Russell Crumpler and Christopher Farmer (Joint Liquidators of Peak Hotels and Resorts Ltd) v Candey Ltd
| Jurisdiction | England & Wales |
| Judge | Davis-White |
| Judgment Date | 01 June 2020 |
| Neutral Citation | [2020] EWHC 1365 (Ch) |
| Docket Number | Case No: CR-2016-001012 |
| Court | Chancery Division |
| Date | 01 June 2020 |
[2020] EWHC 1365 (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 (instructed by Candey LLP) for the Respondent
Hearing dates: 19 March (reading), 20 March 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.
HIS HONOUR JUDGE Davis-White QC (SITTING AS A JUDGE OF THE HIGH COURT)
His Honour Judge Davis-White QC:
Introduction
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 Act 1986. The applicants (the “Liquidators”) rely upon s245 Insolvency Act 1986 in respect of a floating charge which the respondent (“Candey”) says secures its fee for legal services provided to Peak Hotels and Resorts Limited (“PHRL”). Section 245 invalidates, in certain circumstances, a floating charge save to the extent that value is thereafter conferred by the charge holder on the company. I decided that the value of legal services provided by Candey under a fixed fee agreement (the “FFA”), was to be ascertained on a time cost basis, rather than by reference to what might have been charged on some form of contingency basis. I also made various determinations with a view to reaching a figure for that value. That included determining the appropriate hourly rates that were to be used in carrying out the valuation process and identifying certain work that could properly be treated as conferring value on PHRL under the FFA and certain work that could not.
Following the handing down of the December 2019 Judgment, Candey raised two points. The first was in relation to my ruling regarding the question of whether Candey conferred relevant value under the FFA by work that it says that it properly undertook, post liquidation, on seeking further funding for PHRL. The second point was in relation to a matter that was simply not canvassed at all in the hearing before me. That related to the question of disbursements paid by Candey which, again, was said to be value conferred by Candey as part of the legal services properly provided by it to PHRL. In addition, an outstanding question was that of costs in relation not just to the hearing resulting in the December 2019 Judgment but earlier hearings too.
The parties agreed the form of Order that gave effect to my judgment of 20 December 2019. It determined that the value of the services provided by Candey under the FFA, and secured by the relevant floating charge, was some £1,086,755 but that this was without prejudice to the following questions raised by Candey:
(1) whether Candey's floating charge also secures disbursements (and if so in what sum) (the “Disbursements Issue”), and
(2) whether Candey's costs in connection with the obtaining of funding for PHRL in the period from 8 February 2016 to 22 February 2016 are secured by Candey's floating charge (the “Funding Costs Issue”).
In addition, I have before me the questions of the incidence and basis of costs, whether there should be interest payable on costs and whether there should be a payment on account (and if so in what amount).
Representation
As before, Ms Toube QC, leading Mr Robins, appeared for the Applicant liquidators. Mr Saoul QC appeared for Candey. He had been assisted by Mr Stephen Ryan, who had been party to the Skeleton Argument for Candey. Mr Ryan was unable to attend the hearing before me on this occasion. I am grateful to each of Counsel for their assistance and for their continued attempts to agree issues where possible. Following the hearing I received further written submissions on the question of costs as recorded below.
Given the hearing took place in the context of the Coronavirus epidemic, the parties agreed that it should take place by way of Skype video call. I am grateful to all the parties for their co-operation on this issue and especially the solicitors for doing a lot of the necessary organisational work. I should also record my gratitude for the creation of some four core bundles for the hearing which made the running of the hearing more efficient. I also apologise for the delay in producing this judgment but, as I hope the parties will appreciate, the last months have not been ordinary times.
The Disbursements Issue
The position of Candey was that the floating charge secured not only the fixed fee (subject to s245 Insolvency Act 1986) but also disbursements and that the Valuation Issue should be determined on the basis that separate value should be attributed to disbursements in addition to the value attributed to the work in fact carried out by Candey. By letter dated 31 January 2020, a schedule setting out disbursements totalling £68,920 (plus VAT of £2,869) was provided.
As regards this, the position of the Liquidators was that:
(1) it was now too late to raise this issue;
(2) disbursements are not secured by the Floating Charge;
(3) as regards the disbursements claimed: (a) some are liabilities of the PHRL and not Candey and therefore are not disbursements for which Candey is liable; (b) certain sums had been or would be paid by the liquidators as an expense of the Liquidation and in relation to those the issue raised was academic; and (c) there was insufficient information regarding certain sums. Further, VAT was claimed but the Liquidators said that it was not payable by Candey. It was also disputed that the value conferred by Candey should include interest.
Shortly before the start of the hearing before me, the only issue for me to decide was whether or not disbursements of some £18,936 (owed to one creditor) should be included as part of the value conferred by Candey for the purposes of s245 Insolvency Act 1986. By the time of the hearing, it had been agreed that that issue did not arise either. Candey accepted that the Liquidators had or would be paying the relevant disbursement as an expense of the liquidation and so the position under the charge regarding disbursements had become academic.
The Funding Costs Issue
As originally formulated Candey asked me to confirm whether or not I intended by my December 2019 Judgment to allow as part of the value conferred on PHRL only those costs of Candey attributable to obtaining funding up to the date of liquidation and not thereafter and, more particularly, whether I intended to exclude any work undertaken by Candey in obtaining funding between the date of liquidation (8 February 2016) and a letter from the Liquidators to Candey dated 22 February 2016 which, in express terms, stated that work should not be carried out for PHRL without their express authority. It was accepted that no express authority after that date was given to carry out work in seeking funding.
The basis of Candey's case was that it was said that I had altered my position between circulating a draft of the judgment of 20 December 2019 and handing down the final version on 20 December 2019 and “clarification” was sought in light of the evidence that had been put before me.
The matter having been expressly reserved by an order agreed between the parties, it seems to me that I am entitled to revisit the matter in the same manner that I would have been entitled to revisit it prior to the drawing up of any order giving effect to my judgment. I consider that I am still able to alter my judgment or, if I remain of the view expressed in the December 2019 Judgment, then in any event I can and should amplify my reasoning.
At the hearing in March I was taken through a number of documents that I had not been taken through before and/or which had not been in evidence before. Greater detail was explained and the parties were able to reach agreement regarding various factual matters.
In summary, I remain of the view (as set out in the December 2019 Judgment) that Candey's efforts post liquidation to broker funding for PHRL to enable, at the least, the London proceedings to continue was a course of conduct not authorised by the Liquidators and which accordingly does not fall to be valued as part of the valuation exercise under s245 IA 1986 (see paragraph [241]). However, this is subject to one caveat. There was a short...
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