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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Crossley- Cooke v Europanel (UK) Ltd [2010] EWHC 124 (Ch) (25 January 2010)
URL: http://www.bailii.org/ew/cases/EWHC/Ch/2010/124.html
Cite as: [2010] BPIR 561, [2010] EWHC 124 (Ch)
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CHANCERY DIVISION
Strand, London, WC2A 2LL |
||
B e f o r e :
____________________
| DAVID CROSSLEY-COOKE |
Appellant |
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| -and - |
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| EUROPANEL (UK) LIMITED |
Respondent |
____________________
1st Floor, Quality House, 6-9 Quality Court
Chancery Lane, London WC2A 1HP.
Tel No: 020 7067 2900, Fax No: 020 7831 6864, DX: 410 LDE
Email: info@martenwalshcherer.com
Website: www.martenwalshcherer.com
Miss Alejandra Hormaeche (instructed by Messrs Pearson Hinchliffe) appeared for the Appellant.
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Crown Copyright ©
- Mr Crossley-Cooke seeks to appeal from the decision of District Judge Gatter in the Oxford County Court, given on 16th July 2009, refusing his application to set aside a statutory demand served on him by the Respondent, Europanel (UK) Limited ("Europanel"), claiming an unpaid debt of £7,311.93 plus interest. That represents the total of three invoices for MDF panels which were supplied and the subject of three separate deliveries in July and September 2008.
- Mr Crossley-Cooke has appeared before me, as he did in the Court below, in person. He has been very clear and courteous in his submissions. Europanel are represented by Miss Hormaeche of Counsel, who has only recently been instructed.
- Miss Hormaeche took a preliminary objection that this appeal should not be heard as permission to appeal had not been granted either by the Court below or by this Court. In that regard, the position was somewhat confused. The order of 16th July 2009 from the Oxford County Court did not grant permission to appeal. The transcript suggests that it was effectively refused, although that is not recorded in the order, but then, following an application made on behalf of Mr Crossley-Cooke, there was a further order of 29th July 2009 that the matter be transferred to the High Court in London "for hearing of the debtor's appeal". That was assumed on behalf of Mr Crossley-Cooke to amount to the grant of permission to appeal and, on that basis, a formal notice of appeal was filed with this Court, which stated that permission to appeal had been granted pursuant to the order to which I have just referred of 29th July. Notice of this case being set down was given on 2nd November 2009. No objection was taken with the Court on behalf of Europanel that permission had not been granted, although an objection was taken in correspondence to the solicitor at that time representing Mr Crossley-Cooke. In those circumstances, given the size of the claim and that all the parties are here today, I gave permission for Mr Crossley-Cooke to appeal at the outset of this hearing, being satisfied from a reading of the papers that he had set out sufficient grounds for permission. Accordingly, the Court proceeded to hear the substantive appeal.
- This is, of course, an appeal and, accordingly, the decision of the District Judge will only be set aside if it is wrong in law or there is a material error of principle. In particular, the Appeal Court is reluctant to interfere with the decision of a Registrar in the evaluation of the facts: see Union Bank (UK) v Patak [2006] BPIR 1062 and the authorities cited therein.
- The way this matter arises is fairly simple. Mr Crossley-Cooke is a farmer (now partially retired) but, in addition to the farm at Little Crossley Estate, he operates in his own name a small business of an industrial estate in Oxfordshire called Farringdon Business Park, where he has approximately 12 tenants. He also owns some properties in Wantage, some 10 miles away, that are let partly as shops and partly residential.
- At the relevant time in 2008, one of the tenants at the business park was a company called PSD Joinery Limited ("PSD"). Through PSD, Mr Crossley-Cooke was told about Europanel. He thought that supplies of chipboard and MDF panels from them might be useful in the refurbishment of the properties in Wantage. Accordingly, he opened an account with Europanel on 20th July 2008, for which he was given an account reference and a credit limit of £5,000. On the form opening the account, he gave the telephone and fax numbers of his office at Little Coxwell Estate.
- On 2nd July 2008, Europanel received by fax a purchase order, which purports to be in the name of Little Coxwell Estate, for goods to be delivered to PSD at the Farringdon Business Park in the amount of £1,316. There is no dispute that these goods were indeed delivered to PSD. On 7th July 2008, an invoice in that amount was sent to Mr Crossley-Cooke at Little Coxwell Estate. Two further purchase orders and deliveries occurred following the same pattern, the purchase orders being dated 18th July and 29th August 2008 and the corresponding invoices sent to Mr Crossley-Cooke, dated 22nd July and 3rd September 2008.
- Again, there is no dispute that Mr Crossley-Cooke has not paid those invoices. The reason, he says, is that the orders never came from his business or with his authority. They were from PSD. The deliveries were made to PSD and he did not know until recently how PSD used the name of Little Coxwell Estate on their own purchase orders forms. Accordingly, any liability to Europanel is owed by PSD.
- I say "until recently" because, following the decision of the District Judge and in the light of the reasons that she gave for refusing to set aside the statutory demand, Mr Crossley-Cooke has made further enquiries. He has spoken to a lady who lives locally and who used to work at the material time for PSD. She told him, as related to me, that she was instructed by a director of PSD to put a sticker on their purchase order form with the name and, in two cases, address of Little Coxwell Estate. The telephone and fax number on the purchase order, however, are not those of Little Coxwell Estate as shown on the form whereby Mr Crossley-Cooke opened his account with Europanel the previous June.
- With those invoices outstanding and, it appears, no response to telephone messages that were left (although it is not clear whether they were left at the telephone number given on the purchase order forms or at the telephone number given by Mr Crossley-Cooke when he himself had opened an account on 20th June 2008, but in any event no explanation was received at Europanel as to why the invoices were not paid), a Mr Rooney of Europanel came down from Lancashire where the company is based and met Mr Crossley-Cooke at the estate office on 24th October 2008. Mr Crossley-Cooke told the District Judge that he explained to Mr Rooney that this was not his debt and that he then tried to contact PSD but they were out. However, Mr Rooney said that he needed to have a cheque to take back with him and so, to assist Europanel, Mr Crossley-Cooke wrote a cheque for the full amount and gave it to Mr Rooney. However, he wrote on the back of the cheque "Confirmation to be paid in to be given" and initialled that. He says he did that because he told Mr Rooney that he was going to get the money from PSD to cover the cheque before it was presented and that he made clear to Mr Rooney that the cheque was not to be presented until he had confirmed to Europanel that sums had been received from PSD to cover it. He said, in addressing the District Judge, that the next day he spoke to PSD, who told him that they had a dispute with Europanel and so, on hearing that, Mr Crossley-Cooke put a stop to the cheque. He did not, however, contact Europanel to tell them about this or indeed make any further contact with them until they wrote to him to complain about the stopped cheque. He accepted before me that, with hindsight, to have made contact would have been a sensible thing to do. In November 2008, PSD left the estate and it appears that they have stopped trading.
- In the light of this, there seem to me to be two possible scenarios. The first is that Mr Crossley-Cooke, trading as Little Coxwell Estate, opened an account with Europanel, in part to assist his tenants such as PSD to obtain goods from them, so that PSD could then order goods on that account from Europanel. On that analysis, Little Coxwell Estate and thus Mr Crossley-Cooke personally would be liable to pay Europanel for those goods and it would be for him to look for reimbursement from PSD. But that would be a matter as between Mr Crossley-Cooke and PSD with which Europanel is not concerned.
- The alternative scenario is that PSD placed orders without Mr Crossley-Cooke's authority or knowledge for delivery of goods to them. On that analysis, the contract is between PSD and Europanel, albeit that Europanel may have been misled into thinking that it was Little Coxwell Estate that was placing the order. Whether that was a reasonable assumption or not it is not necessary to explore for the purposes of this short judgment. But, on that analysis, Europanel would have no right to recover from Mr Crossley-Cooke. The debt to them is owed by PSD for the goods they supplied and it may be that Europanel have an additional claim against PSD, for the costs incurred in pursuing Mr Crossley-Cooke, by way of damages for misrepresentation.
- The District Judge clearly formed the view that the first of these two alternatives is the correct analysis of the facts. From her brief statement of reasons, it is clear that the issue surrounding the cheque did not play a part in her judgment; and I add quite rightly in view of the account that Mr Crossley-Cooke gave of the conversation at the time that the cheque was issued. But the District Judge was much influenced by the fact that, when the invoice for the first delivery was received on 7th July 2008, Mr Crossley-Cooke did not contact Europanel to protest or to point out the error. The same indeed is the case as regards the second invoice. She noted that, if he had done so, presumably the second order would never have been accepted as PSD had no account with Europanel. The same indeed is the case as regards the third order, which is much the largest of the three and accounts for about half of the total debt.
- When he was asked by the District Judge in the hearing in the Oxford County Court whether he had contacted Europanel on receipt of the invoice, Mr Crossley-Cooke said "No, I think we gave them to, I think I, I can't tell you. I can't answer that question truthfully. I think we gave them to, I even forget the name", and then the District Judge prompted him, "PSD", and he confirmed "Yes, PSD Joinery."
- Before me, Mr Crossley-Cooke sought to amplify in response to questions that I addressed to him that answer, but more particularly to explain why he did not contact Europanel. He said that he had no reason not to trust PSD at that time. They were in a substantial way of business. There was nothing then to suggest to him that they were not trading successfully. He trusted them and he expected that, when the invoice was passed to them, they would pay it. Indeed, he said he did not himself see the invoice. It was a member of his small office staff who passed it to them and he thought no more about it until Mr Rooney subsequently came to see him.
- The grounds on which the Court may set aside a statutory demand are set out in rule 6.5(4) of the Insolvency Rules 2006. Here, the ground that is effectively relied on – I say that because Mr Crossley-Cooke is of course appearing in person – is subparagraph (b): "The debt is disputed on grounds which appear to the court to be substantial." But I would add also (d): "The court is satisfied on other grounds that the demand ought to be set aside." Those are the two subparagraphs of the rule that are of relevance in the present case. The test as to whether that ground is satisfied is whether the alleged debtor can show "a genuine triable issue". Although it was at one time suggested that this is slightly lower than the test applied under CPR 24 for a summary judgment, namely that there is "no real prospect of successfully defending the claim", recent authority has established that there is no material difference between the two formulations: Collier v P&MJ Wright (Holdings) Ltd [2007] EWCA Civ 1329, [2008] 1 WLR 643.
- Miss Hormaeche for Europanel argues that, when the District Judge pressed Mr Crossley-Cooke on this matter, he did not explain as fully why no protest was made against the invoices as he did before this Court today. She reminds me that this is an appeal and not a rehearing and, she submits, evidence should not therefore be added which was not before the Court below.
- I consider that this is putting too strong a construction on what happened in the Court below. Mr Crossley-Cooke was asked whether he had contacted Europanel and he said he did not and, with prompting, he stated what happened to the invoices. It is because I enquired further as to why he did not contact Europanel, a matter that does not appear to have been explored at the hearing in the Court below, that he proceeded to explain the basis of the trust and PSD's apparent trading position at the time.
- In my judgment, that does not go beyond the scope of what is permissible on an appeal, particularly when one has regard, first, to the fact that before the District Judge Mr Crossley-Cooke was appearing in person and, therefore, may not have been understandably aware of all that might relevantly be brought before the Court and, secondly, that it is then, having seen the District Judge's reasoning for dismissing his application, that he has, in my view quite legitimately, made further enquiries of the matter, he previously having assumed that as, on his view, it is not his debt, the statutory demand should clearly be set aside. I, therefore, take account of the answers that he gave in the course of the hearing before me.
- In my judgment, this is a case where the District Judge has erred in principle and applied too high a test in assessing the credibility of the explanation given and, therefore, which of the two alternative scenarios I outlined is correct. If the correct test was that of the balance of probability, it may be that on this appeal the Court would not interfere, but that is not the correct test. It is not appropriate on an application to set aside a statutory demand to conduct anything approaching a mini-trial. The question, as I have said, is whether Mr Crossley-Cooke has raised a genuine triable issue or whether what he says can be dismissed as virtually incredible. Once that test is applied, it seems to me quite clear that the explanation he has given and the scenario No. 2 that I have outlined is credible and raises a triable issue. If that test had been applied by the Court below, in my view, it would have led to the granting of the application. Accordingly, I allow this appeal and the statutory demand is set aside.
- I should only add this by way of postscript. I am not reaching a view as to which of these two alternative scenarios that I summarised is correct. Just as it was wrong for anything approaching a mini-trial to be conducted in the Court below, so no mini-trial can be conducted in this Court on the hearing of the appeal. It is now, of course, open to Europanel to start legal proceedings, if they wish, against Mr Crossley-Cooke. He will then have a full opportunity to call evidence and, equally, Europanel will have an opportunity to cross-examine him. I would only say that, if in fact it is, as the District Judge clearly thought, the first of the two alternatives that I outlined that is correct such that Mr Crossley-Cooke is liable, and if that were to be the outcome of any trial, then he may find himself liable for the costs of the trial that could easily equal the amount of the debt. On the other hand, if the claim when brought to trial against him fails, then Europanel might find themselves liable for costs. As I say, I am not expressing a view, but I add that because it may be of assistance to both parties.
- It follows, therefore, that I set aside the statutory demand and allow the appeal.
Mr Justice Roth :