section 283A. It was agreed by the parties before me on 3 March that what that would entail fell into three sub-issues: (1) whether the Brakes' unvindicated claim in proprietary estoppel to the cottage as against the liquidators was an interest in a dwelling-house within section 283A; (2) whether the strip of land fell within the definition of a dwelling-house within that section; and (3) whether the cottage and strip were the Brakes' sole or principal residence at the date of bankruptcy. By this stage the trustee accepted that, having ceased to hold office, he no longer had any interest in the proceedings, and did not propose to play any active part. His successors as trustees have not applied to be substituted for him.
Judgment of 23 March 2020
On 23 March 2020 I handed down a judgment on further applications made by the Brakes, with which I had been asked to (and did) deal on paper. One of these was an application by notice dated 13 March for a stay or adjournment of the trial. This was sought on the basis of the Brakes' case that Chedington had no valid title to the cottage or the strip, and therefore had no standing to oppose the revesting application. Accordingly, the Brakes said that they should not be put to the expense of a trial at all. Moreover, if the Brakes succeeded in their appeal against my order striking out the rest of their claim against the trustee, their summary judgment application would be revived, and would succeed. And, if on the other hand Chedington failed, they said, it would appeal, which would be pending at the same time as the Brakes' appeals, and this would be procedurally undesirable. I rejected all three submissions. On the first point I held that the question of Chedington's standing could not be dealt with in the way that the Brakes wished,
“by a brief side-wind (and especially not just on the papers) on the way to deciding to stay or adjourn the determination of that issue. It needs a full trial.”
Application of 9 April 2020
At that stage I had not heard much argument, but was envisaging that at the trial Chedington would demonstrate its interest in defending the claim to revesting by proving its title. However, on 9 April 2020 Chedington issued an application notice seeking a declaration that it was not required to prove its title at trial. I considered it briefly (with other matters) at the pre-trial review on 24 April, but decided that more time was needed to deal with it properly (this was also the Brakes' position: see Mr Smith's fifth witness statement at [65]). Rather than wait until the trial, I considered it was better to hear it fully as soon as possible. I heard the application in the morning of 1 May 2020, having had the benefit of full written skeleton arguments in advance. Because of the importance of the matter, I reserved my judgment. I prepared and circulated a draft of my judgment to the parties the next day (Saturday 2 May), which I handed down in final form on Monday 4 May, after incorporating suggestions for amendment from the parties.
Judgment of 4 May 2020
In paragraph 24 of that judgment I said:
“The second respondent was interested (at least in a general, non-technical sense) in [the revesting issue under section 283A] because it claimed as successor in title to the first respondent. If that created another issue to be resolved, that is, the validity and effectiveness of the transactions between the first and second respondents, then that issue would have to be pleaded out and tried so that it could be resolved as rule 19.2 requires. If on the other hand joinder of the second respondent to the Bankruptcy Application did not involve a new issue between the applicants and the second respondent, and was only for the purpose of binding the second respondent to the decision on the revesting issue, then the only issue to be resolved would be that section 283A issue. It may be that Mr John Jarvis QC thought that the answer was the former rather than the latter (although it is fair to say that this was before the strike out application was made). I also thought (but later) that it was the former, and that is one reason why I said what I said in paragraphs 37 and 38 of my judgment of 23 March 2020. The applicants take the same view. But the second respondent submits that the answer is the latter, not the former.”
I then considered the decision of Hunt v Conwy County Borough Council [2015] EWHC 3072 (Ch), which had not previously been cited to me. That was a case where the applicant sought to remove the respondent as...
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