Sir Michael Birt, Kt., Bailiff, sitting alone
IN THE MATTER OF THE REPRESENTATION OF MR CHARLES BARNETT FOR AN APPLICATION FOR A CAVAET RESTRAINING THE SALE OF A PROPERTY
Mr Barnett appeared on his own behalf.
Advocate D. R. Wilson for the Viscount.
1. This is an application by Mr Barnett for a caveat restraining the sale of a property called Sous Le Mont. The caveat was lodged on Wednesday but without any information. A draft affidavit was lodged yesterday but it was not clear to me at that stage what the background was; hence I have convened this hearing at 8:45 this morning because I was told that the sale was due to go through today. However, I was informed at the hearing that the sale is now off for one week but I think the decision still has to be made this morning.
2. The background is that this all arises out of the desastre of Mrs Angela Claudette Amy, who was declared en desastre on 11th November, 2011. Amongst her assets were two real properties which she owned jointly with Mr Barnett. One is called Sous Le Mont and the other is called Glengariff. The effect of the desastre was to turn the joint ownership into ownership in common so that she and Mr Barnett each had a half share and was responsible for half the liabilities. Sous Le Mont has, until recently, been let. At the beginning of this year there was a plan that Sous Le Mont should be sold and, on the figures which were then thought to apply and which were supplied by Advocate Wilson on behalf of the Viscount, there would have been sufficient equity for Mr Barnett then to have used his share of Sous Le Mont to purchase the Viscount's interest in Glengariff, so that Mr Barnett would have ended up as the owner of Glengariff and the Viscount would have received the net amount of each property and the mortgages would have been cleared. However those calculations were done on certain figures, apparently based on a drive-by valuation. A more detailed valuation was prepared by the valuers instructed by the Viscount in February of this year, and this showed a valuation for Sous Le Mont of £245,000 as opposed to over £300,000 which had been used for the earlier calculations.
3. I should add that the Viscount had applied to this Court for licitation in relation to both properties and on 1st March, 2013, after a hearing at which Mr Barnett was heard, the Court ordered that the two properties should be sold either by public tender or, if both parties agreed, by private sale. So the Viscount is under a duty to sell these properties not only under the general law, which is that the Viscount must realise a debtor's assets in order to pay off his creditors, but also by specific order of the Court. That order of 1st March was drawn to the attention of another division of the Court which sat to consider certain issues in relation to the désastre in October and the Court at that stage clearly envisaged the properties being sold in order to clear as many of Mrs Amy's debts as possible before consideration was given as to what should happen to her life interest in another property.
4. What has happened since then is that the tenants, who were in Sous Le Mont, have vacated, at the request of Mr Barnett, which was in turn at the request of the Viscount, so that the property could be sold. However that has resulted in no income coming in so that the mortgage cannot be serviced. The Viscount decided to proceed by way of sale by tender rather than by private sale. The result of that has been an offer of only £218,000, which of course is less than the valuation of £245,000. The Viscount has been advised by the estate agents that the tender offer should nevertheless be accepted as being, in their opinion, the best that can be obtained at the moment. The mortgage company also supports it although that is not really very relevant. It is that sale which was due to go through today and is now due to go through in a week's time.
5. Mr Barnett is dissatisfied with this proposal for reasons which I can understand. The result of a sale at this value is that the mortgage on Sous Le Mont will not be cleared. That means that the plan whereby he could end up buying out Glengariff will not be capable of coming to fruition; he will not have enough from his share of Sous Le Mont to do it. The likely consequence therefore is that Glengariff itself will have to be sold so that he will have to move out and he will be left simply with his half share of the net equity of Glengariff after paying off the mortgage. He feels that it was a mistake to go ahead by way of tender rather than by way of private sale. He also feels this is the wrong time to sell; he considers that the market is at a low point and that the best course would be to put back a tenant into Sous Le Mont; the rent would cover the mortgage and the property could be sold as and when things get better, and could be sold by private tender. It is in those circumstances that he has applied for a caveat which would have the effect of preventing the Viscount from completing this sale.
6. I have much sympathy with Mr Barnett. But one has to remember the correct function of a caveat. A caveat is to protect a creditor so as to ensure that a debtor will not get rid of real property and thereby not pay the creditor. The situation here is completely different. Here the Viscount is under a duty to sell sufficient assets so as to do all he can to clear Mrs Amy's debts; and that general duty is, as I say, reinforced by the order of the Court on 1st March that the property should be sold. So, far from this being a case where it would be right for the Court to say 'do not sell this property in order to protect the creditor', this is a case where both under the general law and under an existing order of the Court, this property must be sold. Mr Barnett points out that it has not been sold for some time, namely since the désastre in 2011, and that is true; but in a way that is all the more reason why it has to be sold now because this désastre cannot last for ever.
7. So I fear that this application is simply misconceived. It is not an appropriate use of a caveat to prevent the Viscount fulfilling his duty. The Viscount's duty is to achieve the best price he reasonably can and that is even more evident in a case like this where, of course, he is selling property which belongs to both him, on behalf of Mrs Amy, and the co-owner Mr Barnett. Nevertheless it is not for the Court to micro-manage how the Viscount undertakes his task. If he were to sell at a gross undervalue and to be negligent in the performance of his duties, there may well be a remedy after the event to somebody who feels they have been prejudiced as a result. But there is nothing in these papers which enables me to say that it would be proper for me to prevent the Viscount doing what he believes is the right thing and which he is advised by the estate agent is the right thing to do, in that it is the best price that can be obtained at the moment. It follows, I am afraid, that I consider that it would not be a proper function for me to issue a caveat to prevent the Viscount proceeding with this sale.