Rubin v Coote

There are two applications before me made by Michael John Coote.

The first application in time is dated 6 August 2010 and is expressed to be made under powers given by Section 34(2) of the Senior Courts Act 1981 and CPR 31.17 and/or under the inherent jurisdiction of the court. This application seeks access to and/or inspection of the Index of proprietors' names held at HM Land Registry in the name of Mr. Brian Henton and Ms. Penelope-Ann Zygmant.

The second application made on 15 September 2010 is expressed also to be made under CPR 31.17, or under CPR 31.18, the Norwich Pharmacal jurisdiction. It relates to third party disclosure against Mr. Henton and an entity called Lookmaster for a number of documents and in addition requires certain statements by the respondents as to means, liabilities and the destination of certain assets.

These applications are the current manifestation of a long-running dispute between Mr. Coote and Mr. Henton. Their relationship began in the 1980s when Mr. Coote became involved in two claims against Branchempire Ltd (a company owned and controlled by Mr. Henton) as headlessor, for damages for failure to repair Mr. Coote’s flat in Embankment Gardens, London SW3. The claim included loss of interest on a bridging loan, and loss of profit following his failure to sell the flat because it was blighted by disrepair and eventually repossessed. In May and June of 2002 HHJ Ryland sitting at the Central London County Court presided over a 12 day trial of the actions. On 2 September 2002 HHJ Ryland sent out a draft of his judgment to the parties. That draft indicated that Mr. Coote had been comprehensively successful against Mr. Henton’s company. For various reasons, including illness, it was not until April 2003 that final judgments were handed down. In the first action Mr. Coote obtained a judgment against Branchempire for £339,000.00 odd and in the second for £332,000.00 odd. Branchempire was placed into voluntary liquidation on 7 August 2003. Mr. David Rubin was appointed Liquidator in October 2003 at a meeting of creditors which included Mr. Coote; Mr. Rubin accepted Mr. Coote’s proof in the liquidation of Branchempire in the sum of £408,954.01.

Mr. Coote is the 95% pre-liquidation creditor by value of the company. His claim for the judgment debt was about £400,000.00 as stated, plus costs of £90,000.00. However, the Legal Services Commission will have a first claim in respect of that £90,000.00 on any recovery that he makes. I have been informed there is one preferential creditor, namely Her Majesty’s Revenue & Customs, and some minor unsecured creditors. It was Mr. Coote’s intervention which secured Mr. Rubin’s appointment in October 2003.

In the course of Mr. Rubin’s duties three sets of proceedings have been brought by him as Liquidator, the defendants being Mr. Henton, who is the sole director of Lookmaster, Lookmaster itself, and a Mr. Martin Rogers who, with Mr. Henton, is the trustee of a pension fund whose principal beneficiary is thought to be Mr. Henton. The allegations in these proceedings are variously of breach of fiduciary duty, transactions at an undervalue and transactions defrauding the creditors of Branchempire Ltd. Certain payments made to Lookmaster are alleged to be preferences. The proceedings were each of them strongly defended although I have been informed by Mr. Henton that a formal defence was only submitted to the first set of proceedings given the parties were in negotiation following issue of the second set of proceedings.

In about July 2008 a compromise was proposed subject to the approval of either the creditors’ committee, in effect Mr. Coote, or the sanction of the court. It involved in summary, a proposed payment in two instalments totalling £1 million from Lookmaster. Mr. Henton was to give a personal guarantee of those funds. In 2005 a compromise of less than half this sum had been proposed. Mr. Rubin withdrew his application for sanction of this earlier settlement when Mr. Coote, by dint of his own researches, provided further material to him, enabling further claims to be brought. Absent Mr. Coote’s approval to the second proposed compromise, Mr. Rubin applied to the court for its sanction. That matter came before HHJ Cooke sitting as a Deputy Judge of the High Court, and on 15 June 2009 he gave judgment, sanctioning the compromise.

It has been indicated by Counsel that much of the copious evidence that was before me was also before HHJ Cooke. In paragraph [21] of his judgment he said the following:

“Mr. Coote has a long and sorry history of involvement with this company, and with Mr. Henton. It is a history that cannot but give rise to a great deal of sympathy for the position in which he now finds himself. The matter goes back to 1987 when Mr. Henton [sic] owned a leasehold flat in a mansion block. The parapet of the block of flats collapsed into the street outside, leading to the structure being declared to be unsafe by the local authority and Mr. Coote being put into the position that he was unable to sell his flat until it was repaired. Branchempire Ltd was one of the landlords of that block of flats but failed to take the necessary action to repair it. Eventually, Mr. Coote was forced to allow his flat to be repossessed and sold by his financier. He recovered nothing in respect of any equity interest he had in the property.

There then followed a long history of dishonest evasion of responsibility by Mr. Henton and Branchempire Ltd, leading up to, but apparently not ending in, a trial of Mr. Coote’s claim in May and June 2002. At the conclusion of that trial the judge delivered a draft judgment in favour of the claimant, but there was a considerable delay in handing it down by reason of the judge’s illness. It appears it was not finally handed down until April 2003.”

Mr. Henton was in fact disqualified as a director for 5 years in connection with these matters.

This is only a summary of the main points in the long and contentious history which bring Mr. Coote to this court on his applications for disclosure. The factual evidence before the Court was exhaustive, highlighting the continuing disagreements between Mr. Coote and Mr. Henton. Mr. Rubin did not appear but there was earlier evidence and correspondence from him produced by Mr. Coote.

Mr. Coote retains an abiding conviction that Mr. Henton has done everything within his power to avoid discharging his responsibilities to him. HHJ Cooke recorded the contentions made in the sanction proceedings by Mr. Coote that Mr. Henton had embarked on a systematic programme of stripping Branchempire of its assets and shifting value to Lookmaster and to himself. It is difficult to avoid the conclusion that the efforts of Mr. Henton up to and after judgment have only fuelled the suspicions and enhanced the persistence of Mr. Coote in his pursuit of satisfaction for the judgment debt. He has been extraordinarily diligent in seeking to trace assets belonging to Branchempire, to Lookmaster and ultimately to Mr. Henton and has not been without success in throwing some doubts over the valuations and the disclosures that have been produced. Mr. Coote has undertaken a large amount of private investigation, in so far as he is able, into the affairs of the relevant entities controlled by Mr. Henton, Mr. Henton's girlfriend, Ms. Zygmant (a director of Lookmaster) and Mr. Henton himself. Indeed, the sum of £30,000 is earmarked as payable to him out of any recovery in recognition of his efforts in assisting in the liquidation.

It has been Mr. Coote's contention throughout the process of liquidation of Branchempire, that such materials as he and the Liquidator have uncovered, point to the existence of far greater assets than have been hitherto declared by the relevant parties. Mr. Coote's reluctance to bring matters between himself and Mr. Rubin to a conclusion is not hard to understand in all the circumstances.

The history shows that when the proposed compromise in the sum of £1 million was first negotiated in July 2008 there were sufficient assets in the liquidation to pay the unsecured creditors including Mr. Coote 100p in the pound. Payment in full was possible at that stage because Mr. Rubin was prepared to compromise to an extent his own claim for fees to ensure Mr. Coote’s full recovery. At that stage it appears that the Liquidator’s costs approximately ran to some £227,000.00 with legal fees on top of £367,000.00. The total payments out, including an earlier Liquidator’s claim, and an HMRC preferential claim together with these other costs was some £656,000.00 odd. Of the £505,000.00 in unsecured claims, Mr. Coote’s was easily the largest. The amount by which the total sum overtopped £1 million was the amount by which Mr. Rubin indicated he would concede fees.

Mr. Coote was dissatisfied with this result for a number of reasons which, on examination by HHJ Cooke, appear not to have had substance, although, he was legitimately also concerned about the Legal Services Commission’s £90,000.00 charge.

At the time of the hearing before HHJ Cooke the amount of prior claims on any available fund had risen to £847,000.00, leaving a much smaller sum available to the unsecured creditors. By the time of the applications before me, the available sum to the unsecured creditors may in fact have disappeared.

It is against this sorry background that Mr. Kynoch effectively invites the court to assist Mr. Coote in achieving what he understands to be justice, namely, the disclosure he believes will reveal further assets to make his just pursuit of Mr. Henton worthwhile.

Although the application for third party disclosure is second in time to the application to view the Index, it is more convenient to deal with it first.

The substance of the application before me is to require Mr. Henton to produce further materials, and to produce them to Mr. Coote rather than to the Liquidator (about which I shall say more below). Mr. Coote contends this will substantiate the allegations he has already made about the inadequacy of the Liquidator’s investigations and the further allegations he now makes as to the concealment and availability of further assets held by the respondents.

The Senior Courts Act 1981, section 34(2) provides relevantly as follows:

“34.

…

(2)

On the application, in accordance with rules of court, of a party to any proceedings the High Court shall, in such circumstances as may be specified in the rules, have power to order a person who is not a party to the proceedings and who appears to the court to be likely to have in his possession, custody or power any documents which are relevant to an issue arising out of the said claim –

(a)

To disclose whether those documents are in his possession, custody or power; and

(b)

To produce such of those documents as are in his possession, custody or power, to the applicant or, on such conditions as may be specified in the order –

(i)

To the applicant’s legal adviser; or

(ii)

To the applicant’s legal advisers and any medical or other professional adviser of the applicant; or

(iii)

If the applicant has no legal adviser, to any medical or other professional adviser of the applicant”.

An application founded on section 34(2) of the Senior Courts Act is subject to the provisions of CPR 31.17 which provides as follows:

“31.17

– (1) This rule applies where an application is made to the court under any Act for disclosure by a person who is not a party to the proceedings.

The application must be supported by evidence.

The court may make an order under this rule only where –

(a)

The documents of which disclosure is sought are likely to support the case of the applicant or adversely affect the case of one of the other parties to the proceedings; and

(b)

Disclosure is necessary in order to dispose fairly of the claim or the save costs.

(4)

An order under this rule must

(a)

Specify the documents or the classes of documents which the respondent must disclose; and

(b)

Require the respondent, when making disclosure, to specify any of those documents –

Which are no longer in his control; or

In respect of which he claims a right or duty to withhold inspection.

Such order may –

(a)

Require the respondent to indicate what has happened to any documents which are no longer in his control; and

(b)

Specify the time and place for disclosure and inspection.”

My attention has been drawn to the case of Gary Flood v Times Newspapers Ltd [2009] EWHC 411 (QB) in which the following passage summarises the effect of the case law and gives assistance in applying the provisions of the rule:

“9.

… Quite apart from the rights of the parties to the litigation, and those of the interested parties, it is necessary for the court to have regard to the special nature of this jurisdiction and to ensure, so far as possible that it is exercised in accordance with appropriate constraint and that the relative criteria are properly addressed.

10.

In relation to any third party disclosure application, it is always necessary to focus carefully on the pleaded issues in the case. That is because of the nature and scope of the statutory jurisdiction.

…

22.

It is clear that disclosure against third parties should be regarded as the exception rather than the rule and not simply ordered by way of routine: see e.g. Frankson v Home Office [2003] 1WLR 1952…

23.

The first requirement is that any documents sought must be shown to be likely to support or adversely affect the case of one or other party. Thus the question to be asked in each case is whether they are likely to help one side or the other. The word “likely” in this context has been considered in the Court of Appeal and is taken to mean that the document or documents “may well” assist: see e.g. Three Rivers District Council v Bank of England (No 4) [2003] 1WLR 210.

24.

Secondly, the hurdle must be overcome of demonstrating that disclosure of the documents sought is “necessary” in order to dispose fairly of the claim or to save costs. This only arises for consideration if the first hurdle has been surmounted. Unless the documents are relevant in that sense, it is not necessary to address the test of necessity.

25.

Thirdly, there is a residual discretion on the part of the court whether or not to make such an order – even if the first two hurdles have been overcome: Frankson, cited above at [13]. It is at this third stage that broader considerations come into play, such as where the public interest lies and whether or not disclosure would infringe third party rights in relation, for example, to privacy or confidentiality. If so, the court must conduct a careful balancing exercise, as the Court of Appeal made clear in Frankson.”

…

There are thus two jurisdictional requirements. They are cumulative, namely, a relevancy criterion that the material is likely to support the case of the applicant or adversely affect the case of another party and secondly that disclosure must be necessary to dispose fairly of the claim or save costs. There is an overriding discretion in the court however, even when those jurisdictional hurdles have been crossed.

The relevant proceedings here are the appeal to the Court of Appeal against the order of HHJ Cooke giving the court sanction to the compromise. The order is sought against Mr. Henton, his companies and his girlfriend none of whom are parties to that appeal. In that appeal Mr. Coote is the appellant and Mr. Rubin is necessarily the respondent.

The application for disclosure requests an order in terms that Mr. Henton should file and set out a statement of his means whether solely or jointly owned, and all his liabilities as at 31 August 2010. Further the court is invited to order Mr. Henton to give capital valuations of such assets supported by such professional valuations as are available together with loan documents and mortgage statements in respect of liabilities. He is to state the current rental income in respect of any property assets, declare the addresses and title numbers of the properties he has been renovating in London which were the subject matter of one of the statements made by Mr. Henton in these applications and also the cost of renovating such properties. Details of sales of properties between the beginning of April 2008 and the end of August 2010 together with the source of money used to purchase such properties, and the details of the costs of renovation are also required. Further requests are made for assets held by a partnership called BH Developments, and also a statement of the value of any pension assets, shares, savings or cash held beneficially by Mr. Henton as at 31 August whether in trust, or otherwise, whether held in his own name or not, and wherever held.

Similarly orders are sought against a director of Lookmaster Limited and by reference to any properties held singly or jointly by Lookmaster, a statement of properties sold between the same dates with details as to sale proceeds and recipients of them. Details of costs of refurbishment are required and building estimates in respect of the various properties.

Disclosure of specific documentation is also requested, namely (i) copy bank statements for accounts in the names of Mr. Brian Henton, BH Developments and Lookmaster Limited from April 2008 to 31 August 2010 to include Mr. Henton's Abbey National Esavers account from 1^st January 2008 to 31 December 2008; (ii) The loan document or mortgage referable to Mr. Henton’s statement made in these applications in August 2010 (iii) any loan or mortgage application relating to the borrowing referred to (iv) any written partnership agreement between Mr. Henton and Penelope Zygmant or relevant memoranda; (v) all partnership accounts held by them between 1 April 2008 to 31 August 2010; (vi) all documentary evidence evidencing payments of £345, 023.00 as referred to by Mr. Henton in his statement, a loan of £100,000.00 also referred to by Mr. Henton in his statement and the costs of security and expenses referred to by Mr. Henton in a statement regarding security at Scraptoft Hall stating the source of monies for the costs.

I was informed that items (iv) and (v) do not in fact exist.

As noted, these applications are made in the appeal proceedings against a judgment of HHJ Cooke given on the application under section 165(2)(b) of the Insolvency Act 1986. It is thus central to understand the issues that fell for determination in that case and which are the subject matter of the appeal in order to judge whether or not these applications fulfil the necessary criteria under the rules.

The thrust of Mr. Coote’s case before the Judge was that the Liquidator had not made enough effort either generally or, in particular, in support of the unsecured creditors’ interests, and that the fact that, in law, some weight should be placed on the interests of the Liquidator was insufficient to overrule Mr. Coote’s concerns about the proposed settlement.

The essential submission on behalf of Mr. Coote to HHJ Cooke was that although the Liquidator, upon legal advice, had formed a clear view that the settlement was in the best interests of all the creditors, he was too willing to accept an amount that would cover his own costs but provide, at the end of the day, little or nothing to Mr. Coote.

The main thrust was the same as before me, namely that the true figure of Mr. Henton’s assets far exceeds the Statements of Affairs before HHJ Cooke; a sum of about £7 million was suggested to be the true figure as against a stated net worth of £1.3 million. Although the Judge did not accept the figure as necessarily correct, the true difference between what was stated by Mr. Henton and what was suggested by Mr. Coote was described by the judge as “nevertheless very substantial”.

There followed a detailed examination by the Judge of the points made by Mr. Coote, many of which, but not all, were the same as the points made to me as to concealment of assets and the potential missing sums. In the event, the Judge weighed in the balance the effect of the three Opinions from Counsel received by the Liquidator, and upon which Mr. Rubin relied, and the submissions of Mr. Coote to the effect that the Liquidator had not properly assessed all the claims that might be brought or the fact that, on bringing further claims Mr. Henton might improve his offer. It was concluded that the Liquidator had made a proper assessment and that it was correct to give weight to his views and that in all the circumstances the court should sanction the compromise.

The judge noted that the effect of doing so put Mr. Coote in a substantially worse position than he would have been had he accepted such settlement in July or August of 2008. Whilst recording the dishonest evasion of Mr. Henton in respect of his obligations concerning the lease and the judgment, the compromise was sanctioned.

HHJ Cooke held that where a Liquidator seeks the sanction of the court, and has taken the view that a compromise is in the best interests of the creditors, in an ordinary case where there is no suggestion of lack of good faith by the Liquidator or that the Liquidator is partisan, considerable weight will be attached to the Liquidator’s views by the court. Accordingly, this was an “ordinary case” (see Lightman J in Re Edennote Ltd (No 2) [1997] 2BC LC 89 at 92, as approved in Re Greenhaven Motors Ltd (in liquidation) [1999] 1BC LC 635 at page 643). This is so unless the evidence reveals substantial reasons why the court should not attach that weight to them or there is another reason for believing that his view is flawed. In the event the Judge attached weight to Mr. Rubin’s view, supported as it was by three clear Opinions from Counsel.

Although Mr. Kynoch expressly disavowed any allegation of bad faith against Mr. Rubin on behalf of Mr. Coote before HHJ Cooke, as he did before me, it is fair to say that there are passages in his skeleton argument and certainly in Mr. Coote’s own correspondence which are difficult to distinguish from such an allegation, and certainly his submissions suggested that Mr. Coote viewed Mr. Rubin as, at best, extremely unfair.

The Master of the Rolls gave leave to appeal against the judgment of HHJ Cooke in the following terms:

In his judgment HHJ Cooke had cited and applied both Greenhaven Motors Ltd and Edennote and, in granting leave to appeal, the Master of the Rolls noted in paragraph (4) of the grant of leave that he had not identified any misdirection or error of principle in the judge’s approach.

Against that background it is relevant to note (as was canvassed in the judgment of Chadwick LJ in Re Greenhaven Motors) that the approach of the Court in cases, as here, under section 165(2)(b), is different from that appropriate to cases under section 167(3) of the Insolvency Act 1986. In the latter type of case the court of first instance is controlling the exercise of a power for which the Liquidator does not require sanction and with which the court will interfere only where a Liquidator is acting mala fide or his decision is one which no reasonable Liquidator could take. The approach before HHJ Cooke was, necessarily, more intrusive and required the judge to examine in detail and weigh all the interests before him, which included the interests of not only pre-liquidation creditors such as Mr. Coote but also creditors whose debts arose post-liquidation like Mr. Rubin and his legal advisers. This aspect was dealt with in paragraph [16] of HHJ Cooke’s decision and it is obvious from the terms of his judgment that HHJ Cooke undertook a very detailed consideration of the materials before him.

The jurisdiction of the Court of Appeal on an appeal from a section 165(2) decision was also set out in the Greenhaven Motors Ltd case. It appears to me relevant that Chadwick LJ said in respect of that case, that, once in the Court of Appeal,

“Whatever the strict position might have been below, it is trite law that this court should not interfere with a discretion exercised by a judge unless satisfied that he applied a wrong principle, took into account matters which he should not have taken into account, disregarded matters to which he should have had regard, or was plainly wrong.” (At page 641).

Accordingly, when the Court of Appeal comes to hear this case it will be considering the exercise of the judge’s discretion in the light of the materials which were then before him.

Mr. Kynoch’s essential submission was that the disclosure sought was necessary to remedy the obvious injustices of Mr. Henton’s iniquity and Mr. Rubin’s inactivity.

Mr. Kynoch said that Mr. Henton had acted in an unconscionable way throughout his dealings with Mr. Coote, and the culmination of his disreputable dealing is the transfer of a sum in excess of £8 million from the debtor company Branchempire to himself; “himself” in this context including Lookmaster, a company controlled by him. Mr. Kynoch took me in detail through the many materials that he submitted demonstrated the spiriting away of assets in order to defeat the true claims of creditors of whom of course, Mr. Coote was by far the largest. He reminded me of the various disparaging remarks made by the judges who had had cause to examine the materials in depth and the fact of the 5 year disqualification of Mr. Henton as a director. He submitted that the Court should strive to assist the interests of creditors over those of delinquent directors.

He suggested that as he had achieved leave to appeal against the judgment of HHJ Cooke, Mr. Coote was entitled to say that I should not go behind the decision of Lord Neuberger MR, but should accept that, leave having been given, the documents he sought were disclosable as likely to assist him in that appeal. One of the central grounds of appeal was as follows:

“1.2.4

failure to properly assess and make proper enquiries of Lookmaster/Mr. Henton to discover whether the assets of Lookmaster and Mr. Henton were indeed limited to £1.3 million (as they contended in their statement of affairs) or whether this was credible and should be accepted at face value, or whether it was merely “window dressing” on the part of Lookmaster/Mr. Henton; and/or whether there had been non-disclosure of assets by Lookmaster/Mr. Henton that could have been readily discovered by a proper inquiry into those parties’ assets; [these are particulars of failure in the judge in failing to take proper account of Mr. Rubin’s own failures. Accordingly 1.2.4 is a failure of Mr. Rubin].”

He submitted the question for the Court was “is the disclosure sought in this case for the benefit of the liquidation of the insolvent company Branchempire, and in the interests of the existing creditors?”. The answer he said was unquestionably “yes” and that justice is served by transparency and that no legitimate purpose is served by refusing disclosure. Mr. Henton had no good reasons for refusing: he was hiding behind Mr. Rubin. Mr. Kynoch also said that Mr. Rubin and Mr. Henton had together been “polishing” the settlement, that the evidence showed them searching, after the event, for evidence to justify a settlement in a sum already agreed.

Mr. Henton is a property developer and Mr. Coote has latterly been collecting more evidence about his property holdings and transactions. Mr. Kynoch says that further materials he was shown only at the beginning of the hearing before HHJ Cooke make clear to him that there are other instances of deception by Mr. Henton about his remaining assets. These concern, among other things, the failure to register 2 properties upon which he had exchanged contracts but not completed and in respect of which he failed to note in his Statement of Assets the amount of the deposits. There are various other matters regarding the sale of properties including a place called Scraptoft Hall, valuations, and as to certain sums in interest bearing accounts. Mr. Coote put before the court his detailed analyses and his deductions from those analyses as to the existence of considerable further undisclosed assets which he says appear to have just disappeared. He believed Mr. Rubin would not take any further steps and was, in effect, regarding the sum in the settlement as his, for his fees, and this showed he had no interest at all in taking proper steps. Mr. Kynoch submitted the whole matter needed sorting out and disclosure would achieve this.

Mr. Kynoch accepted that the courts had not yet gone so far as to assist a disappointed creditor in a liquidation by means of orders such as those sought in these applications. However, he said there was nothing in CPR 31.17 to suggest it could not do so. He re-emphasised Mr. Henton’s breaches of his many duties as director, and argued that there was in fact a direct duty to Mr. Coote as a creditor in the liquidation which made the making of the orders asked the more obvious, because Mr. Henton owes a direct duty to disclose his own iniquity.

The effect of Mr. Kynoch’s submissions was that there had been unconscionable conduct. In such circumstances he argued, the court should step in to assist Mr. Coote in obtaining the chance to give effect to his legal rights by giving him personally access to the documentation the Liquidator refused to acquire.

He stated that the desire for vindication of his rights was a sufficient ground for Mr. Coote’s application. My Kynoch also invited my attention to articles in which the authors encouraged the court to take an expansive view of its various interlocutory powers in order to protect what was argued to be the otherwise unfairly vulnerable position of the disappointed judgment creditor such as Mr. Coote.

He accepted that he could find no example where the court had extended the Norwich Pharmacal jurisdiction to include a disclosure in similar circumstances to the present and he preferred to rely primarily upon the Senior Courts Act 1981 section 34(2).

Mr. Kynoch relied on much the same materials in support of the application to examine the Index at the Land Registry.

In that regard my attention was drawn to the case of Parkinson v Hawthorne [2009] 1WLR 1665. I was informed it was the only known instance of an order being made for a search to be carried out of the Index of proprietors’ names maintained by the Land Registry. In that case Patten J held that the court had jurisdiction, pursuant both to its inherent jurisdiction and section 34(2) of the 1981 Act, in appropriate cases, to make an order enabling an applicant other than the registered proprietor to gain access to the Index of proprietors’ names in order to assist him to enforce orders made in proceedings brought to enforce a separate course of action. Since, in that case the claimant otherwise had no realistic prospect of enforcing the judgment he had obtained against the defendant’s property the judge held it was appropriate to make the order sought.

In that case, the claimant had obtained a judgment against a person who operated under a number of aliases and had been able to conceal her address and effectively disappear. It had thus far proved impossible to enforce the judgment by a charging order or any other form of execution. In order to take those steps it was necessary to find out this person’s address and any properties in respect of which she was the registered proprietor over which the judgment could be executed. The Chief Land Registrar is obliged, by rules made under the provisions of the Land Registration Act 2002, to maintain an Index of proprietors’ names showing the name of the proprietor of a registered estate and any charges against the title with the title number. Such rights as are given to inspect any part of the Register did not, it was held, extend under the Act and rules to this Index. The only rights to search the Index were in a person who could satisfy the Registrar he was interested generally (“for instance as Trustee in Bankruptcy or personal representative”). Other provisions covered the police and other regulatory authorities. There being no route through the 2002 Act and its rules, section 34(2) of the 1981 Act was prayed in aid. This, of course, is the foundation for CPR 31.17.

In asking the question whether or not the Act and rules excluded either the provisions of the 1981 Act or the court’s inherent jurisdiction to direct disclosure in the interests of justice, Patten J held that:

“Where access of the kind sought is required in order to give effect to orders made in proceedings brought to enforce a separate cause of action, the court does have jurisdiction, in appropriate cases to make an order giving that access notwithstanding that the applicant himself would not be able to obtain the information under the 2002 Act or the 2003 Rules.” ([11]).

The court intervened because:

“… Unless the court intervenes by exercising its powers in the way that is sought, Mr. Parkinson has no realistic prospect of being able to discover the whereabouts of the defendant or, more particularly, to enforce the judgment he has obtained against her property” [13].

Patten J also considered the effect of the Data Protection Act 1998. He reflected that exemption from the non-disclosure provisions existed where disclosure was “necessary” in connection with legal proceedings or for the purpose of “establishing, exercising or defending legal rights”.

When asked about the jurisdiction to grant these applications Mr. Kynoch’s case was that he was four square within CPR 31.17 and that if this case was an extension of the Parkinson case, then it was a principled and necessary extension. In Mr. Kynoch’s final submissions he asserted generally that it would “explode the appeal” if the disclosure were given and if, say, it threw up perhaps £3 million worth of assets. This he submits is within the meaning of “[might well] support the case of the applicant or adversely affect the case of one of the other parties to the proceedings” within 31.17.

On behalf of Mr. Henton, Mr. Stuart Ritchie summarised his submissions as, (i) the application is overall misconceived; (ii) the documents and information sought do not fall within any statutory test, (iii) even if they did, there is no factual basis, and (iv) even if there were a factual basis, the Court should not make an order because there is no question of any settlement being reached by disclosure: history shows there will be years of further interrogation. Mr. Coote, irrespective of consequences, will keep on and on litigating.

Furthermore, Mr. Ritchie submitted that authority is clear that Mr. Henton does not owe a direct duty to Mr. Coote as an individual creditor: the best Mr. Kynoch can point to is an obiter dictum of Lord Templeman. Not only is it clear from the Companies Act section 172 that that statutory regime is a complete code, leaving no room for Mr. Kynoch’s duty, but also that the law is settled after Yukong Line Ltd of Korea v Rendsburg Investments Corp of Liberia (No 2) [1998] 4 All ER 82, to the effect that a direct duty to an individual creditor is not owed and so the alleged duty to disclose the alleged iniquity does not arise.

He submitted that Mr. Coote is seeking to assume the role of Liquidator and trying to assume conduct of the liquidation himself, and that this is a reflection of his earlier involvement in refusing to agree the second settlement before HHJ Cooke.

Mr. Ritchie emphasised that Mr. Henton was prepared to disclose a body of documentation to Mr. Rubin, admittedly not all the bank statements that were requested, but he would not disclose any of it to Mr. Coote direct, fearing he would prolong and elaborate the contentions between Mr. Coote and himself. Mr. Coote sought vigorously to dissuade me from any course that resulted in disclosure only to Mr. Rubin (whether or not such was possible under the rules is another matter), and declined to agree to an undertaking to the Court by Mr. Henton to that effect.

Mr. Ritchie also submitted that there were a number of features of the application that were noteworthy. Mr. Coote was not a claimant in the sense understood by the Rules: he was involved in the proceedings before HHJ Cooke because he objected to the sanction sought by the Liquidator and became an appellant through that route only. Furthermore, this was much more akin to a pre-action disclosure application in order to support a case in deceit – i.e. that the parties had been inveigled into a settlement through fraud.

As to the facts, whilst Mr. Ritchie accepted criticism had been made by HHJ Cooke, and said that Mr. Henton did not seek to defend every action he had taken, he submitted it was not appropriate or fair to speak of £8 million. The Liquidator has said there are good claims for £550,000.000 plus costs: Mr. Coote’s figures are exaggerated. The Judge found for Mr. Rubin, and this Court should not go behind that finding.

Mr. Ritchie also argued that Mr. Kynoch’s submission as to the test under CPR 31.17.was wrong: it was quite inappropriate to ask “what is the prejudice”, there was no obligation to disclose and the test is “necessity”. He said that this was not a Norwich Pharmacal case. He drew my attention to Mitsui and Co Ltd v Nexen Petroleum UK Ltd [2005] 3 All ER 511 together with R(on the application of) Binyam Mohammed v Secretary of State for Foreign and Commonwealth Affairs [2008] EWHC 2048 (Admin), as the latest statements of the rule (the latter admittedly in a very different context). He said further the request was a roving interrogation, nothing was “necessary” under either CPR 31.17 or the Norwich Pharmacal principle, and it was insufficiently related to the issues to come within CPR 31.17.

The application to inspect the Index was also inapt said Mr. Ritchie. It was not clear which jurisdiction supported the Order in Parkinson v Hawthorne, but the facts were different in any event. It was accepted by both sides that a retrospective view of the Index was impossible, examination giving the current but not the previous state of affairs; furthermore, Mr. Henton was a property developer so results of any application if granted would for these reasons not be probative.

Judged against the wording of the Rules and the guidance given upon it I regret that I find it impossible to say that these documents are relevant in the required sense to the issue which the Court of Appeal is called upon to decide. They are not likely to help the case of either Mr. Coote or the Liquidator in attacking or defending the judgment of HHJ Cooke in 2009.

I can well understand, and am urged on behalf of Mr. Coote to accept as sufficient, the fact that if Mr. Coote acquires, eventually, and after considerable detective work, all the documentation and information he requires, and if it leads to further trains of inquiry, it might, in certain circumstances “explode” the Appeal. By this, however, I mean it might well, if the evidence is new and powerful, cause Mr. Rubin to think again and might invite an adjournment or withdrawal of the appeal.

However, to hold that these documents are relevant in the way required by CPR 31.17 would be to misunderstand the scope of the appeal for which Mr. Coote has leave. The Court of Appeal must review the discretion of the judge and the sufficiency of the Liquidator’s actions against the information to hand at the relevant times. This material cannot, strictly speaking, be understood as admissible on the question of whether or not the judge erred in principle in deciding, in June 2009, that the settlement should be sanctioned on the basis of the material then before the Court. In the light of the authorities, it is in my judgement appropriate to look at the matter strictly under CPR 31.17.

It is the case that no steps have been taken against Mr. Rubin under the Insolvency Act or otherwise, suggesting that he has misconducted himself as Liquidator. Mr. Coote, save for a certain exuberance in correspondence and in his statements, has before this court as before HHJ Cooke, resiled from any suggestion he may have made that Mr. Rubin has actually acted dishonestly or otherwise improperly. Mr. Rubin has, in full knowledge of the way Mr. Coote puts his case, and aware through correspondence of the materials that Mr. Coote has obtained and now wishes to obtain, declined to exercise the powers given to him under the Insolvency Act, (by section 236 if necessary), to seek that information for himself as office-holder.

I am obliged to consider the criterion of necessity only if the relevance under 31.17 of the materials sought has been shown. In my judgment relevance has not been shown. Even if I were persuaded that a broader reading of the issues before the Court of Appeal here appropriate. It seems to me quite wrong that this jurisdiction should be used in effect to circumvent or replace the powers given under section 236 of the Insolvency Act. This section exists to enable the Liquidator to acquire the documentation he believes necessary to a proper discharge of his duties. So, to that extent, it would in my judgment also be “unnecessary”, within CPR 31.17 to make the disclosure in order properly to protect the rights of Mr. Coote. Mr. Rubin is the office-holder Parliament intended should safeguard his interests, and, indeed, balance these interests against any post-liquidation interests or others that may subsist.

Mr. Rubin has been given an opportunity to consider the exercise of that jurisdiction and has declined to seek to exercise it. Given the figures I have heard as to the costs incurred to date, the previous difficulties in obtaining information, and reading the judgment of HHJ Cooke as to Counsel’s views on recovery, it is not difficult to understand Mr. Rubin’s position.

Furthermore, nothing I have seen persuades me that giving disclosure will do other than escalate costs in this already costly action.

In my judgment it is not appropriate to use CPR 31.17 as a back door to obtaining disclosure that the Liquidator does not deem appropriate in all the circumstances. Although I do not need to decide them, it is clear to me that the points made by Mr. Ritchie as to the duties owed or not owed by Mr. Henton to Mr. Coote are correct. Similarly, Mr Kynoch is not correct in his articulation of the question to be asked in a case under CPR 31.17.

The rules require that disclosure given under CPR 31.17 is relevant in the sense set out in the rules. The issue before the Court of Appeal will be whether or not HHJ Cooke failed to take into account relevant matters or, as stated in the grounds of appeal, whether there was a:

“...failure of the learned judge to properly take account of the merits, or value, of the claims within the third set of proceedings issued by Mr. Rubin against Lookmaster Ltd on 31 March 2009.”

In essence, materials which Mr. Coote now seeks are materials which he contends Mr. Rubin as Liquidator ought properly to have required in the exercise of his functions as Liquidator. He also says that further materials coming to light in the course of the hearing from Mr. Henton lead to further disclosures that are required. Necessarily, these are matters which were not before the judge and which the Liquidator either had regard to but did not consider relevant or alternatively were not available to him at the time to consider. I cannot see how, given the scope of the Court of Appeal’s jurisdiction, these documents could advance Mr. Coote’ case that the learned judge was appealably wrong.

Furthermore, Mr. Coote has put before Mr. Rubin, the Liquidator, his contentions regarding these further trains of inquiry and the information he says may well be recoverable as a result of further enquiries and steps to be taken. I have been shown correspondence between him and the Liquidator beginning in August of this year. On 25 August Mr. Coote wrote to Mr. Rubin enclosing a series of letters he had written to Mr. Henton, also in August, requesting disclosure from Mr. Henton relying upon some comments apparently made by Peter Smith J at a directions hearing in the matter before me. I was told Peter Smith J indicated to Mr. Henton that he ought to disclose his bank statements to the Liquidator and that Mr. Rubin should already have asked for full disclosure. Mr. Coote asked Mr. Rubin whether or not he had asked similar questions before he had entered into the compromise for £1 million. He set out very clearly his views on the propensity, as he saw it, of Mr. Henton and Lookmaster and others to fail to co-operate in disclosure. He indicated that he wished Mr. Rubin to seek the information from Mr. Henton because he needed to give consideration to whether or not he should make an application for disclosure against these persons himself.

Mr. Rubin replied to say he had in fact satisfied himself concerning Mr. Henton’s financial position by asking him to swear the Statement of Affairs on oath and indicating the other steps he had taken. He then said:

“I have always said that if it transpires that Mr. Henton has lied on oath, and that he has significant further assets which can be the subject of attack then I shall, of course, revisit my decision. However, the position was explained at length to the court and the judge was satisfied with my explanation.

If the court permits you to obtain further disclosure and to examine Mr. Henton’s affairs then I shall, of course, abide by whatever decision the court subsequently makes if it transpires that further disclosure establishes that Mr. Henton misled me and the court. I cannot see that I could have done more and I do not feel that I should, after all this time and after the court has approved the settlement, be drawn into further debate and examination.”

On that same day Mr. Coote wrote again to Mr. Rubin enclosing a copy of Mr. Henton’s first witness statement in the applications before me. Mr. Coote recorded in that letter the fact that Mr. Henton was prepared to allow inspection of his bank statements to Mr. Rubin in relation to property transactions by the Liquidator and to allow him to see certain other documentation. Mr. Coote asked Mr. Rubin whether he would then be prepared to disclose the materials to Mr. Coote. He indicated that he expected Mr. Rubin to make requests for the documentation otherwise he felt that he himself would have to proceed with an application to the court.

Mr. Rubin replied on 5 September that he did not feel he could be further drawn into debate and examination. Further correspondence containing requests of Mr. Henton from Mr. Coote was again copied to Mr. Rubin in early September. In a long letter of 8 September 2010 Mr. Coote stated that he was giving Mr. Rubin “one last opportunity to make the relevant requests for disclosure from Mr. Henton by section 236 IA application for the information I have asked you to ask him for”. He also said:

“It is blindingly obvious that Mr. Henton has further assets that he has not disclosed – how else would he be refurbishing and buying properties worth millions of pounds. As I am sure you well know, it simply beggars belief that Mr. Henton’s assets are all limited to £655,000.00 (as he told you and you accepted). I believe you know this very well. I believe you turned a blind eye to his deceptive conduct of Mr. Henton as you had decided that your fees, which you knew were a first charge on the moneys recovered, were your priority. I do not expect you to acknowledge this – in fact I am sure you will deny it – but I believe it to be true.”

Unsurprisingly, Mr. Rubin’s response to that piece of correspondence was through his solicitors. He answered that it was simply wrong for Mr. Coote to suggest that he had turned a blind eye to Mr. Henton’s deceptive conduct and that he was overly focussed in securing enough moneys to cover his own fees. He recalled that these allegations had been made before HHJ Cooke and that Mr. Coote’s case had not been accepted. Most materially Mr. Rubin said the following:

“You have asked me to seek the disclosure you now want against Mr. Henton rather than yourself making the application for fear of exposing yourself to potential adverse costs risks. However, I cannot incur further costs on this basis, particularly as I have already incurred considerable irrecoverable costs in these section 165 proceedings. My position, as explained to you, is that it is for you to make whatever disclosure application you consider fit against Mr. Henton/Lookmaster and I await the outcome of your application with interest. As I explained to you, I am bound by an undertaking to Mr. Henton/Lookmaster not to disclose, without their permission or a court order, information disclosed by Mr. Henton in connection with the settlement (because Mr. Henton sees you as a vexatious litigant). I will, of course, abide by any court order.

I confirm that I do not intend to incur the costs of attending the hearing of your application against Mr. Henton/Ms Zygmant”

These exchanges underline the fact that, in my judgment, Mr. Coote is by this application in effect seeking to step into the shoes of the Liquidator. No doubt his previous success in obtaining materials and information has encouraged him to take this further step. The Liquidator, the relevant office-holder for the past seven years, has been given the opportunity to seek further materials and has considered it is inappropriate for him to do so.

It was pointed out on behalf of Mr. Henton, Mr. Coote is only a party by virtue of his interest as major creditor: there is no lis between himself and the Liquidator in the usual sense. I do not believe this factor alone is determinative or that in the right circumstances a less direct relationship between parties would be insufficient, but it does highlight the parallel nature of an application under 31.17 where the IA procedure exists and the Liquidator has in the exercise of his discretion, declined to use it.

This application was made, either under the Norwich Pharmacal jurisdiction, alternatively, and I detect essentially, under the same jurisdiction as the application dealt with above, namely 31.17. The inherent jurisdiction of the court was also prayed in aid if necessary. It was the submission of the Respondents that the Norwich Pharmacal jurisdiction, preserved by CPR 31.18, reflected the inherent jurisdiction of the Court, and that there was no additional “inherent jurisdiction” which the appellant could invoke.

The difficulty with this submission is that I do not accept that it is necessary for Mr. Coote to be given personal disclosure of these materials in order to vindicate his rights. His rights as an unsecured creditor are protected by the regime that exists under the Insolvency Act 1986 and the rules made thereunder. Inevitably, this means that there may come a time where, acting perfectly properly, a Liquidator may differ from a creditor in his views as to the propriety of further exploration and analysis of material. Although Mr. Coote believes he has not been well-served by Mr. Rubin, the fact remains that Mr. Rubin, who has not been removed as Liquidator, took a certain view before the judgment of HHJ Cooke, and that view was vindicated by the judge’s finding. Mr. Coote has since provided Mr. Rubin with further materials and Mr. Rubin has likewise formed a view that in all the circumstances, including the expenditure made to date, he is not obliged to go any further than he has already gone.

It is, in my judgement unavoidable that this application to examine the Index will be judged according to effectively the same criteria as those which I have already dealt with above. Accordingly, the application must fail on the same basis as the application Mr. Coote makes for disclosure of documents by Mr. Henton.

Although Mr. Kynoch placed most reliance upon section 34(2) of the SCA 1981, his essential submission to me was there must be a way for the Court to order disclosure in the circumstances of this case.

The Norwich Pharmacal jurisdiction has been helpfully summarised most recently by the Divisional Court in R (on the Application of Binyam Mohamed) v Secretary of State for Foreign & Commonwealth Affairs [2008] EWHC 2048 (Admin), (not departed from in R (on the application of) Binyam Mohammed v Secretary of State for Foreign and Commonwealth Affairs [2010] EWCA Civ 158); I therefore take from that Judgment the following summary of the applicable principles.

Per Thomas LJ:

“ [63] The principle in Norwich Pharmacal is best described in the speech of Lord Reid (at page 175):

‘If through no fault of his own a person gets mixed up in the tortious acts of others so as to facilitate their wrongdoing, he may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoers...’”

“[129] The scope of what can be obtained under the principles of Norwich Pharmacal jurisdiction has been more fully considered in the context of actions where those who have been deprived of property have sought to obtain from banks and others information to enable them to trace the assets. The exercise of the Norwich Pharmacal jurisdiction for this purpose was approved by the Court of Appeal in Bankers Trust v Shapira [1980] 1 WLR 1274 – see the Judgment of Lord Denning MR at page 1280, 122.”

“[130] In Arab Monetary Fund v Hashim and Ors (5) [1992] 2 All ER 911, Hoffman J, after citing the passage from the speech of Lord Reid, which we have set out at paragraph [63] above, continued:

‘The reference to “full information” has sometimes led to an assumption that any person who has become mixed up in a tortious act can be required not merely to disclose the identity of the wrongdoer but to give general discovery and answer questions on all matters relevant to the course of action. In my view this is wrong...’”

“[131] We respectfully agree with the observation of Hoffman J (as he then was) that Norwich Pharmacal does not provide a general right of discovery.”

After a further review of case law, the Divisional Court said this:

“[133] It seems to us, therefore, that although the action cannot be one used for wide-ranging discovery or the gathering of evidence and is strictly confined to necessary information, and the Court must always consider what is proportionate and the expense involved, the scope of what can be ordered must depend on the factual circumstances of each case. In our view, the scope of the information which the Court may order to be provided is not confined to the identity of the wrongdoer, nor to what was described by Lightman J in Mitsui & Co. Ltd. v Nexen Petroleum UK Limited [2005] EWHC 625 (Ch) at paragraph 18 as ‘the missing piece of the jigsaw’ it is clear from the development of the jurisdiction in relation to the tracing of assets that the courts will make orders specific to the facts of the case within the constraints made clear in Norwich Pharmacal and the cases to which we have referred.”

The constraints made clear in Norwich Pharmacal and in subsequent cases plainly include the fact that an Order will be confined to “necessary” information. For the reasons I have given in connection with the exercise of the jurisdiction under section 34(2) of the 1981 Act, I do not believe the information is “necessary”, accordingly Norwich Pharmacal does not assist Mr. Kynoch. Furthermore, for the reasons I have given, this Court should not use a back door to the jurisdiction which exists under the 1986 Act: that is the mechanism by which Mr Coote’s rights are to be protected.

In spite of the forceful and comprehensive submissions on Mr. Coote’s behalf by Mr. Kynoch I am unable to accede to these applications.

Mr. Coote is unable to accept that Mr. Rubin has conducted, whether before the compromise was negotiated, or indeed thereafter, an adequate inquiry as to the whereabouts of any assets available to satisfy his claims as an unsecured judgment creditor. There is an unfortunate element of “Catch 22” about this application: Mr. Coote is convinced that more money exists and that Mr. Rubin should expend more time and costs in seeking it out. Mr. Rubin has already expended a very large sum indeed. Mr. Rubin has indicated that, if Mr. Coote shows him that Mr. Henton has lied and that he has significant further assets which can be the subject of attack he will revisit his decision.

I have indicated that I do not believe the jurisdiction under section 34(2) nor that under the Norwich Pharmacal principle assists Mr. Coote. Nor does any other basis lie to give him the disclosure he wishes for.

This is, I am conscious, a view which will considerably disappoint Mr. Coote. I invited the parties to consider, as a way forward, that Mr. Henton undertake to this Court to disclose, as he offered in his statement, much of the documentation sought, but only to Mr. Rubin. Mr. Henton was prepared to accede to this. However, this course of action was wholly unacceptable to Mr. Coote.

Mr. Henton insists that he has not concealed any further assets from Mr. Coote. Having carefully read the papers before me, including the liability judgment of HHJ Ryland given in April 2002, and the many statements put before me on behalf of Mr. Coote, it is plain that whatever steps may properly be taken should be taken by Mr. Henton, to reassure Mr. Coote, so far as he may, that his assertion is correct.

Mr. Henton offered to disclose to Mr. Rubin almost all of the documents asked in the Schedule to this application, as referred to in paragraph 26 above, where they existed. In order to mitigate the current unhappy position I would suggest that Mr. Henton disclose to Mr. Rubin as soon as possible those documents which in his statements before this Court he has indicated a willingness to disclose to him. It was said with some force in the course of argument before me, if Mr. Henton has nothing to hide, why does he not disclose the documentation? I have for the reasons given above been unable to conclude that the law compels Mr. Henton to disclose these documents to Mr. Coote. However I urge him to disclose them to Mr. Rubin without delay.