Patley Wood Farm LLP v Kristina Kicks
| Jurisdiction | England & Wales |
| Judge | Paul Matthews |
| Judgment Date | 25 November 2022 |
| Neutral Citation | [2022] EWHC 2973 (Ch) |
| Docket Number | Case Nos: 166 and 167 of 2015 |
| Court | Chancery Division |
[2022] EWHC 2973 (Ch)
HHJ Paul Matthews
(sitting as a Judge of the High Court)
Case Nos: 166 and 167 of 2015
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
William Day (instructed by Moore Barlow LLP and Stewarts Law LLP) for the Applicants
Rowena Page (instructed by Gateley Legal) for the Respondents
Alexander Learmonth KC (instructed by Direct Access) for Mrs Nihal Brake and Mr Andrew Brake
Hearing date: 16 November 2022
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 judgment will be handed down by the Judge remotely by circulation to the parties or representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10:30 am on 25 November 2022.
Introduction
On 16 November 2022 I heard an originating application within the bankruptcies of Mrs Nihal Brake and Mr Andrew Brake (“the Brakes”) for an order under the Insolvency Act 1986, section 303(1), directing the respondents, the Brakes' current trustees in bankruptcy, to apply to be joined into, and to take certain other steps in relation to, proceedings currently pending in the Court of Appeal between the Brakes and the third applicant, The Chedington Court Estate Limited (“Chedington”). These proceedings are referred to as the “Eviction Proceedings”, and are concerned with a property called West Axnoller Cottage (“the cottage”). On 17 November 2022, I announced my decision to allow the application. However, I said that I would put my reasons in writing as soon as possible, given that the pending proceedings required any application for joinder to be made by 21 November 2022. (The period has since been extended.) These are those reasons.
The first applicant (“PWF”) is a corporate vehicle owned and directed by the second applicant (“Mrs Brehme”). They are both creditors of the Brakes, together accounting for about 60% of the total debts owed by the Brakes in their bankruptcies. In 2014 PWF obtained a charging order over any beneficial interest that the Brakes might have in the cottage. The Brakes were adjudicated bankrupt in 2015, and discharged automatically a year later. Over the last three years, I have given a number of judgments in litigation concerning the Brakes and Dr Geoffrey Guy and various entities controlled by him (“the Guy Parties”), including Chedington. In some of them I have set out the background to the litigation. The interested reader may care to look at Brake v The Chedington Court Estate Ltd [2022] EWHC 366 (Ch), [4]–[19], as a very general introduction.
I have so far tried four actions between the Brakes and the Guy Parties. In all four I found in favour of the Guy Parties. In two of them (“the section 283A Proceedings” and the “Possession Proceedings”), permission to appeal was refused by the Court of Appeal. In two, permission was given. In one of those two (the “Documents Proceedings”), the full appeal was heard and dismissed. In the fourth case (the Eviction Proceedings) the appeal was allowed on 10 October 2022 by the Court of Appeal on one ground, but dismissed on another: [2022] EWCA Civ 1302. The resolution of that appeal has however been held up pending the consideration of written submissions on what remedy, if any, is appropriate in the circumstances. The present application is concerned solely with that appeal.
I should mention that, in addition to these other pieces of litigation, there were also two originating insolvency applications brought by the Brakes, concerned with (i) the Brakes' bankruptcies, and (ii) the liquidation of the partnership between the Brakes and PWF. I struck out most of the former and all of the latter for lack of standing. My decision on the Bankruptcy Application was reversed in part by the Court of Appeal, though my decision on the Liquidation Application was upheld: Brake v Lowes [2020] EWCA Civ 1491, [2021] Bus LR 577, CA. That part of the Court of Appeal's decision reversing my decision on the Bankruptcy Application was itself appealed to the Supreme Court. The hearing has now taken place, and the parties are awaiting judgment.
This application
The evidence filed on the present application includes an exhibit to the application notice itself, a witness statement with exhibit from the first respondent (opposing the application) and a witness statement (with exhibit) from the first and second applicants' solicitor. I may say that there was no permission for the latter statement. It gave background information which was already known to the parties and to me, and also exhibited some photographs of the condition of a quite different property previously occupied by the Brakes, known as Axnoller House. As I say later, these photographs have little probative value on this application.
In the application notice, the applicants' grounds include the following:
“4. On 25 February 2022, the Judge handed down judgment following trial in the Cottage Eviction Proceedings, dismissing the claim ( [2022] EWHC 366 (Ch)).
5. By order dated 7 April 2022, Lord Justice Arnold gave the Brakes permission to appeal on three grounds … . Ground 3 of the appeal challenged the Judge's refusal to grant a possession order to the Brakes in respect of the Cottage. The hearing of the appeal was listed for 26 July 2022.
6. On 25 July 2022, the Trustees' solicitors [Gateley LLP (“Gateley”)] wrote to the Court of Appeal as follows …:
“We understand that if the Brakes are successful in the upcoming Appeal that the possibility exists that they may seek an order for possession of the Cottage. Taking into consideration that our clients are not a party to these proceedings, if the Brakes seek an order in those terms we would be grateful if the proceedings would be adjourned so as to afford our clients an opportunity to consider their position and potentially be heard in relation to such claim. In this regard, you will no doubt appreciate that it would not be appropriate for an order to be made without our clients first being given that opportunity.”
7. … . It was common ground before the Court of Appeal that the Brakes had no beneficial interest in the Cottage and held their possessory interest subject to a bare trust for their trustee in bankruptcy (then Mr Swift, now the Trustees). The argument focused on whether Mr Swift had been entitled to authorise Chedington to dispossess the Brakes of the Cottage on 18 January 2019 without a Court order.
8. On 10 October 2022, the Court of Appeal handed down judgment ( [2022] EWCA Civ 1302) allowing the appeal on ground 1 of the appeal and dismissing it on ground 2 of the appeal. As to ground 3, the Court said:
“31. It was common ground on this appeal that we should deal only with the first two grounds of appeal. If the Brakes were entitled to damages that should be remitted to the High Court; and any question of an order for possession should be dealt with by way of consequential argument.”
Having allowed ground 1:
“83. It does not, however, follow from that that the Brakes are necessarily entitled to any further relief; but as I have said the parties may wish to make further submissions on that question.”
In the result:
“102. As requested by the parties, we will deal with the question whether any further relief is justified as a consequential matter. We will consider the parties' submissions on the points in writing; and if necessary we will reconvene for a further hearing. I would invite the parties to agree a timetable for the filing of written submissions. It may also be the case that the current trustees in bankruptcy apply for permission to intervene.”
9. By order dated the same day …, the Court of Appeal directed ( inter alia) that, by 4pm on Monday 21 November 2022, the Trustees shall (if so advised) make an application to join the proceedings (the Application). At the same time, the Trustees shall file and serve written submissions and/or a witness statement setting out their position on the question of any further relief in these proceedings sought by the Appellants (the Brakes).
10. By a letter dated 21 October 2022, Mrs Brehme wrote to the Trustees noting the prejudice to the bankruptcy estates that would arise if the Brakes obtained a possession order for the Cottage … . She said:
“As the largest creditor in the bankruptcy therefore, I request that you oppose any efforts made by the Brakes to obtain an order for possession and that you make an application in the Court of Appeal to obtain an order for you to be in possession.”
11. On 28 October 2022, Ms Kicks responded on behalf of the Trustees that they considered that there was “no equity available to the Bankruptcy Estates in the Cottage and therefore no asset capable of realisation for the benefit of the Bankruptcy Estates' creditors” … . She continued:
“In such circumstances, we have no positive duty to intervene in the [Cottage Eviction Proceedings]. It is very clearly not in the interests of the creditors of the Bankruptcy Estates for us to do so. Such an intervention will only increase costs in the Bankruptcy Estates without any possibility of a return to them and therefore cannot be justified.”
12. On 31 October 2022, the Brakes filed submissions in the Cottage Eviction Proceedings … confirming that they sought an order for possession and offering an undertaking to the Trustees by email (and the Court) to give vacant possession...
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Patley Wood Farm LLP v Kristina Kicks
...AND PROPERTY COURTS IN BRISTOL, INSOLVENCY AND COMPANIES LIST (ChD) His Honour Paul Matthews sitting as a Judge of the High Court [2022] EWHC 2973 (Ch) Royal Courts of Justice Strand, London, WC2A 2LL Andrew Westwood KC and Rowena Page (instructed by Gateley Legal) for the William Day (inst......