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 Hart)

		Royal Courts of Justice Strand London WC2 Thursday 17th May, 2001

1. LORD JUSTICE ALDOUS: The applicant Mrs Southall is the widow of the late Angelo Anthony Peter Southall who died on 26th January 2000. She seeks permission to appeal the judgment of Hart J of 11th December 2000 which dismissed her application to have these proceedings struck out.
2. The proceedings were brought by the Law Society to recover just over £283,000, being the costs of the intervention into the practice of the applicant's husband's firm, Southall & Co. I understand that the costs of the intervention have nearly doubled and could be over £400,000.
3. As I said, Mr Southall died on 26th January 2000. On 24th February 2000 the Law Society wrote to the persons who they believed to be his executors claiming the costs of the intervention. That letter was in due course replied to by a firm of solicitors acting for the applicant. They advised the Law Society that they understood that the executors named in the will did not intend to apply for a grant on the grounds that the assets in Mr Southall's estate were at best minimal. The property in which he had lived, for at least the majority of his married life, was known as Grimshaw Hall and it and its contents were the sole and unencumbered property of the applicant. On 23rd March 2000 the Law Society wrote intimating an intention to commence proceedings against the applicant invoking the jurisdiction of the court under section 423 of the Insolvency Act 1986, with the purpose in mind of recovering the money spent on the intervention from the proceeds of the sale of the contents of the Hall. Their proposals for settlement were rejected and these proceedings were started on 19th May 2000. The Law Society thereafter applied for a freezing order pursuant to CPR Part 25 in respect of the applicant's assets up to a value of £300,000. That application was adjourned to enable the filing of evidence. In the meantime the applicant sought summary judgment. That application came before Hart J on 31st October 2000 together with the application for a freezing order.
4. The pleadings by that time indicated that the Law Society had two routes to claim money from the applicant. First it was said that the contents of Grimshaw Hall had not in fact been transferred to the applicant as the required delivery by Mr Southall had not taken place. The judge rejected that claim.
5. The judge went on to consider the second issue, namely whether the court had jurisdiction under section 423 of the 1986 Act to set aside the transfer of the ownership of the contents of Grimshaw Hall to the applicant. He found himself unable to concluded that the evidence adduced by the applicant on this point was sufficiently cogent to justify him giving judgment under CPR Part 24 in her favour. Thus that issue had to go to trial.
6. There were other arguments which the judge dealt with. In particular, he went on to consider whether the freezing order should be made. He refused to make it because he held there was no evidence that the applicant would dissipate her assets.
7. The judge refused the applicant permission to appeal. The applicant then applied to this court for permission to appeal. It was considered on paper and refused. She now renews that application to this court.
8. We have had the advantage of oral submissions from Mr Berry QC, and from those we have concluded that this is a case where permission to appeal should be given. In particular the points that have impressed me are the points of law that Mr Berry wishes to argue before this court. In his judgment the judge referred to the submission that had been made on behalf of the applicant that there could be more than one reason for putting into effect a transaction which prejudiced a creditor, and that section 423 only applied if the relative intention was the dominant one. The judge said that the question of whether the section imposed a requirement of a dominant purpose of a creditor was capable of serious argument. But he did not go on to decide that question of law. When he came to consider the facts he concluded that it was, in his judgment, certainly a possible inference that the deceased's principal concern throughout the period covered by the memoranda had been the desire to protect assets from the claims of possible creditors. Thus it is said on behalf of the applicant that he did not decide the question of law, nor make any finding of fact.
9. In my view the question as to whether section 423 only applies where the dominant intention is to defraud creditors is a matter fit to be argued before this court. It could be conclusive if this court came to a conclusion as to what the dominant purpose was. For that reason I would give permission to appeal.
10. The other point of law that Mr Berry seeks to argue is whether the section is only concerned with creditors who were in the contemplation of the debtor. That is a point which has also not, so far as I am aware, been decided and it could be decisive in this case.
11. In my view those points of law do stand a real prospect of success. For those reasons, permission to appeal should be given. Mr Berry raises other points of law and of fact in his skeleton argument. I need not deal with them, but they can also be the subject of an appeal as and when it comes before this court.
12. I therefore would give permission to appeal.
13. LORD JUSTICE MAY: I agree.
ORDER: Application for permission to appeal granted; costs of the application to be costs in the appeal. (Order not part of approved judgment)