Rio Properties Inc. v Gibson Dunn & Crutcher and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Jonathan Parker,Mr Justice Laddie |
| Judgment Date | 29 July 2004 |
| Neutral Citation | [2004] EWCA Civ 1043 |
| Docket Number | Case No: A2 2003 2258 and 2259 CCRTF |
| Court | Court of Appeal (Civil Division) |
| Date | 29 July 2004 |
[2004] EWCA Civ 1043
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT
MANCHESTER DISTRICT REGISTRY
HHJ MADDOCKS
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Justice Jonathan Parker and
Mr Justice Laddie
Case No: A2 2003 2258 and 2259 CCRTF
Mr David Uff and Miss Louise Quigley (instructed by Messrs Pannone & Pannone) for the Appellants
Mr Victor Joffe QC (instructed by Messrs Bermans) for the Respondent
INTRODUCTION
The primary issue on this appeal is whether it is proper for the court, while a bankruptcy petition is pending, to appoint someone other than the official receiver as interim receiver and manager of the debtor's property.
In the period between the making of the July 2002 order and the making of the bankruptcy order Mr Buchler applied (without notice) for, and was granted, orders for disclosure of information relating to the bankrupt's affairs. The orders were made against Messrs Gibson Dunn & Crutcher ("Gibsons"), solicitors acting in the administration of the estate of the bankrupt's late father, in which the bankrupt was entitled to a share. The partner in Gibsons with responsibility for that matter was Mr Anthony Bonnano.
On 7 August 2002, immediately prior to making the bankruptcy order, the judge made two further orders. First, he made an order purporting to extend Mr Buchler's appointment as interim receiver and manager pending the appointment of a trustee in bankruptcy. Secondly, he made a further disclosure order against Gibsons. This last-mentioned order was varied by a further order made on Mr Buchler's application on 9 August 2002 (that is to say, two days after he had been appointed trustee) .
On 29 August 2002 Gibsons and Mr Bonnano applied for (among other things) a declaration that the July 2002 order was a nullity, and that in consequence all subsequent orders (including the disclosure orders) made on the application of Mr Buchler purportedly acting as interim receiver and manager under the July 2002 order were also nullities. The application was heard by HHJ Maddocks.
Before the judge, it was contended by Mr David Uff of counsel (for Gibsons and Mr Bonnano) firstly that there was no jurisdiction to make the July 2002 order. In the alternative, Mr Uff contended that if there was jurisdiction to make the July 2002 order, the exercise of the jurisdiction in the circumstances of the instant case was irregular, such that the applicants were entitled as of right ( ex debito justitiae) to have it set aside. In support of this alternative contention, Mr Uff (citing the decision of this court in Parker v. Camden LBC [1986] Ch 162, to which I shall return in due course) submitted that the provisions of the Insolvency Act 1986 ("the 1986 Act") relating to the appointment of the official receiver as interim receiver of a debtor's property, and in particular section 286(1) of the 1986 Act, meant that only the official receiver could be appointed interim receiver; and that for the court to exercise its discretion to appoint someone else would be an improper exercise of its discretion.
Mr Victor Joffe QC (for Rio) submitted that the court had jurisdiction to make the July 2002 order under and by virtue of section 37(1) of the Supreme Court Act 1981. As to the alternative contention that, even if there was jurisdiction, the July 2002 order was irregular, Mr Joffe submitted that the July 2002 order was justified in the particular circumstances of the instant case. He referred the judge to evidence that Rio feared that the bankrupt was in the process of dissipating his assets in the United Kingdom in anticipation of the making of a bankruptcy order (the petition was due to be heard on 29 July 2002) . He submitted that steps needed to be taken as a matter of extreme urgency to stop the process of dissipation; and that the official receiver, if appointed interim receiver, could not be expected to act with the same degree of speed as an experienced licensed insolvency practitioner such as Mr Buchler.
By his order dated 7 November 2002 HHJ Maddocks dismissed the application.
The judge began his judgment by setting out the relevant statutory provisions. Turning next the issue of jurisdiction, he accepted Mr Joffe's submission that the court had the requisite jurisdiction under section 37(1) of the Supreme Court Act 1981. There is no appeal against that part of his judgment.
Addressing Mr Uff's alternative contention, the judge, after referring to passages in the judgments of Sir John Donaldson MR, and Browne-Wilkinson and Mustill LJJ in Parker v. Camden LBC, continued (in paragraphs 14 and 15 of his judgment):
"14. So here, it can be said that the court should not ordinarily appoint as interim receiver someone other than the Official Receiver in accordance with section 286 [of the 1986 Act]. That, in my view, is a correct approach. The court should not lightly depart from the procedure laid down by [the 1986 Act].
15. Turning to the present facts, however, the circumstances were these. The debtor was a person who was or had been a person of considerable wealth and substantial assets. Those assets appeared to be largely situate abroad and sheltered behind off-shore companies. [Rio's] debt at £1.8million was substantial. There was evidence that the debtor was seeking to place his assets beyond the reach of his creditors. Overall, I think it was a case in which, exceptionally, an order for the appointment of an independent insolvency practitioner under the general jurisdiction was appropriate and justified."
The judge accordingly dismissed the application. He did not deal separately with the disclosure order dated 2 August 2002.
Gibson and Mr Bonnano now appeal, with permission granted by the judge on 5 June 2003. Their original Appellant's Notice raised both the issues which had been argued before the judge (that is to say both the jurisdiction issue and the irregularity issue), but by an amended Appellant's Notice dated 29 April 2004 they have limited their appeal to the irregularity issue.
In granting permission to appeal on both issues, the judge said that the delay which had taken place following the making of the July 2002 order was due to administrative error. Further delay has since occurred, due to confusion (again caused, it would appear, by administrative error) as to whether when he made the July 2002 order the judge was sitting in Stockport County Court or the High Court, Manchester District Registry – a fact which (it was thought) might have had some relevance to the jurisdiction issue.
THE PROCEEDINGS
It is convenient at this stage to set out in more detail the chronology of the proceedings leading to the making of the bankruptcy order, and of the proceedings thereafter.
The hearing of the bankruptcy petition began before the judge on Monday 29 July 2002. In the course of the hearing on that day Mr Joffe sought, and the judge granted, the disclosure order of that date. The hearing concluded on the following day, Tuesday 30 July 2002, when the judge indicated that he would deliver judgment on Friday 2 August 2002. On Friday 2 August 2002, after delivering judgment but before making the bankruptcy order, the judge, at Mr Joffe's invitation, made the two further orders mentioned above.
Mr Joffe tells us (and I of course accept) that his invitation to the judge to extend Mr Buchler's appointment as interim receiver until a trustee in bankruptcy was appointed was made in the expectation that Mr Buchler's appointment as trustee would follow as a matter of urgency on Monday 5 August 2002 (in fact, as we now know, it was not made until Wednesday 7 August 2002), and in the light of his client's continued concern that the debtor was in the process of divesting himself of his assets within the United Kingdom and/or of removing them out of the jurisdiction, and that he would attempt to continue that process over the forthcoming weekend.
The disclosure order dated 2 August 2002 ordered Gibsons to deliver to Mr Buchler by 12 noon on Tuesday 6 August 2002 all files and documents in their possession custody or power relating to matters in which they had acted for the bankrupt and all files and documents relating to the bankrupt's share in his late father's estate.
The orders made on Friday 2 August 2002 were served on Monday 5 August 2002. On Tuesday 6 August 2002 the appellants applied for, and were granted, a stay of the disclosure order made on the previous Friday until after Friday 9 August 2002. Accordingly nothing had been done by the appellants pursuant to the disclosure order dated 2 August 2002 by the time of Mr Buchler's appointment as trustee on Wednesday 7 August 2002.
At the hearing before the judge on Friday 9 August 2002 Gibsons and the bankrupt were separately represented by counsel, and leading counsel (not, on this occasion, Mr Joffe) appeared once again for Mr Buchler, by this time in his capacity as trustee. In the result, on undertakings by Gibsons to preserve all documentation referred to in the order dated 2 August 2002 and by Mr Buchler to preserve all documentation delivered up to him by Gibsons under that order, it was ordered that the order dated 2 August 2002 "do continue in full force and effect" until 12 noon on Tuesday 13 August 2002. It also required Gibsons to serve on Mr Buchler a witness statement scheduling the relevant documents by 12 noon on Monday 19 August 2002.
THE RELEVANT STATUTORY PROVISIONS
Section 37(1) of the Supreme Court Act...
To continue reading
Request your trial
-
Rio Properties Inc. and David Julian Buchler v Gibson Dunn & Crutcher and Anthony Bonanno
...me to take the background facts from the judgment of this court (Jonathan Parker LJ and Laddie J) given on 29 July 2004 and reported at [2004] 1 WLR 2702. This judgment was given on appeal from the earlier order of HHJ Maddocks in the same proceedings. On that appeal the primary issue was ......