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
(His Honour Judge Boggis QC)

		Royal Courts of Justice Strand London WC2A 2LL Tuesday, 20th November 2001

Tuesday, 20th November 2001

1. LORD JUSTICE CHADWICK: This is a renewed application for permission to appeal from orders made on 26th March and 16th July 2001 by His Honour Judge Boggis QC, sitting as a judge of the High Court in the Chancery Division at Birmingham, on an appeal in bankruptcy proceedings brought by the applicant, Guriqbal Singh Sekhon, against Sukhvinder Singh Bains.
2. The applicant does not appear - either in person or by counsel or a solicitor - at this application. The office file shows that notice of the application was sent to the solicitors on the record. A telephone inquiry of those solicitors has led to the response that the solicitors have not received the office's letter; and that, accordingly, they have not instructed counsel. I am in no position to decide whether or not the letter has been received; but it is plain from the office file that it has been sent. In the circumstances that this is an application for a second-tier appeal and that no grounds have been shown in the papers which would permit the court to give permission to appeal, I propose to deal with the application in the absence of the applicant.
3. The applicant is, or was, landlord of premises at Birmingham Road, West Bromwich, let or formerly let to KSB Designer Suite Ltd. Mr Bains was guarantor of the rent payable by the company under the lease of those premises. Over the period May 1999 to March 2000 the company fell into arrears in the payment of rent. By the end of March 2000 the amount of the arrears was £5,633; and there was interest due on each unpaid instalment of rent. On or about 1st April 2000 the applicant served a statutory demand on Mr Bains for unpaid rent and interest - a total debt of £5,931.29. No payment was made in response to that demand, although an offer to pay a lesser amount by instalments was made in April 2000. On 19th May 2000 the applicant presented a bankruptcy petition in the Birmingham County Court. Notice of intention to oppose the making of a bankruptcy order was filed on 19th June 2000. The grounds of opposition were that Mr Bains had offered to secure the debt and to pay it off by instalments over 10 months. By a letter dated 26th May 2001 - that is a week after the presentation of the petition - his solicitors sent four post-dated cheques - making up together the amount of the bankruptcy debt - for presentation on 1st July, 1st August, 1st September and 1st October 2001. Further, they offered to pay £800 towards the costs of the petition. That offer was repeated in a letter of 12th July 2000.
4. The debtor's solicitors drew attention in their letters to the provisions of section 271(3) of the Insolvency Act. The subsection is in these terms:

"The court may dismiss the petition if it is satisfied that the debtor is able to pay all his debts or is satisfied-

(a) that the debtor has made an offer to secure or compound for a debt in respect of which the petition is presented,

(b)that the acceptance of that offer would have required the dismissal of the petition, and

(c)that the offer has been unreasonably refused;

and, in determining for the purposes of this subsection whether the debtor is able to pay all his debts, the court shall take into account his contingent and prospective liabilities."

5. The petition was listed for hearing on 26th July 2000. There was no agreement as to the amount of the petitioner's costs that should be paid by the debtor. The petitioner's solicitors were seeking costs of £2,000; an amount which was quite disproportionate to the amount of the bankruptcy debt. The petition was adjourned. It eventually came before District Judge Owen on 24th January 2001. In the meantime the petitioner had obtained a bankruptcy order in circumstances in which the debtor had not had notice of the appointment. That order had been set aside.
6. On 24th January 2001 District Judge Owen took the view that the offer that had been made prior to 26th July 2000 - and in particular the offer contained in the letter of 12th July 2000 -ought to have been accepted. To put the point in the language of section 271(3) of the 1986 Act, he was satisfied that the offer had been unreasonably refused. He dismissed the petition. He directed that Mr Bains pay the applicant's costs up to and including 26th July 2000 (that being the date of the first hearing) and that the applicant pay Mr Bains' costs after that date. The reason for that order is that it was the District Judge's view that the petition was properly presented but that it should not have been pursued after the first hearing on 26th July 2000. By that time there was an offer which ought to have been accepted and the refusal of which would have led to a dismissal under section 271(3) of the 1986 Act.
7. The petitioner appealed to the High Court. That appeal came before His Honour Judge Boggis QC on 26th March 2001.
8. The first ground argued before the judge was that the District Judge had failed to apply the correct test under section 271(3) of the 1986 ACt. It was said that the District Judge had asked himself whether the offer was reasonable; and that he had not asked himself the correct question, namely whether the offer had been unreasonably refused. In the light of the District Judge's finding, expressed in his judgment, that the offer could and should have been accepted, I find it difficult to see how that argument could have had any prospect of success on the facts in this case. But His Honour Judge Boggis QC did not find it necessary to address that question. As he said, the real issue before him was how he should deal with the matter; given what he described as the valiant attempts made by the debtor to pay off the debt. Those efforts included a letter of 11th January 2001 from Mr Bains' solicitors in which they had offered to settle the matter on terms that Mr Bains paid, by way of cheque, the whole of the debt of £5,931.29 and that the petitioner's reasonable costs be determined by the court, save for the costs of the then forthcoming hearing listed for 24th January 2001. That was, if I may say so, a sensible proposal to avoid the costs of yet another unnecessary hearing in this matter.
9. His Honour Judge Boggis QC was told that offer had been refused because the creditor, on the advice of his solicitor, was not prepared to accept the debtor's cheque. As the judge pointed out, however, the offer was made at a time when there was ample opportunity for the cheque to be presented and cleared before the hearing on 24th January 2001. The judge said this:

"If the monies had been forthcoming, the offer, having been accepted, the debt having been paid, the costs would be determined by the Court, there would be no attendance on 24th January - that would have been dealt with by letters to the Court accepting that there had been a deal - and that would have been an end of the matter. Now, here we are, almost at the end of March 2001, and still arguing about whether the debt has been paid, or can be paid, and arguing about the costs of the proceedings. I do not think that does anyone any good at all."

10. If I may say so, I agree.
11. As to costs the judge said this:

"The question then is the question of costs. As it seems to me, the fault for the matter getting as far as it has today is squarely at the feet of the solicitor for the creditor, who has been obdurate in declining the offers made on behalf of a debtor in his letters in January 2001. It seems to me that he has gone out of his way to stop the debt being paid, and to cause additional costs to be incurred completely unnecessarily. When a debtor is seeking to discharge a debt, it seems to me that it does not help anybody for the creditor's solicitor to present quite so many obstacles in seeing if the money can actually be paid, because that is what his client was most concerned for, namely to get himself paid.

So how do I deal with this as far as the costs are concerned? I think the fairest way of disposing of this matter is to say that the District Judge's order was right and should stand, and that the costs of this appeal should be borne by the creditor, because this appeal is wholly unnecessary in the light of the correspondence emanating from the debtor's solicitors in January of this year."

12. The judge gave liberty to apply to himself on notice. Plainly he was concerned to cover the possibility that the debtor's cheque would not be issued or (if issued and presented) would not be honoured. But the applicant's solicitor appears to have taken the view that the liberty to apply provided a further opportunity to invite the judge to reopen the matters upon which he had already given his judgment. The judge rejected that invitation and dismissed the application on 16th July 2001.
13. The applicant now seeks permission to appeal from the judge's order of 26th March and 16th July 2001. The grounds in the appellant's notice are these:

"1. The Judge was wrong in law to refuse the appeal in that the Creditor was right in law to refuse the Debtor's offer of April 2000 being dishonest and/or a deception.

2. The Judge denied the Creditor Natural Justice by raising issues not before him and denying the opportunity to make proper response.

3. The Judge permitted intervention by the Debtor's Solicitor direct over head of Debtor's Counsel, to Judge with allegation which was false and did not call for response on behalf of Creditor but acted upon the information.

4. The Judge rebuked and threatened Creditor's Solicitor with expulsion from his Court when the Solicitor straineously attempted to attract Counsel to instruct him upon the issues raised by the Judge.

5. Adjourned the proceedings to enable the Debtor to give instructions on payment of the debt but did not the accord similar privilege to the Creditor who wanted to instruct Counsel upon the new issues raised.

6. Failed to read the affidavits of the Parties in the Trial Bundle before him because it was a "True Appeal" albeit the new issues were outside that ambit and the affidavits had relevant information to the new issues raised.

7. Upheld a costs order of the District Judge which was inconsistent with the finding of His Honour that the offer 20th January 2001 ought to have been accepted and having accepted that the offer of April 2000 was properly rejected.

8. The judge was wrong to hold that he had no jurisdiction to recall his costs order of 26 March and he ought not to have treated the application as one to show cause when a transcript of his judgment was not available to the Creditor."

14. It may be observed that insofar as those grounds of appeal proceed on the basis that any court has held that the creditor was not entitled to refuse the offer of April 2000, they are misconceived. It is plain that the reasoning behind the order which the District Judge made was that the creditor was entitled to refuse the offer made in April 2000, but was not acting reasonably when he refused the better offer made in May and July of 2000.
15. The grounds set out under paragraphs 2 to 6, if supported by a transcript of the proceedings, might lead to the conclusion that there was some compelling reason for the Court of Appeal to hear an appeal in this matter on the basis that the petitioner had not had a fair hearing below. But it is significant that none of those matters are rehearsed in the skeleton argument prepared on behalf of the applicant by counsel and dated 27th September 2001. Not only are they not rehearsed in the skeleton argument, but there is no material in the bundle which supports them. In those circumstances they are not grounds to which any weight can be given.
16. The skeleton argument raises two points. First, that the judge was wrong to hold that the costs orders made by the District Judge should stand on the basis that he did not enter into the question whether or not the District Judge's substantive order dismissing the petition was correct. Second, that the judge was wrong to require the petitioning creditor to pay the debtor's costs of the appeal because the judge did not dismiss the appeal on the grounds that it was unmeritorious.
17. That is the position on the material before me. I have had the benefit of reading the arguments that would be put forward by counsel, if counsel were present, as set out in his skeleton argument. It is necessary to keep in mind that this is an application to pursue an appeal which falls within section 55(1) of the Administration of Justice Act 1999 and CPR 53.12. It is an appeal from an order made in the High Court on an appeal from an order made by a District Judge. This court cannot give permission to appeal unless satisfied that there is some important point of principle or practice raised by the proposed appeal or that there is some other compelling reason why the appeal should be entertained by the Court of Appeal. No attempt has been made to show that either of those conditions are satisfied, and I can find nothing in the material which suggests that any such attempt could succeed. In those circumstances, rather than relist this matter for a hearing at which counsel can rehearse the arguments already put forward in the skeleton argument - with further expense and delay - it is my view that the correct course is to dismiss this application for permission to appeal on the grounds that it would be bound to fail.
18. So that the applicant may know the basis upon which I have reached the conclusion that the application be dismissed, I direct that a transcript of my judgment be prepared at public expense and sent to the applicant's solicitors. A copy should also be put on the file.
Order: Application dismissed. As above.