England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE SOUTHAMPTON COUNTY COURT
(His Honour Judge Anthony Thompson QC)

		Royal Courts of Justice Strand London WC2 Friday, 23rd February 2001

1. LORD JUSTICE CHADWICK: This is an appeal against an order made on 24th March 2000 by His Honour Judge Anthony Thompson QC, sitting in the Southampton County Court, in proceedings brought by Mr. Neil Turner against Haworth Associates, a firm. That order was itself made on an appeal from an order made on 14th March 2000 by District Judge Ainsworth. By his order of 14th March the District Judge had discharged an injunction which he had granted without notice against Mrs Patricia Grieves (also known as Patricia Carter Pennington) on an application which Mr. Turner had made to him on 8th March 2000. The District Judge directed, also, on 14th March that Mr. Turner should not take any further steps in the action, save through his trustee in bankruptcy, without first obtaining the leave of the court.
2. As the order of 14th March 2000 suggests, Mr. Turner was then the subject of a subsisting bankruptcy order. He had been adjudicated bankrupt on 6th June 1997. A trustee in bankruptcy had been appointed on 13th February 1998. An appeal against the bankruptcy order was dismissed by the High Court on 12th March 1998; and a further appeal was dismissed by this court (Aldous LJ, Buxton LJ and myself) on 30th June 2000. By that date, of course, Mr. Turner had been discharged from the bankruptcy under the automatic provisions contained in section 279 of the Insolvency Act 1986. But whatever property had vested in the trustee in bankruptcy under section 306 of that Act was not affected by that discharge.
3. Mrs Grieves, or Mrs Carter Pennington (which is the name by which she prefers to be known), is the owner of property known as Bashley House, New Milton, Hampshire. The property was conveyed to her in June 1984. Some years earlier, in 1981, Mr. Turner, together with a co-purchaser, Mrs Mary Tyler, had purchased from the then owner of Bashley House a parcel of land - comprising, in part, woodland - which had become known as Beech Pond Farm. Beech Pond Farm has a common boundary with the retained parts of Bashley House. The land was registered at Her Majesty's Land Registry in the names of Mr. Turner and Mrs Tyler as trustees for sale under title number HP 55 3638.
4. In or about 1987 Mr. Turner agreed with Mr. Colin Haworth, a partner in the firm of Haworth Associates, for a survey of the land at Beech Pond Farm. That survey led to litigation between Mr. Turner and Haworth Associates of which the present proceedings (that is county court proceedings 9312605) forms a part. The particulars of claim in the present proceedings were delivered on 10th October 1993. Mrs Carter Pennington was not a party to those proceedings. The claim was against Haworth Associates, and was for damages for breach of contract and for breach of confidence. Mr. Turner has made a number of applications to join Mrs Carter Pennington in the present proceedings. No order for her joinder has ever been made. The most recent application to join her in the proceedings was made by notice dated 8th March 2000 and was before the District Judge at the hearing on 14th March 2000.
5. On the appointment of the trustee in bankruptcy in respect of the estate of Mr. Turner, the beneficial interests of Mr. Turner and Mrs Tyler in the Beech Pond Farm land were severed (insofar as they had previously been joint tenants in equity) and the undivided share of Mr. Turner vested in the trustee. The title, however, remained registered in the names of Mr. Turner and Mrs Tyler.
6. In October 1999, Mrs Carter Pennington purchased the whole beneficial interest in the Beech Pond Farm property. She did so (i) by the purchase, at a price of £15,000, from the trustee in bankruptcy of Mr. Turner's undivided share, and (ii) by the purchase at a price of £20,000 from Mrs Tyler of her undivided share. Those purchases were completed by assignments dated, respectively, 4th and 5th October 1999. Unless and until those assignments are set aside at the suit of the trustee in bankruptcy or Mrs Tyler, the position is that Mr. Turner and Mrs Tyler hold the legal estate of Beech Pond Farm property as bare trustees for Mrs Carter Pennington, who is entitled to the whole of the beneficial interest.
7. The immediate dispute between Mr. Turner and Mrs Carter Pennington arises from her attempts to take possession of and enjoy the property at Beech Pond Farm which she had purchased. On 8th March 2000 Mr. Turner issued an application in the Southampton County Court in which he sought relief under the following heads: (i) an order joining Mrs Carter Pennington as a party to the action 9312605, and for permission to amend the particulars of claim in the form of a draft annexed to the application so as to pursue a cause of action against her; (ii) an injunction restraining her from entering the premises known as Beech Pond Farm, there described by reference to two title numbers, HP553638 (which is the title in respect of which Mr. Turner and Mrs Tyler are registered), and HP 260449; (iii) an order that Mrs Carter Pennington remove the locks and chains by which she had sought to secure the premises, and (iv) an order that she make an affidavit stating what had happened to items of plant, equipment, fuel oil, hay, vehicles, etc, which (it is said) she had seized and disposed of when she entered the premises.
8. That application was supported by an affidavit (Mr. Turner's sixth affidavit in these proceedings) sworn by Mr Turner on 8th March 2000, with an exhibit, (exhibit "NOT 7"). It was on the basis of that affidavit that the District Judge made the order that he did make on 8th March. That order, as I have said, was made without notice to Mrs Carter Pennington. It did not restrain her from entering upon the land at Beech Pond Farm. It was limited to a restraint on removing, damaging or interfering with any structure or building on those premises, and it was limited in time until a return date on 14th March.
9. When the matter came back before the District Judge on 14th March there was much further evidence. On the one side, there was the affidavit of Mrs Carter Pennington sworn on 12th March 2000, to which there were exhibited witness statements made under the Magistrates' Courts Act by Philip Cramer, the manager of the Bashley House Hotel, on 18th November 1999, and by Mrs Carter Pennington on 17th November 1999, correspondence in 1999 between her solicitors and the solicitors acting for the trustee in bankruptcy, a letter dated 23rd February 2000 from Mrs Carter Pennington's solicitors to Mr. Turner, inviting him to join in a transfer to her of the legal estate (which, in the events which had happened, he held as bare trustee), and copies of the assignments of the beneficial interests from the trustee in bankruptcy and Mrs Tyler. On the other side, there was an affidavit (his seventh affidavit in these proceedings) sworn by Mr. Turner on 14th March 2000, with exhibit "N0T 8", statements signed on the same day by Susan Gunson and by Claire Ellis, and an affidavit sworn by Robin Denson.
10. It was on the basis of that material that, at a hearing on 14th March 2000 at which Mr. Turner appeared in person and Mrs Carter Pennington was represented by counsel, the District Judge dismissed the application to continue the injunction which he had granted six days earlier, on 8th March.
11. We have been provided with a transcript which sets out the District Judge's reasons for the order which he made on 14th March. He began by observing that he can see no connection whatsoever between the relief sought against Mrs Carter Pennington in the proposed amended particulars of claim and the relief sought in the action against Haworth Associates. He went on to point out that he had already made a finding, reflected in a previous order, that, whatever cause of action Mr. Turner had against Haworth Associates had vested in his trustee in bankruptcy, and that until an order of the Bankruptcy Court reversed that position, Mr. Turner had no claim against Mrs Carter Pennington in relation to matters which had vested in the trustee in bankruptcy.
12. That was a reference to an order which had been made on 18th August 1999. By that order (the order of 18th August 1999), made in the presence of Mr. Turner and counsel for Haworth Associates, the court declared that it had found that the whole action in 9312605 had vested in Mr. Turner's trustee in bankruptcy. The court ordered that all proceedings be stayed pending the decision of the Court of Appeal in relation to the bankruptcy, and that an application (then before the court) to amend the particulars of claim and to join the second defendant, Mrs Carter Pennington be adjourned with liberty to restore.
13. The position as at 18th August 1999 (when that order was made) was that Mr. Turner had obtained permission from this Court to appeal against the decision of the High Court dismissing his appeal against the bankruptcy order. That remained the position as at 14th March 2000 when the District Judge made the order which has given rise to the current appeal. The appeal against the bankruptcy order had not been finally determined. Now that it has been finally determined and the bankruptcy order is no longer capable of challenge, the position under the order of 18th August 1999 is that all causes of action in those proceedings are vested in the trustee in bankruptcy and the proceedings are stayed unless and until it is adopted by the trustee in bankruptcy. That is an action in which Mr. Turner has no locus standi whatsoever. If the action is to be pursued, it can only be pursued by the trustee in bankruptcy.
14. Mr. Turner appealed to the circuit judge against District Judge Ainsworth's decision of 14th March 2000. He sought an order that paragraphs 2 to 4 of that order should be set aside and that Mrs Carter Pennington should be joined in the action. The effect of such an order (if made) would have been that the injunction, granted without notice, would or might have revived, and that the bar imposed by the order of 14th March 2000 against Mr. Turner taking any steps in the proceedings 9312605 save through his trustee in bankruptcy, unless he had first obtained the permission of the court, would have gone. Also, the order for costs made against him would have gone.
15. The notice of appeal against District Judge Ainsworth's order is dated 22nd March 2000. It has, in manuscript, a time estimate, written I think by Mr. Turner just above his signature, of one day. When the notice of appeal came before Judge Anthony Thompson QC for preliminary consideration, he took the view that he could deal with it on paper and without a hearing. He ordered that the appeal be struck out. That is the order made on 24th March 2000 against which Mr. Turner appeals to this court.
16. Judge Anthony Thompson QC took that course for reasons which were conveyed to Mr. Turner by a letter dated 28th March 2000 from the Court Service:

"The notice of appeal is frivolous and vexatious and is otherwise an abuse of process, and is hereby struck out.

By an order made on 18 August 1999 District Judge Ainsworth held that the whole action in this case vests in the claimant's Trustee in Bankruptcy. That order still stands. Unless and until the claimant is discharged from bankruptcy he has no standing to bring the appeal."

17. The order of 18th August 1999 is the order to which I have already referred.
18. Mr. Turner sought permission from this court to appeal from the order made by the circuit judge. That application came before this court (Robert Walker LJ) on 4th October 2000. Permission was granted. In giving permission Robert Walker LJ set out the history of the disputes - including much of the history in bankruptcy proceedings - and identified the four points which, as it appeared to him, Mr. Turner was then seeking to take on an appeal. They appear in paragraphs 18, 19, 20 and 21 of his judgment:

"18. First, that he is still the owner of a bare legal estate, even if the entirety of the beneficial interest in the land has been acquired by Mrs Grieves.

19. Second, a point based partly on section 337 of the Insolvency Act 1986 and also, as Mr Turner has explained to me this morning, on the normal practice of trustees in bankruptcy when a bankrupt is in occupation of land.

20. Third, the point on section 283(2) of the Insolvency Act, which I have already mentioned.

21. Fourth, that the District Judge was wrong in treating himself as necessarily bound by his decision of 18th August [1999], since that decision was given at a time when the only issues in the action were issues against Haworth Associates, to which none of the preceding three points could possibly apply."

19. The Lord Justice went on to say this, at paragraphs 22 to 24 of his judgment:

"22. I cannot myself see any force in the first or second point on the facts as I understand them. However, I think there may possibly be something in the third and fourth points. Moreover, the justice of the case is, to my mind at least, affected to some extent by the trustee in bankruptcy's apparent disregard of what the Court of Appeal said when granting Mr Turner permission to appeal last year. The fact that that appeal was ultimately unsuccessful does not, to my mind, wholly remove that factor.

23. I think it is arguable that the circuit judge should not have struck out the appeal in the summary way in which he did, without giving Mr Turner a chance to defend it as an arguable appeal. Power to strike out a notice of appeal is given by rule 52.9(1) and (2) of the Civil Procedure Rules, but paragraph (2) indicates that the power to strike out should be exercised only for a compelling reason.

24. Without, therefore, giving Mr Turner any particular encouragement, I grant him permission to appeal. Even if this is regarded as a second tier appeal (which is possibly debatable), it seems to me that an important point of principle is involved."

20. The reference in paragraph 22 of that judgment to what the Court of Appeal had said on an earlier occasion was a reference to an observation of Robert Walker LJ himself, when giving permission on 15th July 1999 to appeal against the bankruptcy order. He had said that the trustee in bankruptcy should consider carefully whether he should take any further steps in the realisation of Mr. Turner's assets while the appeal was pending. Although the appeal against the bankruptcy order was subsequently dismissed - as I have already indicated - on 30th June 2000, Robert Walker LJ was plainly troubled that the trustee in bankruptcy had in October 1999 thought it right to dispose of assets subject to the bankruptcy - that is to say, during the period that the appeal was pending in this court, and, particularly, without any apparent regard to his own observations made a few months earlier.
21. Before turning to the point which Mr. Turner seeks to raise in his notice of appeal dated 16th October 2000, it is convenient to address the four points which Robert Walker LJ identified in his judgment of 4th October. The first was that Mr. Turner was still the owner of a bare legal estate, even if the entirety of the beneficial interest in the land had been acquired by Mrs Grieves. The true position, as I sought to explain, is that Mr. Turner was a co-owner of the registered title with Mrs Tyler. The point is a short one. Is a person who is owner of the bare legal estate entitled to bring proceedings in trespass against the person who holds the whole beneficial interest; or, to put the point another way round, is there any reason in law why the person who holds the whole beneficial interest should not enjoy the property as he wishes without interference from a bare trustee? Robert Walker LJ thought that there was nothing in Mr. Turner's contention on that point. If I may say so, I respectfully agree with him. The fact that Mr. Turner remains on the title is irrelevant.
22. The second point is based on section 337 of the Insolvency Act 1986. That is a section which requires the trustee in bankruptcy to obtain an order for possession of residential property before taking possession of that property. This is not a case in which the trustee himself was seeking to take possession of the Beech Pond Farm property. It was Mrs Carter Pennington who was seeking to take possession of that property. Like Robert Walker LJ, I see nothing in the point.
23. The third point, on section 283(2) of the Insolvency Act 1986 arises because Mr. Turner asserts that some of the items which were, as he alleges, seized and disposed of by Mrs Carter Pennington following her entry into the property in November 1999, were tools of his trade, or personal chattels belonging to him, or personal chattels belonging to third parties which did not form part of his estate, either because they were excluded from the estate by section 283(2) of the Insolvency Act 1986 or because Mr. Turner was holding them for someone else as a trustee. That is a point which has never been resolved; and, as it seems to me, is unlikely ever to be resolved short of a trial. It is not a point which the district judge could have resolved in the application before him; nor was it a point which bore on the injunction which he had granted. His injunction was concerned with buildings on the land, not with chattels. More to the point, if Mr. Turner has an action in relation to the conversion of chattels which have not vested in the trustee - either because they were excluded from the estate by section 283(2) of the 1986 Act or because they were chattels which he was holding as a trustee - that is an action which he can pursue in his own name against either the trustee or against Mrs Carter Pennington. But it does not follow from that that it is a claim which can be pursued in the present action.
24. The fourth point that Robert Walker LJ identified was that the District Judge was wrong in treating himself as necessarily bound by his decision of 18th August 1999. True, that was a decision taken at a time when the only issues in the action were issues against Haworth Associates. But that remains the position until Mrs Carter Pennington is joined in the action. The fact that there may be causes of action which Mr. Turner can pursue against Mrs Carter Pennington does not lead to the conclusion that those causes of action can be pursued in the present proceedings. The relevant question is whether it is sensible to join in proceedings where the causes of action are vested in the trustee in bankruptcy and are against Haworth Associates new claims which are vested (if they exist at all) in Mr. Turner personally, and where the person against whom they are made is not Haworth Associates but Mrs Carter Pennington.
25. The further point which Lord Justice Robert Walker regarded as arguable was whether the circuit judge should have struck out the appeal in the summary way in which he did without giving Mr. Turner a chance to defend it as an arguable appeal. Robert Walker LJ referred to the power now conferred by CPR 52.9 in the Civil Procedure Rules 1998. CPR 52.9(1) gives to an appeal court power to strike out the whole or part of an appeal notice. But sub-rule (2) provides that the court will only exercise that power where there is a compelling reason for doing so.
26. If, indeed, Judge Anthony Thompson had regard to CPR 52.9, then he must have been satisfied that there was a compelling reason to exercise that power. His view, reported in the letter of 28th March 2000, was that the notice of appeal was frivolous and vexatious and otherwise an abuse of the process. As a matter of principle, it seems to me that there is a compelling reason to strike out an appeal where the court regards the appeal as an abuse of its process; particularly when, as identified by the judge, the abuse lay in seeking to go behind the existing order of 18th August 1999.
27. Mr. Turner, however, points out to us that CPR 52.9 was not an applicable rule at the date when Judge Anthony Thompson made his order on 24th March. It was not an applicable rule because the rules in CPR Pt 52 came into force only on 2nd May 2000 - as Brooke LJ pointed out in the judgment given in this court in Tanfern Limited v Cameron-MacDonald [2001] WLR 1311, 1313. The position, as at 24th March 2000, was that appeals to the circuit judge in the county court were governed by County Court Rule 37,r.6.
28. Mr. Turner sought to persuade us that the present appeal should be allowed on the narrow ground that the circuit judge, sitting in the county court, had no jurisdiction to dismiss his appeal without a hearing. I am not persuaded that that submission is correct. It seems to me that the practice which is now embodied in CPR 52.9 reflects the jurisdiction which a court must have in order to safeguard its own proceedings from abuse; and to deal with an appeal in a summary manner if it thinks that appropriate. Be that as it may, I am in no doubt that the proper course for the circuit judge to have taken - if he thought that the notice of appeal disclosed an abuse of process - was to fix a hearing at which Mr. Turner was required to show cause why the notice of appeal should not be struck out.
29. That would have been a hearing at which no notice needed to be given to the respondents, either Haworth Associates or Mrs Carter Pennington; but it would have given Mr. Turner the opportunity to explain to the circuit judge why the circuit judge's provisional view that the appeal was frivolous and vexatious and an abuse should be reconsidered. Mr. Turner did not have that opportunity in front of the circuit judge. That seems to me to have been unfortunate. However, he has now had the opportunity to raise his concerns in this court.
30. The question in this court is what should be done on the appeal. There is no purpose in sending the matter back to the circuit judge if it can be determined here.
31. The points which Mr. Turner seeks to raise in his notice of appeal dated 16th October 2000 may be summarised as follows: First, that the circuit judge was wrong to dispose of his appeal from the district judge without a hearing. That is the point to which I have just referred. Second, that the circuit judge was wrong to take the view that the causes in action in conversion had vested in the trustee in bankruptcy. Insofar as the causes of action in conversion related either to chattels which were tools of the trade, or to chattels which Mr. Turner held as trustee or bailee for someone else, or to chattels which had been acquired after the date of the bankruptcy, Mr. Turner is right to say that the causes of action in conversion vest in him and do not vest in the trustee in bankruptcy. But, as I have already indicated, that does not answer the question whether those causes of action should be pursued in the present proceedings. Third, that the circuit judge was wrong to take the view that the causes of action based on registered title - which had remained throughout in Mr. Turner and Mrs Tyler - had vested in the trustee in bankruptcy. That is a reflection of the first point which Robert Walker LJ identified in his judgment of 4th October. He thought nothing of it and nor do I, for the reasons which I have sought to explain already. Fourth, that the causes of action which Mr. Turner wishes to pursue were not within the District Judge's order of 18th August 1999. Again, insofar as those causes of action arose after the date of the bankruptcy or were in respect of chattels which never formed part of the bankruptcy order, that must be right; but again it does not answer the question whether those causes should be pursued in these proceedings. Those four grounds are set out in seven numbered paragraphs in the notice of appeal, but those seven numbered paragraphs can, I think, fairly be reduced to those four grounds which I have identified.
32. It is, I think, important to keep in mind that the order of 14th March 2000, which Mr Turner appealed to the circuit judge, was an order discharging an injunction which had been granted without notice. The injunction had restrained Mrs Carter Pennington from removing or damaging structures or buildings on land of which, on the evidence before the District Judge on 14th March 2000, Mrs Carter Pennington was plainly the beneficial owner. Properly understood, the position was that Mr. Turner, as one of the bare trustees in whom the legal title was vested, had obtained without notice an injunction restraining the person entitled to the whole of the beneficial interest from dealing with the land as her own; and had done that on the basis of an affidavit which made no reference to the assignments which Mrs Carter Pennington had taken from the trustee in bankruptcy and Mrs Tyler although, plainly, he knew of those assignments. In my view, it is beyond argument that the District Judge was entitled, on 14th March 2000, to discharge the injunction which he had granted without notice some six days earlier. Indeed, as it seems to me, there was no other course which he could properly have taken on the material then before him.
33. It is important to keep in mind, also, that Mrs Carter Pennington has never been a party to the present action. The present action was brought against Haworth Associates in relation to events which had happened in 1987 or thereabouts. It seems to me, again, beyond argument that, whatever cause of action Mr. Turner may have, or may have had against Haworth Associates, that cause of action vested in the trustee in bankruptcy under section 306 of the Insolvency Act 1986. That had been held in the order of 18th August 1999. There has been no appeal against that order; and I have identified no basis upon which there could have been any appeal against that order. Like the District Judge, I can see no reason at all why claims which Mr. Turner wishes to bring against Mrs Carter Pennington - whether or not they be claims which can be sustained at law - should have been joined in actions commenced in order to pursue quite different claims against Haworth Associates. At least, the question whether or not to join Mrs Carter Pennington as a party to the present action was plainly a matter for the discretion of the District Judge, and there is no basis upon which an appellate court - whether that be the county court or this court - could properly interfere with a decision that she should not be joined.
34. The position now is a fortiori, in that the action against Haworth Associates is vested by reason of the order of 18th August 1999 in the trustee in bankruptcy; and the subsequent order of this court on 30th June 2000 dismissing Mr. Turner's appeal against the bankruptcy order destroys any possibility that those causes of action could re-vest in Mr. Turner, without there being an assignment of them from the trustee in bankruptcy.
35. Before leaving the matter, I should refer to the fact that this is not the first occasion that Mr. Turner has obtained an injunction on a hearing without notice against Mrs Carter Pennington which has subsequently been discharged on terms that he should pay the costs of doing so. District Judges in Southampton County Court who are faced with applications made without notice by Mr. Turner against Mrs Carter Pennington may wish to have in mind the history of unsuccessful and unjustified applications of that nature. They may also wish to have in mind the well established practice that a party who seeks an order without notice is required to give a cross-undertaking as to damages which can be seen to be of some value; and that a party who seeks an order without notice is required to make full and frank disclosure to the court. If those matters are borne in mind, it may be that, in future, there will be fewer injunctions against Mrs Carter Pennington and others on applications made by Mr Turner without notice granted by district judges in the Southampton County Court.
36. For the reasons which I have sought to explain, I am in no doubt that this appeal should be dismissed.
37. LADY JUSTICE HALE: I agree.
Order: Appeal dismissed with costs assessed summarily at £4,500. (Order not part of the judgment of the court)