Blake Morgan secures win in High Court Appeal Centre

Posted by Ben Clark on
Blake Morgan has secured a victory for a client in long standing enforcement proceedings by defeating an appeal of a decision from the High Court of Justice, Companies Court.

Blake Morgan acts for the Liquidator of a company (the "Claimant") against its ex-director (the "Defendant").  The Defendant was found guilty of misfeasance in 2007, and ordered to restore to the company the deficiency left as a result of his misfeasance, plus the costs and expenses of the liquidation.  The Claimant also secured a freezing injunction order against the Defendant at that time.

In 2008, an undertaking was given to the Court by the mother of the Defendant (the "Appellant") that she would grant a charge of up to £350,000 over her interest in a property, to be enforced in the event that the Defendant could not meet the deficiency in the company, in exchange for the sum secured by the Claimant's freezing injunction order being reduced. 

The Claimant (after a protracted enforcement battle against other properties owned by the Defendant) sought in 2014 that the Appellant execute the charge that she had undertaken to give.  The Appellant refused.

The Claimant successfully applied under s39 Senior Courts Act 1981 that the Claimant be permitted to execute the charge in the Appellant's stead.  On 24 April 2015, the Companies Court made an order permitting due execution by the Claimant.  The Appellant appealed the decision of the Companies Court.  In hearing the appeal, the Court considered interesting questions regarding limitation and the very nature of undertakings given to the Court.

The appeal was dismissed and Blake Morgan secured 100% costs against the Appellant.

Below is an excerpt from Lawtel of the decision of the High Court Appeal Centre, pending release of the judgment of Mr Simon Monty QC, sitting as a Deputy Judge of the High Court.

KUMARI v HELLARD (2016)

Ch D (Simon Monty QC) 20/06/2016

REAL PROPERTY - CIVIL PROCEDURE

CERTAINTY : DELAY : ENFORCEMENT : LEGAL CHARGES : UNDERTAKINGS : SENIOR COURTS ACT 1981 s.39 : LIMITATION ACT 1980 s.24(1)

A registrar had not erred in enforcing an undertaking to provide security for a judgment debt by nominating a liquidator to execute a legal charge over a property. The wording of the undertaking was not vague, the wording of the charge was not too onerous, and delay could not be relied upon to contest the order.

The appellant appealed against a registrar's order nominating the respondent liquidator to execute an equitable charge over a property on her behalf.

In July 2008 the appellant had given an undertaking to execute a legal charge in favour of the respondent over her interest in a property as security for her son's liability in legal proceedings. The undertaking provided that the charge was only to be enforced up to a certain amount in the event that her son failed to meet his liability to pay the judgment debt. The judgment debt went unpaid and the appellant never executed any charge, and in August 2014 the respondent applied successfully under the Senior Courts Act 1981 s.39 to be nominated to execute the legal charge on the appellant's behalf.

The appellant submitted that (1) the wording of the undertaking was too vague to be enforceable; (2) the terms of the charge were too onerous; (3) the delay of over six years since giving the undertaking meant that the order should not have been made.

 

HELD:

  1. While the appellant relied on Wilson & Whitworth Ltd v Express & Independent Newspapers Ltd [1969] 1 W.L.R. 197 to argue that the undertaking's wording was too vague, that case had been very different. Unlike in Wilson, the terms of the undertaking in the instant case had been embodied in a court order and therefore had been sanctioned by the court, Wilson considered. The undertaking had been freely and voluntarily given, and there had been no objection to its wording when it was drawn up. An undertaking to grant a charge over a defined property as security up to a specified sum could not be said to be too vague to enforce.
  1. There had been no objection before the registrar to any specific clauses. The terms had been agreed, so it was not possible for the appellant to argue that they were too onerous.
  1. While the appellant accepted that there was no statutory limitation period applying to the enforcement of undertakings, she referred by analogy to the Limitation Act 1980 s.24(1), which imposed a six-year limitation period for enforcing judgments. Such an analogy could not be accepted: absent bad faith, delay needed to be considered in the overall exercise of discretion rather than as imposing any absolute time bar. In any event, insofar as there had been any delay, it had been caused by the appellant and her family's campaign to avoid enforcement.
  1. There was no reason to interfere with the registrar's exercise of discretion to enforce the undertaking. He had had jurisdiction to make the order and had been right to do so.

    Appeal dismissed

 LTL 20/6/2016 EXTEMPORE

 

 

Document No. AC9401994 

This case report was originally published on www.lawtel.com on 21 June 2016 and is reproduced with the permission of Thomson Reuters.

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Ben is an Associate in the London Commercial Litigation team.

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