Sands v Layne
| Jurisdiction | England & Wales |
| Judge | David Donaldson |
| Judgment Date | 12 November 2014 |
| Neutral Citation | [2014] EWHC 3665 (Ch) |
| Date | 12 November 2014 |
| Docket Number | Case No 5369 of 2013 |
| Court | Chancery Division |
[2014] EWHC 3665 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
David Donaldson Q.C.
sitting as a Deputy High Court Judge
Case No 5369 of 2013
James Couser for the Applicant; Mr Laynein person;
Paul French for the Second Respondent
David Donaldson Q.C.:
(a) Mr Carlos Layne, the First Defendant, was a tenant of the Second Defendant ("WDC") in respect of commercial premises at 148 Desborough Road, High Wycombe between 2001 and 2007, when the lease was surrendered leaving substantial arrears of rent outstanding. On 15 July 2009 WDC obtained default judgment in respect of these arrears for £32,308.53 and costs.
(b) In addition, Mr Layne failed to make various payments of business rates (£4,904.54) and council tax (£19,663. 02) in respect of both those premises and other properties for periods between 2004 and 2009, leading to liability orders in those sums.
(c) On 16 March 2011 WDC served a statutory demand in the sum of £57,361.09 in respect of that judgment and those orders. Unpaid, it formed the basis of an amended petition for bankruptcy against Mr Layne.
The district judge granted permission for the amendment at a hearing on 5 May 2011. At the same time he adjourned the hearing of the amended petition until 7 July 2011, directing that Mr Layne should file and serve an affidavit setting out his grounds for opposing the petition on the basis that he was offering security for the debt, and provide details of all charges over his property. In the event, while detailing the charges, the witness statement which Mr Layne produced on 25 May 2011 offered no security and only an immediate payment of £1,000 and instalments for the time being of £100 per month, with the hope of increasing that to £200 if and when he found full-time employment (being currently on JSA). In subsequent correspondence, he revised these figures upwards, but they were rejected by WDC on 4 July 2011 on the grounds the offer was not an offer of security, it was not reasonable, and there was no reasonable prospect of payment in full being made within a reasonable time. Mr Layne set out these matters in a letter to the court dated 7 July 2011, attaching copies of his correspondence with WDC, which he suggested was acting unreasonably in refusing his offer.
The district judge began the hearing on 7 July 2011 by noting that the letter made no mention of an offer of security, as had been mooted on the previous hearing. Thus, he observed, the only defence being advanced was that the refusal to accept the offer of instalments was unreasonable, which, given the time that would be required for full payment, the judge did not accept. Having satisfied himself that there were no supporting creditors, he therefore made the bankruptcy order sought by WDC.
On 4 August 2011 Mr Layne applied for permission to appeal against the making of that order (and since, he had belatedly discovered that he was one week out of time, for an extension of time to do so). In a supporting statement he said that if he had been invited to address the court below he would have explained that he did wish to offer security, indicating by reference to documents which had been before the district judge that there was equity of about £68,000 in his present home 1. In his grounds of appeal (verified by a statement of truth) he further stated that he remained solvent in that his assets exceeded his liabilities 2. The relief sought by the appeal was that the bankruptcy order should be set aside and the hearing of the petition restored to a date 8 weeks after the determination of the appeal to enable Mr Layne to secure (and/or compound) the debt by granting WDC a charge over his home. By a letter dated 22 August 2011 he formally offered to execute such a charge in return for WDC's agreement to rescind the bankruptcy order and/or consent to his appeal.
On 30 August 2011 the Official Receiver summoned a meeting of creditors for 22 September 2011, when Mr Colin Nicholls was appointed as trustee in bankruptcy, subsequently replaced in April 2012 by the applicant (jointly with a colleague removed in May 2013). The trustee was assisted as case-worker by Ms Harriet Barnes until she left the employment of his firm, RSM Tenon, in September 2013.
On 9 March 2012 Peter Smith J ordered that the application for permission to appeal should be heard by a High Court Judge followed immediately, if permission were granted, by the hearing of the appeal. In the event, it came before me, sitting as a Deputy High Court Judge, on 19 June 2012. On the basis of the materials in the appeal bundle it appeared that the essential question which the court would have to determine was whether, having regard to section 271(3) of the Act, the order below could or should stand in the light, particularly, of the offer in the letter of 22 August 2011. In the event, the parties resolved that
question by agreement, requesting me at the hearing to make a consent order under which the bankruptcy order was set aside on the basis, recorded in the order, that Mr Layne's interest in his home stood charged with payment of £61,000, to be paid by monthly instalments ending in April 2016 3.I made an order in those terms. The charge was registered, and Mr Layne has since – albeit with some lapses – paid the agreed instalments.
Throughout Mr Layne kept Ms Barnes apprised of developments, in particular:
(a) on 8 November 2011 that he had applied for the bankruptcy order to be set aside;
(b) on 15 March 2012 that the judge was to set a hearing date to consider granting permission to appeal;
(c) on 18 June 2012 that the hearing would take place on 19 June 2012.
On 29 June 2012 Mr Layne faxed a copy of the consent order to Ms Barnes.
On 3 July 2012 the Applicant (presumably "ghosted" by Ms Barnes, whose reference appears on this and later letters) wrote to the court seeking a copy of the application, witness statements, and judge's notes. In December 2012 Ms Barnes received a voice-mail from an officer at the court, explaining that he had retrieved the file from storage but it did not contain a copy of the application and that he was not permitted to provide a copy of the judge's notes. The Applicant recorded this in a letter dated 17 December 2012, asking to be provided with a written judgment. On 28 May 2013 the Applicant expressed his disappointment that he had not yet received a substantive response, which was required "in order for me to proceed with my administration". On 7 June 2013 the Chancery Appeals
section of HMCTS replied stating after consulting the appeal file that the court had been presented with the consent order on 19 June 2012 which negated the need for further hearing and indeed ended the appeal without any further orders or judgments being given.On 25 June 2013 the applicant issued an application seeking an order that the consent order of 29 June 2012 should be rescinded pursuant to section 375 of the Insolvency Act, 1986 (the text of which I set out later in this judgment at paragraph 13). It is unclear what impelled or motivated the applicant to make that application. Though the Applicant mentioned the fact that he had outstanding fees of about £6,000, earned before the bankruptcy order had been rescinded, the application seeks no relief in that regard, and the court could have dealt with that question without reinstating the bankruptcy order: see Appleyard v Wewelwala [2013] 1 WLR 7524.
On 7 November 2013 the district judge ruled that he had no jurisdiction to order rescission of an order made by the High Court and transferred the application to the High Court. It came on for hearing before me 5 on 23 October 2014.
The gravamen of the applicant's submission is that Mr Layne and WDC had sought solely to deal with matters as between themselves and failed to take into account "their obligations towards me as Trustee of the Bankrupt's estate and more importantly the other unsecured creditors … whose claims presently exceed £300,000" 6. As expanded orally, it is said by the applicant that the parties should have drawn the court's attention to the existence of unsecured creditors and/or notified the applicant so that he could defend their interests, if, as the figures suggested (and contrary to Mr Layne's statement in his grounds of appeal that he was solvent in terms of net assets), the provision of the security would prejudice them....
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National Asset Loan Management Ltd v Cahillane; Re John Christopher Cahillane
...Briggs J's interpretation of s.375(1) has very recently been considered by Mr David Donaldson QC sitting as a Deputy High Court judge in Sands v Layne [2014] EWHC 3665 (Ch). At paragraphs 14 and 15 of his judgment he cited the above passage from Briggs J's judgment and then said this: "14….......