Secure Mortgage Corporation Ltd v Peter John Harold

JurisdictionEngland & Wales
JudgeHalliwell
Judgment Date28 May 2020
Neutral Citation[2020] EWHC 1364 (Ch)
Docket NumberCase No: 2007 of 2020
CourtChancery Division
Date28 May 2020

[2020] EWHC 1364 (Ch)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS IN MANCHESTER

INSOLVENCY AND COMPANIES LIST (CHD)

Manchester Civil Justice Centre

1 Bridge Street West

Manchester M60 JDJ

Before:

His Honour Judge Halliwell Sitting as a Judge of the High Court at Manchester

Case No: 2007 of 2020

In the Matter of Secure Mortgage Corporation Limited

And in the Matter of the Insolvency Act 1986

Between:
(1) Secure Mortgage Corporation Limited
(2) H Commercial Capital Limited
Applicants
and
(1) Peter John Harold
(2) Gregory Paul Tierney
(3) Thomas Merlin Bamber
Respondents

Mark Harper QC (instructed by Ralli Solicitors LLP) for the Claimants

David Mohyuddin QC and Victoria Roberts (instructed by Bishop & Co) for the Defendants

Hearing dates: 12–13 th May 2020

Approved Judgment

Halliwell His Honour Judge

(1) Introduction

1

These proceedings arise from the extra-judicial appointment of Mr Peter Harold (“Mr Harold”) as administrator of Secure Mortgage Corporation Limited (“SMC”) under a floating charge.

2

SMC seeks to challenge the appointment on the basis that it was not made by the holder of the floating charge and, in any event, the floating charge was not enforceable on the date of the appointment. There is also an issue as to whether the procedural requirements of Schedule B1 to the Insolvency Act 1986 have been complied with.

3

It is contended that, by the time of the putative appointment, SMC had granted a second charge to H Commercial Corporation Limited (“HCC”) which is thus joined as a co-applicant. SMC and HCC sue Mr Harold himself together with Messrs Gregory Paul Tierney (“Mr Tierney”) and Thomas Merlin Bamber (“Mr Bamber”) who together appear to have appointed Mr Harold as administrator in their capacity as personal representatives or trustees of the estate of the late Mr Peter Nolan (“Mr Nolan”).

4

The proceedings were brought under the Insolvency Rules 2016. Following trial on 12 th–13 th May 2020, this is my judgment on the substantive issues.

(2) Factual Sequence

5

On 12 th September 1996, SMC was incorporated. Mr Nicholas Henesy (“Mr Henesy”) was sole shareholder and director. SMC was subsequently registered as freehold owner of property (“the Property”) encompassing land and buildings at Sherbourne Street, Cheetham Hill, Manchester. Whilst the historical background is obscure, this appears to have been SMC's only substantial asset. By a mortgage debenture dated 12 th May 1998 (“the 1998 Charge”) between SMC and Lancashire Mortgage Corporation Limited (“LMC”), SMC mortgaged the Property and granted a floating charge over its assets and undertaking. The 1998 Charge was promptly registered by the Registrar of Companies.

6

On 14 th September 1999, SMC was struck off the Register of Companies. It was then dissolved by notice dated 21 st September 1999. At that point, SMC's title to the Property would have become vested, as bona vacantia, in the Crown in Right of the Duchy of Lancaster. However, the registered title remained in SMC's name and this remains the case.

7

There is nothing to suggest that the Land Registrar was ever invited to enter notice of dissolution in the Proprietorship or Charges Register. On 12 th June 1998, the 1998 Charge was entered in the Charges Register. LMC was initially registered as proprietor of the charge but it ceased to be registered as such and, on 17 th October 2007, Intermedio Financial SA (“Intermedio”), a company incorporated in the Territory of the British Virgin Islands, was registered as proprietor of the charge. On 1 st May 2015, Intermedio was itself struck off the list of companies in the British Virgin Islands. The 1998 Charge remains registered in Intermedio's name. It has not been vacated from the Charges Register but, on 7 th November 2019, it was marked satisfied at Companies House.

8

On 15 th August 2018, Mr Nolan died. No grant of representation has yet been taken out with respect to his estate. However, Messrs Tierney and Bamber contend that they were appointed as Mr Nolan's personal representatives in his last will dated 30 th June 2017. Whilst this will has not been admitted to probate, a copy was shown to me at the hearing from which it can be seen that Messrs Tierney and Bamber were named as Mr Nolan's executors, trustees and residuary beneficiaries. They have instructed Messrs Bishop & Co as their solicitors.

9

On 29 th June 2019, SMC was restored to the Register of Companies pursuant to an order dated 12 th June 2019 (“the 12 th June 2019 Order”) of the County Court at Central London. SMC was thus deemed to have continued in existence from the time of dissolution and, in the absence of any disposition of its assets as bona vacantia, its assets would thus be deemed to have remained vested in SMC. The 12 th June 2019 Order was made on the application of one Richard Armstrong, who was recorded as a creditor of the company.

10

Once the 12 th June 2019 Order was brought to the attention of Messrs Bishop & Co, they contacted the Land Registry to note their concerns about it on the basis that Mr Nolan and his representatives had been in possession of the Property for some 20 years. It was at least implicit in their representations to the Land Registry that they perceived SMC to have been restored to the Register of Companies as a device to enable Mr Henesy to obtain possession of the Property. On behalf of the Respondents, it is contended that, by letter dated 23 rd July 2019, Bishop & Co demanded repayment of the amounts allegedly due under the 1998 Charge. The demand was made on behalf of “the Estate of Mr Peter Nolan” and was addressed to SMC although it is unclear when it was first delivered into the possession of Mr Henesy, as SMC's sole director.

11

Meanwhile, on 17 th July 2019, HCC was incorporated and Mr Stephen Henesy was appointed at its sole director. I am advised that Mr Stephen Henesy is Mr Henesy's nephew. Once HCC was incorporated, arrangements were allegedly made for HCC to advance £50,000 to SMC and obtain a charge over the Property as security. On 14 th August, SMC and HCC entered into a debenture which was delivered for registration on 23 rd August 2019 (“the 2019 Charge”).

12

However, on 30 th August 2019, Mr Harold was purportedly appointed as administrator of SMC. In the Notice of Appointment, “the Estate of the Late Mr Peter Nolan care of Bishop & Co” was named as “Appointer” rather than Messrs Tierney and Bamber and it was recorded that “the Estate” was itself the holder of a qualifying floating charge, now enforceable. However, the supporting statutory declaration was made by Mr Tierney in his capacity as “a trustee of the Estate of Mr Peter Nolan”. In view of the fact that they had instructed Bishop & Co as their solicitors in connection with Mr Nolan's estate, it can reasonably be inferred that Messrs Tierney and Bamber instructed Bishop & Co to make the appointment on their behalf jointly in their capacity as personal representatives although evidence has not been filed to confirm that this is the case. Consistently with this, I shall also infer that the appointment was purportedly made on Messrs Tierney and Bamber's behalf.

13

In his Report to Creditors dated 23 rd October 2019, Mr Harold confirmed that he “understood the debt” secured by the 1998 Charge had been “assigned on more than one occasion” so that “the current proprietorship of the debt resides with the estate of Peter Nolan”. He quantified this debt in the sum of £2,317,091. However, he did not identify any other debts or liabilities, observing that no evidence had been provided that monies were due under the 2019 Charge. In his Estimated Statement of Affairs as at 30 th August 2019, Mr Harold valued the Property at £500,000. After accounting for the Estate debt of £2,317,091, he thus envisaged a deficiency of £1,817,091 before providing for the company's share capital. He was satisfied he could achieve the statutory objective of realising the company's property in order to make a distribution to its secured or preferential creditors under Paragraph 3(1)(c) of Schedule B1 to the Insolvency Act 1986.

14

From an early stage, SMC and HCC instructed Ralli Solicitors LLP to act on their behalf. Between October 2019 and January 2020, they repeatedly asked Mr Harold and Bishop & Co for copies of the alleged assignments of the debt so as to show how the benefit of the indebtedness putatively secured by the 1998 Charge had become vested in Mr Nolan's estate. However, Mr Harold and Bishop & Co successively declined to provide them with the alleged assignments or otherwise explain how LMC's rights under the 1998 Charge had become vested in Mr Nolan's estate.

15

In these circumstances, SMC and HCC issued the present proceedings on the basis that the 1998 Charge was not vested in Mr Nolan's estate and it was no longer enforceable.

(3) Standing

16

At one point in the proceedings, Mr Harold sought to challenge the standing of SMC on the basis that the proceedings have been initiated by Mr Henesy in his capacity as a director without the consent of Mr Harold himself as administrator. However, this begs the very question in issue as to the lawfulness of Mr Harold's own appointment. In any event, following the judgment of Mr Richard Snowden QC (as he was) in Closegate Hotel Development v McLean [2013] 3237, it is now well established that, in a case such as this, the company through its directors does, indeed, have standing to bring the proceedings. In these circumstances, Mr Mohyuddin QC wisely chose not to pursue this point in his submissions. I am satisfied that, in the present case, SMC does have standing.

17

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