England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		10/06/2010

Mrs Justice Proudman :

1. This is an application by the defendant, Mr Raguz, for permission to appeal a decision of February 12^th 2010 of District Judge Nield in the Worcester County Court, (the appeal to follow if permission is given), coupled with an application to review his decision under s. 375 of the Insolvency Act 1986. Mr Raguz wishes to adduce fresh evidence for both purposes. By the Order appealed against, DJ Nield made Mr Raguz bankrupt on the petition of Scottish & Newcastle Limited, which had been presented on 30^th September 2009 and served personally on Mr Raguz on 10^th November 2009.
2. The petition debt of £211,275 is undisputed. It reflects sums paid by the petitioner to the freeholder of premises of which it was the original tenant and in respect of which it is entitled to seek an indemnity from the intermediate lessee to whom the petitioner assigned its interest. The extent of the underlying entitlement was litigated up to, and finally established in, the House of Lords in Scottish & Newcastle plc v. Raguz [2008] UKHL 65, [2008] 1 WLR 2494.
3. At the hearing before the Judge on 12^th February Mr Raguz contended that he was offering adequate security for the debt. Alternatively, he asked for the petition to be adjourned on the ground that as a result of a contemplated sale of the shareholding in Impney Group Ltd ("Impney") of which he owned 55% (respectively "the Impney shares" and "his Impney shares"), he would soon receive funds sufficient to settle the debt. Impney owns and runs a large hotel ("the hotel") in Worcestershire called Chateau Impney.
4. The appeal concerns the Judge's treatment of both these contentions. It is said that he erred (a) in not dismissing the petition on the ground that the petitioner was acting unreasonably in refusing Mr Raguz's offer of security, and (b) in not adjourning the petition for 3 months pending the outcome of the sale of the Impney shares or a sale of Impney's assets.

The relevant law

5. The provisions which the Judge had to consider are contained in s. 271(3) of the Insolvency Act 1986, namely,

"The court may dismiss the petition if it is satisfied that the debtor is able to pay all his debts or is satisfied-

(a) that the debtor has made an offer to secure or compound for a debt in respect of which the petition is presented,

(b) that the acceptance of that offer would have required the dismissal of the petition, and

(c) that the offer has been unreasonably refused."

6. The approach that the Court should take to the question of an adjournment was explained by Henderson J in Ross and Holmes v. Revenue and Customs Commissioners [2010] 2 All ER 126 at 148-9, where he said,

"There is no doubt that the court retains a discretion not to make a bankruptcy order, even where the petition debt has been clearly established and any grounds of opposition have been dismissed. However, the authorities establish that in such circumstances the discretion to adjourn should only be exercised if there is a reasonable prospect of the petition debt being paid in full within a reasonable period: see Harrison v. Segger [2005] EWHC 411 (Ch) a7 [7], [2005] BPIR 583 at [7] per Blackburne J, and Re Gilmartin (a bankrupt), ex p bankrupt v. International Agency and Supply Ltd [1989] 2 All ER 835 at 838, [19898] 1 WLR 513 at 516 per Harman J. Furthermore, as Blackburne J said, '[t]here must be credible evidence to support such a prospect if the court is to grant an adjournment for payment."

7. Appeals are governed by s. 375 of the Insolvency Act 1986, which is headed "Appeals etc. from courts exercising insolvency jurisdiction". I am concerned with s. 375(1) and (2), which provide,

"(1) Every court having jurisdiction for the purposes of the Parts in this Group may review, rescind or vary any order made by it in the exercise of that jurisdiction.

(2) An appeal from a decision made in the exercise of jurisdiction by a county court…lies to a single judge of the High Court…"

8. It is common ground that an appeal requires the permission of the court, but that an application for a review does not. The two jurisdictions are discrete and different tests must be applied.
9. The appeal jurisdiction involves the consideration of whether the judgment below was wrong. As Chadwick J said in Vadher v. Weisgard [1997] BCC 219 at 221,

"…this appeal to me- brought under s. 375(2) of the Insolvency Act 1986 and 7.4(2) of the Insolvency Rules 1986 (SI 1986/1925) - is a true appeal and…I should not interfere with the district judge's order unless satisfied that he had exercised his discretion on a wrong principle, or had taken into account matters which he should not have taken into account or had failed to take into account matters which he should have taken into account. It is not open to me, on an appeal of this nature, to set aside the district judge's order on the basis that I might myself have exercised the discretion differently."

10. S 375(1) gives the court a power of review which goes beyond an appeal if the conditions for the application of the section are satisfied. The rationale was explained by Vinelott J in In re a Debtor No 32 of 1991 (No 2) [1994] BCC 524 at 528, where he said,

"The court's power of review under s. 375(1) is an exceptional power, not to be found in any other jurisdiction. The reason for conferring this exceptional power on the court in exercising bankruptcy jurisdiction must, I think, lie in the fact that bankruptcy results in a serious restriction on the debtor's freedom of action and on his reputation. It should not be resorted to in place of the ordinary process of appeal, save in cases where the court is satisfied that there has been something amounting to a miscarriage of justice which cannot be corrected by the ordinary process of appeal."

11. In Papanicola v. Humphreys [2005] EWHC 335 (Ch), [2005] 2 All ER 418, Laddie J reviewed the authorities, (in particular the decision of the Court of Appeal in Fitch v. Official Receiver [1996] 1 WLR 242) and summarised the requirements for engagement of the s. 375(1) jurisdiction. Laddie J formulated the following propositions in relation to s. 375 (at paragraph [25]):

"(1) The section gives the court a wide discretion to review vary or rescind any order made in the exercise of the bankruptcy jurisdiction. (2) The onus is on the applicant to demonstrate the existence of circumstances which justify exercise of discretion in his favour. (3) Those circumstances must be exceptional. (4) The circumstances relied on must involve a material difference to what was before the court which made the original order. In other words there must be something new to justify the overturning of the original order. (5) There is no limit to the factors which may be taken into account. They can include, for example, changes which have occurred since the making of the original order and significant facts which, although in existence at the time of the original order, were not brought to the court's attention at that time. (6) Where the new circumstances relied on consist of or include new evidence which could have been made available at the original hearing, that, and any explanation the applicant gives for the failure to produce it then or any lack of such explanation, are factors which can be taken into account in the exercise of the discretion."

12. Laddie J stressed that, on the basis of the authorities, there must be "something new", "the concept that something has changed", "a material difference". As he went on to say (at paragraph [26]),

"If there is no change in circumstances, the only way to challenge the order is by appeal. The court is not to review its order simply on the basis that the applicant wants to present substantially the same facts and the same arguments but more forcefully and attractively."

Evidence before the court on 12^th February 2010

13. The background to the offer at the time of the hearing on 12^th February 2010 is as follows. Mr Raguz initially offered a charge over his Impney shares, an assignment of a right of indemnity against a Mr Virani (an assignee of the lease) and a charge over some land near the hotel. However Impney went into administrative receivership and in anticipation of this the offer of a charge had been withdrawn on 18^th November 2009.
14. By 14^th December 2009 Mr Raguz was seeking an adjournment on the basis that he had offered an assignment of the right of indemnity from Mr Virani and charges over three pieces of land, although it was clear by that stage that the terms of the charges had changed in that the security was not to be enforceable until June 2010. His evidence did not state, as was the case, that all of the properties offered as security were subject to prior charges. Those charges were thought by the petitioner to be substantial but the exact extent was not known. Moreover Mr Raguz adduced no professional valuations of the properties at that stage.
15. Further, in his first witness statement (of 10^th December 2009) Mr Raguz gave evidence of a potential purchase of the Impney shares. No detail was given about the purchase, although it was said that the purchaser preferred, largely for fiscal reasons, to buy the Impney shares rather than buy the hotel from the administrators. In his second witness statement (of 11^th December) Mr Raguz adduced a very short email from a representative of Keyroll Investments Ltd ("Keyroll"), indicating that Keyroll intended to proceed with the purchase of the Impney shares. There was no evidence of the price, although the email indicated that 4-6 weeks were needed to complete the purchase.
16. At a hearing on 14^th December (at which Counsel appeared for Mr Raguz) District Judge Marston directed him to file independent evidence of the value of the properties on offer, evidence about the charges and evidence about the offer for the Impney shares and the likely completion date. Permission was given to the petitioner to file independent third party evidence in reply.
17. The evidence about the offers before the Judge on 12^th February was as follows. What was described as "the primary security" was the Virani assignment. What was described as the secondary security was a charge on two of the three parcels of land previously offered (one approximately 50 acres and the other 10.2 acres), with a charge over an additional property, the lease of the flat where Mr Raguz lived, as a fallback. Mr Raguz gave evidence about the charges (although without corroborative documentation) and adduced his independent evidence of valuation in the form of a pre-existing report from a Mr Uffold of McCartneys LLP dating from 2007.
18. On this evidence of Mr Raguz the securities offered resulted in a net deficit of £86,227 over the petition debt. The petitioner's independent evidence from a Mr Brent of Humberts Leisure put a higher value on the properties but, when taken together with Mr Raguz's statements about the charges, still showed a net shortfall of over £54k.
19. At the hearing, Mr Raguz withdrew his offer of the right of indemnity against Mr Virani, acknowledging that it had no substantial worth. However he sought to argue, on the basis of critical analysis of the Humberts report, that the value of the land offered by way of charge was much higher than that attributed to it by the two independent valuations from McCartneys and Humberts. He contended that the proper approach to valuation was different from that adopted by both independent valuers. Instead of applying a discount for larger areas of land the court should take the average price per acre for the smaller area and apply the appropriate multiplier for the larger area. He also stated that the debt in relation to one of the charges was £374k, without adducing any probative documentation, despite the implication in the order of 14^th December that hard evidence was required.
20. In addition, Mr Raguz produced a fourth witness statement dated 4^th February 2010. This appended a short letter from a Mr Rogers on behalf of a company called Pencroft Ltd, offering (in a single line) the sum of £525k for the larger plot, the 50 acres. There was no detail at all: no draft contract, proof of funding and no explanation why a sum twice as high as the value that the valuers had put on the property was being offered. Mr Raguz's own evidence was that he was not going to accept the offer because he felt a better price would be obtained if the land were sold to the owner of the hotel, that is to say sold with the Impney shares or with the hotel itself. However he sought to use the short letter in support of his contention that the land was worth far more than the figure put on it by the valuers.
21. Mr Raguz also exhibited a one line email from Keyroll stating that it "should be in a position to close the purchase of Chateau Impney on or before the end of February 2010". No other documentation was adduced from Keyroll or any of the solicitors involved in the share purchase negotiations about the transaction or its source of funding. However Mr Raguz argued that the court should exercise its discretion to adjourn the petition for 3 months on the basis that there was a reasonable prospect that the petition debt would be repaid in a reasonable period of time.

The District Judge's decision

22. The Judge considered all the evidence before him in the context of s. 271 (3) and decided that the security offered had not been unreasonably rejected by the petitioner and did not require dismissal of the petition.
23. In particular the Judge acknowledged that the security offered resulted, on the basis of the independent valuations, in a net deficit. He considered and rejected the submission that the discount for a larger plot of land applied by both firms of valuers was the wrong approach for calculation of the 50 acre plot. He adopted Humberts' opinion as to the market value on the basis that this was the value to a chargee, and accepted Humberts' view that the greater value that the land might have to a purchaser of the hotel should not be taken into account. He also preferred Humberts' valuation to the offer from Pencrofts.
24. The Judge went on to consider Ross and whether there was credible evidence of a reasonable prospect of payment in full within a reasonable period such as to lead him to decide to grant an adjournment.
25. On the question of an adjournment, the Judge drew attention to the very sparse evidence available, including evidence in a witness statement put in on the day of the hearing. He referred to the fact that in a witness statement made in January Mr Raguz had said that Keyroll's solicitors expected a transfer of funds to be in place by 15th January 2010. The Judge continued,

"…four weeks ago now, according to that statement, a letter was said to be forthcoming from George Green & Co, confirming the terms of the offer. Well, nothing from the solicitors has been provided. We have no contract, no terms, no heads of agreement, no letter from the solicitors themselves. This would be a huge transaction with the consideration Mr Raguz is putting forward. He has been put on notice by the court order of 14^th December, that more evidence is required. It is a golden opportunity- indeed an essential opportunity to be taken, to produce a letter from the solicitors, explaining precisely where the transaction has got, exhibiting a copy of a contract, heads of agreement, terms. None of that is there. All that is put forward are one initial email and a very brief two-liner, and that is the only evidence which is put forward."

26. He concluded that Mr Raguz's evidence was just not credible enough and that on that evidence it was not possible to say that there was a reasonable prospect of payment in full within a reasonable period.

Principles for adducing fresh evidence

27. There is an application to adduce fresh evidence for today's purposes in the form of 5^th and 6^th witness statements from Mr Raguz and a witness statement from Mr Rogers. The new matter in those witness statements comprises (a) Heads of Terms signed on behalf of Keyroll as to the purchase of the Impney Shares, (b) correspondence in May 2010 with Keyroll and its solicitors about the purchase, (c) a letter from John Sanders, Chartered Surveyors dated 22^nd March 2010 containing a valuation of the agricultural land the 50 acres, (d) a letter dated 19^th March 2010 from Ribchester Associates, property agents, containing a valuation of Mr Raguz's flat, (e) a witness statement from Mr Rogers expanding slightly on the Pencroft offer and saying that he is still interested in buying the land.
28. Different principles apply depending on whether I am considering an appeal in the strict sense or a review under s. 375(1). The usual rules apply about fresh evidence on an appeal: see the note at CPR 52.11.2 (and 7.49 Insolvency Rules 1986). In brief, the court must apply the overriding objective unfettered by authority decided prior to May 2000 However, the approach taken in those previous cases remain relevant and persuasive, as they are concerned with striking a fair balance between the need for concluded litigation to be determinative of the issues and the desirability that the right result should be achieved. Thus the fact that the evidence sought to be adduced could with reasonable diligence have been adduced at the earlier hearing is relevant to the exercise of discretion, as is its credibility and importance.
29. On the other hand, fresh evidence has to be admitted in a review case, at any rate for the limited purpose of the decision whether there is indeed something new so as to invoke the jurisdiction at all. In so far as the evidence could have been adduced in the court below, that is also a material factor in the exercise of the s. 375(1) jurisdiction: see Papanicola at paragraph 25.
30. I propose to deal with the appeal and the review questions in turn and the application to admit evidence separately also in relation to each.

The appeal

31. I am told by Miss Lonsdale that Mr Rogers' new evidence has been given to rebut the inference drawn by the Judge (in paragraph 17 of his judgment) that as Mr Rogers is well known to Mr Raguz the reality was that he knew that Mr Raguz was not going to accept his offer. In other words, it is there to reinforce the bona fides of the offer. However, it seems to me that it has been adduced to improve upon the evidence which was before the Judge. It says no more in essence than the short letter previously adduced; there is still no evidence of funding or reason given as to why Pencroft is prepared to pay considerably more even than the value in the letter from Sanders. Moreover, it is evident from the judgment that the Judge did take the letter from Mr Rogers into account. However in the balancing exercise with Humberts valuation, he rejected the contention that the value of the 50 acres should be increased on the basis of the letter. The new evidence does not meet the requirements for fresh evidence and ought not in my judgment to be admitted for appeal purposes.
32. Again, the new valuation evidence (from Sanders and from Ribchester) was not adduced before the Judge on 12^th February 2010 and there is no explanation in evidence as to why Mr Raguz did not cast his net wider for valuations for the purposes of that hearing. Miss Lonsdale has merely told the court on instructions that Mr Raguz could not afford to do so at that stage. However that does not seem to me to be sufficient reason to admit such evidence at the appeal stage. It is an attempt to have another bite at the same cherry.
33. There are also a number of question marks over the cogency of the fresh evidence. The Sanders valuation, unlike the previous valuations, contains no comparables. Further, there is no indication as to whether the discount for the larger area (applied both by Humberts and by Mr Raguz's former valuers) has been applied and, if not, why not. The valuation is also expressly made on the assumption that the property is sold with full rights of access; however it is not possible to assume that it would be. The evidence is that the rights to the driveway are owned by Impney which has granted Mr Raguz a gratuitous licence to use the drive. If access were sought, the fact that Impney holds the key to it could well result in negotiations as to price, both for access and for the land itself, casting doubt on the proposition that the hotel owner might be prepared to pay 20% more for adjoining land as a special purchaser. These matters are nowhere explained.
34. As to evidence about the progress of negotiations, that relates to developments since the hearing and cannot in my judgment be relevant to any issue as to the correctness of the decision based on the circumstances obtaining at the time.
35. I have to balance the issue of unfairness to the appellant in excluding what could be relevant evidence against unfairness to the respondent in allowing the appellant a second bite at the same cherry. Looking at the matter from the appeal perspective, it seems to me that justice requires that the new evidence be excluded.
36. On the subject of the appeal, Miss Lonsdale addressed the court on overarching points of principle and on points of detail.
37. Her points of principle relate principally to the application for an adjournment. She submitted that there was in this case an unusually short period of time between service of the petition (on 10^th November 2009) and its determination on 12^th February 2010. There was no indulgence at all to Mr Raguz within that time; expedition was driven either by the petitioner or by the Court itself. The result was therefore that Mr Raguz had no fair opportunity to adduce evidence, to provide adequate security or to broker a deal for the sale of his Impney shares and for the land so as to be able to pay the petition debt. She submitted that the overriding objective applies in a different way to bankruptcy proceedings as to ordinary litigation. Bankruptcy is draconian and results in a forced sale of the bankrupt's assets, a blot on his reputation and an impediment to his ability to do business. Thus although the petitioning creditor has a right to be paid, the debtor has a right to have sufficient time to put his affairs in order, particularly where, as here, he has the chance of disposing of assets for a price far in excess of the petitioning creditor's debt.
38. Miss Lonsdale pointed to the delays that had taken place in Ross and invited the court to compare the present case with Henderson J's statement,

"In the context of the long drawn out history of the petitions, and the adjournments which had already been granted, it seems to me that a reasonable time for payment in full of the petition debts could have been no more than a further two or three months at the most."

In the present case, the whole process took three months from beginning to end.

39. I accept the proposition that what is a reasonable time when considering the issue of an adjournment must depend on the circumstances of each case. However, Miss Lonsdale's wider submissions face some formidable difficulties. First, one cannot assume (as she submitted) that if the case had been heard by a Bankruptcy Registrar in the High Court the case would necessarily have progressed far more slowly. She seemed to be saying that in principle a debtor is entitled to a number of extensions of time before a bankruptcy order is made. The Rules prescribe time limits and the Court cannot be expected to extend them as a matter of course, particularly in a case where the petition debt is substantial and undisputed.
40. Secondly, although Miss Lonsdale tells me that she was present and contested the time limits that were set for evidence on 14^th December 2009, there was no attempt to appeal the District Judge's directions on the grounds that the time limited was too short. When this was put to her, she responded that such an appeal would have been disproportionate and would have had little chance of success since the directions were well within the Judge's case management discretions. However today's challenge is made on the same basis, and the same response may be given. The decision whether or not to adjourn was within the case management powers of the Judge on 12^th February 2010, he indisputably applied the correct test and made his decision on the evidence before him in circumstances where it has been effectively conceded that the time limited for such evidence was unappealable.
41. The submission that the paucity of that evidence is attributable to the short timescale faces the further difficulty that if an adjournment had been granted, Mr Raguz would have had to ask for a further adjournment as he is still not even nearly in a position to discharge the petition debt. Three months was the period asked for, it was asserted that funding for the purchase would be in place imminently and (I quote from Miss Lonsdale's skeleton argument prepared for that hearing) "within the next three months...there is every likelihood that Mr Raguz will realise assets sufficient to satisfy the bankruptcy debt in full." Instead, Mr Raguz is as far from that position as before; he now says that there is every likelihood that the sale of the shares and the land will complete by the end of July 2010. The evidence as to valuation that I have considered is hardly more cogent than before. Further, until very recently, Mr Raguz relied alternatively on a potential sale by Impney's administrators of its assets. It now appears that sale is not proceeding.
42. Miss Lonsdale submits that an adjournment of six months would have been a reasonable period in any event. However the Judge came to his conclusions, (and in my view the right conclusions) on the evidence before him. There was no evidence as to funding for the purchase, it was something which might not proceed at all, and even if it did he had no convincing evidence as to when. Applying the correct test, namely whether there was a reasonable prospect that the debt would be paid in full within a reasonable time, he refused the adjournment. In my judgment that was a decision legitimately within the scope of his discretion.
43. I now turn to the specific points of detailed criticism of the judgment on the issue whether the petitioner had not unreasonably refused the security offered.
44. The Judge took the view that the security offered was inadequate. It is important to note that he did so on the basis of the expert valuation evidence before him from both sides.
45. Miss Lonsdale objects to the fact that the Judge accepted Humberts' valuation, notwithstanding that it had not been updated sine a drive-by inspection on 3^rd June 2009. I see nothing in that since, despite the order of 14^th December 2009, Mr Raguz himself took no steps to obtain an updated valuation. Moreover there is no suggestion that there was any significant change in values since 3^rd June 2009. Criticism of a drive-by valuation is also misplaced since this was agricultural land and it has not been explained in what way access would have informed the valuation.
46. Secondly, Miss Lonsdale objected to the rejection of the Pencroft offer as a means of establishing value. However in my judgment the Judge was right to prefer a professional valuation to one comprised in a brief offer in which there was no explanation of the figure offered, why it was twice the figure arrived at by both sets of valuers, or how Pencroft could afford to pay the figure quoted.
47. Thirdly, she objects to the approach taken of ignoring the price which might be paid by a purchaser of the hotel. As I have already indicated, there were too many imponderables and the Judge was entitled to make the decision he did and accept Humberts valuation.
48. Fourthly, she objects to the Judge's rejection of Mr Raguz's critical analysis of Humberts' Report in other respects, for example the discount for the larger acreage. Again, the judgment shows that the Judge considered and understood all the submissions that were made to him. He was entitled to accept the experts' opinion, particularly as Humberts reconsidered their opinion on a number of matters after reviewing comments which had been made by Mr Raguz.
49. The Judge's comments on that review also form a ground of appeal. It is said that the judge assumed ("Humberts are alive to the criticism of their report by Mr Raguz") that Mr Raguz had had the opportunity of considering the Humberts Report before he made his own witness statement. However I do not consider that remark was central to the Judge's decision. His point was that Humberts had dealt with the criticisms of their methodology, as indeed they had. In so far as it is the subject matter of complaint that Mr Raguz was not given the opportunity to respond to this evidence, I note again that the order of 14^th December 2009 was not appealed. In any event he did adduce a further witness statement (without express permission from the court but without objection from the petitioner) at the hearing.
50. In my judgment there is nothing in the appeal.

Review

51. I therefore turn to the question of review. This is a jurisdiction which, as I have said, should only be exercised in an exceptional case, and only where there is something new which has occurred since the decision in question.
52. I fail to find anything new in any of the valuations, or in the evidence from Mr Rogers. It has not been suggested, either in formal evidence or by way of submission, that this new evidence has been prompted by any change of circumstances, such as the lifting of a planning blight or something of that kind. On the contrary, it seems to me that it is merely an attempt "to present essentially the same facts and the same arguments but more forcefully or attractively": see Papanicola at 425c and the observations of Millett LJ (giving the judgment of the Court of Appeal) in Fitch v. Official Receiver [1996] 1 WLR 242 at 246.
53. Obviously, if a change in circumstances is found such that the order is rescinded, all the evidence available at the time the matter is reconsidered will be taken into account. However Miss Lonsdale says I can take it into account at this earlier stage in deciding whether or not to rescind the bankruptcy order by way of review under s. 375(1). Again, she relies on the short time scale and lack of indulgence as to time of which Mr Raguz complains. In my judgment the relevance of any new evidence depends on whether it touches on change of circumstances. If it does not, it cannot be taken into account in deciding whether or not to rescind the Judge's order below.
54. The only evidence that is genuinely new is the evidence about the progress of negotiations with Keyroll which have happened since 12^th February 2010. The question for the court is whether to review its order by rescinding the bankruptcy order because of a material change in circumstances.
55. It is true that the Judge complained about lack of any Heads of Terms and now there are some written Heads of Terms. However it is important to analyse the position in context.
56. On 10^th December 2009 Mr Raguz said in a witness statement that he was expecting specific proposals from a number of interested parties before Christmas but that it was unlikely that the sale of the Impney shares would complete before February 2010. On the following day he swore a witness statement naming Keyroll and exhibiting an email referring to delay in proceeding with the intended purchase. The email continues,

"…the delay has been caused principally because of the need to appoint another signatory for the UK bank and although the replacement signatory expects to be able to visit the UK before Christmas, this gave our timetable a serious setback.

I can confirm that the solicitor appointed by Keyroll, Richard Cliff of George Green & Co is standing by, waiting for us to confirm that the UK bank is in funds to enable this acquisition to go ahead and that as soon as he has been so notified, he expects to need between 4 and 6 weeks to complete the purchase of the shares."

57. In a witness statement dated 8^th January 2010, Mr Raguz said that he had been told that Keyroll expected transfer of funds to have been concluded by 15^th January 2010. On 4^th February he swore a witness statement exhibiting an email saying that Keyroll "should be in a position to close the purchase…on or before the end of February 2010." That was the latest position before the Judge on 12^th February 2010.
58. Since that date, non-binding Heads of Terms have been signed on behalf of Keyroll for the purchase of the Impney shares and also, as a package, Mr Raguz's neighbouring land. There is no evidence that a counterpart has been signed by the sellers, that is to say the other owners apart from Mr Raguz of the Impney shares, although Miss Lonsdale asserts that all the sellers are in fact in agreement and there is a counterpart signed by Mr Raguz on behalf of all of them. The timetable in those Heads of Terms is that evidence of funding was to be provided by 30^th April 2010 with simultaneous contract and completion on 4^th June 2010. Time was expressed to be of the essence in relation to those dates, but in the context of a 'subject to contract' agreement such a provision is meaningless.
59. The timetable was not in the event adhered to. I am told that the petitioner pressed Mr Raguz as to whether funding was indeed provided by 30^th April in accordance with the Heads of Terms, but was met with silence. However, Mr Raguz swore a further witness statement on 24^th May 2010 exhibiting letters demonstrating a new timetable. Evidence of availability of funds in the UK is now to be provided by 28^th June 2010, due diligence is to proceed and the date for exchange and completion is to be 19^th July 2010.
60. There is an additional development affecting the prospect of conclusion of a deal within a reasonable time frame. In his witness statement of 24^th May 2010 Mr Raguz deposes to the fact that he had been told by Keyroll that the reason for the delay was that the hotel was to be part of a group of hotel and property acquisitions. The identity of the other property is commercially sensitive and Mr Raguz does not know it. However he continued,

"It seems that their funders would not permit them to go ahead with the purchase of the Impney Hotels until the remaining properties to be acquired had been identified with terms for their acquisition agreed. Therefore, their funders would not release funds for the two hotels within the Impney Group Limited in accordance with their original timetable."

61. Although he goes on to say that "Keyroll now tell me that outstanding hurdles have now been cleared in relation to the other properties and that they will be able to proceed with the Impney group deal in accordance with the revised timetable…", it appears that there are still funding conditions outside Mr Raguz's knowledge and control.
62. Miss Lonsdale submits that there is something new for the purposes of s.375(1), namely the existence of the non-binding Heads of Terms signed on behalf of Keyroll, showing that Keyroll is seriously interested in acquiring the Impney shares and Mr Raguz's neighbouring land for a very substantial sum. However, in any real sense, there has been no progress since 12^th February 2010. Then it was hoped that contract and completion would take place before the end of the month (February), evidence of funding having been provided by 15^th January. Today, evidence of funding has still not been provided and the date set for it, which is non-binding, is at the end of this month (June), with simultaneous contract and completion not until 19^th July 2010. There is no draft contract and as the sale is a complex one all sorts of matters are, as a matter of common sense, likely to arise during the exercise of due diligence which has yet to be undertaken. The timetable is in truth in exactly the same position as it was before the Judge on 12^th February. In one sense the position is worse as Mr Raguz has uncovered the real reason for the delay, namely funding difficulties dependent on the acquisition of several other properties, the identity of which are not known, let alone the state of the title or other matters of due diligence.
63. I cannot therefore see that there has been a material change meeting the requirements for the court to undertake a review under s. 375(1).
64. I have a great deal of sympathy with Mr Raguz. He has pressed Keyroll hard. He believes that, given time, he has the best chance of recovering his position (and the position of the petitioner) if he is permitted to continue negotiations. There is a very large sum of money at stake for him. Employment is also at stake since Keyroll require him to manage the hotel for a year after purchase. He asks for an adjournment of this appeal until the end of July when the position will become clear, as Miss Lonsdale put it, one way or the other. However I must maintain the balance with the interests of the petitioner also. Of course it is in Scottish & Newcastle's interests for Mr Raguz to sell his shares for a sum greatly in excess of the petition debt, which would be paid in full. The petitioner's interests would also be secure in relation to any future rental defaults. However, it plainly regards the chances of payment in the reasonable future as unreasonably slight. I agree.

Conclusion

65. This appeal must therefore fail under both heads. I was at first inclined to refuse permission to appeal under s. 375(2). However, there is considerable overlap in Miss Lonsdale's submissions on appeal and on review under s. 375(1). Permission is not required for a review. I do not wish the two parts of the appeal to operate on a different basis. I therefore refuse to review the decision of the Judge below for the reasons I have given. I give permission to appeal that decision but refuse the appeal on the merits.