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 HIGH COURT OF JUSTICE
CHANCERY DIVISION
(Mr Justice Neuberger)

		Royal Courts of Justice Strand London WC2 Tuesday 20th November, 2001

1. LADY JUSTICE ARDEN: This is an application for permission to appeal from the order Neuberger J on 4th April 2001 dismissing the applicant's appeal against the order of Mr Registrar Baister, which in turn dismissed the applicant's applications to stay or annul a bankruptcy order made on 1st June 2000. The decision of Mr Registrar Baister was made on 5th December 2000.
2. The application therefore is for a second appeal. Under CPR 52.13, as Mr Burgess, who appears for Mr Atherton today, has accepted, it is necessary to show that there is an important point of principle and practice involved in the appeal or some other compelling reason why the court should hear an appeal.
3. The bankruptcy order was made on the basis of a debt which was incurred to Mrs Atherton, the applicant's former wife and to whom he was married until 17th January 1996. Mrs Atherton repaid a mortgage with the Bradford & Bingley Mortgage Society which she held jointly with the applicant. The petition debt represents the applicant's share of the liability to the building society. On 25th August 1999 Mrs Atherton assigned the debt to the first petitioner, Mr Ogunlende, and it was on the basis of that petition debt that the bankruptcy order was made.
4. I should say a little about the events in these proceedings. In August 1999 Mr Ogunlende served a statutory demand as assignee of the debt which I have described. Mr Registrar Baister dismissed Mr Atherton's application to set aside the statutory demand on 11th November 1999. On 13th December 1999 Mr Ogunlende presented a bankruptcy petition against Mr Atherton. The petition was then adjourned on three occasions and, as I have said, it was finally heard on 1st June when a bankruptcy order was made.
5. On 13th June 2000 Mr Atherton applied to annul the bankruptcy order. On 8th September he applied to stay the bankruptcy order, and it was on 5th December 2000 that Mr Registrar Baister dismissed those applications.
6. On 5th January 2001 Mr Atherton filed a notice of appeal against Mr Registrar Baister's order. That matter came before Neuberger J on 4th April 2001 when Neuberger J dismissed the appeal. On the occasion when Neuberger J heard the matter, both the petitioners and the applicant were represented by counsel.
7. The first proposed ground of appeal is that the applicant has a real prospect of recovering more than the petition debt from Mrs Atherton in ancillary relief proceedings.
8. Second, the applicant wishes to challenge on appeal the judge's finding that the applicant was in arrears with child maintenance, which the applicant challenges. What the judge said was:

"Mr Atherton did not deny that six months ago he was in arrears to the tune of seven years in relation to the payment of his child maintenance in respect of his three, or it may be more, children."

9. Thirdly, it is sought on appeal to challenge the assignment in that no notice was apparently given of it until service of the statutory demand.
10. Fourthly, reliance is placed on Article 6 of the European Convention on Human Rights.
11. The question of a cross-claim was originally raised on the application to set aside the statutory demand which was dismissed in November 1999. There was no appeal from that order and the appellant's case was that his solicitor substantially let him down. The judge held that it was too late to reopen this issue, and in so doing he relied on Turner v Royal Bank of Scotland [2001] 1 BPIR 688, where the Court of Appeal held that, save in exceptional circumstances grounds unsuccessfully argued on the hearing of a statutory demand cannot be reargued on the hearing of the petition for bankruptcy. That is obviously a binding authority in this case.
12. When this application was opened it became clear that the applicant wished to file a substantial quantity of new evidence. So far as relevant the new evidence goes to three points. The first of those points is that he was not able to attend in person before Neuberger J because of his means. However, as I have said, Mr Burgess appeared on that occasion for Mr Atherton. Second, the applicant deals in more detail with the ancillary relief proceedings, or rather he sets out a calculation of what he says is due to him in those proceedings. He has also done a calculation of the child maintenance arrears, the matter to which the judge referred. That shows, among other things, that his children as of 2001 were all over 18, and the youngest obtained the age of 18 in 2000. So that while the applicant accepts that there may have been some arrears, it is not the case that there have been seven years' arrears as the judge thought. The applicant wishes to clarify that matter.
13. In his calculation of the amounts which he says are due to him in the ancillary relief proceedings, he takes into account the amount on which the petition was based, and then takes into account the properties which were jointly owned by the applicant and his former wife. He says that even having taken all those into account, there is a balance which would be due to him and in his favour. So, as he sees it, he would have a good cross-claim against the petition debt. Moreover, it appears that it was accepted below that it would be possible to raise the question of any amount to which the applicant is entitled to in the ancillary relief proceedings as a cross-claim against the debt, notwithstanding the assignment. I do not seek in any way to go behind that point.
14. The applicant also explains that the ancillary relief matter is due finally to be heard in Blackpool in December 2001. Though Mr Burgess has fairly and frankly told me, as he is bound to do so, that he had reason to doubt whether the application can be effective on that date because the trustee in bankruptcy has not released the action back to the applicant and therefore there will be some delay which may necessitate adjournment.
15. The ancillary relief proceedings have been on foot for a considerable period of time. The parties were divorced in January 1996. The judge refers to the proceedings and says that there had been inactivity in the proceedings. Indeed, that was part of his ground for saying that he did not think that there was substance in the cross-claim that was sought to be set up.
16. The evidence now sought to be put in further indicates that the parties have joint assets worth £500,000, being the amount of an offer received from Red Rose Limited for certain land at Longton Hall Barn, subject however to discharge of a mortgage to Royal Bank of Scotland of £160,000.
17. The information about that particular matter is very sparse indeed and I am not told, for instance, whether or not there were any conditions attached to the offer or when it was made, although Mr Burgess has helpfully told me that the offer was made, it is thought, in December 2000 and that he is not instructed as to the conditions, but understands that it is still open.
18. So far as this evidence is concerned, Mr Burgess frankly accepts, as he must, the evidence was available to be put in at the hearing before Neuberger J at the very latest. It is also, as I see it, extremely sparse on detail. I have already referred to the offer by Red Rose Ltd which lacks detail, but also the court is not told what the issues are in the ancillary relief proceedings. The court is merely given the applicant's own calculation as to what is due.
19. I appreciate that the evidence has had to be prepared no doubt on instructions from the applicant who now lives in Oban and that it is difficult to put all the material before the court. But the fact of the matter is it could have been done, and it could have been done in time for the appeal before Neuberger J. It is also apparent to me that there could well be evidence disputing some of the matters in this witness statement. There must be issues on which it is possible for there to be more than one view, given the little detail which the court is given. Although, of course, the court would only be concerned with whether there was an arguable case that there was a cross-claim, there must be some doubt about the influence which this new evidence could have on the outcome of the appeal.
20. But the real problem for the applicant is that this witness statement could have been put in before. Given that this is a second appeal, my conclusion is that there is no real prospect of obtaining permission from the Court of Appeal to put in this evidence at this point in time. So I must proceed to consider this application without the benefit of that evidence.
21. Mr Burgess has made submissions to me. He puts his points persuasively. His first point is that the bankruptcy court was the wrong forum in which to proceed on the basis of the assigned debt and that the matter should have been dealt with within the scope of the ancillary relief proceedings. There is some difficulty about that submission given that the debt has now been assigned. But as I understand it, the point is really that there an arguable case that there would be a cross-claim at least equal to the petition debt, and that there is a prospect that that amount will be determined in the ancillary relief proceedings. Mr Burgess, in arguing this point, has said that this case is really more analogous to the situation that arose in Winstanley v Winstanley [2001] BPIR 720, where there was a bankruptcy petition presented by a father against a son on one debt, when the son had a cross-claim against the father. The court held that there was a genuine triable issue of the son's claim for damages and that the appropriate forum for proceeding was not in the bankruptcy court, but outside of bankruptcy altogether. On the basis of that case Mr Burgess argues that it is disproportionate to proceed in bankruptcy.
22. The difficulty for Mr Burgess though is that the Winstanley case is significantly different on the facts. First of all, there was no assignment, so it was simply a dispute between the father and the son. But secondly the cross-claim against the father to which the son was entitled was one which had been proceeded with comparatively recently - and that is immediately prior to the presentation of the bankruptcy petition. The son had obtained judgment for damages to be assessed due to his father's unlawful occupation of a farm on 25th April 2000.
23. The bankruptcy petition was presented in May 2000. Thus the court had a sequence of events where the cross-claim was being pursued at much the same time as the father was proceeding by way of bankruptcy proceedings, and the entitlement to damages had crystallised in an order of the court before the petition was preserved.
24. In this particular case the judge notes that very little had happened in the ancillary relief proceedings at all, and that was one of the grounds relied upon for saying that the judge did not consider that there was substance in the ancillary relief proceedings. Even now, it has to be accepted that there is some doubt about when those matters will be heard.
25. So given the position before the judge, it seems to me there is no real prospect of success in arguing that the judge was wrong in his conclusion that there was no real substance in the cross-claim. The proceedings had been started six years previously and had been dormant for a long time. The parties were in dispute about various assets and contributions. In any event, it seems to me the judge was right on the authority of Turner to say that since the cross-claim had been raised on the statutory demand and there had been no appeal against the dismissal of the application to set aside the statutory demand, the matter could not be reopened at the bankruptcy petition stage.
26. So, as I see it, that leaves really the point about the notice of assignment. What Mr Burgess argues is that there was no notice of assignment given until the statutory demand was served. But he does not press this point, because clearly there was notice given when the statutory demand was served. I do not think this point could justify setting aside the bankruptcy order which has been made.
27. So far as the Article 6 point is concerned, plainly Mr Atherton, the applicant, has had access to court. Indeed, he was represented by counsel on the appeal before Neuberger J.
28. In all those circumstances, in my judgment, I direct time for making the application should be extended as sought, but I should refuse the applications to file fresh evidence and for permission to appeal.
ORDER: Application for an extension of time granted; application for permission to appeal and to file fresh evidence refused; detailed assessment of the applicant's community legal funding. (Order not part of approved judgment)