Shierson v Vlieland-Boddy

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Chadwick,Lord Justice Longmore,Sir Martin Nourse
Judgment Date27 Jul 2005
Neutral Citation[2005] EWCA Civ 974
Docket NumberCase No: A2/2004/2614

[2005] EWCA Civ 974

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION (IN BANKRUPTCY)

MR JUSTICE MANN

Royal Courts of Justice

Strand, London, WC2A 2LL

Before

Lord Justice Chadwick

Lord Justice Longmore and

Sir Martin Nourse

Case No: A2/2004/2614

1948 of 2004

Between
Malcolm Brian Shierson (As Trustee in Bankruptcy of Martin Vlieland-Boddy)
Appellant
and
Clive Vlieland-Boddy
Respondent

Mr Gregory Mitchell QC (instructed by DLA LLP of 101 Barbirolli Square, Manchester M2 3DL) for the Appellant

Miss Jane Giret QC and Mr Stephen Tudway (instructed by John A White & Co of St John's House, 84 High Street, Huntington, PE29 3DP) for the Respondent

Lord Justice Chadwick
1

On 27 February 2004 a petition was presented to the High Court by Mr Malcolm Shierson, an insolvency practitioner and the trustee in bankruptcy of Mr Martin Vlieland-Boddy, for a bankruptcy order to be made against Mr Clive Vlieland-Boddy. Mr Martin Vlieland-Boddy and Mr Clive Vlieland-Boddy are twin brothers. In this judgment references to "the debtor" are to Mr Clive Vlieland-Boddy.

2

Article 3.1 of Council Regulation (EC) No 1346/2000 on insolvency proceedings provides (so far as material) that:

"The courts of the Member State within the territory of which the centre of a debtor's main interests is situated shall have jurisdiction to open insolvency proceedings…."

Article 3.2 provides that:

"Where the centre of a debtor's main interests is situated within the territory of a Member State, the courts of another Member State shall have jurisdiction to open insolvency proceedings against that debtor only if he possesses an establishment within the territory of that other Member State. The effects of those proceedings shall be restricted to the assets of the debtor situated in the latter Member State."

Proceedings opened under article 3.1 are referred to as "main insolvency proceedings". Proceedings opened under article 3.2 are referred to as "territorial insolvency proceedings". The provisions of article 3 are incorporated in the Insolvency Act 1986 by section 265(3) of that Act.

3

This appeal raises the questions (i) whether, on the facts found by the bankruptcy court in this case, the centre of the debtor's main interests was within the territory of the United Kingdom at the relevant date and (ii), if not, whether the debtor possessed an establishment here, so as to found jurisdiction in respect of territorial insolvency proceedings.

The background

4

The circumstances which led to the presentation of a bankruptcy petition against the debtor in February 2004 are set out in paragraphs 3 and 4 of the judgment delivered by Mr Registrar Rawson on 13 July 2004:

"3. On 3 rd October 1997, the Co-operative bank Plc was defrauded of £2 million by Dexter [Dexter Limited, a company of which Mr Shierson is now administrative receiver]. Claims were pursued by Dexter and the bank against Martin Vlieland-Boddy. In the course of the trial of these claims in November 2002 Martin Vlieland-Boddy decided that he no longer wished to defend and judgment was given against him for £2 million with an interim order for the payment of £300,000 [on account of costs]. In May 2001, the debtor commenced proceedings against the petitioning creditor in his capacity as trustee in bankruptcy of Martin Vlieland-Boddy, claiming the recovery of funds from his estate. In April 2002, on the second day of a three-day trial, the debtor discontinued those proceedings. The costs of Mr Shierson, which were ordered to be paid by the debtor, were assessed at £127,905 odd. A certificate in respect of these costs was issued on 20 th January 2004 …

4. In February 2002, proceedings were commenced against the debtor claiming that he had assisted in the fraud on the bank, had benefited from part of the proceeds of it and was also liable for repayment of the £2 million. He sought to have these proceedings struck out as an abuse of process. This application was rejected by Lloyd J [on 25 th July 2002] and the debtor's appeal against that decision was dismissed by the Court of Appeal [on 24 th January 2003] which gave directions for the future conduct of those proceedings. The trial was due to have started in June of this year [2004] but was then postponed until after the determination of this petition."

The debtor's connection with the United Kingdom

5

The debtor is a qualified accountant of some twenty five years standing. For many years he practised as such, and as an insolvency practitioner, formerly (until October 1993) from offices at 1 The Centre, Gillingham, Dorset and latterly from offices at Abacus House, Poole, Dorset. He lived with his wife and sons at Milland House, Shaftesbury.

6

On 27 January 2001 the debtor and his wife entered into an agreement—described as a deed of separation—for the division between them of the "family assets". Those assets, as shown in the agreement, included Milland House and a flat at 8 Ongar Road, Fulham (which were to be taken by Mrs Vlieland-Boddy) and Unit 2A, Sunrise Business Park, Blandford Forum, Dorset (also known as Millennium House) and a share in Abacus House (which were to be taken by the debtor).

7

Notwithstanding that apparent division of family assets, on 22 August 2001 the debtor and his wife took a lease of property known as First Floor Flat, 137 Westminster Bridge Road, London SE1 for a term of 125 years from 1 January 2001. The consideration for the grant of the lease was £185,000. The address of both the debtor and his wife was shown, in that lease, as Milland House.

8

On 4 September 2002 the debtor and his wife charged Unit 2A Sunrise Business Park (Millennium House) to Millennium Investment International Limited, a company incorporated in the British Virgin Islands with an address in Jersey, to secure liabilities under a facility agreement of the same date. The legal charge contained a recital that the debtor was entitled to the entire beneficial interest in the property charged.

9

On 12 October 2002, the debtor and his wife transferred the leasehold interest in the flat at 127 Westminster Bridge Road to Millennium Investment International Limited for no consideration.

The 2003 insolvency proceedings

10

On 3 February 2003 the debtor swore an affidavit in support of his application to the High Court for an interim order, pursuant to sections 252 and 253 of the Insolvency Act 1986, pending approval of his proposals to creditors for an individual voluntary arrangement. In that affidavit he gave as his main place of residence an address in Malaga, Spain. In his proposals, a copy of which was exhibited to that affidavit, he stated that he was "currently living in rented accommodation in Malaga where I have recently been able to find employment" The only asset disclosed in the statement of affairs as at 31 January 2003, annexed to the proposals, was Unit 2A Sunrise Business Park, which was shown as subject to a charge in favour of Millennium Investment International Limited to secure £245,000.

11

That application came before Mr Registrar Baister on 13 February 2003, under reference 24-IO-2003. It was adjourned to 27 February 2003 on the debtor's undertaking to make and file a witness statement confirming that his centre of main interests was in the United Kingdom. Although there is no witness statement to that effect in the papers before this Court, the application proceeded on the basis that that undertaking had been met. The chairman's report of a meeting of creditors held on 14 March 2003 records that "The EC Regulation will apply and will be the main proceedings (sic)". When, after adjournments on 27 February and 13 March 2003, the application for an interim order came back before Mr Registrar Baister on 20 March 2003, he took the view that no valid meeting of creditors had been held and so made no order.

12

On 3 April 2003 the nominee under the proposals of February 2003 applied to the High Court under section 262 of the Insolvency Act 1986. That application was, I think, for directions under subsection (4)(b) of that section for the summoning of a further meeting. The application was opposed by Mr Shierson, as administrative receiver of Dexter Limited and as trustee in bankruptcy of Mr Martin Vlieland-Boddy. The application was dismissed by the registrar on 1 May 2003 and the order was made final on 18 July 2003.

13

On 6 June 2003 Dexter Limited, acting by Mr Shierson as administrative receiver, presented a bankruptcy petition against the debtor on the basis of the order for costs (£8,500) made in this Court on 24 January 2003. It was alleged in that petition that the debtor's centre of main interests had been in England and Wales and that the bankruptcy proceedings would be main proceedings for the purposes of article 3 of the EC Regulation. In a witness statement dated 17 July 2003 the debtor took the point—I think for the first time—that his centre of main interests had changed. He said this:

"Having now settled permanently in Spain, it is now my 'Centre of Interest' in accordance with the provisions of (EC) No 1346/2000

Having no 'Establishment' as defined in (EC) No 1346/2000—Article 2(h) within the United Kingdom, there are no grounds for Secondary or Territorial proceedings."

It appears (from a witness statement made on 15 April 2004 by a solicitor acting for Mr Shierson in the current proceedings) that that petition was subsequently withdrawn on the debt being satisfied in full by the debtor's wife.

14

Notwithstanding his assertion (in his witness statement of 17 July 2003) that there was no longer jurisdiction to open insolvency proceedings, the debtor appealed from the order of 18...

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