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
(IN BANKRUPTCY)
LEEDS DISTRICT REGISTRY
(His Honour Judge Behrens
(sitting as a deputy High Court judge))

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

1. LORD JUSTICE ALDOUS: I invite Lord Justice Mummery to give the first judgment.
2. LORD JUSTICE MUMMERY: This is an appeal from the order of His Honour Judge Behrens in Leeds on 15th August 2000. He dismissed an appeal from an order made by District Judge Young on 11th July. He refused permission to appeal. On 8th December Arden LJ granted permission to appeal to this court.
3. The District Judge (whose decision was affirmed by His Honour Judge Behrens) had refused to set aside a statutory demand and went on immediately to make a bankruptcy order. The bankruptcy order was made against Mr Richard David Winstanley (who I shall refer to as "the son") on the petition of his father, Mr Ralph Winstanley (who I shall refer to as "the father").
4. The history of this very unfortunate dispute goes back a long way. The father is the owner of a property called Manor Farm, Moss Wood, Moss in South Yorkshire ("the farm"). He allowed his son to occupy it. First, the farmhouse and then later the farm.
5. The arrangements between them relating to the use and occupation of the farm are set out in a memorandum of agreement made in January 1991. As this is at the heart of the disputes which subsequently arose, I should quote it in full. The document is headed "Memorandum of agreement" and reads:

"I, Ralph Winstanley, currently resident in Tenerife, United Kingdom being care of Grange farm, Moss, Askern, Doncaster hereby confirm that with effect from Friday 4th January 1991 I have agreed with immediate effect to let to my son Mr Richard David Winstanley the farm property known as Manor Farm, Moss, Askern, Doncaster, South Yorkshire, the tenancy extending to the whole of the farm property including the farmhouse currently leased by my son at an annual rental of £460, payable half yearly, the first rent being due at this date with future rents being payable on the 2nd August and 2nd February.

The rental agreed takes into account the separate agreement between my son and myself that I will be permitted to graze horses on the land and to use the farm buildings in connection with the stabling of horses and other activities which I may wish to conduct with the agreement of my son, subject to these operations not being in conflict with the farming operations of my son.

I confirm that it is our agreement that the tenancy of Manor Farm in favour of my son is effective from Friday 4th January 1991."

6. There is then the signature of Mr Ralph Winstanley, and beneath that this:

"I, Richard David Winstanley of Manor Farm, Moss, Askern, hereby confirm my agreement to entering into the tenancy of the agricultural property Manor Farm, Moss, Askern on the terms detailed above, and that with effect from Friday 4th January 1991 I hold the tenancy of the property subject to payment of the annual rent detailed of £460 per annum."

7. Unfortunately the father and the son fell out. The son gave his father notice to terminate the agreement permitting the grazing of horses on the land and use of farm buildings in connection with stabling. The agreement terminated in February 1993. This led to litigation.
8. Proceedings were started on 19th February 1993 by the son against his father. In those proceedings he sought an injunction restraining his father from trespassing on the farm, or disturbing the son's quiet enjoyment of it in any way. He also sought an injunction restraining the second defendant, Nina Winstanley, from trespassing on the farm or interfering with his use and enjoyment of it. He sought an order for possession of all parts of Manor Farm occupied by his father and Nina Winstanley, and damages.
9. There were other proceedings in which monetary claims were made by the father against the son and the son against the father. Those proceedings were heard by His Honour Judge Behrens. He gave a judgment on 6th August 1997. He declared that the son had a lien over the farm to the value of £6,000. He also ordered that the father was entitled to judgment on a counterclaim in the sum of £20,765, together with interest in the sum of £10,752.29 to 8th August 1997, and continuing thereafter at the daily rate of £4.55 until payment. Orders for costs were made. The father was ordered to pay to the son half of his costs of the claim and the son was ordered to pay to his father the costs of his counterclaim. The costs were to be taxed if not agreed.
10. The son appealed to the Court of Appeal. On 22nd July 1999 the Court of Appeal dismissed his appeal with costs.
11. In the meantime there were more legal proceedings. I should explain that, notwithstanding the issue of the proceedings by the son against his father in relation to the occupation of the property, the father continued to occupy the farm which he had let to his son under the 1991 memorandum of agreement.
12. The proceedings about the occupation of the farm were brought in the Doncaster County Court. They were the subject of an order made by Deputy District Judge Edwards on 7th January 1998. The Deputy District Judge dismissed an application by the father to strike out the proceedings for want of prosecution, reserving the costs of that application to the trial judge. Directions were made for the exchange of experts' reports and the exchange of witness statements, and leave was given to amend and re-serve the particulars of claim by adding a prayer for a declaration as to the occupation rights of the parties in respect of the property in question – that is the farm – and the matter was listed for trial by a Circuit Judge with a time estimate of two days. The judge was to try, not the claims for injunctions or for damages, but only the claims for a declaration added by amendment and the claim for possession.
13. The case was tried by Mr Recorder Kealy, who gave a judgment on 8th July 1998. His findings were that, on the basis of the memorandum signed in January 1991, the son was entitled to an agricultural tenancy of the farm, that he had been unlawfully excluded from it by the father, who had been in unlawful occupation of it since 4th February 1993, and that the son was entitled to possession of the farm as against the father.
14. The judge did not make an award of damages. He gave no direction for the assessment of damages suffered by the son in consequence of the loss of his right as tenant to the occupation of the farm during the period already mentioned.
15. The Recorder is not to be criticised for this since, as already indicated, it was not directed that he should try the issue of damages. But it is clearly implicit in his judgment, as a consequence of the son being entitled to an agricultural tenancy and to the unlawful occupation of the farm by his father over the relevant period, that the son was entitled to damages to be assessed at a later date.
16. Unfortunately, no order was drawn up and no steps were taken at that time for directions to be given for the assessment of damages. This failure on the part of the court and of the son to pursue the matter immediately has led to considerable confusion in the history of these proceedings.
17. On 10th November 1998 the son (who I understand at that time was in dispute with his solicitors and therefore took the matter upon himself personally) wrote a letter for the attention of Mr Recorder Kealy and the Listing Officer at the Doncaster County Court, giving the case number of the proceedings between himself and the father, and stating that he was extremely concerned about the position. He referred in the letter to the unfortunate impasse between him and the solicitors acting for him about the way in which they had handled the case, expressing the view that he did not feel that they had acted in his best interests regarding this matter.
18. There are other matters dealt with in the letter. The important point mentioned at the end is this. He said there was livestock on the property and he wanted the court to give him a date at the earliest opportunity where the court could make an order in its discretion which would enable him to take up what he describes as his legitimate right of occupancy of Manor Farm in its entirety. He added:

"... and award me the costs damages and losses and accrued interest I have suffered and continue to suffer by not being able to occupy it."

19. There was a further period of inactivity.
20. The next thing that happened in the occupation proceedings was that on 14th April 2000 the solicitors acting for the son issued an application in the Doncaster County Court asking for an order that the Civil Procedure Rules should apply to the case and that a date should be given for directions for an assessment of damages hearing restoring that part of the action adjourned by the order of the court on 7th January 1998. That is the order already mentioned as having been made by Deputy District Judge Edwards.
21. The solicitors now acting for the son were Thomas Burke & Co of Manchester. It is explained in the form of application that in July 1998 judgment was given in this action. However, the damages sought by the claimant were not dealt with at that hearing, as, by an order of 7th January 1998, the court adjourned that part of the claim sine die with liberty to restore for further directions:

"... the claimant wishes to restore that part of the claim and wishes CPR to be applied and an appointment for a directions hearing given."

22. On that application - but without any hearing taking place - an order was made on 25th April 2000 by District Judge Bower in the Doncaster County Court. His order was this:

"... the Defendant [that is the father] must pay the Claimant [that is the son] an amount which the court will decide, and costs."

23. He directed that a disposal hearing would take place at the Doncaster County Court on 16th June 2000 at 10.30, with a time estimate of 10 minutes.
24. The matter was not disposed of on 16th June. However, there was a hearing at which both the solicitor for the son and the solicitor for the father were heard by Mr Recorder Woolman sitting in the Doncaster County Court. That resulted in a consent order being made on that day. The order was that there be a joint valuation of Manor Farm to be carried out by an agreed valuer, Mr Tim Scourfield of Whilbys, valuers in Barnsley, such valuation to be on joint letter of instruction, approved by the parties' solicitors and to be filed by 16th August 2000. Directions were given for the exchange of witness statements by 16th September 2000, and it was directed that the matter be listed for hearing on the first open date after 30th September 2000 with a time estimate of one day, before Recorder Kealy, if possible.
25. The fact that these directions were given to progress the assessment of damages was referred to by the son in affidavits sworn by him on 29th June 2000 in the bankruptcy proceedings (which I shall describe in a moment and which have led to this appeal).
26. The position is that the damages still have not been assessed. The directions have been, to use a neutral word, overtaken by events in the proceedings which the father had instituted to bankrupt his son. I must now go back a little in time to describe the course of the bankruptcy proceedings.
27. In October 1999 a statutory demand was, by substituted service, served on the son. The father demanded payment of £35,257.39, that being the total sum due under the judgment of His Honour Judge Behrens of 8th August 1997. It appears that no other proceedings or enforcement measures were taken by the father to recover that judgment debt.
28. On 19th May 2000 - that, it is to be noted, after the date on which District Judge Bower had ordered the father to pay the son an amount which the court would decide in respect of the damages claimed in the occupation proceedings – a bankruptcy petition was served, by substituted service, on the son. The petition was based on the fact that the statutory demand for the judgment debt had not been satisfied.
29. The hearing of the petition was originally fixed for 16th June, but was moved because that date clashed with the date fixed for the hearing in the Doncaster County Court of the adjourned application for directions for the assessment of damages for the father's occupation of the farm from 1993 onwards.
30. On 5th July 2000 a letter, which was misdated 5th June 2000, was written to the Court Manager of the Doncaster County Court by Mr Martin Pennington, the solicitor acting for the father. It does not appear that a copy of this letter was sent to the son or to the solicitors acting for the son. The letter referred to a telephone conversation which Mr Pennington had had with a Mrs Slingsby, and referred to the fact that the son had made an application, apparently without notice, to District Judge Bower in relation to the matter, which resulted in District Judge Bower making an order for damages to be dealt with at the hearing on 16th June 2000. The letter said this:

"Please may we have sight of the Application because in our view the Judgement of Recorder Kealy made on the 8th July 1998 relating to this action only dealt with the possession issue and specifically did not deal with the matter of damages. The Claimant's Application for assessment of damages (if it be thus) was therefore misconceived."

31. The letter went on:

"An Order for Directions was subsequently made by Recorder Woolman on the 16th June which we agreed on the basis that the remainder of this action (apart from the possession issue which had already been decided by Recorder Kealy on the 8th July 1998) be disposed of."

32. That is the consent order already mentioned. The letter continued:

"However we wish to make it quite clear that we do not believe that any order was made by Recorder Kealy on the question of damages, and we invite the Learned District Judge to consider page 12 of the Judgement of Recorder Kealy specifically under the section headed ORDERS - Action No 93 01504 to confirm our view of that matter.

Since this issue of the order is the subject of argument in bankruptcy proceedings being brought by the Defendant against the Claimant in the Sheffield County Court next Tuesday the 11th July your urgent response would be appreciated."

33. A reply was sent by the Court Service from the Doncaster County Court on 20th July 2000, saying that there had been no hearing in the Doncaster County Court in respect of the son's solicitors' application, and what had been done was simply to place the application before the District Judge to see how it would be dealt with on paper. The letter continued:

"Now that it is clear that there is a dispute about the existence of the order for damages to be assessed, the order made by District Judge Bower has been set aside. This does not have the drastic consequences which you set out in your letter. The application will still be dealt with, but at a hearing when solicitors for both parties will be able to address the Judge."

34. It now appears that in all this procedural confusion Deputy District Judge Shimmin, sitting in the Doncaster County Court, upon the basis of the father's solicitors' letter wrongly dated 5th June, ordered, without any notice to the son or his legal advisers, that the order of 25th April 2000 be set aside. That was the order on the basis of which the consent order of 16th June had been made. It was further directed that the son was to have leave to request the court to list his application of 14th April on notice to the father and that the son was to supply the court with a time estimate for the application.
35. That order was made on 10th July and drawn on 14th July. Between those two dates there was the hearing of the bankruptcy petition and also of an application by the son to set aside the statutory demand before District Judge Young on 11th July. The District Judge rejected the contention by the son that the petition was an abuse of process, saying that even if (as was alleged) the father was still in occupation of the farm and the son had a cross-claim against him for damages for loss of rental value, that did not make the petition an abuse. It seems that the consent order of 16th June, relating to the assessment of the quantum of that cross-claim, was not mentioned.
36. The District Judge proceeded to refuse to set aside the statutory demand, having extended the time to allow the application to be made, and she proceeded immediately to make a bankruptcy order.
37. The next event in this extraordinary affair was that on 27th July 2000 District Judge Bower in the Doncaster County Court made an order on the application of the father's solicitor adjourning generally the action which had been partly determined by Mr Recorder Kealy, with liberty to restore and providing that, if no application to restore was made by 1st November 2000, then:

"... the application do stand struck out."

38. That order, it should be noted, was made after the son had been made bankrupt. I assume the order was made on the basis that he had been made bankrupt.
39. The son appealed against the bankruptcy order. The appeal was heard by His Honour Judge Behrens in Leeds in the middle of August 2000. The judge dismissed the appeal. He held that the District Judge had come to an acceptable decision on the material before her and declined to interfere with the orders she had made. In his judgment the District Judge was right in holding that it was not an abuse of the court for the father to present a bankruptcy petition against his son; no steps had been taken by the son to obtain or enforce any order in the proceedings in the Doncaster County Court; the father was not in breach of any court order; and the subject matter of the cross-claim had not been quantified. Further, it was observed there had not been any assessment of the costs and there was no order for any payment of a quantified sum, either by way of damages or costs. The mere fact, the judge held, that the father was in possession of the farm did not in any way justify the son for failing to pay the judgment debt. The judge held that the son was unable to show on the evidence that the rent which he would have had to pay on an agricultural tenancy of the farm, following the determination of the grazing agreement, was less than the rent which he would have achieved from rents on subletting the property, if his father had not been in wrongful occupation of it. Judge Behrens said that the District Judge was justified in refusing to set aside the statutory demand; she was entitled to conclude on all the evidence that the son did not appear to have a cross-claim against the father which equalled or exceeded the amount of the debt specified in the statutory demand; and there was no other reason why a bankruptcy order should not be made. This was not a case of a bankruptcy order stifling a genuine claim. The son had shown reluctance in pursuing his claim for damages, and it was extremely doubtful whether the son in fact had any significant claim for damages against his father.
40. So the matter comes on appeal by the son to this court. Mr Parker appears for the son and Mr Jarand for the father. The court has received a letter from the trustee in bankruptcy, who has been appointed, Mr Peter O'Hara. His solicitors, Kirbys of Harrogate, informing the court that, until the appeal is determined, the trustee will not be taking any more action than is absolutely necessary in the administration of the bankruptcy. The letter concludes:

"We would ask that our client's attendance at Court be excused purely on the basis that we wish to minimise the costs involved. On that basis, we would ask the Court to consider our client's position when making its order and direct how the fees are to be paid."

41. Then details are given of the fees.
42. Mr Parker drew the court's attention to the Practice Note (Bankruptcy: Statutory Demand: Setting Aside) (No 1 of 1987) [1987] 1 WLR 119. In particular, paragraph 4 which states:

"Where the debtor (a) claims to have a counterclaim, set off or cross demand (whether or not he could have raised it in the action in which the judgment or order was obtained) which equals or exceeds the amount of the debt or debts specified in the statutory demand ... the court will normally set aside the statutory demand if, in its opinion, on the evidence there is a genuine triable issue."

43. Mr Parker has also referred to the judgment of this court in Garrow v Society of Lloyd's [1999] BPIR 885, a decision relating to cross-claims.
44. Mr Parker's argument is essentially that Judge Behrens found that the son's cross-claim was not of substance when it was not open to him to do so, as the liability of the father to the son for damages had effectively been established by the judgment of Mr Recorder Kealy, and that the son's evidence of quantum was not controverted. So, he submitted, given that the son had a cross-claim of substance, the bankruptcy order should only have been upheld if there were exceptional circumstances for doing so; and there were none. In his submissions he analysed how the cross-claim for damages inevitably arose out of the Recorder's decision finding that the son had an agricultural tenancy of the farm and that the occupation of it by the father and his wife were unlawful. So it followed, though no order had been drawn up and made to this effect, that the son was entitled to an order for the assessment of damages in respect of the period of unlawful occupation which ran for a period of 5½ years from 4th February 1993 to 8th July 1998.
45. Mr Parker submitted that, given the decision on liability by the Recorder in the son's favour, there could be no question of the son not having a genuine triable issue. That issue of unlawful occupation had been tried. The son was successful. He criticised the judge's treatment on the issue of whether the son's claim for damages was one of substance, pointing out that the son's full claim had been adjudicated on by the Recorder in respect of the relevant period. All that remained to be done was to assess the quantum of the damages. He pointed to a fallacy in the submission made on behalf of the father in the correspondence that his solicitors had had with the court, that there had been no order awarding him damages. He pointed out that in fact an order had been made on 25th April by the Deputy District Judge. Even though the court had later purported to set that aside, there remained undisturbed the consent order, binding on both parties, for directions on 16th June 2000 for the trial of the question of damages.
46. As to quantum, Mr Parker submitted – in my view correctly – that the test of genuinely triable issue applied equally to quantum as to liability. He submitted that what his client would be entitled to was damages based on the amount of rent which he could have obtained from the farm, had his father not been in unlawful occupation of it for the period of 5½ years.
47. He then proceeded to criticise in detail the way in which Judge Behrens had dealt with the matter. He answered some particular points raised by Mr Jarand, in his skeleton argument on behalf of the father, relating to the quantifying of the damages and to the delay on the part of the son in progressing his claim for the damages.
48. Mr Parker submitted finally that the court should look, as well as at the genuinely triable issue point, to the circumstances to see if there were any exceptional circumstances which would cause the court to make a bankruptcy order, despite the fact of the son's cross-claim. He submitted that there were no such circumstances: on the contrary, there were circumstances of an exceptional nature pointing against the making of a bankruptcy order.
49. First, he said the making of the bankruptcy order would unjustly enable the father to continue in occupation of the farm. The protection of the son's agricultural tenancy would be terminated by the son's bankruptcy and so the Recorder's judgment in 1998 giving the son possession of the farm would be circumvented.
50. Secondly, there was no practical possibility of the directions given for the assessment of damages in the occupation proceedings ever being complied with or those damages ever being assessed, since the effect of the bankruptcy order would be to vest the right to damages in the trustee. The son would no longer have the right to pursue the matter himself or to insist that the matter be pursued by his trustee. So, he said, in these circumstances we should allow this appeal, the position being that the son had an incontrovertible claim against his father for damages over the period mentioned. He also had orders for costs and he had a lien for £6,000 under the 1997 order. What the father had was a judgment for £35,000-odd and an order for costs. In all the circumstances, it would be an injustice if, as a result of the entangled claims and cross-claims, the father could make his son bankrupt.
51. Mr Jarand took a number of contrary points. The essence of his argument was that the son could not realistically claim that he had a genuine triable issue on the cross-claim for damages for an amount which equalled or exceeded the sum of £35,000 which was undoubtedly due to the father under the judgment. His argument on this related to the terms of the 1991 memorandum of agreement.
52. He accepted that the document created a tenancy in favour of the son. The nature of the son's claim against his father is that he had lost the rental value of the farming land, farmhouse, stables and outbuildings, which would have accrued to him on a subletting which he could not make by reason of the father's possession of the property. So the claim for damages was the loss which the son claimed to have suffered by reason of the default of the father. But, Mr Jarand argued, in order to establish a loss arising out of his inability to sublet the farm, the son would have to establish that he had in fact lost a profit rent; i.e. the rent payable by him to the father would have exceeded the rent receivable by him, the son, on a subletting. He pointed out that, under the terms of the tenancy agreement, the arrangement was that the son paid a rent - what may be called a concessionary rent - of £460 a year for the farm, but that rent was expressly stated to take into account the separate agreement relating to the father's entitlement to graze horses on the land and use the farm buildings in connection with stabling of horses and other activities. As already mentioned, the separate agreement for grazing had been terminated by the son as from 4th February 1993 when relations between the two of them broke down.
53. So, Mr Jarand argues, the position is this. Had the father duly ceased to use the land for grazing on 4th February 1993, the basis for the low rent of £460 per annum was at an end under the express terms of the agreement. As a matter of probability, if the father had discerned that the property was to be sublet by his son, the father would then have taken the required statutory steps to have the rent due from the son revised to the level of a market rent. As he pointed out, the document made it clear that the concessionary rent of £460 per annum only applied while the father was using the grazing facility under the arrangements between them. The earliest operable date for a revised a rent under the Agricultural Holdings Act 1986 was three years from the commencement of the tenancy, taking it to 4th January 1994. Had the son immediately found a subtenant after 4th February 1993, he might have achieved a profit for 11 months or so, but that claim was now barred by limitation. But - and this was Mr Jarand's key point - once the rent was revised upwards to the market level, the rent receivable by the son from subletting would have been equivalent to the rent payable by him to his father, leaving him with no profit rental. Thus he said, it was demonstrated that the son had suffered no recoverable loss in consequence of the father's wrongful occupation of the farm for 5½ years. There was no sensible prospect, for these reasons, of the son establishing a genuine triable issue on the evidence so as to raise a cross-claim in an amount equal to or exceeding the amount of the statutory demand. His Honour Judge Behrens, he contended, was correct. He accepted this argument and he was right to reject the son's appeal.
54. There were a number of other points taken by Mr Jarand which did not advance the matter. They related to the absence of a court order following Mr Recorder Kealy's judgment, to the status of the proceedings and various orders which were made in the Doncaster County Court, and criticisms of the delay which he said had taken place, indicating that the son did not really have a genuine belief in the validity of a cross-claim of the amount which he now advanced. In the course of those submissions Mr Jarand did accept that, as a matter of law, if a tenant was prevented by the landlord from enjoying possession of the property the subject of the letting, he could not recover the rent from the tenant; but that was not a relevant consideration in this case. I agree. This is not a case in which the father was seeking to recover rent from his son as tenant. The relevance of the rental was in relation to the arguments about the alleged loss suffered by the son in consequence of his father's wrongful occupation of the tenanted property.
55. The conclusion which I have reached is that this appeal should be allowed. I am satisfied by the arguments of Mr Parker that this is a case which should have been regarded by the District Judge and by His Honour Judge Behrens as raising a genuine triable issue of a cross-claim by the son for an amount which equalled or exceeded the amount of the statutory demand. It is not necessary to examine all the details of quantification. That is not the function of the Bankruptcy Court, particularly when a judgment has already been given establishing liability and a consent order has been made giving directions for valuations and evidence which will go, it is hoped, before Mr Recorder Kealy to make the assessment of damages.
56. In my judgment, the course taken by the parties in this case strongly indicates that the proper place to determine this issue is in the Doncaster County Court, in the proceedings in which the Recorder has already given a judgment on liability, and that a Bankruptcy Court is not the appropriate place in which to test the strengths and weaknesses of the contentions of the parties on quantum.
57. I express no final view upon the arguments which have been advanced by Mr Jarand that the son will recover nothing. It seems a bold proposition that, although the father was in unlawful occupation of the farm for 5½ years, he is not bound to pay the son anything in respect of that occupation. I say no more than that.
58. Mr Jarand may well be right when it comes to the proceedings on the assessment of damages in saying that the sum of £172,000, which Mr Parker puts on the value of the son's claim, is greatly in excess of what he is really entitled to. The real point, according to the wording of the Practice Note, is that this is a genuine triable issue on quantum. It has gone so far down the road of being decided in the County Court proceedings that it should be decided in these proceedings.
59. In addition, I look at the other circumstances relevant to the discretion that a court has whether or not to set aside a statutory demand and whether or not to make a bankruptcy order.
60. In my view - and in agreement with the contentions of Mr Parker - the circumstances in this case are so exceptional that they strongly point against the father being allowed to bankrupt his son in the present circumstances. The exceptional circumstances are these. This is a family dispute, essentially about rights over the farm. It is a dispute between father and son, and a bitter one. It is true that the father had a judgment against the son on which he based a statutory demand. But it is also true that the son had judgments against his father for the sum of £6,000 by way of a lien in the monetary proceedings, and a claim for damages in the occupation proceedings. No steps were taken by either of them to satisfy the judgments or to enforce them. The father cannot say that the son does not have a genuine claim in the light of the Recorder's judgment. When the son did take active steps to get the damages assessed, the father's solicitors cooperated with the son's solicitors to the extent of agreeing on the directions in the consent order of 16th June 2000. But, instead of pursuing the directions given in that order in those proceedings in order to progress the assessment of damages, they pursued the bankruptcy proceedings.
61. The consequences of the bankruptcy proceedings for the son are disproportionately more severe to the son than the refusal of the bankruptcy order is to the father. The consequences for the son are catastrophic. He will lose the tenancy of the farm, and I agree with Mr Parker that for all practical purposes he will lose the prospect of pursuing the claim for damages to the successful conclusion that it might otherwise have reached.
62. For the father the position is different. The effect of now setting aside the statutory demand and discharging the bankruptcy order will not cause prejudice to the father. The matter can proceed in the Doncaster County Court to the assessment of damages. If the father is right he will not have to pay any damages, or will not have to pay as much as the son owes to him. If the son persists in refusing to pay what is owed under the judgment, then the father would be entitled to institute fresh proceedings, either by way of enforcing the judgment or by way of bankruptcy.
63. I am not persuaded by the point raised by Mr Jarand on the affidavit which has been sworn by his solicitor, Mr Martin Pennington, saying that the son has registered five transfers in relation to land that he owned – this is land other than the farm – into the name of his wife. The father believes that this is an attempt on the part of the son to ensure that he will incur no further financial liability to his father in relation to any of the proceedings that there have been between them. Some details are given about these transfers. I understand from Mr Parker that the dates on which they were made is disputed. Mr Pennington says they were made in July 1998, Mr Parker says that they were made at earlier dates in 1992 and 1996.
64. The point Mr Jarand made on this was that, if the son did not satisfy his present indebtedness, the father would have no other means of enforcing the debt against his son, and any action to invalidate the transfers which were made for no monetary consideration have to be taken within two years of them being made. He believed that the son's present application was designed to ensure that the assets were retained from the benefit of the father beyond the expiry of the two year period.
65. I am not satisfied on this matter. There are disputes on the evidence. The position, as I understand it, is that if these transfers of property were made with intent to defeat the father's claims and to deprive him of the benefit of the judgment, they may well fall within Part 16 of the Insolvency Act 1986 which contains provisions relating to the invalidation of transactions made in order to defraud creditors. I refer to sections 423 to 425. I am not satisfied that setting aside statutory demand and discharging the bankruptcy order would seriously prejudice the father in the way that Mr Jarand suggested.
66. For all those reasons I would allow the appeal against the order of His Honour Judge Behrens, I would set aside the statutory demand and discharge the bankruptcy order.
67. LORD JUSTICE ALDOUS: I agree. There is nothing that I wish to add on the merits of the appeal. I, however, would wish to draw attention to the basic facts of this appeal which revolve around disputes between father and son.
68. I would urge them to seek, with (if necessary) professional help, reconciliation and resolution of their disputes, thereby avoiding further recourse to the courts. If that cannot be achieved quickly, then the issues that remain between them must be resolved quickly by the court. This is a case subject to the Civil Procedure Rules. In my view the court must take control of it and drive it forward to a quick conclusion, so that all the remaining disputes are resolved and the parties can get on with their lives without recourse to the courts.
69. It follows that the appeal will be allowed, the statutory demand of October 1999 will be set aside, as will the bankruptcy order.
ORDER: Appeal allowed with costs; order of 15th August set aside; order of 11th July 2000 set aside; bankruptcy petition dismissed; application for leave to amend allowed; no order on the trustee in bankruptcy's fees; detailed assessment of the Appellant's costs. (Order not part of approved judgment)