England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
APPLICATION FOR PERMISSION TO APPEAL AND AN EXTENSION OF TIME

		Royal Courts of Justice Strand London WC2 Wednesday, 26th September 2001

1. LORD JUSTICE ALDOUS: The claimant, Metropolitan Special Project Limited, seek permission to appeal out of time the order of 10th May 2001 of Mr Justice Mackay. The application was out of time by about four weeks.
2. Metropolitan is a company engaged in the provision of project management and specialist engineering professional services. The defendant, Marigold Services Ltd, are an off-shore company which carries out property development. We were told today that the owners of the shares in that company are two persons resident in Israel.
3. At a meeting in January 2000 representatives of Metropolitan met with representatives of Marigold and it was agreed that Metropolitan would provide services to be paid for by stage payments. That agreement was implemented in respect of services provided for premises known as 22 Kempster Gardens, London SW5. However payment claimed by Metropolitan in a sum of just over £27,000 was not paid. These proceedings were started to recover that sum.
4. I need not go into the dispute as to whether the sum is owing and is recoverable in any detail. It is sufficient to record that Marigold deny it is payable. It is Marigold's contention that Metropolitan had been paid for the full value of all the work and services carried out by them pursuant to the agreement between the parties.
5. The application for permission to appeal concerns the decision of the judge to refuse to continue a freezing order that was obtained by Metropolitan. In March 2001 Metropolitan gathered that Marigold were looking for a joint venture partner for the development of the property and that it was likely to be sold. This caused Metropolitan concern. They were worried that the proceeds would be taken out of country prior to the satisfaction of their claim. To prevent that happening Metropolitan instructed their solicitors to take action to ensure retention of sufficient funds to meet their claim. There followed a letter of 29th March 2001 written by solicitors acting for Metropolitan to Mr Lee who was a solicitor and also a director of Marigold. That letter stated that the solicitors were instructed on behalf of Metropolitan in regard to the claim. It stated that their client was surprised to learn there was a proposed purchaser for the property. It requested information as to whether the property had been sold. It requested undertakings: the main one, with which we are concerned, is that a sum of £50,000 should be deposited in a joint account in names of the solicitors. It ended in this way:

"We look forward to hearing from you as a matter of urgency and in any event within the next hour."

6. No reply was received to that letter within the hour.
7. On the same day Metropolitan sought ex parte and were granted a freezing injunction to 10th May 2001 against the assets of Marigold up to the value of £50,000. On 10th May the matter came back before Mr Justice Mackay. Mr Justice Mackay refused to continue the order and made an order for costs in favour of Marigold assessed at £6,750. He refused permission to appeal. Metropolitan sought leave to appeal. Their application was considered on paper by Lord Justice Clarke and was refused. He accepted that it was arguable that the claimants had a good arguable case. However he concluded that it was not right to grant the extension of time in the circumstances and therefore he refused the application.
8. Metropolitan have now renewed their application. We have had the benefit of submissions by Mr Randolph on their behalf. It is not appropriate on an application for permission to appeal to go into the merits of the case in any depth. However I considered the merits when I read the papers, particularly as the judge came to the conclusion that he did not see that there was a good arguable case. I, like Lord Justice Clarke, have come to a contrary conclusion. I believe that this application should be decided upon the basis that a good arguable case has been shown. However I believe that the crucial issues in the case are the delay in seeking permission to appeal to this court and the effect that that has and also the reasons for the decision of the judge that it was not an appropriate case for continuing a freezing order.
9. I will deal with those matters in that order but before doing so I should set out the further facts of which we have been appraised. The particular property in question has been sold. It is not known what happened to the proceeds. Even so it was not considered urgent to come before this court for permission to appeal. It became urgent in the eyes of Metropolitan about 21 days ago when their solicitors learned that the second property which was owned by Marigold was on the market and attempts were being made for its sale. In those circumstances solicitors acting for Metropolitan wrote to solicitors who were then acting for Marigold seeking comfort and an undertaking that proceeds from the sale, sufficient to satisfy their claim, would be maintained in this jurisdiction in an account in the joint names of the solicitors. No such comfort has been given. Further, those solicitors have now come off the record and it appears that the defendant Marigold is acting in person. Further, there is going to be a hearing on 8th October 2001 in which a preliminary issue will be decided.
10. The position so far as Marigold is concerned is that they are outside the jurisdiction; their owners are outside the jurisdiction; of the two properties which they have disclosed as belonging to them the first has been sold and the second is up for sale. They no longer have solicitors on the record and have refused to accept a comfort letter. Upon that basis Mr Randolph says there is a real risk of further dissipation. That may be so. In my view those matters are relevant to an application which could be made to the trial judge or another judge of the Queen's Bench Division to prevent dissipation. We are concerned with permission to appeal the judgment of Mr Justice Mackay.
11. I turn therefore to those matters. Metropolitan concede that the delay in filing the application was caused by a mix-up. Perhaps it is an understandable mix-up, but it is one that should not have taken place, particularly in a case where what was sought to be maintained was a freezing injunction. The evidence is sufficient, in my view, to explain what happened and the delay is such as would be excusable in normal circumstances. But it must be remembered that what is sought to be appealed is a refusal by Mr Justice Mackay to maintain a freezing order. The freezing order was made in extreme haste so as to prevent dissipation of assets. The fact of the delay in filing the application is, in my view, a clear indication of the lack of urgency. Mr Randolph accepted that it was not considered urgent and had only became urgent in the last 21 days or so.
12. In a case where injunctive relief of the type in question sought is sought to be maintained, a delay of four weeks or more, without demonstration of exceptional circumstances, must, in my view, require exceptional circumstances argument to prevent it being fatal. The assets which were sought to be maintained in this country had in the meantime or could have been removed out of the jurisdiction and in those circumstances there was no threat at the time when the judge made his decision to require him to take further action.
13. I turn next to consider the merits of the judge's judgment. At the hearing before the judge who granted the injunction, evidence from Marigold was not available. When it came to the hearing on 10th May before Mr Justice Mackay there was an affidavit of Mr Stanley Lee which set out the asset position. The freehold property at 22 Kempster Gardens was subject to a contract of sale at £830,000 with a mortgage of about £410,000. Marigold also had a leasehold property with equity exceeding £150,000 and a bank account in credit to the sum of nearly £5,000. There is a risk that if one enters into a business with a foreign registered company it may be difficult to satisfy any claim made against that company. There was nothing on the evidence before the judge -and all the evidence was considered - which was such as to prevent him from exercising his discretion in the way that he did. In my view his conclusion was one based upon discretion. I do not believe that the way in which he exercised his discretion would be altered in this court. It is for that reason and for that reason only that I have come to the conclusion that this is not an appropriate case for permission to be granted.
14. I would therefore refuse this application.
15. LORD JUSTICE RIX: I agree.
Order: Application refused