Stephen John Day v Refulgent Ltd
| Jurisdiction | England & Wales |
| Judge | Judge Behrens |
| Judgment Date | 07 January 2016 |
| Neutral Citation | [2016] EWHC 7 (Ch) |
| Court | Chancery Division |
| Date | 07 January 2016 |
| Docket Number | Case No: BK 142A |
[2016] EWHC 7 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
LEEDS DISTRICT REGISTRY
The Court House
Oxford Row
Leeds LS1 3BG
His Honour Judge Behrens sitting as a Judge of the High Court in Leeds
Case No: BK 142A
Stephen John Day appeared as a litigant in person.
Eleanor Temple (instructed by Watson Burton LLP) for the Respondent
Hearing date: 16 December 2015
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.
Judge Behrens This is an application by Mr Day for permission to appeal an order made by D J Kelly on 7th August 2015 when she made a bankruptcy order against Mr Day. There are three grounds of appeal which are conveniently summarised in paragraph 2 of Mr Day's skeleton argument:
1) Judge Kelly was wrong to make her final decision, without first awaiting the outcome of the application to the variation of the High Court Freezing Order made on the 3 August 2015. Judge Kelly had ordered it be made, at the hearing on the 17 July 2015, and then did not await the outcome which could have settled the bankruptcy;
2) Judge Kelly did not review and discuss my alternative proposals, to any great extent and thus did not appreciate the assets held and the ability to release them in order to settle a debt of £30k and insisted the case must be settled on the day of the hearing;
3) Judge Kelly did not take account of the fact there were charges of properties by the freezing order and therefore the Petitioners money was secure.
The application is opposed by Miss Temple on behalf of Refulgent Ltd ("Refulgent"). She submits that this was a discretionary decision of D J Kelly. She referred me to the well-known principles set out in the judgment of Lord Woolf MR in Phonographic Performance Ltd v AEI Rediffusion Music Ltd [1999] 1 W.L.R. 1507 at 1523C-D:
"Before the court can interfere it must be shown that the judge has either erred in principle in his approach or has left out of account, or has taken into account, some feature that he should, or should not, have considered, or that his decision is wholly wrong because the court is forced to the conclusion that he has not balanced the various factors fairly in the scale."
She drew my attention to the recent Court of Appeal decision in Edgington v Sekhon [2015] EWCA Civ 816 where these principles had been applied in a bankruptcy situation where the Deputy District Judge refused a late application for an adjournment to enable the debtor to have time to pay. She submitted that D J Kelly's judgment was careful and comprehensive and had taken into account all relevant factors. The decision not to adjourn was within the ambit of her discretion and that this Court should not interfere with the decision.
When I first saw the papers I did not have the benefit of a transcript of D J Kelly's judgment. I took the view that the matter was urgent and accordingly directed that the application for permission and the appeal should be listed at the same time.
The matter was argued before me for a full half day. In the light of the matters that were argued I am satisfied that this is an appropriate case for permission to appeal to be granted. The remainder of this appeal is concerned with the appeal itself.
Before dealing with the merits of the appeal I should like to acknowledge with thanks the assistance I received from both Mr Day and Miss Temple in the conduct of this appeal. Both produced skeleton arguments which were full and comprehensive. Mr Day is, of course a litigant in person, and thus did not address the law in any detail. His oral submissions to me were relevant and presented with courtesy. Miss Temple's skeleton argument contained a comprehensive analysis of the relevant law. In her oral submissions she drew my attention to a number of documents which she submitted were sufficient to justify D J Kelly's decision.
The facts
Background
In his skeleton argument Mr Day sets out what he alleges is the material background to the dispute. Much of the background is controversial and is not relevant to the issues in the appeal. I shall deal with it quite shortly.
Refulgent Limited is now owned and controlled by Mr Andrew Duffield. Mr Day has been associated with Mr Duffield October 2009. From 8 April 2008 to 5 June 2014 Mr Day was a Director of Refulgent Limited and from October 2009 Mr Duffield was a minority shareholder. Mr Duffield took control of Refulgent Limited on the 31 March 2014.
The High Court Claim
On 23 May 2014 Refulgent issued proceedings against Mr Day and a company under his control (Entrusted Group Ltd) in the High Court in London. In the proceedings Refulgent claimed rescission of agreements entered into on 14 February 2013, damages for fraudulent misrepresentation and the return of monies paid by way of loan. The loss was claimed in the sum of £763,907.
On 31 July 2014 Mr Day served a defence denying liability.
On 13 August 2014 Bean J (as he then was), on a without notice application, made a freezing order against Mr Day and the Company. The injunction listed some 12 properties including Warmanbie Cottage, Annan Dumfriesshire and Tom Na Car, Aberfeldy, Perthshire. Under paragraph 9 of the order Mr Day was required to disclose all of his assets worth more than £1,000.
The return date for the freezing order was extended on a number of occasions. The matter was eventually listed for 10 or 11 November 2014. Shortly before the hearing date the application was compromised. It was agreed that the freezing order would continue until the date of the trial or further order. The agreement was included in a consent order made by William Davis J on 7 November 2011. The consent order provided for a CMC in the action to be listed for the first available date after 11 December 2014.
Meanwhile, on 22 and 27 August 2014 Mr Day served a witness statement in pursuance of paragraph 9 of Bean J's order. Refulgent did not accept that Mr Day had made full disclosure and on 20 October 2014 made an application to commit Mr Day to prison for breach of the order. The application was listed before HH Judge Seymour QC on 12 December 2014. On 7 December 2014 Mr Day filed a witness statement in which he apologised to the Court and admitted that the witness statement contained a number of inaccuracies which he alleged were inadvertent. In the result Refulgent applied to withdraw the committal application and to apply for its costs. On 12 December 2014 Judge Seymour QC acceded to both applications. A transcript of his judgment is reported at [2014] EWHC 4760 (QB). He summarily assessed the costs in the sum of £30,000 to be paid by 24 December 2014. There was no appeal against that order.
It is that order for costs which forms the basis of the bankruptcy petition.
The Bankruptcy Proceedings.
Mr Day did not pay the £30,000 by 24 December 2014. Accordingly on 29 December 2014 he was served with the Statutory Demand in the sum of £30,085.48. On 12 January he made an application to set aside the demand.
Mr Day was represented by solicitors who on 27 February 2015 agreed to a consent order under which the application was dismissed with costs. Mr Day agreed to pay the £30,085.48 by 19 March 2015 and to make an interim payment in respect of costs in the sum of £5,000 plus VAT by 1 April 2015.
The consent order contained a recital that Refulgent consented to a variation of the freezing order to permit payment of the sums of £30,085.48 and £5,000.
No payment was made by 19 March 2015 and no application was made to vary the freezing order.
On 23 March 2015 the petition was presented. It was served on Mr Day on 16 April 2015.
On 15 May 2015 Mr Day filed a Notice of Intention to Oppose the petition relying on 6 grounds. One of the matters relied on was that he was in the process of obtaining a loan of £40,000 against the security of Warmanbie Cottage and Tom Na Car.
The petition came before DJ Troy on 22 May 2015 who gave directions including a direction that Mr Day file a witness statement in support of his Notice of Opposition. Mr Day duly filed a witness statement in opposition. In paragraph 39 he referred to an offer dated 21 May 2015 on behalf of Save on Stock Ltd ("SOS") to purchase Warmanbie Cottage and Tom Na Car with a £30,000 deposit which would be released to enable the bankruptcy debt to be settled. He went on to assert that Refulgent was unreasonably holding up the sale of the two properties.
On 9 July 2015 Mr Graham, the partner at Watson Burton responsible for overall control on behalf of Refulgent filed a witness statement in answer. The witness statement deals in detail with the assertion made by Mr Day in his witness statement.
On 15 July 2015 Mr Day filed a witness statement in reply. It will be necessary to summarise the matters raised in relation to the offers.
The matter came before D J Kelly on 17 July 2015. Mr Day was unwell on that date and presented medical evidence that he was having an operation on 29 July 2015. As a result D J Kelly adjourned the hearing until 7 August 2015. She directed Mr Day to file and serve evidence by 3 August 2015 "proving that the sale of the Scottish properties is still likely to proceed, together with evidence as to the likely timescale for exchange of contracts".
She also made an order that any application by Mr Day to vary the freezing order to allow the sale of the Scottish properties should...
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