Green v Wright

This is my extemporary judgment on an appeal by Mr James Green against a decision of Deputy District Judge Langley exercising insolvency jurisdiction in the County Court at Burnley, appeal reference M14C358.

This case arises in somewhat unusual circumstances and appears to raise a novel question of law. An individual voluntary arrangement has been successfully completed in accordance with its terms and a certificate of completion has been issued. Since that time, further funds have come into the hands of the former supervisor of the IVA.

The issue that came before the Deputy District Judge, and which arises on this appeal, focuses on the question of who should have those funds: the former creditors or the former debtor? The Deputy District Judge decided in favour of the former debtor.

The former supervisor now seeks permission to appeal to this Court. On the 8^th December 2014 I ordered that the application for permission to appeal should be listed for hearing before me today, with the hearing of the appeal (subject to such permission) to follow.

On this appeal Mr Paul French (of counsel), who did not appear in the lower court, appears for the appellant former supervisor. Mr Ian Tucker (of counsel), who did appear in the lower court, appears for the respondent and former debtor.

Both counsel have submitted a helpful written skeleton argument which, in the case of Mr French, was dated the 20^th November 2014 and, in the case of Mr Tucker, was dated the 3^rd February 2015. Mr French addressed me in opening the appeal for about 50 minutes, Mr Tucker responded for a little under 20 minutes, and Mr French then replied for about 10 minutes. I am indebted to both counsel for the clarity of their submissions, both written and oral.

I am satisfied that this is a case in which there is a real prospect of success on appeal and, in any event, given the apparent novelty of the issue of law raised on this appeal, it seems to me that there is a compelling reason why this appeal should be heard. I therefore give permission to appeal and proceed to consider the merits of the appeal itself.

There is an issue as to whether, in addition to permission to appeal, the court is required to give an extension of time for appealing. The Deputy District Judge’s decision was given on the 10^th October 2014 and the Appellant’s Notice was not filed until the 5^th December 2014 due to difficulties in obtaining an approved transcript of the judgment of the lower court.

Extensions of time for appealing were given, first, by an order of Deputy District Judge Thexton on the 31^st October 2014 until 4pm on the 14^th November 2014, and thereafter by an order of Deputy District Judge Pickup dated the 17^th November 2014 but made pursuant to an application issued on the 28^th October 2014. Both applications had sought permission to appeal from a judge of the High Court, which is the appropriate appeal body for an insolvency appeal from a district judge’s order in the County Court, but, due apparently to the address given in the application notices, both applications had been placed before deputy district judges rather than a judge of the High Court.

Whatever the true status of those two orders (bearing in mind the provisions of CPR 52.6(1), which provides that an application to vary the time limit for filing an appeal notice must be made to the appeal court), there is no suggestion that there has been any undue delay or intentional failure to comply with the requirements of the Civil Procedure Rules by the appellant, and no prejudice to the respondent has been suggested by him as a result of the delay in filing the Appellant’s Notice. Insofar as any extension of time for appealing may therefore be required, I grant that necessary extension of time.

The background to the appeal is set out in Mr French’s written skeleton argument. On the 31^st August 2007 the respondent to the appeal and former debtor, Mr James Patrick Wright, had proposed the terms of an individual voluntary arrangement incorporating the R3 Standard Conditions (version 2). That proposal was submitted to the County Court on the 6^th September 2007. On the 9^th October 2007 the proposal was approved with some 30 modifications.

Mr Wright complied with his obligations under the terms of his IVA and, on the 17^th January 2013, the supervisor reported to the creditors that Mr Wright had fully complied with his obligations and issued a certificate of due completion. That certificate is headed ‘Certificate of Due Completion’ and it states that Mr Green, as supervisor of the IVA, confirms that there is nothing more to be done under the arrangement and that the debtor has complied fully with his obligations under it. In accordance with Insolvency Rule 5.34(1) he now gives notice that the arrangement is now completed and the debtor is released from all liabilities to creditors bound by the arrangement.

On the same day the supervisor wrote to Mr Wright, and also to his wife (who was subject to a similar IVA), enclosing his report to creditors for their information and stating that, following compliance with the terms of their IVAs, they were then complete and that each of Mr and Mrs Wright was discharged from all debts included in their arrangements.

Some nine months or so later, in September and October 2013, the supervisor received two payments from banks (Barclays and RBS), totalling some £24,500, which were the proceeds of payment protection insurance policies that the relevant banks accepted had been mis-sold to Mr Wright. As between the supervisor and Mr Wright (the latter acting by Stephensons Solicitors), it could not be agreed whether these proceeds should be paid into the IVA for distribution to creditors or should be made available to Mr Wright.

On the 25^th July 2014 the former supervisor therefore issued an application in the County Court for directions as to whether the funds, amounting to some £24,500, and being the payment of compensation for mis-selling of payment protection insurance to the respondent debtor, should be distributed by the supervisor in accordance with the terms of the IVA or should be paid by the former supervisor to the debtor. That application was supported by a witness statement from the former supervisor, Mr Green, dated the 24^th July 2014. There was a short witness statement in response from Mr Wright, dated the 11^th September 2014.

The application came on for hearing before Deputy District Judge Langley on the 10^th October 2014. Having heard counsel for both parties - Mr Jonathan Lowe for the Applicant and Mr Ian Tucker for the Respondent - the Deputy District Judge declared that the funds held by the applicant, as supervisor of the respondent’s IVA, and representing the proceeds of the compensation for mis-selling of payment protection insurance to the debtor, should be paid by the former supervisor to the debtor. He also ordered that there should be no order as to costs.

The Deputy District Judge’s reasons are set out in a very short, five paragraph, extemporary judgement, an approved transcript of which has been made available to me. The Deputy District Judge stated that the application before him was an interesting and unusual one following the conclusion of an IVA which, unusually, had been complied with. The Deputy District Judge said that he had been taken through the arrangement, the modifications and the basic practice. He said that, after the issue of a completion certificate by the supervisor, further assets had come into the supervisor’s hands from a PPI claim.

At paragraph 2, the Deputy District Judge recorded that it had been accepted that the claim itself, or the right to make such a claim, had been an asset of the arrangement. He referred to the argument of counsel for the former supervisor that, notwithstanding the issue of the completion statement, it was only right and fair that those assets should be distributed for the benefit of the creditors. It was said that they formed part of the trust and had not been excluded.

At paragraphs 3 and 4 the Deputy District Judge referred to the competing submissions of Mr Tucker for the debtor. Mr Tucker approached the matter first ‘on the basis that the debtor was affected in’ what he described as ‘good faith’. The Deputy District Judge said that he had to take that position as there was no formal evidence to the contrary.

The Deputy District Judge then said that the IVA was a contract, the proposal was a full and final settlement, and the supervisor had issued a certificate of completion which was said to be ‘in stark terms’. He referred to Mr Tucker’s argument that, after the issue of that certificate, there was no trust. He said that Mr Tucker had taken him to a modification of the IVA Standard Terms, which said that until the issue of a completion certificate all the debtor’s obligations, including obligations to make contributions or realise property, continued. What Mr Tucker said was that the obverse of that was that after the completion statement there was no obligation on the debtor. The Deputy District Judge said that he thought that must be right.

At paragraph 5, the Deputy District Judge said that the completion certificate was conclusive in the absence of any breach by the debtor. The arrangement was concluded, there was no trust, there were no beneficiaries, and those funds did not fall to be distributed to the creditors because the arrangement had been concluded. He found in favour of the debtor.

The former supervisor of the IVA seeks permission to appeal from that decision. It is said that the Deputy District Judge erred in law in construing the terms of the standard conditions governing the IVA (as modified) in such a way that, having regard to paragraph 27(3) of those Standard Conditions, the effect of the former supervisor serving a completion certificate within paragraph 9(2) of those Standard Conditions was to conclude the IVA such that:

It is said that the true meaning and effect of paragraphs 14(1) and 28(3) of those standard conditions, in particular having regard to the decision of the Court of Appeal in Re NT Gallagher & Son Ltd [2002] EWCA Civ 404 and reported at [2002] 1 WLR 2380, was that:

It is appropriate at this point for me to refer to certain of the terms of the IVA (as modified).

Version 2 of the Standard Conditions for IVAs, produced in November 2004 by the Association of Business Recovery Professionals, begins (at paragraph 1) with an interpretation provision. Paragraph 1(f) defines ‘Creditor’ as:

“A person bound by the Arrangement to whom a Debt is owed.”

By paragraph 1(g):

“‘Debt’ has the meaning given to it in section 382 of the Act with the modifications necessary to refer to a voluntary arrangement.”

For present purposes, it is sufficient to say that, by reference to that definition, a debt is any debt or liability to which the debtor was subject at the commencement of the relevant IVA.

Paragraph 1(h) defines ‘Debtor’ as meaning:

“The person who makes the Proposal.”

Paragraph 1(i) defines ‘Dividend’ as meaning:

“A distribution to Creditors.”

Paragraph 1(m) defines ‘Property’ by reference to:

“The meaning given to it in section 436 of the Act.”

Here, as Mr Tucker acknowledges, it is common ground that the cause of action that gave rise to the settlement under which the PPI compensation was paid to the former supervisor by the two banks in question came within the meaning of an ‘asset of the Arrangement’.

Paragraph 3 states that the Arrangement is to:

“Come into effect upon [its] approval … by the Creditors.”

Paragraph 4 describes the ‘Nature and effect of the Arrangement’. By subparagraph 4(1):

“The Arrangement is a proposal under Part VIII of the Act for a scheme of arrangement of the Debtor’s affairs or a composition in full and final satisfaction of the Debtor’s Debts.”

Paragraph 4(3) contains a restriction on creditors’ rights. It provides that:

“After the commencement of the Arrangement, no Creditor shall, in respect of any Debt which is subject to the Arrangement:

(a)

have any remedy against the property or person of the Debtor;

(b)

commence or continue any action or other legal proceeding against the Debtor.”

Paragraph 9 deals with completion of the arrangement. By subparagraph 9(1):

“Upon the expiration of the Arrangement, the Supervisor shall, if the Debtor has complied with his obligations under the Arrangement, issue a certificate (‘the Completion Certificate’) stating that the Proposal has been fully implemented.”

By subparagraph 9(2), subject to an exception not material for present purposes in paragraph 4(4):

“Upon the issue by the Supervisor of a Completion Certificate, the Debtor shall be released from all Debts which are subject to the Arrangement.”

‘Completion’ of the arrangement is to be contrasted with ‘termination’ of the arrangement, for which provision is made in paragraph 11(1). As modified, paragraph 11(1) provides that:

“The Arrangement shall terminate upon:

(a)

the Supervisor issuing a Certificate of Termination under Paragraph 71;

(b)

the making of a bankruptcy order against the Debtor;

(c)

the Debtor’s death.”

‘Termination’ is an event that arises following breach of the IVA. It is to be contrasted with ‘completion’ of the arrangement, which follows compliance by the debtor with his obligations under the arrangement.

The supervisor’s functions are addressed in paragraph 12 and his powers in paragraph 13.

Paragraph 14 addresses the supervisor’s powers upon completion/termination. By paragraph 14(1):

“Completion and/or termination of the Arrangement shall not affect the Supervisor’s power to carry out such of his functions and to exercise such of his powers as are necessary for him to fully carry out his duties, obligations and responsibilities under the Arrangement, Act and Rules and to resolve such matters as may have arisen during the course of the Arrangement.”

Paragraph 14(2) relates to the retention of funds by the supervisor. It provides that:

“Upon completion and/or termination of the arrangement, the Supervisor shall be entitled to retain for such period as he reasonably deems necessary from any funds under his control such moneys as he reasonably thinks fit on account of his fees, costs, charges, liabilities and expenses, and shall advise Creditors and the Debtor in writing of the quantum of the funds so retained and the reasons why.”

Paragraph 27 deals with after-acquired assets. The whole of the standard-form paragraph 27 was deleted by modification 21 and replaced with the following provisions:

“27(1) [After-acquired property subject to arrangement] Should the debtor inherit any property, or receive or become entitled to any property which had not been foreseen by the proposal then such property shall become an asset of the arrangement upon the debtor’s becoming entitled to it. (‘After-Acquired Assets’).

27(2) [After-Acquired Assets to be supplementary] After-Acquired Assets shall be sold or realised to the extent necessary to effect full repayment of the creditors together with interest, if any, to which creditors are entitled pursuant to the arrangement [and] as such will be supplementary to any other contribution or property which the debtor is to include in the arrangement.

27(3) [Continuance of the debtor’s obligations] Until the issue of a completion certificate all the debtor’s obligations under the arrangement, including any obligations to make contributions or realise property, continue notwithstanding the realisation of any After-Acquired Assets.”

Paragraph 28 is headed ‘Trust of Arrangement assets’. Paragraph 28(1) deals with assets in the possession of the debtor and provides that:

“Property constituting an asset of the Arrangement in the possession, custody or control of the Debtor shall be held by the Debtor upon trust for the purposes of the Arrangement until realisation thereof (if so provided) in accordance with the Arrangement.”

Paragraph 28(2) addresses assets in the possession of the supervisor and provides that:

“Property constituting an asset of the Arrangement in the possession, custody or control of the Supervisor shall be held by the Supervisor upon trust for the purposes of the Arrangement.”

The standard-form paragraph 28(3), headed ‘Trusts to survive termination of Arrangement’, is replaced with a new provision by modification 22 in the following terms:

“28(3) [Effect upon Trusts of termination of arrangement] Upon termination of the arrangement [within the meaning of paragraph 11] the trusts referred to in sub-paragraphs (1) and (2) shall cease save that assets already realised shall [after provision for supervisor’s fees and disbursements] be distributed to arrangement creditors.”

Paragraph 49 of the IVA is headed ‘Distribution by Dividend’. Subparagraph 49(1) provides that:

“At the time or times specified in the Proposal or, if none, whenever the Supervisor has sufficient funds in hand for the purpose, the Supervisor shall, subject to the retention of such sums as he considers necessary for payment of the expenses of the Arrangement, declare and distribute Dividends among the Creditors in respect of those of their claims which have been admitted.”

Subparagraph 49(2) provides that:

“In the calculation and distribution of a Dividend the Supervisor shall make provision:

(a)

for any Debts which are the subject of claims which have not yet been determined; and

(b)

for disputed claims.”

There are then consequential provisions in the following paragraphs. Paragraph 70 relates to breach by the debtor of the terms of the arrangement and, in paragraph 71, for the procedure following breach. Paragraph 72 deals with the retention of funds by the supervisor.

Those are the material provisions of the IVA Standard Conditions as modified.

Mr French makes the point that the IVA did not terminate in accordance with paragraph 11. There was no breach by the debtor. Rather the IVA ended with the issue of a completion certificate. Therefore paragraph 28(3), which applies only upon termination of the arrangement within the meaning of paragraph 11, is said to have absolutely no application in the present circumstances. Accordingly, Mr French submits, the position is that general principles apply. Unless otherwise expressly provided for under the terms of the IVA, the trusts under which both Mr Wright and the supervisor held the arrangement assets are said to have survived the completion of the IVA.

Reference is made to the Court of Appeal’s decision in the Gallagher case (previously cited) and, in particular, to the conclusions reached by the Court of Appeal as expressed by Lord Justice Peter Gibson at paragraph 54 of his judgment. Those conclusions were as follows:

“(1)

Where a CVA or IVA provides for moneys or other assets to be paid to or transferred or held for the benefit of CVA or IVA creditors, this will create a trust of those moneys or assets for those creditors.

(2) The effect of the liquidation of the company or the bankruptcy of the debtor on a trust created by the CVA or IVA will depend on the provisions of the CVA or IVA relating thereto.

(3) If the CVA or IVA provides what is to happen on liquidation or bankruptcy (or a failure of the CVA or IVA), effect must be given thereto.

(4) If the CVA or IVA does not so provide, the trust will continue notwithstanding the liquidation, bankruptcy or failure and must take effect according to its terms.

(5)

The CVA or IVA creditors can prove in the liquidation or bankruptcy for so much of their debt as remains after payment of what has been or will be recovered under the trust.”

Mr French submits that because (1) the trusts have not been brought to an end by the effect of paragraph 28 (as modified), and (2) there is no other provision as regards the termination of the trusts upon the expiration of the arrangement and the issue of a completion certificate, the trusts referred to in paragraphs 28(1) and 28(2) of the Standard Conditions apply. It is therefore said that Mr Wright, as the former supervisor of the IVA, holds the proceeds of the PPI mis-selling claims on trust for the purposes of the arrangement. Although the IVA provided for a minimum dividend of 32 pence in the pound, it is said that that does not mean that the creditors should not be entitled to more if the arrangement assets generate more than that minimum dividend.

It is said that the Deputy District Judge confused:

The Deputy District Judge had referred to paragraph 27(3) of the Standard Conditions (as modified) but that is said not to be concerned with Mr Wright’s obligations after the issue of a completion certificate. Paragraph 27(3) (as modified) applies only during the course of the IVA. That is said to follow from the phrase ‘until the issue of a completion certificate’.

Mr French submits that since paragraph 27(3) (as modified) only applies during the course of the IVA, it has no application after the issue of a completion certificate, and it has no relevance to what is to happen at that point in time. Mr French submits that, after the completion certificate was issued, Mr Wright was released from all the debts which were subject to his IVA, but that does not mean that the IVA ended for all purposes. He submits that, to the extent that there were uncollected assets that were arrangement assets within the IVA, and because of the continuing trusts, the supervisor remained obliged to collect them and distribute them in accordance with the terms of the IVA, as envisaged by paragraph 14(1) of the Standard Conditions.

It is said that the debts to the creditors that remained unsatisfied in full continued to exist for the purposes of the IVA. They were not extinguished even though Mr Wright was discharged from any liability for them. Such liability as had been owed to his creditors by Mr Wright was replaced by a right of such creditors to participate in the IVA.

It is said that the Deputy District Judge was wrong to conclude that the effect of the completion certificate was that there was nothing else for the supervisor to do, and that the supervisor no longer remained entitled, and obliged, under the terms of the continuing trust, to collect the proceeds of PPI mis-selling claims - which it is accepted were an arrangement asset - and to distribute those proceeds amongst the creditors bound by the IVA in accordance with its terms.

In summary, it is said that the PPI mis-selling claims against the two banks were arrangement assets, as were their proceeds; and that despite the issue of the completion certificate, the supervisor remained empowered to collect the proceeds of the claims, and to apply them in accordance with the IVA. It is said that paragraph 9(2) of the Standard Conditions had no effect on this because there was no termination of the trusts upon which the arrangement assets were held.

Paragraph 27(3), cited by the Deputy District Judge, had no effect upon this as that was a term which expressly applied on its face only in the event of the realisation of after-acquired assets during the course of the IVA. In any event, it only applied until the issue of a completion certificate.

For all of those reasons, it is said that the Deputy District Judge was wrong to decide the application in favour of the respondent to this appeal. Rather, he should have concluded that the supervisor was entitled to keep the PPI mis-selling proceeds and to apply them for the benefit of creditors in accordance with the terms of the IVA. On that basis, Mr French submits that the appeal should be allowed.

In the course of his oral submissions, Mr French identified five separate questions:

Mr French took me to the Guidance Note on Payment Protection Insurance Mis-Selling Claims issued jointly by, amongst others, the Association of Business Recovery Professionals on the 19^th April 2013. Paragraph 4.2 provides as follows:

“If at all possible IVAs should not be kept open beyond the planned duration. Where R3 or Protocol Standard Conditions apply the supervisor’s powers survive the concluding formalities of the IVA. [R3 Standard Conditions clause 14(1) and Protocol Standard Conditions 10(6)]. It follows that where the debtor has provided all the information necessary to pursue a PPI mis-selling claim, the office holder is satisfied that due provision has been made for his fees (see 4.4) and it has been agreed by both the debtor and the financial institution involved that any proceeds of a claim should be paid to the supervisor or the supervisor has secured payment in some other way (e.g. by taking an assignment of the claim), there is no need to delay issuing the Completion Certificate. Office holders are reminded that any funds received after the Completion Certificate has been issued should be held on a designated client account pending distribution, in accordance with the relevant RPB’s Client Money Regulations.”

Mr French acknowledges that paragraph 1.3 states that:

“This guidance does not constitute legal advice nor does it seek to instruct or direct IPs in the administration of their insolvency cases.”

Nevertheless, Mr French submits that it expresses and reflects the considered view of the relevant professional insolvency bodies.

Mr Tucker points out that paragraph 4.2 makes express reference to agreement ‘by both the debtor and the financial institution involved that any proceeds of a claim should be paid to the supervisor’. Mr Tucker also points out that an IVA is a statutory contract, and anything can be agreed between the parties thereto. Here, by contrast, the court is required to consider what the position should be where there has been no express agreement between the debtor and the financial institution involved.

Mr French concluded with the submission that the unmodified paragraph 28(3) would, if applicable, have cast no light on the matter because it is, in terms, confined to ‘termination’ and does not apply where the IVA has been completed rather than terminated for breach.

For the respondent, Mr Tucker submits that the question of who should have the funds can be arrived at shortly from considering the statutory contract reached between the parties. The answer is that, in the absence of any breach by the former debtor, and given the full and final nature of the IVA in this case, the issue of the certificate of completion released the respondent from his debts. There were therefore no creditors, and no party has any right to a dividend.

It is said that the facts of the instant case are very different to those of the Gallagher decision. That was one which involved a liquidation after a CVA rather than a completion certificate and the release of debts. Beyond the general principle that an IVA is a statutory contract, and that the answer lies in interpreting what the creditors have agreed, there is said to be relatively little of the ratio that applies to the instant case.

Mr Tucker accepts that there is no clause that expressly terminates the trusts created by the Standard Conditions; but he says that there is also no clause that expressly continues the trusts beyond the issue of the certificate of completion. Whether the trusts continue is therefore said to depend upon the other terms of the IVA.

Mr Tucker submits that the true situation is that the trusts created by the IVA were a purpose trust, the purpose of which was to distribute the funds due to be paid into the IVA to creditors (as defined). It is said that that purpose was completed when the respondent was released from his debts. There were no more debts, therefore there were no more creditors, and therefore the purpose was completed. Upon the issue of the completion certificate, the respondent was released from all his debts; and, as a result of that release, it is the former debtor who becomes entitled to any further funds.

The right for any creditor to the funds depends upon the creditor’s right to participate in a dividend because there is no other mechanism under which the funds are to be distributed. The right to a dividend is dependent upon one’s standing as a creditor; but here, upon the issue of the certificate of completion, all the debts have been released. Put simply, according to Mr Tucker, there are no debts, there are no creditors, and there can therefore be no dividend.

It is said that the modified paragraph 27(3) supports that conclusion. There are said to be no obligations on the respondent after the issue of the completion certificate. It is said that the submission that the supervisor remains obliged to distribute the funds does not withstand analysis. In the first instance it is said to be circular, relying on the continued existence of the trusts as evidence that the trusts continue to exist. Secondly, it is said to depend upon there being a debt without there being a debtor. In the third instance it is said to rely upon re-writing what is meant by ‘Creditor’, and who has a right to participate in a dividend.

As the Deputy District Judge put it at paragraph 5 of the judgment:

“The arrangement is concluded, there is no trust, there are no beneficiaries, and those funds do not afford [sic: fall] to be distributed to the Creditors because the arrangement has been concluded.”

It is said that the Deputy District Judge’s judgment is correct. The supervisor should have paid the money over to the respondent upon its receipt and there was, and is, no other course of action open to him.

In the course of his oral submissions, Mr Tucker submitted that neither paragraph 28(3) (as modified) nor the decision in Gallagher applies. Mr Tucker referred to the definition of ‘Creditor’ in paragraph 1(f). He submitted that there are no longer any creditors, and therefore no longer any dividend that can now be declared or paid.

Mr Tucker accepted that, if a dividend had been declared prior to the issue of the completion certificate, then it could have been paid. That payment would have been effected as part of the former supervisor’s powers and functions which were continued by paragraph 14(1). But once the debtor had been released from his debts, there were no creditors remaining in whose favour a further declaration of dividend could be made.

In his brief reply, Mr French reminded me of the definition of ‘Debtor’ in Section 382 (1) (a) of the Insolvency Act 1986. He emphasised that the status of a creditor is determined at the commencement of the IVA, and one does not stop being a creditor thereafter. He also took me to paragraphs 47 to 51 of Lord Justice Peter Gibson’s judgment in Gallagher for the policy considerations underlying the judgment. Those were the submissions.

I derive no assistance, in the context of the present case, from the Court of Appeal’s decision in Gallagher. The Gallagher case concerned a voluntary arrangement for the benefit of the arrangement creditors, where the debtor subsequently went into liquidation, and the issue was whether, in those circumstances, the trusts created by the arrangement automatically terminated. The Court of Appeal was considering the position on failure of the arrangement, and not upon its completion.

The Court of Appeal’s discussion of the relevant policy considerations was directed to a situation where the debtor was in breach of its obligations under the statutory contract, constituted, in that case, by the CVA. In my judgment, one derives no assistance from the Gallagher decision in a case, such as the present, where the IVA has been brought to a successful conclusion, and where there has been no breach by the debtor of his obligations thereunder.

In my judgment, the order in which Mr French posed his five questions is not the correct order. One cannot begin to answer question 2 (‘What happens at the end of the IVA?’) without having first supplied an answer to question 3 (‘What is the effect of the completion certificate?’). Only then can one then go on to consider question 4 (‘What are the supervisor’s powers after completion of the IVA?’).

In my judgment, the resolution of the question which fell for determination by the Deputy District Judge, and which now falls to me to determine on this appeal, turns upon the true meaning, effect and extent of paragraph 9(2) of the Standard Conditions. What does it mean when the paragraph states that ‘the Debtor shall be released from all Debts which are subject to the Arrangement’?

Mr French attaches a limited meaning and effect to that provision with which I cannot agree. It seems to me that the provision means what Mr Tucker submits that it means: that the debtor is released from all debts which are subject to the arrangement. That, in my judgment, can only mean that the creditors are no long to be treated as creditors for the purposes of the arrangement. They are no longer persons in whose favour a dividend can be declared, pursuant to the powers conferred by paragraph 49(1).

I fully accept that, if a dividend has been declared, but not paid, then the continuation of the supervisor’s powers, duties, obligations, responsibilities and functions effected by 14(1) would enable him to make payment of that declared dividend. However once the arrangement has been satisfactorily concluded by the issue by the supervisor of a completion certificate, the debtor, it seems to me, is released from all debts subject to the arrangement. In my judgment, that release applies for all purposes of the arrangement and brings an end to the trusts affecting the arrangement assets.

If the debtor and the supervisor wish to make specific provision for the supervisor’s powers to continue after the conclusion of the IVA in relation to possible PPI mis-selling claims, then the remedy is for the supervisor to insist upon a special agreement with the debtor to the effect that any moneys received from such a mis-selling claim shall be paid to the supervisor, and distributed to the creditors, notwithstanding the conclusion of the IVA. If the debtor is not prepared to agree to such a modification of the terms of the IVA, then the supervisor has it within his power simply to withhold the issue of a certificate of completion. In my judgment, there is no practical difficulty in keeping the IVA within its planned duration in that way.

For those reasons, in my judgment the Deputy District Judge came to the correct conclusion. I fully accept that paragraph 27(3) (as modified) has no direct application after the conclusion of the IVA. But I accept Mr Tucker’s submission that it does point in the right direction. It is implicit, as it seems to me, in condition 27(3) (as modified) that there are no obligations on the debtor after the issue of the completion certificate; but my judgment does not depend upon that point.

My judgment is firmly rooted upon my interpretation of the effect of paragraph 9(2) of the Standard Conditions, which, in my judgment, has operated to release the debtor from all debts which are subject to the arrangement, and means that there are no longer any beneficiaries of any trust created by the arrangement. In short, completion of the arrangement means what it says: that the arrangement has come to an end. For those reasons, insofar as is necessary, I extend time for appealing, and I give permission to appeal, but the appeal is dismissed.