Re Majory, A Debtor. ex parte the Debtor v F. A. Dumont Ltd
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS |
| Judgment Date | 17 March 1955 |
| Judgment citation (vLex) | [1955] EWCA Civ J0317-6 |
| Date | 17 March 1955 |
| Court | Court of Appeal |
[1955] EWCA Civ J0317-6
The Master of the Rolls (Sir Raymond Evershed)
Lord Justice Jenkins and
Lord Justice Romer
In The Supreme Court of Judicature
Court of Appeal
MR. G. E. DUVEEN, instructed by Messrs. Isadore Goldman & Son, appeared for the Appellant (Debtor).
MR. R. O. C. STABLE, instructed by Messrs. Rustion, Clark & Rusion, appeared for the Respondents (Petitioning Creditors).
The judgment I am about to read is the judgment of the court. Upon this appeal by the debtor against a receiving order made against him by Mr. Registrar Bowyer on the 7th December, 1954, the only point raised on the debtor's behalf in this court (as it was before the learned Registrar) was that the petitioner creditor, having been guilty of "extortion" or attempted "extortion" in regard to the judgment debt obtained by him against the debtor, is now disqualifiedfrom obtaining a receiving order founded upon that judgment debt. The judgment was obtained on 9th September, 1954, and was for a sum of £800 for money lent plus £12.15s. for costs. There was a question raised in the court below as to a further sum of £40, payment of which, it was suggested, the petitioning creditor had attempted improperly to extort from the debtor. It was, however, admitted before us that the debtor had at all material times in fact owed this further sum to the petitioning creditor. It was not, therefore, argued in this court that there had been any extortion in regard to the £40 and we can henceforth disregard it. The extortion contended for by Mr. Duveen on the debtor's behalf was exclusively related to the debtor's promise to pay, or the petitioning creditor's attempt to obtain, in the circumstances late specified, a further sum of £8. 15s.0d. for costs, representing the difference between the full amount of legal costs which the petitioning creditor had incurred in obtaining his judgment and the amount of £12. 3s.0d. the party and party costs awarded by the judgment.
Since, on the view which we take, this case, as every other like case, must depend upon its own particular facts, it is necessary to relate those facts fully and precisely.
The proceedings in which the judgment was obtained had been initiated by specially indorsed writ, issued on 9th August, 1954, in the Queen's Bench Division of the High Court, claiming, as we have said, the sum of £800 for money lent and costs. The writ was served on the debtor on 20th August. The next event was that on 31st August the debtor, of his own motion, called upon the petitioning creditor's solicitors and saw a Mr. Farrell, a managing clerk in their employ. What occurred at that interview is narrated in paragraph 3 of Mr. Farrell's affidavit made in the present proceedings, and there has been no challenge of the accuracy of Mr. Farrell's evidence. We attach, as will later appear, great importance to this evidence, and therefore read paragraph 3 of the affidavitsubstantially in full. It ran as follows; "On the 31st August, 1954, the debtor called at 14, Norfolk Street and was seen by so. He informed so that he wished to discuss the question of his indebtedness to the petitioning creditor. He admitted to me that although only 5800 was claimed in the writ of summons 1954 F. Bo. 1354, with which he had been served on the 20th August, 1954, he owed a total of £840 to the petitioning creditor. He informed me that he wished to pay not only the 5800 claimed on the writ, but the debt of £40 in addition thereto. He told me that he was not able to pay £840 down, but wished to pay the debt instalments. He said that a company, Hingeless Products Limited, of which he was a director and whose shares were all held by either himself or his wife was entitled to receive from another company, Thurloe Holdings Limited, commission which was payable to Hingeless Products monthly, in respect of sales of Hingeless spectable frames. He told me he did not know precisely the amount that would be paid in the coming months because the amount varied according to the sale of the frames. He proposed that he should arrange for Thurloe Holdings to pay to the petitioning creditor the money that would otherwise be paid to Hingeless Products as commission and assured me that Hingeless Products would be willing to agree to this arrangement. I told the debtor that before my firm could advise their clients regarding his proposal, enquiries into the standing of the companies concerned would have to be made and into the agreement subsisting between Hingeless Products and Thurloe Holdings and that, if my firm's clients were to allow him discharge his indebtedness my instalments, they might require that he discharge in addition to his debt of £840 all the costs that the petitioning creditor had had to in our over the matter. The debtor said that he would be willing to pay these costs if the petitioning creditor required it. I then asked his to puthis proposal in writing and send it to my firm. He agreedto do this and said he would produce: (a) The agreement under which Thurloe Holdings paid in commission to Hingeless Products: (b) A letter from Hingeless Products authorising Thurloe Holdings to supply information to the petitioning creditor, and (c) A letter signed by all the directors of Hingeless Products intimating that they would agree to assign to the petitioning creditor the fall benefit of the agreement between Hingeless Products and Thurloe Holdings until such time as the indebtedness of the debtor together with the costs had been satisfied. I said that my firm would take instructions from their clients as soon as they were in a position to advise them on the matter, but that my firm's instruction did not permit than to delay issuing a summons for Judgment under Rules of the Supreme Court, Order XIV"
It will be observed that the debtor's proposal was that the amount owing by his should be paid by instalments and that the petitioning creditor should accept certain sums to which the Hingeless Products Company were said to be from time to time entitled in or towards satisfaction of the instalments. It will be observed further that the debtor, upon bring informed that the petitioning creditor "might" require an indemnity as to the costs to which they had been put as a term of their agreeing to accept payment in the way proposed (without any interest), at once expressed himself as willing to pay such costs It will be observed finally that no mention of bankruptcy proceedings was made from first to last, A summon for judgment had not then been issued, but Mr Farrell informed the debtor, at the end of the interview, thathis last motions required his to proceed to judgment in any event.
On the following day the debtor wrote to the petitioning creditor's solicitors as follows: "With reference to our interview of yesterday regarding the settlement of your clients claim I confirm that I have made the following proposal.
I shall make all arrangements you require with Messrs. Thurloe Holdings Limited, of 15, Whitehall, S.W 1 that all future payment due in respect of commission regarding the Hingeless spectacle frames shall be made to you direct until the full amount of your clients claim and costs are fully met. In consideration of the above you will be good enough to let me have your undertaking to discontinue further proceedings. I trust that my proposal will receive your favourable considerate and on your acceptance I shall be pleased to supply further details and produce all necessary documents".
It will be noticed that the debtor did not then produce the documents he had been asked to produce but that he expressed in his letter his conditional readiness to "produce all necessary documents".
On 2nd September the summons for Judgment was issued; and on the same day the petitioning creditor's solicitors wrote as follows to the debtor. Having regard to its importance this letter must also be read at length. It will be noticed that bankruptcy proceedings are twice referred to: "We have considered your letter of 1st September and the proposals contained wherein whereby it is your intention to discharge your indebtedness to our client company. We must take it quite clear at this stage that there is no possibility of discontinuing the proceedings and that our instructions are to obtain Judgment against you without further delay and that is the course which we are pursuing. If, when judgment has been obtained, we are in a position to submit a reasonable proposal to our clients whereby the Judgment may be satisfied without recourse to bankruptcy proceedings we are, of course, prepared to take instructions thereon.
"Our instructions at this stage are absolutely specific and unless we have a really satisfactory alternative to submit, we see no reason why we should trouble our clients for any variation. Nevertheless, we are prepared to explore suchproposals as you may care to make on the distinct understanding that our so doing will not prejudice our clients' eventual decision in any way whatsoever. The statements in your letter under reference are not sufficiently definite for us to advise our client on the position and, in order that we may do so, will you please let us have the following at your earliest convenience.
"1. The original or a certified copy of the existing agreement between Hingeless Products Limited and Thurloe Holdings Limited. In the event of your sending us the original, we undertake its safe custody and return to you in due course.
"2. A letter of authority from Hingeless Products Limited addressed to Thurloe Holdings Limited requesting and authorising them to supply us with such information relating to the agreement as we may reasonably require.
"3 A letter signed by all the...
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...Bridge, L.J., cited the observations of Lord Evershen M.R. in Re a debtor (No. 757 of 1954), ex parte the debtor v. F.A. Dumont Ltd. , [1955] 2 All E.R. 65 at 78, [1955] Ch. 600 at 623: 'The so-called "rule" in bankruptcy is, in truth, no more than an application of a more general rule that......