England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice The Strand London WCA 2LL
		5th November 2002

1. This is an appeal by Mr. Royston Leicester, who appears in person. The respondent is Philip Navier, who is a person appointed under Section 399 of the Insolvency Act 1986 to act in the office of Official Receiver and is attached to Brighton County Court. Mr. Navier appears by Miss Anna Markham.
2. Mr. Leicester's appeal is brought by a notice dated 23^rd July 2002 against the order made by District Judge Edwards at Brighton County Court on 12^th July, 2002 setting aside a statutory demand dated 1^st May 2002 which Mr. Leicester had served on Mr. Navier.
3. The demand is addressed to Mr. Navier and describes him as "Official Receiver". The demand is, therefore, addressed to Mr. Navier in his official capacity. The alleged debt of which it claims payment is in the sum of £939,244.97. In the demand, Mr. Leicester described the particulars of the debt in the following terms:

"(a) This debt of £939,244.97 arose on 20.9.1996, when bailiffs acting for the Under-Sheriff and Official Receiver, Brighton seized my business, Real Bites Food (a firm) on pretext they were executing a Writ of FiFa. Thereafter, those bailiffs failed to account for property they seized and, during seizure of the premises, smashed and trashed the premises, fixtures and fittings.

(b) In compliance to requests under sections 7(1) and 8(2) of The Data Protection Act, 1989…"

(I think that is probably a mistaken reference to 1998)

"…this debt has been evidenced and verified by the Official Receiver, Brighton and Mr. Desmond Flynn, the Inspector General and Agency Chief Executive of the Insolvency Service. Mr. Flynn has directed me to the Official Receiver, Brighton to recover.

(c) The said sum of £939,244.97 remains unpaid."

4. The way in which Mr. Leicester arrives at that figure is to be found in a letter he wrote to Mr. Navier and two assistant Official Receivers, Trevor Flood and Heather Wilkin, on 23^rd April 2002. The letter is headed, "Re request under section 14 of The Data Protection Act, 1998 and to return property obtained by fraud on 20^th September 1996." In that letter Mr. Leicester referred to letters he had written earlier on 20^th and 22^nd April 2002, which apparently included the giving of formal notice to, among other people, Mr. Navier, "to return my business and property seized by fraud on 20.9.1996." He enclosed with his letter an invoice in respect of the property he was referring to, which he said Mr. Navier had refused to return, and said he had added Value Added Tax where applicable.
5. The list Mr. Leicester enclosed included cash of £60,000, and 12 other items, including vehicles, alleged damage to property (Mr. Leicester did not use the word "alleged"), the value of frozen and dried foods (I understand that the business of Real Bites Food was dealing with frozen food), set up costs, tools and equipment, and the value of the customer base and business, together with various other items. In summary, the claim was in respect of the entire loss and damage claimed by Mr. Leicester to have been suffered by him as a proprietor of that business when the events of 20^th September 1996 took place. Each item had a value against it and the total was the amount claimed in the statutory demand. Mr. Leicester's stance now, and indeed his stance before the District Judge, was that in fact subsequent events have led him to conclude that the writ of fi.fa was not in fact executed at all, so that the removal of his property on 20^th September was, he says, a wholly unlawful act.
6. Mr. Navier applied to set aside the statutory demand, and his evidence in support of his application was contained in a very full affidavit of 10^th May 2002. He gave a chronology of the relevant events, which I do not understand to be disputed by Mr. Leicester. The most material ones are as follows.
7. On 14^th May 1996, a firm called Everest Frozen Foods ("Everest") obtained a judgment against Mr. Leicester's firm, Real Bite Foods. Apparently, on the same day, Everest issued a writ of fi.fa directed to the Sheriff of East Sussex. Mr. Navier asserts that the Sheriff executed it by his bailiffs on 20^th September 1996 and that, in doing so, they were acting, as one might assume, on behalf of Everest and only Everest. I have, of course, already recorded that Mr. Leicester does not accept that the writ was lawfully executed, but I am here recounting Mr. Navier's interpretation or evidence as to what he understands the course of events to have been.
8. On 10^th February 1997, a company called Plumtree Farms Limited presented a bankruptcy petition against Mr. Leicester, and on 31^st July 1997 a bankruptcy order was made against him on that petition in Brighton County Court. Mr. Leicester made two subsequent challenges to that order, those challenges being either made or heard on 20^th November 1997 and 19^th May 2000, but both were unsuccessful, although Mr. Leicester has by now been discharged from his bankruptcy.
9. Mr. Navier asserts in terms, in paragraph 4 of his affidavit, that the Official Receiver was in no manner involved in the execution – or what he believes to have been the execution – of the fi.fa on 20^th September 1996, and instructed no agents in connection with the events of that day. Mr. Navier's evidence is that the Official Receiver was simply not involved with the Everest litigation, and I do not understand Mr. Leicester to suggest anything different. Mr. Navier's first involvement with Mr. Leicester's affairs arose when he became the receiver and manager of Mr. Leicester's estate between the making of the bankruptcy order on 31^st July 1997 and 2^nd October 1997, when the creditors appointed Mr. Forsey, of a firm called Morrison Stoneham, as the trustee, although I am told by Mr. Leicester that Mr. Forsey was at some later stage replaced by a Mr. Beet. The only prior involvement which the Official Receiver had had with any of Mr. Leicester's affairs was in relation to a company in which Mr. Leicester had had an interest, namely Wilton Fare Limited ("Wilton").
10. On 14^th May 1997, a compulsory winding-up order was made against Wilton on a petition which had been presented by a company called Lyedale Limited ("Lyedale"), that petition having been presented on 18^th March 1997. Lyedale was formerly a company in which Mr. Leicester also had an interest, or with which he had a connection, but it had entered into voluntary liquidation on 4^th December 1996. I should comment at this point that I understand Mr. Leicester to question the validity of that voluntary liquidation. He also questions the lawfulness or validity of the winding-up order made against Wilton, and has devoted some part of his address to me this afternoon to explaining the complaints he has about those matters. However, I am not on this application concerned to unravel what lies behind that. Those questions are not before me, and I understand they are questions which Mr. Leicester has raised in other proceedings in other courts, but I have recited the course of events I have so as to reflect Mr. Navier's recitation of his understanding of the course of events. Mr. Navier also acknowledges that the Official Receiver had also been appointed to act as liquidator of Wilton on the making of the winding-up order on 14^th May 1997, but, of course, this too post-dated the purported execution of the fi.fa in September 1996. Mr. Navier points out that there has been a great deal of correspondence in relation to all this, generated by Mr. Leicester, and that he and the two assistant official receivers to whom Mr. Leicester addressed the correspondence in April to which I have referred have squarely denied any liability to Mr. Leicester.
11. Having explained that background, Mr. Navier's request to the court was to set the statutory demand aside on the ground that there was no arguable basis in fact for the allegation of the debt asserted by Mr. Leicester, and he suggested that Mr. Leicester may have misunderstood the position with regard to the fi.fa. Mr. Navier added that he did not wish to be taken as suggesting that Mr. Leicester had any claims against either the bailiffs or Everest in relation to that matter, but Mr. Leicester has made it plain to me today that he does consider that a grave injustice was carried out on 20^th September, 1996, and I do not think Mr. Leicester would agree with the suggestion that no claims lie against those people, although whether there is any foundation for any complaint against anyone in that matter is not something on which I can even begin to express any sort of view.
12. That was the essence of the material which was before the judge, who heard Mr. Leicester in person and counsel (not Miss Markham) for Mr. Navier. The judge then gave a short judgment, setting out the nature of the claim and referring to Rule 6.5(4)(b) of the Insolvency Rules 1986, which shows that the court is empowered to set aside a statutory demand if it is based on a debt which is disputed on grounds which appear to the court to be substantial. The District Judge referred also to para 12.4 of the Insolvency Practice Direction at B1-012, para. 12.4, in Vol I of the CPR, which states that:

"Where the debtor… (b) disputes the debt (not being a debt subject to a judgment or order) the Court will normally set aside the statutory demand if, in its opinion, on the evidence, there is a genuine triable issue."

13. The judge then summarised the essence of Mr. Navier's point, as set out in his evidence, namely that he was not, in his capacity as Official Receiver or in any other capacity, remotely involved with Mr. Leicester's affairs on or prior to 20^th September 1996. The judge referred also to the writ of fi.fa itself, which was apparently produced to him, which showed that it had been issued at the behest of Everest, which is what one would expect. The judge also referred to various complaints that Mr. Leicester had raised under the Data Protection Act, complaining about the lack of provision of information to him, or the alleged lack of correction of allegedly incorrect information, but pointed out that insofar as Mr. Leicester had any complaints in respect of his assertions under that Act, that could not give rise to the debt on which the statutory demand was based.
14. From what I have related, it is no surprise that the judge came to the inevitable conclusion that the debt which was the subject of the demand was the subject of a genuine and substantial dispute, since there was no sensible, rational basis on which he could conclude that Mr. Navier, in his capacity as Official Receiver, could be answerable to Mr. Leicester in the sum of almost a million pounds in relation to the events of 20^th September 1996, in respect of which Mr. Navier, as Official Receiver, had no role whatsoever, either as principal of those carrying out the activities or otherwise, and those being activities of which he could not possibly have been aware at the time. It appears to me that that was the only possible conclusion to which the judge could come, and that is the conclusion to which the judge did come.
15. Mr. Leicester's appeal is against that order. I have to say that when I read the papers before embarking upon the hearing of this appeal, I simply could not understand on what basis Mr. Leicester was seeking to say that the Official Receiver could, in some way, be held to be responsible for events which not even Mr. Leicester was saying the Official Receiver had had anything to do with. However, in the course of the short adjournment before the hearing started I was provided with a skeleton argument, which Mr. Leicester had faxed through in response to a skeleton argument prepared by Miss Markham, which he had been provided with. He there sets out the story of his complaints rather more fully.
16. Mr. Leicester has a great many complaints about a great many things that have happened to his businesses. They concern not only the particular matter giving rise to the application before the District Judge, but they also concern complaints, as I have indicated, in relation to the liquidations of Lyedale and Wilton. Mr. Leicester reminds me that, some 18 months or so ago, he made an application to me, which, as I recall, although now only with some imprecision, sought relief in relation to one or other or both of those companies.
17. However, what does emerge from Mr. Leicester's skeleton argument is that the way in which he puts the case against the Official Receiver, as he has explained to me in his very moderate and courteous address, is that the Official Receiver is there in the nature of a bloodhound, not just a watchdog. He says he has a public duty, as an officer of the court, to gather in assets and recover assets. He was told about the events of 20^th September 1996 fairly promptly after the making of the bankruptcy order against Mr. Leicester, or, at any rate, he or one of the examiners of the court was told about it in or about the latter part of August 1997. Mr. Leicester's point is that, although he does not suggest that the Official Receiver either authorised the activities of 20^th September 1996 or had any personal involvement in them, or even knew about them, he does suggest that, because of his office as someone who has to carry out the type of functions I have briefly referred to – I have described the functions essentially in the way in which Mr. Leicester chooses to describe them – he is, or ought to be, personally responsible for the fact that recovery for the losses Mr. Leicester suffered, or says he suffered, on 20^th September 1996, has not yet been achieved. As Mr. Leicester put it in his argument to me, "The buck has to stop somewhere and it stops with the Official Receiver." Mr. Leicester had his business taken away from him on 20^th September 1996. He says it was taken away unlawfully and improperly. The Official Receiver was told about this almost a year later, but has done nothing to recover that property and so, says Mr. Leicester, Mr. Navier is indebted to him for the full value of that lost business, namely the sum which is the subject of the statutory demand.
18. Putting it at its highest, that is a near impossible assertion to make against the Official Receiver, and it seems to me it is an almost unprecedented proposition that the point is even arguable. The Official Receiver was entitled to say, and did say – although in rather more decorous terms – that this is complete nonsense, and the District Judge was bound to accept that, putting it at its lowest, it could not be said that there was no substantial dispute about the matter. As it seems to me, there really is no answer to the conclusion to which the District Judge came and there is nothing before this court which enables me to conclude that there is any basis at all on which the statutory demand could stand. Mr. Navier's evidence raised an unanswerable case that there was a real and substantial dispute over the alleged indebtedness, and Mr. Leicester has put in no material, either before me or before the District Judge, demonstrating otherwise.
19. Miss Markham, in her skeleton argument, raised the point that there was also a problem with the fact that Mr. Leicester became the subject of a bankruptcy order in 1997, which was after the accrual of the claims in respect of the events of 20^th September 1996. She asserted in her skeleton argument that there had been no assignment by the trustee to Mr. Leicester of that cause of action, and therefore he was anyway not entitled to bring proceedings in respect of it. If that proposition is right, that would be another reason why the statutory demand was also misconceived. I did not call upon Miss Markham in answer to Mr. Leicester, so I have not heard from her in elaboration of that point, but I did raise the point with Mr. Leicester when he was addressing me, and he showed me various letters passing between him and Mr. Beet, the successor trustee, which did appear to suggest that there had been, at any rate, some assignment of some causes of action to Mr. Leicester. Mr. Leicester also showed me – although quite how it came into his possession I know not – a copy of some notes made by, I think, a judge at Brighton County Court, which appeared to record that he had been told that there were various assignments of causes of action in favour of Mr. Leicester. The material Mr. Leicester showed me did not demonstrate the causes of action so assigned, if that is in fact what happened, and I do not make any finding on what did or did not happen. They did not include any material which enabled me to be satisfied that any cause of action in respect of the events of 20^th September 1996 had been assigned. However, since it is not necessary to decide that point for the purposes of this appeal, since I have already pointed to the fundamental ground on which the appeal is hopeless, I need not refer to it further. I am prepared to assume in Mr. Leicester's favour, although expressly without deciding, that it may be there is some assignment which entitled him to take the course he has. But, and I make this absolutely clear so that no-one misunderstands it, I am expressly not deciding that point one way or the other.
20. Finally – although again this is not a point which is taken either by Miss Markham in her skeleton argument, nor was it raised by the judge – I did raise it with Mr. Leicester in the course of his address, although he was, I think perfectly reasonably, not able to deal with it, since it is essentially a point of law. The point is that it appears to me fairly obvious that the claims that Mr. Leicester seeks to raise against Mr. Navier as Official Receiver are not claims which can properly be characterised as claims for payment of a liquidated sum for the purposes of Sections 267 and 268 of the Insolvency Act 1986. That being so, they could not provide the basis for a valid statutory demand. Most of the claims are, quite obviously, claims for compensation for damage to his business and, therefore, are in the nature of claims for damages, which are obviously not claims for payment of a liquidated sum.
21. The claim in respect of the £60,000 cash might be thought to be different, but, as it seems to me, the claim for that would be a claim for money had and received, or, as it is more popularly known nowadays, a claim for restitution. So it is a claim for an account and payment and not a claim in debt, and it makes no difference that the claim can be calculated down to the last penny. I had occasion to consider points such as this in my decision in Hope v. Premierpace (Europe) Ltd [1999] BPIR 695, at 699. I expressed the view in that case that a claim for an account and payment was not one for debt which could form the subject of a statutory demand. I have no reason to depart in this case from the view I expressed in that one. Again, however, I have not heard from Miss Markham on that point, and it is not necessary for the purposes of the disposition of this appeal. The appeal fails anyway, on the basis that there is a fundamental factual difficulty in Mr. Leicester's case, namely, that he cannot show that he has an unanswerable claim against the Official Receiver for the sum claimed in the statutory demand. For those reasons I dismiss Mr. Leicester's appeal.
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