Russell Crumpler and Christopher Farmer (Joint Liquidators of Peak Hotels and Resorts Ltd) v Candey Ltd
| Jurisdiction | England & Wales |
| Judge | Davis-White |
| Judgment Date | 20 December 2019 |
| Neutral Citation | [2019] EWHC 3558 (Ch) |
| Date | 20 December 2019 |
| Docket Number | Case No: CR-2016-001012 |
| Court | Chancery Division |
[2019] EWHC 3558 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
HIS HONOUR JUDGE Davis-White QC
(SITTING AS A JUDGE OF THE HIGH COURT)
Case No: CR-2016-001012
In the Matter of Peak Hotels and Resorts Limited (In Liquidation)
And in the Matter of the Cross-Border Insolvency Regulations 2006
Ms Felicity Toube QC and Mr Stephen Robins (instructed by Stephenson Harwood LLP) for the Applicants
Mr Daniel Saoul QC and Mr Stephen Ryan (instructed by Candey LLP) for the Respondent
Hearing dates: 25 th (reading), 28 th–30 th October 2019
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.
HIS HONOUR JUDGE Davis-White QC (SITTING AS A JUDGE OF THE HIGH COURT)
His Honour Judge Davis-White QC:
Introduction
The issue before me is the value of the legal services actually supplied by the Respondent, CANDEY Limited (“Candey”), to Peak Hotels and Resorts Limited (“PHRL”) on or after 21 October 2015. As I shall explain, that issue has been remitted to this Court by the Court of Appeal. For convenience, I refer to this, as did the relevant order of the Court of Appeal dated 27 March 2019, as the “Valuation Issue”.
The Valuation Issue arises in the context of the application of s245 of the Insolvency Act 1986 to circumstances in which Candey provided legal services to PHRL under a fixed fee agreement (the “FFA”) effectively agreed on 21 October 2015. The fixed fee was some £3.8 million or so. In addition to the FFA, the parties also entered into a Deed of Charge dated 21 October 2015. Under that deed of charge what has, at an earlier stage of this application, been determined by me to be a floating charge over certain assets of PHRL was created in favour of Candey, providing security to Candey for the payment of the liabilities to Candey under the FFA.
The Court has also determined that the charge bites on certain property which is well in excess of the amount of the fixed fee. (As to these matters see my judgment of 23 June 2017 [2017] EWHC 1511 (Ch) (“my earlier judgment”) and the Court of Appeal decision of 16 October 2018 [2018] EWCA Civ 2256.) In summary, the charge was held to extend to sums paid into court, in what have been referred to as the London Proceedings, by way of security for costs and fortification of cross-undertakings. The sums in question totalled some US$10,013,000 and £1,648,000 (the “Court Monies”). It was not disputed that the charge also extended to a sum of some US$1.5 million (plus interest) formerly held on trust for PHRL in an account with Standard Chartered Bank (the “SCB Monies”). The dispute before me regarding the SCB Monies was limited to the question of whether the charge was fixed or floating.
The legal services provided by Candey were in relation to the litigation arising from an ill-fated joint venture to purchase the Aman Group of luxury hotels in 2014 which is described in some detail in my earlier judgment.
PHRL entered liquidation in the British Virgin Islands (the “BVI”) on 8 February 2016. This Court recognised those liquidation proceedings as a foreign main proceeding under Schedule 1 to the Cross-Border Insolvency Regulations 2006 on 24 February 2016.
The current application was issued on 27 September 2016. By it, the BVI Liquidators of PHRL (the “Liquidators”), currently Mr Crumpler and Mr Farmer, the applicants, seek, in effect, relief pursuant to s245 Insolvency Act 1986 (“ IA 1986”) in relation to the charge and FFA.
S245 IA 1986 avoids certain floating charges to a certain extent. In very broad terms four conditions need to be met. First, the company must be in liquidation or administration. Secondly, the floating charge must have been created at a relevant time, that is within a certain period ending with the commencement of the relevant insolvency regime into which the company entered. Thirdly, where the charge was given to a person not connected with the company, the company must then have been insolvent or become insolvent in consequence of the charge. Fourthly, the charge must have been given, and will only be invalid to the extent that it is given, otherwise than for what Professor Goode has called “appropriate new value”. In this case, the appropriate new value is the value of so much of the consideration for the charge as consists of services supplied to the company at the same time as, or after the creation of, the charge (see s245(2)(a) IA 1986). The identification and valuation of those services supplied by Candey is, in effect, the Valuation Issue.
At an earlier stage of this application, I determined that the floating charge meets the first three relevant conditions of s245 IA 1986 that I have identified above (see my earlier judgment which was not appealed on those points). The charge is therefore invalid subject to the proper application of s245(2) to the facts of this case and, therefore, determination of the Valuation Issue.
The Valuation Issue was originally tried by this Court in November 2017. In broad terms, Candey submitted that the relevant value conferred was about £3.8 million, the amount of the fixed fee. The Liquidators submitted that the value was the value calculated on a time costs basis, the time being identified from time sheets prepared by Candey, and applying hourly charging rates to the same. The time sheets in question were provided to the Liquidators in May 2016 (the “Timesheets”). At Candey's applicable charging rates those time costs were estimated to be some £1.2 million. However, the Liquidators asserted that the £1.2 million or so was the maximum value. They submitted that the true value of the services actually supplied was in fact substantially less. This was, they submitted, because Candey's standard hourly rates were in various respects unreasonably high and that some of the work the subject of the Timesheets could not properly be treated as being work carried out by Candey for PHRL.
Having heard oral evidence from experts and on the factual evidence before him, His Honour Judge Raeside QC (sitting as a High Court Judge) determined that the value of the relevant work was the fixed fee amount of about £3.8 million figure (see his judgment of 22 November 2017, [2017] EWHC 3388 (Ch)).
The Liquidators successfully appealed the decision of HH Judge Raeside (see the judgment of the Vice President of the Court of Appeal, Underhill LJ with which the other two Lords Justices agreed: 8 March 2019 [2019] EWCA Civ 345 (the “2 nd Court of Appeal Judgment”)). As I have said, the Valuation Issue has been remitted to the High Court and it is now for me to resolve it, in light of the 2nd Court of Appeal Judgment and the guidance that it contains.
This judgment should be read with my earlier judgment and the 2 nd Court of Appeal Judgment. In this judgment I have, in the main, sought to minimise summarising background matters set out in the two judgments or setting out large excerpts from them in full.
As regards the sums outstanding under the FFA, I should also note that Candey has been reimbursed the entirety of Counsel's fees (to the extent that it paid them) and that in addition, on 7 November 2018, it was been paid by the Liquidators some £643,248.75 together with interest of almost £138,000 in relation to the fixed fee under the FFA.
The sub-issues
A number of sub-issues have been raised before me, briefly they are as follows:
(1) On whom does the burden of proof lie (“ the burden of proof”)?
(2) What is the correct basis of valuation to adopt in this case (“ the basis of valuation”)? In particular, should the valuation be based on a time cost charge basis or on some form of agreement based upon the contingency of there being a success or win (i.e. a damages based agreement, an investment agreement or a conditional fee agreement)?
(3) If the basis of the valuation is to be a time cost basis and if the matter is to be resolved by the Court now:
a. Should the Court determine the whole matter at this stage or only points of principle so that there should be at least one further hearing, and if so what should the nature of such further hearing be (“ Time cost charging: (1) the procedure”)?
b. What hourly rates should be applied (“Time cost charging: (2) hourly rates”)?
c. As regards the time spent, is Candey prevented from relying on a case and evidence contained in witness statements served after expiry of the time laid down by court order for the serving of such statements? The new case/evidence is to the effect that Candey worked for further (substantial) time which is not recorded in the...
To continue reading
Request your trial
-
Candey Ltd v Russell Crumpler and Christopher Farmer (as Joint Liquidators of Peak Hotels & Resorts Ltd ((in Liquidation)))
...on the remitted value of services issue was handed down by HHJ Davis-White QC on 20 December 2019, after the hearing of this appeal ( [2019] EWHC 3558 (Ch)). The judgment set a timetable for computing the value of services and for dealing with consequential matters such as costs early in 2......
-
Candey Ltd v Russell Crumpler
...[2017] EWHC 3388 (Ch) at para 41(2). 11 [2019] EWCA Civ 345 at para [38]. 12 The equivalent of section 247(2)(c) of the BVI Act. 13 [2019] EWHC 3558 (Ch). 14 1974 c 47. 15 Candey Ltd v Crumpler and another [2019] EWHC 282 (Ch). 16 2012 c 10 section 44. 17 [2020] EWCA Civ 26. 18 (1843) 3......
-
Russell Crumpler and Christopher Farmer (Joint Liquidators of Peak Hotels and Resorts Ltd) v Candey Ltd
...Honour Judge Davis-White QC: Introduction 1 This judgment should be read together with my judgment handed down on 20 December 2019, [2019] EWHC 3558 (Ch) (the “December 2019 Judgment”). That judgment dealt with what I there described as the “Valuation Issue” arising under s245 Insolvency A......