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 THE CHANCERY DIVISION
COMPANIES COURT
(Mr Justice Jacob)

		Royal Courts of Justice Strand London WC2 Thursday, 18th October 2001

Thursday, 18th October 2001

1. LORD JUSTICE ROBERT WALKER: This is a renewed application for permission to appeal by Mr Ernest Juer, who has today appeared in person. He was represented below by leading counsel and leading counsel prepared a skeleton argument in support of the application for permission to appeal. Mr Juer has addressed me with great courtesy and some skill. Mr Juer wishes to appeal from an order of Jacob J made in the Companies Court on 28th June last dismissing Mr Juer's application, which was made on 19th December 2000, under Part 8 of the CPR, for the disqualification of two authorised insolvency practitioners under section 4 of the Company Directors Disqualification Act 1986 (which I will call "the 1986 Act").
2. The practitioners in question are Mr Anthony Lomas and Mr Peter Spratt, who are both chartered accountants and partners in Price Waterhouse Coopers, the very well-known international accountants. Mr Lomas and Mr Spratt were successively administrative receivers and then joint liquidators of a company called Adbury Park Estates Ltd (which I will call "APEL"). There is another company called Ernest George Ltd (which I will call "EGL") which is also in liquidation but of which Mr Lomas and Mr Spratt are not the liquidators. Mr Juer was the majority shareholder in both companies and both are now insolvent.
3. Section 4(1) of the 1986 Act provides, so far as material:

"The court may make a disqualification order against a person if, in the course of the winding up of a company it appears that he -

(a) ...

(b) has otherwise been guilty, while an officer or liquidator of the company or receiver or manager of its property, of any fraud in relation to the company or of any breach of his duty as such officer, liquidator, receiver or manager."

4. Mr Juer's case before Jacob J was that Mr Spratt (who was for practical purposes in day-to-day charge of the liquidation) and Mr Lomas had been guilty of fraud and conspiracy in knowingly admitting a false claim to proof in the liquidation of APEL, and of paying dividends in respect of that liability, when the indebtedness was that of Mr Juer himself and not of APEL. Indeed Mr Juer has pointed out that by the time the dividends were paid the liability was not a liability even of Mr Juer himself since it had been extinguished by a settlement which I shall mention in due course.
5. The claim in question was by County Natwest, as it was then called, a company in the National Westminster group of companies, for £446,000 odd on a counter indemnity in respect of a guarantee which County Natwest had provided to Lloyd's in respect of Mr Juer's contingent liabilities as an underwriting name at Lloyd's.
6. The liquidators' position was that they admitted that they had made a mistake in admitting to this debt to proof, that they regretted their mistake and that they had corrected it (recovering the overpaid dividend with interest) as soon as Mr Juer had belatedly drawn it to their attention. They denied any sort of fraud or conspiracy and asserted that there was not a scrap of evidence to support that grave allegation. They also submitted through their counsel that Mr Juer had no standing to make an application: this point turned on section 16(2) of the 1986 Act, which provides:

"An application to a court with jurisdiction to wind up companies for the making against any person of a disqualification order under any of sections 2 to 5 may be made by the Secretary of State or the official receiver, or by the liquidator or any past or present member or creditor of any company in relation to which that person has committed or is alleged to have committed an offence or other default."

7. The judge accepted those submissions and he dismissed the claim with indemnity costs.
8. The background facts of this case are very remarkable. The judge said in his judgment that he had considered setting out some of the history, but had decided that it would not be useful to do so. For my part I think I should summarise it as shortly as I can if only to give the background to the indemnity costs order, about which a separate complaint is made in the skeleton argument. There is in fact no real dispute about the basic facts, as opposed to the allegations of fraud and conspiracy which are of course hotly disputed.
9. APEL owned the Adbury Park Estate near Newbury in Berkshire. It was a substantial residential, agricultural and sporting estate with a principal house where Mr and Mrs Juer lived. The house and estate were valued by Strutt & Parker in January 1993 at between £2.75 and £3.3 million, and it was marketed at about that time at £3.5 million. APEL did therefore own substantial assets. However, it also had substantial liabilities, partly to banks and partly to Mr and Mrs Juer's other main company, that is EGL, which traded as a distributor of dairy products. EGL itself had severe financial problems and was heavily indebted to banks. Mr Juer was a guarantor of EGL's indebtedness to the banks as well as being a name at Lloyd's, where (in common with other unfortunate persons) he incurred further liabilities.
10. Matters came to a head in April 1993. In that April administrative receivers were appointed of EGL, and on 28th July 1993 EGL was ordered to be wound up. It had, as Mr Juer tells me and I accept, a liquidator quite separate from Mr Spratt and Mr Lomas.
11. Meanwhile, on 27th April 1993, a petition was presented to wind up APEL. On the same day Mr Juer caused APEL to sell the estate to a company called Earlplace Ltd for a consideration, in cash or in kind, of about £1.62 million. He then left England for Spain. Mr Spratt and Mr Lomas heard about the sale on 6th May 1993, and on 12th May they were appointed as provisional liquidators of APEL (in advance of any hearing of the petition) by an order of Jonathan Parker J. They at once commenced a misfeasance action against Mr Juer and obtained a worldwide freezing order against him. That order was also made by Jonathan Parker J on 12th May 1993 and it was served on Mr Juer in Spain.
12. Mr Juer had paid £1.34 million from the sale of the estate into his own bank account with a bank in Geneva. On 17th May the provisional liquidators obtained a freezing order from a court in Geneva, but by then three-quarters of a million pounds had been withdrawn in cash.
13. Mr Juer did not defend the misfeasance proceedings, and in due course a number of further orders were made again him. I need not detail those. Mr Juer appears not to have complied with any of them.
14. In October 1994 Mr Juer sued the liquidators of APEL in proceedings commenced in the Queen's Bench Division. The liquidators applied for the proceedings to be transferred to the Chancery Division and for them to be struck out. The transfer to the Chancery Division was made, but the striking out application was never heard. Instead there was on 20th September 1995, and no doubt after long and difficult negotiations, a settlement agreement reached between numerous parties under which Mr Juer was to pay £1.5 million to APEL and he and his wife released the banks and others, including the liquidators, from all causes of action and claims. On the other hand, as Mr Juer has pointed out to me, he personally was released from various liabilities, including his liability to County Natwest under the counter indemnity.
15. That was the background to Mr Juer's claim. The liquidators readily accept that they made a mistake, in dealing with APEL's complicated affairs, by admitting proofs from companies in the National Westminster group for an aggregate sum of about £1,517,000, thereby incorrectly including Mr Juer's liability (down to the time of its extinction) of £446,000 odd to County Natwest. It appears that the liquidators believed, incorrectly, that APEL was ultimately responsible for that liability. Mr Juer (and the solicitor then acting for him in criminal proceedings) seem to have noticed the mistake in March 1996. It appears that for tactical reasons they did not at once take it up with the liquidators (although it does seem to have been mentioned soon after its discovery by Mr Juer to another creditor bank which was on the creditors' committee). Once the mistake was known to the liquidators they asked County Natwest on 22nd October 1997 to repay the overpayment with interest; and it was repaid with interest on 14th November 1997.
16. Jacob J dismissed Mr Juer's claim on two grounds: first, that he did not have sufficient standing to bring the claim; and, secondly, that the conduct complained of came nowhere near the standard of serious delinquency required for disqualification under section 4. On the latter point, he said in the course of his judgment:

"People make mistakes; they sometimes make big mistakes. These liquidators did make mistakes, but there is nothing that suggests that the way they made the mistake amounts to such conduct that they are not fit to be liquidators. On the contrary, as soon as they found out their mistake they put it right."

17. As to Mr Juer's standing, the judge followed authority, including the recent decision of the Privy Council on an appeal from the Cayman Islands, that is the case of Deloitte & Touche v Johnson [1999] 1 WLR 1605. In giving the judgment of the Privy Council in that case Lord Millett said this at page 1611:

"Where the court is asked to exercise a statutory power, therefore, the applicant must show that he is a person qualified to make the application. But this does not conclude the question. He must also show he is a proper person to make the application. This does not mean, as the plaintiff submits, that he `has an interest in making the application or he may be affected by its outcome'. It means he has a legitimate interest in the relief sought."

18. Jacob J also cited Lord McNaghton in an old case Cavendish Bentinck v Fenn (1887) 12 AC 652 at page 669:

"I cannot think that Parliament intended that a person who happens to come under the description of a creditor or a contributory may take upon himself the functions of a public prosecutor in a matter with which he has really no concern."

19. The judge followed that guidance and said that the application should never have been brought. In his written submissions for permission to appeal, Mr Simon Goldblatt QC has attacked both grounds of the judge's decision. He has also attacked the judge's order for indemnity costs. This afternoon Mr Juer has also in his oral submissions attacked both grounds. While accepting that he must show some financial interest, he has submitted to me that that was established by an assignment dated 11th September 2000 made to Mr and Mrs Juer by the liquidator of EGL. Mr Juer tells me that that assignment was in evidence before the judge, although it is not I think referred to in his judgment. The effect of the assignment was to transfer to Mr and Mrs Juer (on appropriate terms which I need not detail) various possible rights of action vested in EGL in relation to alleged malpractice by Mr Spratt and Mr Lomas, mainly in the course of the administrative receivership of APEL, but also in one instance as liquidators of that company. However, it appears to me that the effect of that assignment, even on the assumption that the rights of action are of value, cannot increase the value of Mr Juer's stake in APEL. Those rights of action, if they are worth anything, are as personal rights of action against Mr Spratt and Mr Lomas and no doubt Price Waterhouse Coopers which stands behind them.
20. I have carefully considered the written submissions made by leading counsel and the oral submissions which Mr Juer has made to me this afternoon. I can only say that having done so, I remain of the clear view that there are no arguable grounds for overturning either of the reasons for the judge's dismissal of the application or for challenging his discretion as to awarding indemnity costs. I agree with the judge that the claim should not have been made. An appeal would be hopeless and I dismiss this renewed application.
Order: Application dismissed.