England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
APPLICATION FOR PERMISSION TO APPEAL
AND A STAY OF EXECUTION

		Royal Courts of Justice Strand London WC2 Tuesday, 7th May 2002

1. LORD JUSTICE CHADWICK: This is an application for permission to appeal against an order made on 25th February 2002 by His Honour Judge Behrens QC, sitting as a Deputy Judge of the High Court in the Chancery Division, dismissing an appeal from an order made on 14th December 2001 by Mr Deputy Registrar Schaffer, sitting in the High Court in Bankruptcy.
2. This is an application for permission to bring a second appeal to which Section 55 (1) of the Access to Justice Act 1999 and CPR 52.1.3 apply. The Court of Appeal cannot give permission for such an appeal unless it considers that (a) the appeal would raise an important point of principle or practice, or (b) there is some other compelling reason for the Court of Appeal to hear it. That is the hurdle which the applicant needs to surmount on this application.
3. The circumstances in which the orders to which I have referred came to be made are these. In November 1989 the Leamington Spa Building Society, a predecessor of Bradford and Bingley Building Society, sent £145,000 odd to the firm of solicitors with which Mr Silver was then in practice. It appears that that money was sent in anticipation of a secured advance to be made by the building society to a Mr Gordon in connection with a purchase or remortgage of a dwelling house. In the event, the mortgage did not proceed and Mr Silver ought to have returned, but did not return, the money to the building society. The building society issued a writ for that sum and the interest which, over the period, had mounted up. That writ was issued in August 1995. On 24th January 1997 judgment was obtained in that action against Mr Silver for £225,000. Mr Silver accepts that that judgment was made by consent. The effect therefore is that Mr Silver is or was a judgment debtor in the sum of £225,000 to what has become Bradford and Bingley Building Society.
4. Shortly after the issue of the writ the building society made application to the Law Society for compensation under the Law Society compensation fund. That claim took some time to be resolved. But eventually in November 1999, or shortly thereafter, the Law Society paid £140,000 to the building society in relation to that compensation claim. The effect was that the building society had received from the Law Society £140,000 towards satisfaction of its judgment debt. Nevertheless, on 8th August 2001 the building society issued - and, shortly thereafter, served - a statutory demand in the full sum of £225,000 under the judgment. That demand did not take into account - as it should have done - the £140,000 paid to the building society by the Law Society. Mr Silver made application under Rule 6.4 of the Insolvency Rules 1986 to set aside that statutory demand. He pointed out, in support of his application, that the £140,000 had not been taken into account. He took a number of other points, including the point that the Law Society ought to have joined in the demand.
5. That application was dismissed by the Deputy Registrar on 14th December 2001. He gave a written and detailed judgment in which he addressed each of Mr Silver's points; but the basis of his decision was that the statutory demand was effective, even though incorrect, because there had been no prejudice suffered by Mr Silver and there was no evidence that if a demand for the correct sum had been served upon him he would have met it. The registrar referred to the familiar observations of Lord Justice Nicholls in In re a debtor (No 1 of 1987).
6. The order of 14th December 2001 authorised the building society to present a bankruptcy petition on or after 14th January 2002, as required by Rule 6.5 (6) of the Insolvency Rules.
7. Mr Silver appealed against that order, and it was that appeal that came before His Honour Judge Behrens. The judge took the view that there was nothing before him which suggested that the registrar had erred. He said this at page 6 F-G in his judgment:

"In the final analysis, the position here is really quite straightforward. The building society have a judgment for £225,000. They have received £140,000 by way of grant from the Law Society. The Law Society are subrogated to £140,000 of their claim, but they still have an unsatisfied claim of £85,000. There is nothing that I can see in the Solicitors Act which prevents the enforcement of that claim."

8. Accordingly, as I have said, the judge dismissed the appeal on 25th February 2001.
9. Following that, the building society presented the bankruptcy petition on 22nd March 2002 relying on a debt of £117,382, described as the balance outstanding under the judgment obtained in the High Court action. The way in which that debt has been computed is not before me; but it seems probable that it represents the balance of £85,000 together with a sum in respect of accrued interest.
10. Mr Silver has told me that shortly before the hearing on 25th February 2002 he became aware that the building society had not pursued all its remedies in respect of the £145,000 which it had paid to him. In particular, he contends that there were remedies to be pursued either against the Law Society or against the prospective borrower. I am in no position to judge whether or not that contention could be made out. Nor whether or not, if it were made out, Mr Silver would have a cross-claim against the building society. But he has told me that no such claim has yet been brought. He has applied to the High Court on 17th April 2002 for an extension of time for an application - that is to say, a further application - to set aside the statutory demand. That application is to be heard on 23rd May 2002. If it is not heard until that date it will have been overtaken by the hearing of the petition, which is fixed for Thursday 9th May 2002. Plainly, therefore, if Mr Silver wishes to pursue a second application to set aside the statutory demand he will need to raise that at the hearing of the petition on 9th May 2002. Those matters are not before me. I express no view about them. I record them so that the present application may be put in context.
11. The basis of the present application, as presented to me this morning, is that Judge Behrens was in error on 25th February 2002 because (it is said) he ought to have appreciated that Mr Silver had a cross-claim against the building society which was sufficient to extinguish the balance of the judgment debt in respect of which a statutory demand had been served. But there was no evidence before Judge Behrens to support either the existence or the amount of any cross-claim. The judge referred to that in the penultimate paragraph of his judgment when he said:

"This is an appeal from the deputy registrar, and the evidence before me is limited to the evidence before the deputy registrar. There is no evidence in fact before me that the society failed or could have obtained more monies once it had the deeds. In those circumstances it seems to me my concerns as to what may or may not have happened should not mean that this appeal should be allowed."

12. For my part, I find it impossible to see how the judge could have taken any other view. Not only does the appeal for which permission is now sought raise no important point of principle or practice, it is an appeal which has no prospect of success and there is no compelling reason for the Court of Appeal to hear it.
13. If Mr Silver wishes to raise the existence of a possible cross-claim against the building society in opposition to the petition which is to be heard on 9th May 2002 and to join that with a renewed application to set aside the statutory demand, he should raise those matters before the Bankruptcy Court later this week. As I have said, I express no view as to the prospects of success.
14. My task is to consider whether or not to give permission to appeal against the order of His Honour Judge Behrens. That permissionmust be refused.
Order: Application refused