McGuire v Rose

This is a renewed application by Michael McGuire for an extension of time for appealing and for permission to appeal against an order made by Lewison J (as he then was) on 28 July 2010 in the Chancery Division. Arden LJ refused permission on the papers on 29 July 2011. By his order, Lewison J dismissed with costs Mr McGuire’s appeal against an order made on 7 January 2008 by District Judge Sparrow in the Norwich County Court. The respondent is Robert Rose.

I heard Mr McGuire’s application on 14 December 2012. He appeared in person. As his proposed appeal is a second appeal, the obtaining of permission faces the hurdle presented by CPR Part 52.13, namely that the Court of Appeal will not give permission unless it considers that ‘(a) the appeal would raise an important question of principle or practice; or (b) there is some other compelling reason for the Court of Appeal to hear it.’ It is not, therefore, enough on an application for permission for a second appeal merely to show that such an appeal would have a real prospect of success. One or other of the two specified ingredients must also be satisfied.

I explained to Mr McGuire that the extensive material that he had provided in support of his application did not appear to include the material that was essential to its proper assessment. In particular, it did not appear to include any evidence adduced by him in the courts below. Having heard his submissions in support of his application, in which he explained to me his heads of complaint about what has happened in this litigation, I asked him to provide me with such evidence. He provided a further bundle of material that was received by the Civil Appeals Office on 21 December 2011 and which I received at the beginning of this legal term. I am grateful to Mr McGuire for compiling that material. It includes a ‘statement of the applicant’ of 20 August 2007 said to have been copied to Judge Sparrow and Master Teverson, which may have provided the essence of his evidence before Judge Sparrow.

So far as concerns an extension of time, Lewison J’s order was made on 28 July 2010 and the time for filing an appellant’s notice expired on 18 August 2010. Mr McGuire explains that whilst he filed his notice on 18 August, it was rejected as unaccompanied by a sealed order. The notice was eventually filed, according to the court stamp, on 23 November 2010. I do not have details of what happened in the meantime. There may be grounds for extending time, although the real question is whether the proposed appeal has any merits.

The litigation has a considerable background, best discovered from two judgments delivered by Lewison J. First, a judgment dated 10 October 2008 which explained why he considered it appropriate to give Mr McGuire permission to appeal against Judge Sparrow’s order. Second, his judgment of 28 July 2010 by which he dismissed that appeal.

The background is that in the 1980s Mr McGuire built up an accommodation business consisting of the rental stream from eight properties: (i) five at Sea Cliff, Sheringham, Norfolk; (ii) one at 51 Vicarage Square, Grays, Essex; (iii) one at 43 Camelot Close, London; and (iv) a house in Boulogne. He had interests in four of the Sea Cliff properties. The fifth was in his sister’s name, as was 43 Camelot Close. She died in 1999 and he is her residuary beneficiary.

Mr McGuire retained Hayes & Storr, solicitors, to conduct his conveyancing. He did not pay a bill for £2,529 odd and the firm sued him for payment. A default judgment followed, which he did not satisfy, and a statutory demand also followed. He applied to set neither aside, a petition was presented on 27 September 1996 and he was adjudicated bankrupt on 14 November 1996.

Mr McGuire has since insisted that the bankruptcy order should not have been made, his argument being the original bill was inflated and excessive. Whatever merit there may have been in that, a judgment on the bill was obtained and the petition was based on the judgment. He complains about the fairness of the court procedure leading up to the making of the bankruptcy order but did not appeal against it at the time, although in February 2001, some four years late, he sought permission to appeal out of time. He was refused permission. He took the matter to the Court of Appeal, which on 19 March 2002 endorsed such refusal. That marked the end of his challenge to the bankruptcy order, although he continued to maintain that the decision of the Court of Appeal was wrong.

Lewison J explained, obviously rightly, that he had no choice but to proceed on the basis that the bankruptcy order was properly made and could not be re-opened. That remains the position. The effect of the bankruptcy order was that Mr McGuire’s property vested in his trustee in bankruptcy. The respondent became the trustee.

The matters before Lewison J that were the subject of his first judgment were applications for permission to appeal against a variety of orders made by Master Teverson and Judge Sparrow. Lewison J refused permission to appeal against most of the orders and that marked the end of the claims and applications resulting in such orders, there being no appeal against the refusals. The one application in respect of which he gave permission related to one of the orders made by Judge Sparrow. That had dismissed an application (which I cannot find in the papers) that Mr McGuire had made for leave to bring a claim against the respondent under section 304(1) of the Insolvency Act 1986 requiring him to restore to the bankrupt estate money in respect of which, in short, Mr McGuire claimed he was accountable. A critical question was whether success on any such claim would yield a surplus to the estate, otherwise Mr McGuire could have no interest in pursuing it.

In his judgment of 28 July 2010 dismissing the appeal for which he had given permission, Lewison J explained at paragraphs 23 and 24 why he considered that Judge Sparrow had erred in his approach to Mr McGuire’s application before him and why, therefore, as an appellate judge, he had to exercise the discretion afresh. He said in paragraph 24:

Lewison J then engaged in a careful analysis of the relevant issues and figures and concluded that, making all the assumptions in favour of Mr McGuire that he properly could, he did not consider that Mr McGuire had a real prospect of turning the deficiency into a surplus. He also considered it improbable that any proceedings for which he gave permission would be conducted properly and proportionately by Mr McGuire, who has, it must be said, displayed an intemperate attitude to many of those involved in the matters the subject of his litigation. For example, he has headed one of his files before me ‘The Thieves of Norwich’ and sub-headed it ‘Theft, exploitation, corruption, and gross ineptitude in the legal and insolvency industries’. It claims to expose ‘the real truth’ as distinct from ‘all the untruths told by the defendants’.

I have no confidence that Mr McGuire has a properly arguable basis for showing that Lewison J’s careful judgment was materially in error. He is, however, deeply dissatisfied with it and advances what he claims are fundamental challenges to it. I do not claim to have understood them all properly, nor have I had the benefit of his oral assistance in relation to the material he has supplied since the hearing before me.

One course that I might have adopted would be a careful trawl through the mass of material I have with a view to endeavouring to assess for myself whether Mr McGuire has a properly arguable appeal. Were I to do so and conclude that he did not, the exercise of doing so and explaining it adequately on in writing would probably have required days rather than hours, which I would regard as disproportionate for the disposal of a permission application. There would also be a risk that, unaided by argument, I would fall into error.

I have decided, after some hesitation, that the fairest course is to adjourn to the full court Mr McGuire’s application for an extension of time for appealing and for permission to appeal, such application to be on notice to the respondent, with the appeal to follow immediately if an extension and permission are granted. That is what I will direct. I will also direct that that hearing be listed before a court comprising two Lords/Lady Justices, one of whom should have Chancery experience. One day should be allowed for the hearing.

I have not forgotten the second appeal criteria. I doubt whether any appeal would raise an important question of principle or practice. If, however, Mr McGuire could show that he had been wrongly deprived of the opportunity to bring a claim that he ought to be entitled to bring, it could perhaps be said that there is some other compelling reason for an appeal.

I add two things. First, Mr McGuire would be well advised, if practicable, to obtain the benefit of legal representation at the hearing. It is apparent that he needs such help. Second, he should understand that, if he does pursue this matter to the further hearing I am permitting and his application and/or appeal are then dismissed, he will be probably be ordered to pay the respondent’s costs of his successful resistance, which will be likely to run to many thousands of pounds. Mr McGuire should, therefore, give the most careful consideration to the wisdom of taking up the benefit of the order I am making and recognise that there is a high risk that this will be the outcome.