England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		10 October 2008

MR JUSTICE LEWISON:

1. Mr Mike McGuire applies for permission to appeal against eight judgments made against him. Seven of those judgments were given by Master Teverson in the Chancery Division; and the eighth by District Judge Sparrow in the Norwich County Court. Permission to appeal in relation to five of the appeals has been refused on paper. The seven judgments given by Master Teverson were all judgments against Mr McGuire on applications by Defendants for summary dismissal of claims against them, on the ground that they had no real prospect of success.
2. The principles governing that type of application may be summarised as follows: (1) the court must consider whether the Claimant has a realistic as opposed to a fanciful prospect of success - Swain v. Hillman [2001] 2AER 91; (2) a realistic claim is one that carries some degree of conviction. This means a claim that is more than merely arguable - E D & F Mann Liquid Products v. Patel [2003] EWCA Civ 472; (3) in reaching its conclusion the court must not conduct a mini-trial - Swain v. Hillman; (4) this does not mean the court must take at face value and without analysis everything that a Claimant says in his statement before the court. In some cases it may be clear that there is no real substance in the factual assertions made, particularly if contradicted by contemporaneous documents - E D & F Mann Liquid Products v. Patel; (5) however, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial - Royal Bolton Hospital NHS Trust v. Hammond No. 5 [2001] EWCA Civ 550; (6) although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial that is possible or permissible on summary judgment. Whilst the court should hesitate about making a final decision without a trial, even where there is no obvious conflict at the time of the application where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case - Doncaster Pharmaceuticals Group Limited v. Bolton Pharmaceutical Company 100 Limited [2007] FSR 63.
3. The test I am required to apply under CPR Part 52 on these applications for permission to appeal is to consider whether Mr McGuire has a real prospect of persuading an appeal court that the decision of the lower court was wrong. The underlying actions relate to Mr McGuire's bankruptcy and the subsequent administration of his bankrupt Estate; and to the death of his sister and the subsequent administration of her Estate. Mr McGuire firmly believes that he ought never to have been made bankrupt; that his sister was duped on her deathbed into altering her Will and that unscrupulous and dishonest professionals have conspired to strip both his and her Estates of their valuable assets, aided and abetted by a corrupt legal system.
4. Mr McGuire says, rightly, that the eight applications for permission to appeal are inter-related. I shall therefore deal with them in the order in which the underlying allegations appear in the chronological story rather than in the order in which the judgments under appeal were given. Putting the chronology together is not a simple matter. The papers that Mr McGuire has filed in support of his applications do not include some of the pleadings that were before the Lower Courts nor the evidence on which the Lower Courts relied in reaching their decisions. Rather, they include a detailed catalogue of alleged errors in the principal judgment of Master Teverson; and accusations that Master Teverson was biased in favour of Mr McGuire's opponents, all supplemented by a highly charged and emotive description of Mr McGuire's perceived grievances. In addition, the relationship between the allegations and the underlying story is easier to understand if it is not told in strict chronological order.
5. So far as I can tell the underlying facts are these. In the early to mid-1980s, Mr McGuire built up an accommodation business consisting of the rental stream from eight properties. Five of the properties were at Sea Cliff, Sheringham, Norfolk, the sixth was 51 Vicarage Square, Grays in Essex, the seventh, 43 Camelot Close, London and the eighth, a house in Boulogne in France. Of the five properties at Sea Cliff Mr McGuire had interests in 1, 5, 6 and 8; and 3 was held in the name of his sister, Joan. 43 Camelot Close was also held in Joan's name. Both the latter formed a part of her Estate.
6. Mr McGuire engaged the firm of Hayes & Storr in Sheringham to conduct his conveyancing. In 1995 the firm raised a bill of some £2,529 odd against Mr McGuire, which he did not pay. At some stage the firm issued proceedings against Mr McGuire in the Norwich County Court. Those proceedings resulted in the entry of a default judgment on 4 July 1996, in the sum of £2,929 odd plus £158 in costs, making a total of £3,087 odd. Mr McGuire did not satisfy that judgment. On 23 July 1996, the firm issued a statutory demand based on the judgment debt. Mr McGuire did not apply to set aside the default judgment and did not apply to set aside the statutory demand. A bankruptcy petition was presented on 27 September 1996, and a bankruptcy order on the petition was made on 14 November 1996.
7. Mr McGuire alleges that the bankruptcy order should not have been made. Throughout these proceedings he has called it the non-genuine bankruptcy order. Underlying that nomenclature is Mr McGuire's allegation that the bill on which the statutory demand was based was inflated and excessive. He says that a solicitors' bill, which has not been taxed or assessed by judicial authority, is not a liquidated sum upon which a statutory demand can be based. However, in his case the statutory demand was not based on the solicitors' bill; it was based on the default judgment which had been entered against him. The entry of that judgment superseded the bill on which the action was based. In more technical language the cause of action merged in the judgment. What was subsequently enforceable was not the original bill, but the judgment debt.
8. He also has a number of complaints about the way that his case was handled in the Norwich County Court leading up to the making of the bankruptcy order. He says that he did not have a fair hearing before the District Judge who made the order and that he ought to have been allowed to challenge the judgment on which the judgment debt was based. If those allegations were justified they would have afforded Mr McGuire grounds to appeal against the bankruptcy order. In fact, in February 2001, some four years after the bankruptcy order was made, Mr McGuire did apply for permission to appeal out of time. His application was refused by Registrar Simmonds on the grounds of inexcusable delay. That decision was affirmed by Lloyd J and by the Court of Appeal, which gave judgment on 19 March 2002, refusing permission to appeal.
9. In the course of his judgment Peter Gibson LJ said this:

"Mr McGuire is convinced that he should never have been made bankrupt because, he said, he was not insolvent. I am afraid he has misunderstood the grounds on which a petition can be presented by a creditor and the grounds on which a court may make a bankruptcy order. In particular, he has not taken account of the fact that where a statutory demand has been served in the prescribed form and with the correct formalities, the failure by the debtor to pay the debt or to secure or compound for it to the satisfaction of the creditor will mean that the debtor will be treated as unable to pay his debt once the time allowed - that is to say at least three weeks - has elapsed since the demand was served, when the demand has neither been complied with nor set aside in accordance with the rules (sections 267(2)(c) and 268(1) and (2) Insolvency Act 1986).

Peter Gibson LJ said that in his judgment there plainly was power to make the bankruptcy order and added that:

"...the fact that a debtor claims that he has other assets which make him solvent do not detract from that fact."

Peter Gibson LJ then referred to Mr McGuire's complaint about the refusal of an application for an annulment of his bankruptcy, commenting that the application:

"...does not take proper account of the limits on the court's power to annul a bankruptcy order.

In those circumstances Mr McGuire was refused permission to appeal out of time against either the making of the original bankruptcy order or the refusal of his application to annul. Even now Mr McGuire firmly believes that the decision of the Court of Appeal was unjust and wrong.

10. During the course of the hearing I explained to him that it is not open to me, sitting at this level in the judicial hierarchy, to say that the decision of the Court of Appeal is wrong. That can only be done by the House of Lords. I must, therefore, accept that the decision of the Court of Appeal was right. It follows that I must decide all Mr McGuire's applications for permission to appeal on the basis that Mr McGuire was effectively made bankrupt in November 1996. None of his complaints about the alleged debt on which the bankruptcy order was based nor his complaints about the way in which his case was handled nor his complaints about refusals to annul the bankruptcy are matters that can be raised in the applications before me. Mr McGuire may not accept that this is the correct basis, but no other basis is open to me.
11. The effect of the making of a bankruptcy order was that Mr McGuire's property vested in his Trustee in Bankruptcy. Property is widely defined by s.436 of the Insolvency Act 1986. It includes things in action. Things in action include claims and causes of action. The scope of this section was considered by the Court of Appeal in Heath v. Tan [1003] 1WLR 1421. In that case the Court of Appeal approved the earlier decision of Bowler v. Power, in which it was held that even a claim to set aside the judgment on which the bankruptcy order was founded on the ground that it had been procured by fraud, was one of the claims that vested in the Trustee in Bankruptcy.
12. In Heath v. Tan the Court of Appeal pointed out that s.303 of the Insolvency Act gave a bankrupt the right to appeal to the court supervising the bankruptcy to challenge decisions of his Trustee and, that it is the supervision of the bankrupt by the bankruptcy judge which protects the bankrupt from injustice. Mr McGuire relied on the decision of the House of Lords in Mulkerrins v. Price Waterhouse Coopers [2003] 1WLR 1937. That was a case in which Price Waterhouse Coopers were defendants to a claim for professional negligence brought against them by Mrs Mulkerrins who had been adjudicated bankrupt. She claimed that, but for the negligence of Price Waterhouse Coopers she would not have been made bankrupt at all. In proceedings between Mrs Mulkerrins and the Trustee in Bankruptcy the District Judge decided that that cause of action had not vested in the Trustee. Price Waterhouse Coopers then applied to strike out the claim against them on the ground that the cause of action had indeed vested in the Trustee. The House of Lords held that, that question had already been decided by the District Judge and that the District Judge's decision had not been appealed, with the consequence that Price Waterhouse Coopers could not mount a collateral challenge to that decision. Thus, far from supporting Mr McGuire's case, on analysis the Mulkerrins case confirms the unwillingness of the courts to allow collateral challenges to previous decisions.
13. The first of the judgments under attack before me is that of Master Teverson on 27 July 2007. By his order the Master struck out Mr McGuire's claim against Mr Shepherd, a partner in Hayes & Storr, the petitioning creditor. The claim form complains of the original over-charging, and also the improper use of the bankruptcy procedure. Master Teverson struck out the claim on four grounds. (1) It was a collateral attack on previous judgments of the court, namely the un-appealed default judgment and the refusal of permission to appeal against the bankruptcy order. (2) There was, in fact, no abuse of process by Hayes & Storr in beginning proceedings and in following through the ordinary procedures of the court. (3) Since Mr McGuire knew all the facts by 1996 at the latest and did not bring his claim against Mr Shepherd until June 2006, any claim that he might have had was statute barred. (4) Any cause of action that Mr McGuire might have had to set aside the judgment on which the bankruptcy order was founded or to pursue Mr Shepherd for damages had already vested in his Trustee in Bankruptcy. Any one of these grounds, if correct, would have justified the Master's decision. In my judgment, all four grounds are unquestionably correct. The appeal has no reasonable prospect of success and I refuse permission to appeal. There is now no question but that Mr McGuire was made bankrupt in November 1996. Insofar as any of his proposed appeals are based on allegations that he was improperly made bankrupt, they are doomed to failure in the light of the decision of the Court of Appeal.
14. Upon the making of the bankruptcy order Mr McGuire's Estate vested in the Official Receiver as interim Trustee. Mr Robert Rose of Larkin Gowan was appointed Trustee in Bankruptcy on 30 December 1998. His name was the next one on the rota of licensed insolvency practitioners maintained by the Official Receiver. Master Teverson's judgment of 24 July 2007 dealt with Mr McGuire's claim against the Insolvency Service and the Secretary of State relating to his bankruptcy and the appointment of Mr Rose as Trustee. First he alleged that the Insolvency Service had a duty to prove on the balance of probabilities that he was genuinely bankrupt. This allegation is hopeless. The Insolvency Service has no duty to investigate whether a person against whom a bankruptcy order is made was genuinely bankrupt. They have no power to go behind an order of the court and no power to go behind the original default judgment on which the bankruptcy order was made. In addition, the allegation that Mr McGuire was not genuinely bankrupt is a collateral attack on the decision of the Court of Appeal.
15. Next, Mr McGuire alleges that the Secretary of State should not have appointed Mr Rose. The Secretary of State does not, in my judgment, owe any duty to an individual against whom a bankruptcy order has been made in appointing a Trustee, which is the exercise of a public discretionary function. And even if he did, there is no material before the court on which it can be said that the Secretary of State's knowledge at the time of the appointment amounted to a breach of any duty. The appeal has no reasonable prospect of success and I refuse permission to appeal.
16. Mr McGuire's sister, Joan, died of cancer on 8 August 1999. She was in hospital. Shortly before her death she made two codicils to her Will. Her original Will, dated 29 January 1999, had appointed Mr McGuire as her sole Executor. After making certain legacies the Will left the rest of her Estate to him. The first of the two codicils is the relevant one for present purposes. It was made on 23 July 1999, and revoked the appointment of Mr McGuire as Executor, appointing in his place Mr Matthew Arrowsmith-Brown, a partner in Mills & Reeve, a firm of solicitors in East Anglia. The codicil was witnessed by Miss Risk of Mills & Reeve and a hospital manager. Mr McGuire alleges that when the codicil was executed Joan lacked testamentary capacity and was pressurised or deceived into appointing Mr Arrowsmith-Brown as Executor in place of her brother. Master Teverson dealt with this allegation in paragraph 34 of his judgment of 18 December 2006. He held that there was no sound evidential basis for Mr McGuire's allegations and that Mills & Reeve had supplied good evidence to the effect that Joan had testamentary capacity and executed the codicil of her own free will. Mr McGuire says that this factual conclusion was wrong. However, his case on this point does not depend on direct evidence and although he has made allegations about the reliability of the evidence of others upon which Mills & Reeve relied, he has not placed any material before me to support those allegations. He has not, in my judgment, shown that he has a real prospect of showing that Master Teverson's conclusion on the facts was wrong. In addition, the only benefit that could accrue to Mr McGuire if he were to succeed in this claim is the potential loss to his sister's Estate. Insofar as that is something in which Mr McGuire had an interest, it was an interest that passed to his Trustee in Bankruptcy. Again, I refuse permission to appeal against this part of Master Teverson's decision.
17. On 30 November 1999, Mr Rose wrote to Mills & Reeve notifying them that any property inherited by Mr McGuire from his sister Joan would vest in the Estate in Bankruptcy as, after required property, under s.307 of the Insolvency Act 1986, this following a public notice having been placed in the Eastern Daily Press on the previous day. Amongst the many allegations that Mr McGuire makes it is not alleged that this notice under s.307 was given too late. He did, however, issue an application in his action against Mr Shepherd requiring Mr Rose and Mr Brumby, a solicitor, to attend court and produce incontrovertible proof that the 42 day limit existed.
18. On 2 November 2007, Master Teverson dismissed this claim on two grounds. First, that he had already struck out the action against Mr Shepherd, with the consequence that there was no action in which the application could be made and second, that the claim was in any event misconceived in law, because the 42 day limit was one which was contained in the Insolvency Act itself. I agree with Master Teverson and consequently, refuse permission to appeal. The notice under s.307 was an effective notice and had the consequence that Mr McGuire's rights as regards his sister's Estate passed to his Trustee. The effect of the notice under s.307 has a major impact on Mr McGuire's claims against Mills & Reeves. It means that any proprietary or pecuniary claim that he might have has passed to his Trustee. It was for that reason that Master Teverson struck out his claims against Mills & Reeve relating to the allegations of maladministration of his late sister's Estate. Master Teverson regarded the decision of the Court of Appeal in Heath v. Tan, to which I have already referred, as decisive with this question and so do I. Mr McGuire submits that this principle only applies to someone who is genuinely bankrupt and that he neither is or ever has been. But that also amounts to a collateral challenge to the bankruptcy order, which is precluded by the decision of the Court of Appeal to refuse him permission to appeal against it out of time. I therefore refuse permission to appeal.
19. As I have said, there were two properties in Joan's Estate. The first of these, 3 Sea Cliff, was sold on 18 May 2000, to Mr and Mrs Thwaites for £44,500. The second, 43 Camelot Close was sold on 24 November 2000, for £45,000. Before the Master, Mr McGuire alleged that it was agreed between him and Mr Arrowsmith-Brown that the properties would not be sold in the first year following Joan's death that is, before 8 August 2000. 43 Camelot Close was not sold in the first year following the death, so the alleged agreement does not affect that. Master Teverson dealt with the agreement by saying that, to the extent that there was any agreement, it was made before the Trustee gave notice under s.307. The notice under s.307 claimed after acquired property, which included whatever rights Mr McGuire had in relation to his late sister's Estate. Those rights would have included whatever rights he might have had under the alleged agreement, which related to the administration of that Estate. In my judgment, there is no real prospect of success in persuading an appeal court that the Master was wrong on that point.
20. As I have said, Mr Robert Rose was appointed Trustee in Bankruptcy on 30 December 1998. Mr Rose is a partner in a firm of accountants and insolvency practitioners called Larkin Gowan. He set about dealing with Mr McGuire's Estate in Bankruptcy. In November 1999, Mr Rose's partner, Mr Howard, asked Mr Frank Brumby, a solicitor, whether he could act for Mr Rose. Mr Brumby thought there might be a conflict of interest, because one of his partners had previously acted for Mr McGuire. Mr Brumby made careful investigations in the course of which, he wrote to Mr McGuire asking him whether he had any objections. At that time Mr McGuire raised no objection. It was not until 2006 that Mr McGuire brought proceedings against Mr Brumby complaining of a conflict of interest. Master Teverson dismissed that claim on 5 June 2007. He held that it was far too late for Mr McGuire to raise a claim of that nature and that in any event, there was no real prospect of Mr McGuire establishing that Mr Brumby had improperly used any confidential information. In my judgment, the Master's judgment on that claim is unimpeachable and I refuse permission to appeal.
21. I turn now to the properties at Sea Cliff. In relation to 1 Sea Cliff, Mr McGuire had entered into a delayed purchase agreement in 1996, to buy that property from a Mrs Marleau. The arrangement was that Mr McGuire paid a deposit of £1,000 and was to pay the balance of £50,000 over a period of 60 months at the rate of £842 odd per month. Mrs Marleau's solicitors informed Larking Gowan that at the date of the bankruptcy order £2,150 had been paid, leaving a balance of £48,370 at the date of the bankruptcy. G A Keys, a firm of estate agents, had advised in August 1999, that 1 Sea Cliff had a value in the region of £42,000. That is some £6,000 less than the outstanding balance. Consequently, on 6 April 2000, Mr Rose disclaimed any interest under the delayed purchase agreement. In the following month Mrs Marleau sold 1 Sea Cliff to Mr and Mrs Thwaites for £35,000, some £7,000 less than the value advised by G A Keys. Mr McGuire says that the value ascribed to 1 Sea Cliff by G A Keys was too low and that G A Keys' valuation was dishonest.
22. 2 Sea Cliff did not belong either to Mr McGuire or to his sister. Its relevance to the matters in issue comes about, because G A Keys informed Mr Rose's partner, Mr Howard, in August 1999, that they had it on the market for £53,000 with no interest being shown. Mr McGuire alleges that it was not being properly exposed to the market, but there is no direct evidence to substantiate this allegation that has been placed before me. It is however, fair to say that it is difficult to prove a negative by conclusive evidence. He also alleges that Mr Hedges of G A Keys offered the property to him in 1998 for £65,000. It was subsequently also sold to Mr Thwaites. The precise sale price is unclear, but Mr McGuire alleges that it was in the region of £45,000.
23. 3 Sea Cliff was part of Joan's Estate. It was sold on 18 May 2000, for £44,500, the value ascribed to it by G A Keys. Mr McGuire says that the valuation was dishonest. 5 Sea Cliff was subject to a mortgage in favour of the Halifax. At the time when the mortgage was made in 1990, the valuation of the property supplied to the mortgagee valued it at £45,000 with a potential value of £46,000 if improved. Mr McGuire said that the purchase price at that time was, in fact, some £47,950. Mr McGuire fell into arrears under the mortgage. In about September 2000 the Halifax repossessed the property and sold it for £41,000. The buyer was again Mr Thwaites. G A Keys advised the Halifax on the selling price. They said that a suitable guide price would be £43,000. By the time the Halifax had added selling expenses, insurance and legal fees to the amount of the principal and interest outstanding, there was a shortfall of £22,000 odd on the mortgage account. Some years later in July 2005, 5 Sea Cliff was sold on for £115,000.
24. On 8 September 2006, Mr McGuire issued proceedings against Burgess Salmon, the solicitors who had acted for the Halifax. The Halifax had paid Burges Salmon's bills between April 1996 and April 2002. No allegation of fraud is made against Burges Salmon. The claim against Burges Salmon alleged that their charges were excessive and they acted negligently in the repossession of the property and, that they breached Mr McGuire's rights under Article 1 of the First Protocol to the European Convention on Human Rights. By his judgment of 6 June 2007, Master Teverson struck out the claim. As regards the allegation of overcharging, he held that Mr McGuire's primary remedy was to have the bills taxed under s.71 of the Solicitors' Act 1974, but that he was out of time, because s.70(4) precludes a taxation more than 12 months after the bill has been paid. That conclusion was plainly right. Master Teverson also considered whether he should exercise the discretionary power of the court to direct taxation of the bills, but decided that he should not. The reason that led him to that conclusion was that Mr McGuire had been complaining about the bills since 1997, but had done nothing about it despite having had his attention drawn to his right to have the bills taxed. As an exercise of discretion the Master's reliance on that serious delay cannot, in my judgment, be faulted.
25. So far as the allegation of negligence is concerned, the Master held that as solicitors retained by the Halifax Burges Salmon owed no contractual or tortious duty of care to Mr McGuire. In that conclusion he was also plainly right. So far as the Human Rights Act was concerned, he held that since the acts complained of had all taken place before the Human Rights Act came into force there was no possibility of a claim under the Act, because the Act did not have retrospective application. He was plainly right in that conclusion too. Mr McGuire's proposed appeal has no real prospect of success and consequently I refuse permission to appeal.
26. 6 Sea Cliff was sold by Mr Rose in September 2000, for £52,500. Again, Mr Thwaites was the buyer. G A Keys had advised that 6 Sea Cliff had a maximum value of £45,000. Mr McGuire says that this was a gross under value based on G A Keys dishonest valuation. He says that 6 Sea Cliff has since been sold on, again in 2005, for £105,000. 8 Sea Cliff was the subject of a contractual arrangement with the owners under which Mr McGuire paid £650 and agreed to assume liability for mortgage arrears and future payments of instalments under the mortgage. Mr Rose apparently took the view that the value of the property was less than the liability under the mortgage and disclaimed Mr McGuire's interest under that arrangement.
27. These sale and purchase prices show a clear pattern. There are four sellers, Mrs Marleau, the owner of 2 Sea Cliff, the Halifax and Mr Rose. Where there are four different sellers all selling properties in the same terrace at about the same time for about the same price the obvious and natural inference to draw is that the sale prices represent the market value of the properties. What then does Mr McGuire rely on to rebut this obvious and natural inference? First he points to prices and valuations ascribed to properties in Sea Cliff before the dates of sale. In 1984 houses in Sea Cliff were on the market for £33,000 odd and in 1990, some ten years before the sales the mortgagee value 5 Sea Cliff, at £45,000. In 1996 Mr McGuire himself agreed to buy 1 Sea Cliff under an arrangement which amounted to the payment of a sum in excess of £50,000. Prices rose between 1996 and 2000 with the result that the true market value of a house in Sea Cliff in 1999 or 2000 would have been higher than £50,000. Mr McGuire says that it is inconceivable that house prices for a seaside location remained static for ten years or more.
28. Second, he points to prices ascribed to houses in Sea Cliff after the dates of sale. In July 2002, 8 Sea Cliff was on the market for £155,000, although it appears to have sold in August 2003 for £120,000. There were actually sales of 6 Sea Cliff in May 2005 for £105,000; 5 Sea Cliff in July 2005 for £115,000 and 7 Sea Cliff in November 2006 for £233,500. Although it is true to say that house prices rose between 2000 and 2006, Mr McGuire says that a rising market value from G A Keys of £45,000 or thereabouts to £233,000 or thereabouts cannot simply be ascribed to the general rise in house prices over that period. Third, he relies on Halifax and Nationwide house prices indices for East Anglia. On the basis of those indices he says that 1 Sea Cliff would have had a value in May 2000 of approximately £85,000, which is more than double the value given by G A Keys. Fourth, he points to the fact that the Sea Cliff properties were all acquired by Mr Thwaites, who has a history of convictions for dishonesty.
29. Mr McGuire sued Mr Rose and Mr Howard, the two partners in Larking Gowan, alleging that these properties had been sold at an undervalue. He alleged, moreover, that the sales were part of a dishonest conspiracy in which Mr Rose, G A Keys and Mr Thwaites at least were conspirators. He also sued Messrs Herne and Hedges, the two partners in G A Keys. Master Teverson dismissed the claim against Larkin Gowan on 18 December 2006, and dismissed the claim against G A Keys on 5 June 2007.
30. In his judgment on the application by Larkin Gowan, Master Teverson's conclusion on this part of the case was that he would have been willing to allow the claim to proceed if he had been satisfied that Mr McGuire had a real prospect of success in turning the shortfall in his bankruptcy Estate into a surplus. He concluded that Mr McGuire did not have that and therefore, struck out the claim. Thus, within the Master's conclusion there are two factors. First, he must have concluded on the facts that there was a real prospect that Mr McGuire would succeed in showing that the properties in Sea Cliff had been undervalued and sold at undervalues. In other words, subject to the procedural question, Mr McGuire had a viable cause of action.
31. Second, he came to a view on the quantum of the claim. It was Master Teverson's view on the quantum of the claim namely that it would not turn the shortfall into a surplus that was decisive. In my judgment, Mr McGuire has a real prospect of establishing that the properties were sold at an under value. However, whether this will have the effect of turning a shortfall into a surplus will depend not only on the quantum of this claim itself, but also on whether Mr McGuire is successful in challenging professional fees charged, both in relation to his own bankrupt Estate and also in the administration of his late sister's Estate, of which he is the residuary beneficiary.
32. At this early stage I consider that it is not possible to say that Mr McGuire has no real prospect of success, particularly since Master Teverson himself expressed disquiet about the level of professional fees that had been charged to Mr McGuire's bankrupt Estate. With all respect to him, it seems to me to be strongly arguable that Master Teverson did conduct a mini-trial and did not take account of the evidence that Mr McGuire might succeed in obtaining by way of disclosure. He also arguably overlooked the inter-relation between Mr McGuire's allegations about sales at an under value and his complaints about the fees that had been charged. It follows that, in my judgment, there is a real doubt over Master Teverson's evaluation of the facts. This is a case in which Mr McGuire has a real prospect of persuading another judge on appeal that a fuller investigation of the facts might well alter the conclusion that the court eventually reaches.
33. However, the procedural problem remains. In dealing on the same occasion with the application made by Mills & Reeve, Master Teverson regarded the decision of the Court of Appeal in Heath v. Tan as decisive and as I have said, so do I. Master Teverson accepted the submission that Mr McGuire's remedy was by way of an application in the bankruptcy court under s.303, 304 or 360 of the Insolvency Act 1986. But this, as it seems to me, applies equally to Mr McGuire's complaints about Mr Rose and G A Keys as it does to his complaints about Mills & Reeve. Indeed, the submissions to this effect which the Master accepted were, in fact, made by counsel for Larkin Gowan, that is to say Mr Rose's firm. In my judgment, the procedural problem is not one that Mr McGuire can overcome. His remedy is by application to the bankruptcy court and not in this court. For that reason I refuse permission to appeal. That said the doubt over Master Teverson's evaluation of the factual aspects of Mr McGuire's case has a knock on effect on District Judge Sparrow's decision, to which I will come in due course.
34. In dismissing the claim against G A Keys, Master Teverson held that G A Keys owed no duty to Mr McGuire as they had been instructed by others. He relied principally on the case of Rajah v. Austin Gray [2002] 3 EGLR 61. That case does establish beyond doubt that a valuer instructed by a mortgage owes no duty, either at common law or in equity to the mortgagor. The Master held that the same principle applied to a valuer instructed by a Trustee in Bankruptcy or an Executor. In my judgment, he was plainly right.
35. Mr McGuire advanced a separate argument before the Master, based on his allegation that G A Keys had been parties to a dishonest conspiracy. Master Teverson held that the pursuit of this claim was precluded in this court as a result of Heath v. Tan, but that Mr McGuire's remedy was to make an application in the bankruptcy court. I agree. I therefore refuse permission to appeal.
36. I come at last to the judgment of District Judge Sparrow in the Norwich County Court. This was given on 7 January 2008. In paragraph 71 of his judgment of 18 December 2006, Master Teverson had expressed concern over the high level of professional fees incurred in Mr McGuire's bankruptcy and in the administration of his late sister's Estate. These included fees charged by Mills & Reeve, Burges Salmon and the fees of the Trustee in Bankruptcy, Mr Rose. He expressed the hope that they would come under independent scrutiny. Mr McGuire duly applied for a review of the fees and costs. He also applied for an order against the Trustee in Bankruptcy for an order restoring his property, that is to say the properties principally at Sea Cliff.
37. Mr McGuire also tried to re-open the question of whether he was properly made bankrupt at all. District Judge Sparrow held that it was not able to do so and I agree. District Judge Sparrow approached the remainder of Mr McGuire's applications on the basis that the court was unlikely to give permission to exercise its discretion in Mr McGuire's favour unless there was a real prospect that the shortfall would be turned into a surplus. In that I consider that he was applying settled principles, which cannot be faulted.
38. District Judge Sparrow referred to Mr McGuire's allegations that the properties at Sea Cliff were sold at an under value. He said that Master Teverson had considered Mr McGuire's allegations and that he, that is District Judge Sparrow, was not there to review Master Teverson's decision and that Master Teverson had explained clearly why he did not accept Mr McGuire's evidence that there had been sales at an under value. But in my judgment, that is not what Master Teverson said. He said that he would have been prepared to allow the claim to go forward if it would result in turning the shortfall into a surplus. In other words, Master Teverson does appear to have accepted that there was a case to answer, that there had been sales at an under value, but that the quantum of the claim was not as great as Mr McGuire suggested.
39. In my judgment, Mr McGuire has a real prospect of success in persuading an appeal judge that District Judge Sparrow misunderstood what Master Teverson had decided about the claim and thus began his consideration of the case on the wrong starting point. Moreover, the question of whether pursuit of that claim has a real prospect of turning a shortfall into a surplus is linked to the question of whether the fees are to be scrutinised. In addition, since Master Teverson made the point that the correct court to consider Mr McGuire's application was the bankruptcy court, I consider that Mr McGuire has a real prospect of persuading an appeal judge that District Judge Sparrow ought to have considered Mr McGuire's material for himself. It is true to say that Mr McGuire has produced no independent expert evidence in support of his claim and the absence of such evidence may well be a fatal deficiency -- see Brown v. Beat [2002] BPIR 421. But at this stage, bearing in mind Master Teverson's view that there was a case to answer I would not shut out Mr McGuire from arguing his appeal.
40. District Judge Sparrow then considered the question of fees. It will be recalled that Master Teverson expressed concern about the fees charged by a number of professionals, including Mills & Reeve. Mills & Reeve acted for the Executor of Joan's Estate, who was a partner in that firm. Their bill came to over £44,000. However, it was greatly reduced by a remuneration certificate, which reduced the bill to £12,250. District Judge Sparrow said that there was no prospect of the bill being reduced again. Thus far I agree. But he went on to say that therefore, there was nothing in Joan's Estate for the creditors. Whether that is so or not will depend on whether Mills & Reeve have credited back to the Estate the difference between the bill charged and the remuneration allowed and whether the Trustee ensured that a proper credit to the Estate accounts was made. The Estate accounts were not amongst Mr McGuire's voluminous papers and it is notable that District Judge Sparrow did not refer to them. If no credit has been made there might be as much as £30,000 for Mr McGuire's creditors.
41. When District Judge Sparrow came to look at the figures he concluded that there was no point in investigating the Trustee's fees. He came to this conclusion on the basis that there were unsecured creditors of £47,000 and, that the Trustee had only actually received £19,000, thus, if the £19,000 was paid back into the Estate there would still be a shortfall of some £28,000. However, if Mr McGuire succeeds in his claim that properties were sold at an under value, even if he does not succeed to the extent that he alleges and if there is, in fact, some money in his sister's Estate which can be used for the benefit of creditors, then there might well be a surplus in the event that the Trustee's fees are disallowed. Whether Mr McGuire is able to make good any of his allegations is not for me to decide at this stage, nor am I deciding that an appeal against District Judge Sparrow's decision will succeed. All that I am deciding is that Mr McGuire should have permission to appeal against that decision.
42. The upshot is that I refuse Mr McGuire permission to appeal all of Master Teverson's orders, but I grant permission to appeal the order of District Judge Sparrow. Permission to appeal is therefore granted in relation to appeal CH/2008/PTA/0045. Permission to appeal is refused in relation to appeals CH/2007/PTA/049; CH/2007/PTA/0370; CH/2007/PTA/0371; CH/2007/PTA/0372; CH/2007/PTA/0508; CH/2007/PTA/0511 and CH/2007/PTA/0767. In making that single appeal, Mr McGuire will have to persuade the appeal judge, (1) that he has a real prospect of succeeding in his claim that the properties at Sea Cliff were sold at an under value. (2) That he has a real prospect of succeeding in showing that Mills & Reeve incorrectly failed to credit the difference between the fees they billed and the amount allowed under the remuneration certificate to the Estate of his late sister. (3) That he has a real prospect of succeeding in showing that the Trustee in Bankruptcy's remuneration was excessive and (4), that he has a real prospect of turning a shortfall into a surplus.
43. That will not be done by the wild and generalised allegations of corruption of the whole of the system that Mr McGuire has made so far. It will not be done by impugning the integrity of the judges who have dealt with his case. These sorts of allegations divert attention from the real issues. What he will have to do is to concentrate on the objective facts and not his highly charged spin on them. In addition, Mr McGuire must not raise again any complaint about the making of his bankruptcy order in the first place. He must now come to accept that whatever his private feelings are, so far as the court is concerned he was validly and properly made bankrupt. Accordingly, much of the voluminous material placed before me will be irrelevant to the single appeal for which I have given permission to appeal.
44. At the hearing of his applications Mr McGuire told me that he would be able to obtain some legal advice. I strongly urge him to do that. If he does not, there is a serious danger that any real and legitimate grievance he does have will be buried under the large quantities of mud that Mr McGuire has thrown at everyone who has been involved in his case so far. I should add, if, and I stress the word if, Mr McGuire's appeal succeeds consideration should, in my judgment, be given to transferring proceedings in Mr McGuire's bankruptcy from Norwich County Court to the Royal Courts of Justice in London under the power contained in Rule 7.11(4) and (5) of the Insolvency Rules. That will go some way to dispelling Mr McGuire's feeling that he is not receiving justice locally in the Norwich County Court.
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