England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
(MR D OLIVER QC sitting as a Judge of the High Court)

		Royal Courts of Justice Strand London WC2A 2LL Friday 26 January 2001

1. LORD JUSTICE CHADWICK: This is an application for permission to appeal against the order made on 24 November 2000 by Mr David Oliver QC, sitting as a deputy judge in the Chancery Division, dismissing an appeal against an order made by the Deputy District Judge in the Croydon County Court, sitting in bankruptcy, on 22 May 2000.
2. The background to the application can be stated shortly. On or about 22 November 1999 the Wimbledon Bridge Club served on the applicant, Mr Edward Frederic Northcote, a statutory demand seeking payment of £9,769. That sum was said to be due in respect of three orders for costs made in proceedings brought by the Bridge Club against the applicant in the Croydon County Court. The costs had been taxed. The applicant had been notified of the amount payable on taxation on 11 November 1997 and on 12 February 1998.
3. On 14 December 1999 the applicant, as he was entitled to do under rule 6.4 of the Insolvency Rules 1986, issued an application to set aside the statutory demand. The application was supported by an affidavit sworn by the applicant on that day. The basis of the application was that the creditor was behaving in a capricious way motivated by some concern other than a proper desire to recover as much money as it could. It was said that the proper course was for the debts to be considered by the Wandsworth County Court; further, that the debtor expected to be able to pay the debts when he received a share of his former wife's property to which he was entitled. Reference was made to an oral examination ordered in the Wandsworth County Court in relation to one of the debts and a payment offered of £1700.
4. Paragraph 10 of the affidavit is in these terms:

"I then received (again without warning) notice of intention to serve the Statutory Demand. I took advice from a free solicitor who suggested I should make an offer. Accordingly I said that I could afford £2,500 immediately and £50 a month, but that as I was obviously not the best person to decide how much I could afford, I would negotiate. I now expect an improvement in my circumstances and have told the Creditor of it."

5. The reference in the final sentence of that passage is to a letter of 6 December 1999 in which Mr Northcote wrote to the creditor's solicitors in these terms (so far as material):

"I have acquired the business of Flints Bridge Club and am renaming it Putney Bridge Club. I am registering it in London and advertising it there so as to minimise competition with your clients, so they have no reason to resent my doing this, and I am paying for the business out of profits. If they will negotiate, therefore, I will be able not only to pay the £2,500 that I have already offered, but also a proportion of the profits to them."

6. That is an offer to negotiate; it cannot be said to be an offer of payment which the creditor was obliged either to accept or reject. It cannot be such an offer because the total amount to be paid and the term over which it is to be paid are uncertain. They depend upon future negotiation.
7. The application came before the district judge on 20 January 2000. He dismissed the application without an oral hearing. He must have taken the view that the material before him did not support a case for the exercise of the court's powers under rule 6.5(4) of the Insolvency Rules 1986. That rule sets out the circumstances in which the court may grant an application to set aside a statutory demand. The only relevant paragraph, in the present context, is paragraph (d): that the court is satisfied on other grounds that the demand ought to be set aside.
8. The principle upon which the court acts under paragraph (d) of rule 6.5(4) is to ask whether the material before it shows that any bankruptcy petition founded upon the statutory demand would be bound to fail. If so, then the statutory demand ought to be set aside because it can serve no useful purpose. A petition would fail if the court hearing the bankruptcy petition were satisfied that an offer to compound the debt had been made and the offer had been refused unreasonably - see section 271(3) of the Insolvency Act 1986 - so, where the judge hearing an application to set aside the statutory demand can see that there has been an offer which has been refused unreasonably, he may take the view that it is proper to exercise the power under rule 6.5(4)(d) of the 1986 Rules. But he cannot take that view in circumstances in which there has been no offer in respect of which a refusal could be said to be unreasonable.
9. On 13 March 2000 the applicant gave notice of appeal to the circuit judge. That was, of course, misconceived. An appeal from a district judge in bankruptcy lies to a judge of the High Court - see rule 7.48 the Insolvency Rules 1986 and section 375(2) of the Insolvency Act 1986. The application to set aside was coupled with an application for an extension of time. On 22 May 2000 Deputy District Judge Durman, after hearing the applicant in person and the solicitors for the respondent creditor, dismissed the application. The applicant appealed to the High Court. It was that appeal which came before Mr Oliver QC. For the reasons which he gave in a judgment delivered on 24 November 2000, he dismissed the application. It is from that order that the applicant seeks leave to appeal.
10. His grounds of appeal are set out in a document annexed to his appellant's notice; and are amplified in a written text which he has put before the court today. Those grounds are that the judge failed to consider the conduct of the creditor; and that if he had done so he would have come to the conclusion that a court of conscience could not condone the conduct of the creditor in this case.
11. This is an application for permission to bring an appeal to which section 55 of the Administration of Justice Act 1998 would apply; the appeal (if permission were granted) would be an appeal against the decision of a High Court judge on an appeal from a district judge. In such circumstances this Court will not grant permission to appeal unless satisfied that there is some important point of principle or practice raised by the appeal or that there is some other compelling reason why it should be entertained by the Court of Appeal.
12. In my view that test is not satisfied in the present case. The applicant's real complaint is that the court ought to have told him what would constitute a reasonable offer. There is no provision for that in the Act or in the Rules. If the statutory demand is not set aside the creditor can, if he chooses, present a bankruptcy petition. On that petition the court will have to consider, under section 271(3) of the Insolvency Act 1986, whether an offer has been made and, if so, whether that offer has been unreasonably refused. It is open to the applicant at any stage before the hearing of the petition to make an offer; but the offer must be in sufficiently certain terms to require the creditor to address it, and either to accept it or to refuse it. An offer to negotiate about terms which are uncertain is not an offer which it is unreasonable to refuse.
13. In the circumstances that the test posed by section 55 of the Access to Justice Act is not satisfied, I must dismiss the application. To do so is, actually, in the best interests of Mr Northcote; although he may well not recognise that. If the application were allowed, there would be an appeal which, in my view, would be bound to fail. That would be likely to leave Mr Northcote with another costs order against him to add to those which already exist. That is what happened before the Deputy High Court judge. It has led to Mr Northcote's indebtedness increasing by a further £3,600. It would not assist him to give permission to appeal which, in my view, would simply lead to another costs order being made against him.
14. Although it gives me some comfort that the order I make is in Mr Northcote's best interests, I do not make it on those grounds, I make the order on the grounds that the pre-conditions required by section 55 are not satisfied in this case. Accordingly the application is refused.
Order: Permission to appeal refused.