Palmer (t/a Cotswold Stone Quarries) v Ingram

This is an appeal against the order of Foskett J of 25 April 2008, whereby he ordered, so far as material, that Mr Ingram, the respondent to this appeal, being the receiver of Michael Richard Stannard, appointed pursuant to a confiscation order made by HHJ Fingret on 17 October 2003, should be permitted to bring proceedings in the name of Julian Harper as trustee of the Victoria Trust, Severn International Company Limited and Lausanne Investments Limited to enforce a loan made by Mr Stannard to a Mr Julian Palmer.

The relevant background is this: that Mr Stannard was convicted of tax evasion in January of 2001. A confiscation order was made as I have explained. In his judgment giving reasons for making the confiscation order HHJ Fingret stated that he was satisfied that the realisable assets of Mr Stannard included a loan of £524,334 repayable by Cotswold Stone Quarries. He said that such loan constituted a gift. The order did not name the donee of the gift. There was a dispute as to who the donee was, and that dispute involves the three persons to whom I have referred: Mr Julian Harper as trustee of the Victoria Trust; Severn International Company Limited and Lausanne Investments Limited. Mr Palmer is the appellant on this appeal.

On 5 July 2006 Wilkie J appointed Mr Ingram, the receiver of Mr Stannard’s assets, with authority to get in those assets; and those assets included assets held by the donee of any gift by Mr Stannard. An application was then made by the receiver to Foskett J for permission to take proceedings in the respect of the loan to Mr Palmer. The judge rejected an application for an adjournment put forward on behalf of Mr Palmer on the basis that the judge should not make an order in the terms sought because Severn was a company incorporated in Ireland and it had been struck off the Register of Companies on 6 April 2008 and dissolved on 11 April 2008. The judge held that it was appropriate to grant relief. The counsel for the receiver had accepted that it would be necessary to apply for Severn to be restored to the Register of Companies.

The relevant paragraph is paragraph 4 of the judge’s judgment. It states:

“I have heard what Mr Clarke has said about it and what he is effectively arguing is that what I am being asked to do is to authorise something which is impossible to be achieved, namely, the bringing of proceedings in the name of a company that no longer exists. However, the purpose of the application, as I understand it, is to give the receiver permission, if he can achieve it, to bring proceedings in the name of that company and that will require the restoration of the company to the register before that can be effectively achieved.”

The judge went on in paragraph 5 to say:

“I have considered carefully what has been said but I can see no basis for preventing the receiver from doing that. The receiver is an officer of the court who has been enjoined with the responsibility to recover the assets of Mr Stannard, a convicted criminal, and this seems to me a perfectly proper and appropriate course to take.”

Since the judge’s order was made, Severn has been restored to the Register of Companies in Ireland by order dated 15 January 2009. The application for that restoration was made by Mr Harper, to whom I have referred above. No objection was made by the court or anyone else to the locus of Mr Harper on that application so far as we are aware, and certainly no objection was made that was upheld by the state or anyone else to an order restoring the company to the register. Pursuant to the judge’s order, two relevant sets of proceedings have been commenced. The first was by the receiver in the name of Mr Harper, Severn and Lausanne Investments Limited, pursuant to the judge’s order of 28 April and against the defendant as Mr Palmer. On 4 March 2009 the receiver started a fresh set of proceedings against Mr Palmer. We are not concerned with the claims made in those proceedings which relate to the loans to which I have referred.

On this appeal Mr Clarke appears for Mr Palmer. He submits that the judge erred in law. At the time when the judge made his order, Severn had been dissolved and therefore could not be a claimant in any proceedings. Its assets were vested in the Minister for Finance in Ireland and the minister enjoyed state immunity. The judge’s order infringed the principle whereby an English court should not exercise jurisdiction over property which is in the possession or control of a foreign state or property in which a foreign state claims an interest. Alternatively, the judge should have declined to make an order; he should have required the production to him of proper evidence that a successful application could be made to restore the company to the Register or evidence to like effect. Mr Clarke also submits that the judge should have given greater weight to the delay on the part of the receiver in making his application. The receiver had given no proper explanation for his delay. The receiver had contended that the application should be heard on short notice because of the impending expiration of a limitation period. Mr Clarke also submits in his written skeleton argument that in these circumstances a borrower could find himself both liable to the receiver and to a claim from the Minister of Finance, and he further submits that Mr Palmer has a good defence to the claim for reasons which I need not go into.

Mr Palmer traded as Cotswold Stone Quarries. In my judgment there is no doubt that the effect of the order which now has been made for the restoration of Severn to the Register of Companies in Ireland is that proceedings which have been begun by it whilst struck off the register continue as if the company had never been struck off. This appears from the evidence as to Irish law contained in the witness statement of Caroline Moran, a solicitor in Ireland. She states in paragraph 8 of her witness statement, dated 24 April 2008:

“Under the Companies Acts […] a dissolved company can be restored to the Register on the application of the Register of Companies, a shareholder officer or creditor of the Company. The application would normally be made to the High Court. If the Court it satisfied that it is just to do so, it may order the restoration of the Company to the Register. As soon as the Order is delivered to the Companies Registration Office, the Company and all other persons are placed in the same position as if the company had continued in existence and never been dissolved.”

As I see it, the judge was entitled to make an order authorising the beginning of proceedings by the receiver in the name of Severn because he was informed that the receiver would be taking steps to have the company restored to the Register. The receiver was therefore fully alive to the problems caused by the striking off and was proposing to take steps to remedy the problem and, in addition, the effect of the restoration would be to validate ex post facto any proceedings begun before the order for restoration took effect.

In my judgment there is no question of state immunity because no proceedings were actually being authorised against the Irish state. If the Minister for Finance chose to make a claim, the court hearing the proceedings would have to consider section 6(4) of the State Immunity Act 1978 and take the matter from there, but the right course at least in the absence of any such claim was to authorise the proceedings which the judge in fact authorised against Mr Palmer. In any event, section 6(2) of the State Immunity Act 1978 provides that the state is not immune as respects proceedings relating to the interests of the state in property held by way of bona vacantia.

The appellant has criticised the judge’s judgment on the grounds that he should have required better evidence that the receiver would have a good prospect of having the company restored to the Register. In my judgment this was a matter for the discretion of the judge. The receiver was, and is, an officer of the court. The matter was fairly and squarely raised by the receiver in the skeleton argument filed on his behalf, and there were no doubt exchanges between the judge and counsel for the receiver which satisfied the judge as a matter of discretion that it was appropriate to make the order.

The judge’s judgment is separately criticised on the ground that the judge did not give sufficient weight to the fact that the receiver had delayed in bringing these proceedings. The judge considered that matter and he accepted that there might be some criticism of a delay in proceeding in this matter, but he said, and here I quote again from paragraph 5 of his judgment:

“…that does not seem to me to be something that should get in the way of making what is otherwise an appropriate and proper order.”

Again that question of weight was a matter for the judge. No error of principle is shown and accordingly I would dismiss the appeal also on that ground. For these reasons I would dismiss this appeal.

I agree.

I also agree.