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
CHANCERY DIVISION
IN BANKRUPTCY
BRISTOL DISTRICT REGISTRY
(Mr Justice Neuberger)

		The Royal Courts of Justice Strand London WC2 Wednesday 10th July, 2002

1. LORD JUSTICE JONATHAN PARKER: Before the court are applications by Mr Richard Canty and his mother Mrs Rita Canty for permission to appeal against orders made by Neuberger J on 31 January and 12 February of this year, in the applicant's bankruptcies. Mr Canty has addressed the court this morning on behalf of himself and his mother.
2. The detailed background to these applications is set out in a judgment of Sir Richard Scott V-C dated 3 July 2000. For present purposes a brief summary of the background will suffice.
3. Mr Canty and his mother became embroiled in litigation over a plot of development land adjacent to the house in which they lived at 1 Raldan Close, Barry. They negotiated with a Mr Broad for the sale to him of a plot of development land, but the negotiations never matured into a binding contract. Notwithstanding the absence of any contract, however, Mr Broad apparently proceeded to build a house on the plot. That led to litigation in which Mr Canty and his mother obtained an order for possession against Mr Broad, with an award of mesne profits. The mesne profits were later assessed at £4,950. Mr Canty contends that that sum was intended to be an annual sum, with the consequence that since there is in issue some nine years of mesne profits the true figure for mesne profits is in the region of £44,000.
4. Returning to the chronology, thereafter Mr Broad sued his solicitors, Messrs Wakely & Co, for negligence. At some stage, conduct of that action by the solicitors was taken over by the Solicitors Indemnity Fund ("the Fund"). After that had occurred, Mr Canty sought to join the representatives of the Fund, a Mr Hale and a Mr Clarke, in his own action against Mr Broad. The action between Mr Broad and his solicitors was eventually compromised, but not before orders for costs had been made in favour of the Fund against Mr Canty and his mother, and vice versa.
5. In 1998 Mr Canty commenced proceedings against Greenfield Roads Building Company Ltd, to which Mr Canty's parents had some time earlier sold the land adjoining the development plot. This action was in the nature of a boundary dispute. The trial of the action against Greenfield took place in February 2000, when Mr Recorder Britten dismissed the claim on the basis, among other things, that no particulars of the boundary claimed by Mr Canty and his mother had been provided, as had earlier been ordered. The judge made an order for costs in favour of Greenfield. Mr Canty sought permission to appeal against the dismissal of his claim, and against two earlier interlocutory orders made in the action. On 3 July 2000 Sir Richard Scott V-C refused those applications, delivering the lengthy and detailed judgment to which I referred earlier.
6. In the meantime, on 3 March 2000 Greenfield presented bankruptcy petitions against Mr Canty and his mother based on the costs orders which it had obtained in the action. On 4 July 2000 bankruptcy orders were made on Greenfield's petitions. On 8 December 2000 the present trustee, a Mr Boyden of PricewaterhouseCoopers, was appointed.
7. In due course, the trustee applied for possession of the property at 1 Raldan Close. On 29 November 2001, His Honour Judge Weeks made a possession order. Mr Canty and his mother applied for permission to appeal from that order, and that application came before Mr Justice Neuberger on 31 January 2002. Neuberger J rightly noted that no permission to appeal was in fact required, and accordingly he treated the application as a substantive appeal against the possession order. He concluded that there was no ground upon which the trustee's right to possession of the property could be challenged, but he considered that it would be appropriate in the circumstances to allow Mr Canty the opportunity to apply to annul the bankruptcy orders themselves, that being the burden of submissions made to Neuberger J by Mr Canty on that occasion. The judge accordingly suspended execution of the order for possession until 27 February 2002 to enable Mr Canty to make such an application. That is the first of the orders in respect of which he seeks permission to appeal this morning.
8. Mr Canty duly applied to annul the bankruptcy orders, and that application came before Neuberger J on 12 February 2002, when he dismissed the application. That is the second of the orders in respect of which Mr Canty and his mother seek permission to appeal today.
9. Since this is a second appeal in bankruptcy, permission to appeal is required (see section 375(2) of the Insolvency Act 1986, and Supreme Court Practice Volume 2 paragraph 9A-47, at page 1535).
10. Before Neuberger J, Mr Canty raised four points. In the first place, he contended that the order for costs on which the petitions were based could not be justified. Neuberger J rejected that argument, saying that the orders for costs appeared to him to have been regular, and justified. Mr Canty's second point was that one of the relevant orders for costs had in effect been discharged given that there was an appeal, albeit unsuccessful, against the order of which it formed part. Neuberger J rejected that argument too. He concluded that the order for costs was not affected by the subsequent unsuccessful appeal. Thirdly, Mr Canty pointed to the fact that he and his mother had obtained orders for costs against the Fund which ought to be set off against any valid orders for costs obtained by the Fund. As to that, Neuberger J noted that the costs payable under the orders made in favour of Mr Canty and his mother against the Fund had not as yet been assessed, notwithstanding that they had been made some considerable time previously. Neuberger J concluded that the existence of those orders for costs, as yet unassessed, could not affect the entitlement of Greenfield to a bankruptcy order based upon its own quantified debt.
11. Neuberger J also noted that the points sought to be raised by Mr Canty in challenging the bankruptcy orders were points which could have been taken at the hearing of the bankruptcy petitions, and that the trustee was in any event in as good a position to pursue any available claims for costs against the Fund as were Mr Canty and his mother. The judge accordingly concluded that there was no ground for annulling the bankruptcy orders.
12. This morning, Mr Canty has made, in effect, four points. He submits, firstly, that the default costs certificate giving rise to the debt upon which the bankruptcy petitions are based ought not to have been issued. He has referred me to CPR 47.9(5) which provides that no default costs certificate may be issued where a party serves points of dispute before the issue of the certificate. He submits that in the instant case he did serve points of dispute prior to the issue of the relevant certificate. He has referred me in that connection to a letter which he wrote to Greenfield's solicitors dated 7 July 2000, in which he said this:

"We disagree with the amount of your costs entirely in this said action."

13. Plainly, in my judgment, that letter cannot constitute points of dispute under CPR 47.9(5), and I can, for my part, see no substance in the suggestion that the issue of the costs certificate was contrary to the Rules and that accordingly the petitions were, in effect, demurrable.
14. The second point which Mr Canty makes is based upon a costs order against Greenfield in favour of himself and his mother dated 16 December 1998. That order was subject to an unsuccessful appeal. Those costs have never been assessed. They are still unquantified. Mr Canty submits that the trustee in bankruptcy should at least have obtained a mutual credit and set-off in respect of these costs, as required under the insolvency regime.
15. Once again, I cannot see any substance in that proposed ground of appeal against the making of the bankruptcy orders. As Neuberger J commented in his judgment dated 12 February 2002, in paragraph 15, there have been substantial delays in processing the various orders for costs obtained by Mr Canty and his mother and, as the judge said:

"... Mr Canty is the author of his own misfortune, or if he is not the author of his own misfortune, others may be responsible."

16. At all events, the judge considered that it would not be appropriate to annul the bankruptcy based upon the existence of as yet unquantified costs orders. In my judgment, the point which Mr Canty seeks to take in relation to the costs order dated 16 December 1998 is wholly insufficient to support an appeal against the making of the bankruptcy orders.
17. Thirdly, Mr Canty points out that there has as yet been no public examination of himself and his mother; that there has been no mention of any IVA in respect of either of them; and that no statement of affairs has yet been produced by the trustee in bankruptcy. He submits, accordingly, that the trustee in bankruptcy has not complied with his duties under the Insolvency Act 1986. He had he done so, submits Mr Canty, then the position would have become clear, that he and his mother are indeed solvent and that the bankruptcy ought not to proceed.
18. In my judgment, however, breaches of duty by the trustee in bankruptcy, even if proved -- and I emphasise that I have seen nothing which suggests that there has been a breach of duty on his part -- could, in my judgment, found a challenge to the bankruptcy orders.
19. Fourthly, Mr Canty has referred, as he did before the judge, to the various orders obtained by himself and his mother against the Fund. He seeks, as he did before the judge, to rely on those orders as a basis for challenging the bankruptcy orders. Like the judge, however, I can see no substance in that proposed ground of appeal.
20. I should also record that Mr Canty has repeated his submission that the appropriate figure for mesne profits is an annual figure of £4,950, giving rise to a total in excess of £44,000. He submits that that is a relevant factor which the court ought to take into account, and that in doing so it must at the least be arguable that the bankruptcies should be annulled.
21. I regret that I cannot accede to that submission either. As the judge commented, if there has been an error in the drawing up of that order, it may be corrected under the slip rule, but whether or not there is such an error is not a matter that I can determine this morning. At all events, I can see no basis upon which the existence of a dispute as to that order could justify the annulling of the bankruptcies.
22. Lastly, Mr Canty put before me evidence showing the disrepair of the property. He submits that that is a matter which he is entitled to bring before the court, and he suggests that the existence of that chose in action will provide an effective riposte to any reliance upon the statute of limitations in relation to liability under costs orders made in favour of himself and his mother. I take note of what Mr Canty has said, but once again it does not, in my judgment, amount to a ground of appeal.
23. Accordingly, for the reasons I have given, I am unable to discern, despite Mr Canty's helpful submissions, any real prospect that an appeal against either of the orders made by Neuberger J would have any real prospect of success, and accordingly I dismiss the applications.
ORDER: Application for permission to appeal refused. (Order not part of approved judgment)