Brake & Ors v Swift & Anor

The background to this matter is complex, and is dealt with in a number of earlier judgments, of both Mr John Jarvis QC, sitting as a deputy judge, and myself. Some of these are available on BAILII under neutral citation numbers [2019] EWHC 3332 (Ch), [2020] EWHC 537 (Ch), [2020] EWHC 694 (Ch), and [2020] EWHC 1071 (Ch). In the hope of making this judgment more intelligible for those who have not time to look at those decisions, I will simply say this (although it is by no means a substitute for the full procedural history). The Brakes became bankrupt following the breakup of a partnership with a third party. The first respondent (Mr Swift) was their trustee in bankruptcy. The partnership itself went into liquidation. There were disputes about many aspects of the bankruptcies and the liquidation. In 2019 Mr Swift had entered into a transaction with the liquidators in relation to a property called West Axnoller Cottage (“the cottage”). The second respondent (“Chedington”) entered into back to back transactions with Mr Swift in order to acquire the cottage and a strip of land adjacent. Chedington is an investment vehicle for a Dr Geoffrey Guy, and he is the moving spirit behind that company.

The Brakes allege that Chedington and Mr Swift acted collusively, implementing “unlawful arrangements to create the false appearance that Chedington had acquired title to the cottage” (as Mr Christian Smith, their solicitor, puts it at paragraph 4 of his sixth witness statement; he refers to the allegations of such collusive conduct as “the Unlawful Conduct”). Chedington subsequently took possession of the cottage, the Brakes say unlawfully. As well as eviction proceedings against Chedington, on 12 February 2019 the Brakes commenced insolvency proceedings (the “Liquidation Application” and the “Bankruptcy Application”) against both the liquidators and the trustee.

The first purpose of these proceedings was to unwind the disputed transactions (based on the allegations of “the Unlawful Conduct”; Mr Smith calls this unwinding

In paragraph 24 of that judgment I said:

I then considered the decision of Hunt v Conwy County Borough Council [2015] EWHC 3072 (Ch), which had not previously been cited to me. That was a case where the applicant sought to remove the respondent as a party to a dispute about a pier which, before the applicant’s bankruptcy, had belonged to him, and which had since been purportedly disclaimed by his trustee in bankruptcy, escheated to the Crown, and regranted ultimately to the respondent local authority. The underlying proceeding was one for a revesting order, not under section 283A, but under section 320, on the basis that the disclaimer had been invalid. Morgan J dismissed the application to remove the local authority. I said of the decision:

I therefore decided as follows:

Whether the second respondent has a good claim to any rights in the cottage and the strip that the first respondent might have is a matter between the first and second respondents (and possibly the bankruptcy creditors), but it does not concern the applicants. Their concern is with the claim to revesting under section 283A. On the other hand, the second respondent is directly affected by the litigation between the applicants and the first respondent, because the second respondent claims under the first respondent. If the first respondent has no rights (because they have been allocated to the applicants by operation of bankruptcy rules) then the second respondent obviously gets nothing. It is in this respect exactly like the Hunt case, where the local authority claimed (indirectly) under the trustee in bankruptcy who had disclaimed the fee simple estate, so that it escheated to the Crown. As I have said, Morgan J said, in circumstances where the trustee in bankruptcy had been released and had no further interest in dealing with the claim, that the local authority was the obvious respondent.

In my judgment, that is sufficient to resolve this application. The second respondent was joined because it would be directly affected by the result of the litigation between the applicants and the first respondent, and it is necessary or at least desirable that the second respondent be joined in order that it is bound by the result, thus avoiding a multiplicity of litigation. In my judgment the second respondent is not obliged to go on and prove the validity of transactions between the first respondent and itself. That is not an issue in the section 283A claim. It was an issue in other parts of the Bankruptcy Application put forward by the applicants, but they were struck out for lack of standing. It would be an issue between the first and second respondents, if the first respondent chose to make it so, or perhaps between the bankruptcy creditors and the respondents, but they have not chosen so to argue.”

I then went on to refuse the application also on a different ground, concerned with abuse of process. Subsequently, Mr Davies QC formulated and submitted to me written grounds of appeal against my decision, and advanced them at the hearing on 7 May 2020. After hearing both him and Mr Sutcliffe QC, I refused his application for permission to appeal on the basis that most of the grounds put forward had no ‘real prospect of success’, and, although two points of law that he raised (including the significance of Hunt v Conwy County Borough Council) could properly be said to have such a prospect, I considered that it would be better if the Court of Appeal itself decided whether it wished to hear the appeal in relation to them.

I deal first with the application for recusal. This is put expressly on the grounds of apparent, rather than actual, bias. The application is supported by the sixth witness statement of the Brakes’ solicitor Christian Smith, dated 4 May 2020. I also received and read helpful skeleton arguments from Mr Davies QC and Mr Sutcliffe QC. So far as concerns the law relating to recusal on the basis of apparent bias, both sides were content to refer to the summary of the law in one of my own judgments, Kimyani v Sandhu [2017] EWHC 151 (Ch), though other cases were also referred to. Kimyani v Sandhu was a case in which a litigant in person applied by notice for me to recuse myself from the hearing of that case on the grounds of “bias and unfair proceedings”.

In that case I said:

But the second rule goes wider. It extends beyond cases where the judge has a personal interest to cases of bias. As the Court of Appeal once put it,

As to the law in relation to recusal by judges for bias, the claimants cited Howell v Lees-Millais [2007] EWCA Civ 720 (referring to Porter v Magill [2002] 2 AC 357, Lawal v Northern Spirit [2003] ICR 856, HL, and AWG Group v Morison [2006] 1 WLR 1163, CA). The general principle is not in any doubt. In Porter v Magill [2002] 2 AC 357, the House of Lords endorsed the approach taken by Lord Phillips MR in Re Medicaments and Related Classes of Goods (No 2) [2001] ICR 564, as follows:

In her skeleton argument, the defendant cited only Porter v Magill. That is a case about apparent bias. But she is not a lawyer, and although in section 3 of the application notice she seeks my recusal expressly on the grounds of ‘real danger of bias’ (see also the evidence at section 10 of the notice), it does appear that she is also making allegations against me of actual bias. I will consider this in more detail shortly.

So far as concerns the ‘informed and fair-minded observer’, in Harb v HRH Prince Abdul Aziz bin Fahd bin Abdul Aziz [2016] EWCA Civ 556, the Court of Appeal said:

So the hypothetical informed and fair-minded observer knows all the relevant facts, whether publicly available or not, and has a perception of the case which is not that of the litigant, but is instead more objective and dispassionate. That is the standard to be applied.

But the court must apply these rules not only for the protection of the litigant against whom bias or apparent bias may operate, but also for the benefit of the other litigants involved, and indeed the wider public. This is because in our system litigants are not permitted to choose their judges. As Chadwick LJ once said:

Mr Davies QC also referred me to Locabail (UK) Ltd v Bayfield Properties Ltd [2000] QB 451, where the Court of Appeal (Lord Bingham CJ, Lord Woolf MR and Sir Richard Scott V-C) said:

Immediately following that passage, the Court of Appeal went on to say:

Mr Davies QC also referred to AWG Group Group Ltd v Morrison [2006] 1 WLR 1163, where the judge shortly before trial disclosed a 30 year friendship with a prospective witness, and stated that he would have difficulty in trying the case if an attack was to be made upon his veracity. The party calling him proposed to substitute another witness in order to meet the difficulty. The judge then went on to decide not to recuse himself, taking into account (as the judge put it),

Mummery LJ (with whom Latham and Carnwath LJJ agreed) said:

In the present case, a central factual plank of the application that I recuse myself for apparent bias is that Dr Geoffrey Guy (whose investment vehicle is the second respondent) and I were at school together, and in the same form, in the late 1960s and early 1970s. When I first became (briefly) involved in these proceedings in July 2019, I read some of the documents in the case, noted the name and background of Dr Guy, and caused enquiries to be made to see whether it was the same Geoffrey Guy that I had known more than 45 years ago. This was confirmed. I therefore sent an email via my clerk on 31 July 2019 to the parties disclosing what I had just learned.

The relevant passage from the email is as follows:

I went on to state the test for recusal, and my provisional conclusion, as follows:

Following that email, both sides confirmed that they had no objection to my dealing with the case. It is right to say that it was not known at that time who would ultimately be trying these proceedings. But I am the Chancery specialist circuit judge sitting in Bristol, and so long as the proceedings were tried in Bristol there was obviously a possibility that it would be me. No-one at any time suggested I should not do so. At the time, Mr John Jarvis QC had dealt with other aspects of these proceedings as a deputy judge, and he dealt with further aspects thereafter (in September, October, November and December 2019). As it happens, having reached the statutory retirement age, he was not able to deal with the trial that he later listed for May 2020, and it was listed before me.

I should say that I understand that Mr Jarvis QC, when dealing with the listing in December 2019, referred to the fact that he would be retiring and that the trial would be listed before me, and as I understand it no objection was taken then or thereafter on the part of the Brakes, until this application was issued on 4 May 2020. Lastly on this point, at the start of the hearing on 2 March 2020, I expressly referred once more to

In his sixth witness statement Mr Smith sets out the primary complaint which forms the basis of the application for recusal as follows:

The “five separate judgments or rulings” referred to by Mr Smith appeared to be the following:

Extempore judgment of 2 March 2020, on Chedington’s application to strike out most of the Bankruptcy Application for lack of standing;

Extempore judgment of 3 March 2020, on Chedington’s application to strike out most of the Liquidation Application for lack of standing, and on the Brakes’ application to strike out an application concerning the cottage brought by the Trustee;

Written judgment of 23 March 2020, on the Brakes’ application for a stay of the Bankruptcy Application;

Written ruling of 6 April 2020, on the Brakes’ application for permission to appeal against my order of 23 March 2020.

Written judgment of 4 May 2020, on Chedington’s application for a negative declaration.

The first point to make about this complaint is that in none of the five applications which gave rise to the judgments or rulings concerned was it necessary for me to consider or examine, much less decide, whether there was anything in the allegations of Unlawful Conduct made by the Brakes against the Trustee and Chedington. Those allegations had been made, were in the pleadings, and underlay the insolvency proceedings concerned. The applications giving rise to numbers 1, 2 (part) and 5 above concerned the question of standing, and not the nature or quality of the allegations made. The application giving rise to another part of number 2 above concerned want of prosecution in relation to an application brought by the Trustee. The application giving rise to number 3 above was for a stay on the grounds that Chedington had no legitimate interest in the remaining part of the Bankruptcy Application, that is, the Vesting Issue (section 283A). I dealt with this on procedural grounds, without needing to deal with any of the substance. The application giving rise to number 4 above was for permission to appeal, and I dealt with this by considering whether there was any real prospect of success on the grounds of appeal advanced. Since in my judgment of 23 March 2020, in relation to which permission to appeal was sought, I had not dealt with any of the substantive points arising in the allegations of Unlawful Conduct, it follows that I did not need to deal with those allegations in deciding whether to give permission to appeal.

The second point to make about this complaint is that, in some of the judgments concerned, I did, in fact, refer to the allegations referred to as the Unlawful Conduct. These references are: in judgment 1 at [16], in judgment 2 at [2] of the ruling striking out the Cottage Application, and at [2] of the costs ruling on that application, in ruling 4 at [2] (in the grounds), and in judgment 5 at [2] (although obliquely). This shows that I have been acutely aware of the serious nature of the allegations made against Chedington and its moving spirit Dr Guy from the outset. But as I have said, for the purposes of the applications the subject of these judgments and rulings, it was not necessary to for me to deal with them in any detail. Indeed, since these did not arise, it would have been inappropriate to do so. In my judgment, a failure on my part to deal with these allegations in the judgments and rulings could not lead a fair-minded and informed observer to conclude that there was a real danger that I was biased.

A further complaint made by Mr Smith is that in my judgment of 4 May 2020 I did not address what he calls (at [46.2] of his sixth witness statement) the Brakes’ “principal submissions”. He summarises them at paragraph 36 of that witness statement as follows:

The No Appeal Point – the judge has not identified the jurisdiction he was exercising in the absence of an appeal against the earlier decisions that the question of Chedington status should be tried on the pleadings.

The No Dispute Point – the judge has not addressed the fact that there is no longer any dispute between the persons whom he found in paragraph 24 to be the true parties to the Vesting Issue (in respect of which Chedington was to play a passive role under a Type 1 joinder).

The Inconsistency Point – the judge has not considered Chedington’s conduct in avoiding determination of the question whether it has any interest in the Cottage Eviction Proceedings by successfully persuading that court that the nature and extent of its interest was to be determined in the Bankruptcy Application.

The Timing Point – the judge has not addressed the submission that Chedington should have taken the point when it was fully debated and decided at the CMC on 12 December 2019.

The Purpose Point – the judge has not considered the lengths to which Chedington has gone to avoid the court looking at the merits of its claim to have acquired an interest in the Cottage.

The No Strike out Point – although it is not clear, the judge appears to have proceeded in paragraphs 34 and 35 of the judgment of 4 May on the basis that the Applicants’ pleaded case that Chedington has no legitimate interest is struck out without referring to the No Strike out Point.

The If Not Now, When? Point – the judge has overlooked the

The Unviable Declaration Point – the judge has not explained the basis upon which any court could make the declaration sought, namely, that a court would try a case at the instigation of a person who has no legitimate interest in the outcome.

The Counter-Factual Point – the judge has failed to address the fundamental change of circumstances since 10 May 2019 or the submission that Chedington would not have been joined under CPR 19.2 if there was no dispute inside the bankruptcy and if Chedington had submitted that it had no legitimate interest in the outcome.”

Mr Smith’s fifth witness statement was made on 20 April 2020

Given the absence of any such list in the Brakes’ preparatory materials for the hearing of 1 May 2020, it is unfortunate that there are no references given, either in the sixth witness statement of Mr Smith of 4 May 2020, or in the skeleton argument of Mr Davies QC of 5 May 2020, as to where, in the transcript of the hearing on 1 May, these individual submissions are to be found. I do not recall this list of issues being raised at the hearing, and, having looked again at that transcript, I have not been able to find any such list, though of course I accept that my memory may be at fault, or I may have missed something in going through it. What I dealt with in my judgment were what I considered to be the principal submissions made to me at the hearing, taking into account the preparatory materials, and based on my notes of the hearing: see at [15]-[18] of my judgment of 4 May 2020. Nowhere at the hearing was I told that there were nine “principal submissions”, or anything like that. I did deal with the

In my judgment, it is not necessary for me to deal now in detail with these “principal submissions”. The fair-minded and informed observer, having read the preparatory materials and listened to the arguments, or read the transcript, would not have been aware that the Brakes were advancing these nine “principal submissions” at the hearing of 1 May. But even if that observer had so thought, or at any rate had thought that the Brakes were advancing some of those submissions, that observer would know that a judge’s reasons for decision must be read on the assumption that the judge knew how to perform the judicial functions and the matters which had to be taken into account: Piglowska v Piglowska [1999] 1 WLR 1360, 1372.

Secondly, he or she would know that, although judges must take into consideration all the evidence presented and weigh all the arguments made, they are not obliged to deal in their judgments with every single point that is argued: Weymont v Place [2015] EWCA Civ 289, [6]; Simetra Global Assets Ltd v Ikon Finance Ltd [2019] 4 WLR 112, [46]. Moreover, I dealt with the preparation of the judgment at some speed. As it happened, I was unable to do more than begin the judgment that afternoon because of other urgent matters. But I continued it that evening, and finished it just before lunch on the next day (Saturday), sending it out in draft to the parties in the early afternoon. Bearing in mind the limited time that I had to prepare the judgment, such an observer would not think that any failure of mine to deal with the “principal submissions” as such could lead him or her to conclude that there was a real danger that I was biased.

A further argument made in support of the application for recusal, made both in Mr Smith’s evidence and in Mr Davies QC’s skeleton argument, is that in my judgment I relied “conclusively” upon arguments that were not advanced or argued at the hearing. As Mr Davies QC puts it at [27.3], it is said that I relied on

It is however not correct to say that these are new concepts. CPR rule 19.2 provides:

it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or

there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue.”

Nor is it correct to argue that I relied on these concepts in order to avoid “having to try the question whether Dr Guy was guilty of Unlawful Conduct”. This is an underlying argument in Mr Davies QC’s skeleton argument, though so far as I can see it does not find any place in Mr Smith’s witness statement. It is based on the fact that, as discussed earlier in this judgment, and as disclosed in July 2019, I went to school with Dr Guy in the late 1960s, although I have had no contact with him since the early 1970s. Mr Davies QC put it this way in his skeleton argument:

I record, simply in order to avoid its being said I have not done so, that the suggestion that I would somehow prefer to make a wrong decision in order to avoid presiding over the cross-examination of someone I last saw in the early 1970s at school, when we were both schoolboys, and whom I have not seen since, is not only untrue, but frankly ridiculous. I have no idea what sort of man Dr Guy has turned out to be. I do not even know what he looks like now. Since the Brakes do not suggest that I was actuated by actual bias, I therefore understand the argument to be that in these circumstances the fair-minded and informed observer would nevertheless conclude that, objectively viewed, in the circumstances there was a real danger of bias. As I said in Kimyani,

In any event, even if I were wrong about that, to the extent that such an observer would conclude that there was a real possibility of bias because of my school friendship with Dr Guy more than 45 years before, this was disclosed and no objection was taken, both initially and then even once it was clear that I was to try the Bankruptcy Application. Accordingly, the Brakes have waived this objection.

In the Brakes’ skeleton argument, at [25], it is said of the Chedington application of 9 April that “it was completely unforeseeable”, and that the informed and fair-minded “Observer would be … entitled to expect its summary dismissal”. Mr Davies QC supports this argument with the following observations:

There had been no appeal against the earlier decisions that the issue should be tried.

The issue was fully pleaded and no application to strike out had been attempted.

There had been no material change of circumstances since 23 March 2020 when the question had been determined decisively.

The need for a trial of Chedington’s status was particularly acute because there was otherwise no dispute between the proper parties (i.e. within the bankruptcy).

Even without the procedural history and assuming all other considerations in Chedington’s favour, it could cite no authority, textbook or other learning in support of the proposition that a party could insist on a full trial of an issue without having a legitimate interest in its determination.”

It is also supported by attacks made on other aspects of the legal reasoning of the judgment of 4 May 2020. For example, in his skeleton argument at [27.3] Mr Davies QC attacks “the creation of new concepts of Type I and Type II joinders” (which I have explained above). He also attacks my reliance on Hunt v Conwy CBC (at [19]) as legally wrong, on the basis that that decision is “incapable of supporting” my view. And he stigmatises my judgment by saying (at [27]) that the informed and fairminded “Observer would also be shocked. It represents a sea change from all that has gone before.” Here in the context Mr Davies QC is saying that I have departed from long-standing insolvency law.

It seems to me, with great respect to Mr Davies QC, that this line of argument is elevating the “informed and fair-minded observer” from an intelligent layman to an appellate judge. I am not aware of any authority holding that such an observer is entitled, much less obliged, to take positions on the correctness of the legal judgments made by the judge. My understanding of the position on a recusal application is that it was the judge’s behaviour and his or her relationship with the parties and witnesses which was in issue, rather than whether the judge had got the law right. In my judgment, these arguments from Mr Davies QC are irrelevant to the issue of recusal.

However, I will make this comment. Mr Davies QC refers (at [26.3]) to the question whether Chedington would have to prove its title or not as having been “determined decisively” by me on 23 March. This is not so. In that judgment I was dealing with the Brakes’ application by notice of 13 March for a stay or adjournment of the trial. It is correct that one of the arguments made by the Brakes in support of this application was that Chedington had no valid title to the cottage or the strip, and therefore had no standing to oppose the revesting application. In my judgment I said that I was not prepared to deal with that issue on the papers (as the Brakes wished) on the way to deciding whether or not to stay the trial, because it had to be dealt with more fully than that. At that time, of course, I simply assumed that it was going to be dealt with at the trial. My order therefore dismissed the Brakes’ application for a stay.

I therefore did not determine (decisively or otherwise) how the question of Chedington’s standing should be dealt with. I simply said the question could not be dealt with in this way. As is well known, appeals are against orders, not reasons for orders: Marino v Secretary of State for Work and Pensions [2007] 1 WLR 3033, [6], per Maurice Kay LJ. Chedington having opposed the Brakes’ application could not therefore have appealed my order dismissing it. Whether it could have appealed the original listing direction by Mr Jarvis QC, and if so why it did not, I do not know. Perhaps it thought that it would not have to prove its title at the trial and it was only my judgment of 23 March that alerted it to the point. Since it is my conduct in question on this application, however, that does not matter.

A further complaint is advanced by Mr Smith at [46.4] in the following terms:

There is nothing in this point. To deal first with the point made by Mr Smith, I did not decline to grant the declaration because the parties were too close to trial. I said:

In his skeleton argument, Mr Davies QC also said this:

I am afraid that I do not recall having so indicated at the PTR, and certainly never intended to do so. Mr Davies QC does not cite any part of the transcript in support of his submission. What I did say at the PTR (at page 35) was:

That statement in my judgment is predicated on my having previously assumed that Chedington was going to prove its title at the trial. It was only in the light of the argument on 1 May 2020 that I was persuaded that that assumption was wrong. No informed and fair-minded observer, knowing of all these circumstances, would conclude that at the PTR I was indicating “a preliminary view in favour of having a trial without establishing Chedington’s right to oppose it,” and that therefore there was a real possibility of bias.

At paragraph 48 of his witness statement Mr Smith refers to what he calls my

I will deal with Mr Davies QC’s examples of criticism in a moment. But I assume first of all that Mr Smith’s reference to “relatively minor procedural matters” does not include the criticism I made in my judgment of 23 March, where I said:

That was a significant procedural criticism, rather than a minor one, and I consider it entirely justified. It is in the nature of judicial management of litigation that criticism of the parties’ behaviour on procedural issues is sometimes made. In the present case, I have criticised both sides and not (as the Brakes appear to suggest) only one. For example, in my ruling of 18 March 2020 on the form of order following the hearings on 2 and 3 March 2020, I said:

In eleven sub-paragraphs of paragraph 29, Mr Davies QC gives examples of criticisms that he says I have made of the Brakes. In paragraph 29.1 of his skeleton argument, Mr Davies QC refers to paragraph 21 of my reasons for refusing permission to appeal dated 6 April 2020. In that paragraph I referred to court time taken up in historic proceedings between the Brakes and their former partner (which ultimately led to the Brakes’ bankruptcies). Mr Davies QC says:

That is not what I intended, and is not a fair inference. In the previous paragraph of my reasons I had said:

All this, however, was merely a prelude to the criticism which I then did go on to make of Mr Davies QC that

This criticism appears to be the one referred to at paragraph 29.8 of the skeleton. In my view, it was perfectly justified. I note that Mr Davies QC in paragraph 29.8 does not in fact refer to the actual criticism I made (of overlong written submissions), but instead refers to the fact that I said that the judgment contained “typical case management conditions which will not be lightly overturned by an appellate court”. But this is a statement which represents my understanding of the current law, and cannot justify an informed and fair-minded observer in concluding that there was a real possibility of bias.

In paragraph 29.4 of his skeleton, Mr Davies QC says that

So far as I can see, it is only in paragraph 4 that this matter is mentioned at all. What I said was:

In paragraph 29.10 of his skeleton, Mr Davies QC complains of my conclusion that there was no real prospect of success on ground 3 of the grounds of appeal. That is not a criticism of the Brakes (or indeed of their legal team). It is simply an adjudication on the legal merits of the point made.

I have already dealt above with the points made by Mr Davies QC in paragraph 29.11

In paragraph 49 of his witness statement, Mr Smith refers to the fair-minded and informed observer as considering that there was

In my judgment, there is nothing in either point. First, it is not a question of urgency. The trial was fixed last December by Mr Jarvis QC. Since then I have struck out some of the matters which were to have been tried at the trial. But the section 283A issue, which always was intended to be tried at that time, remains and can still be tried at that time. It does not show bias simply to try a case when it was intended to be tried. Secondly, I am not obliging the Brakes to have a trial at all. It was the Brakes that issued the claim, including the section 283A issue, they consented to the joinder of Chedington, and it was after their input into the directions hearing before Mr Jarvis QC that the trial was fixed for matters including that issue. As late as the hearing on 3 March, following my decision on strike out, it was clear that the Brakes realised that there would be a trial of the section 283A issue in May. However, if they do not wish to have a trial of it now, they can of course discontinue. The informed and fairminded observer would not conclude from this that there was any real possibility of bias.

Finally on the question of recusal, in paragraph 8 of his skeleton argument Mr Davies

At the hearing Mr Davies went on to say that at the PTR

A point which Mr Davies QC made something of at the hearing was that at the directions hearing in December 2019 Mr Jarvis QC gave permission to Chedington to amend its defence to the Bankruptcy Application subject to reservations

Of course, this was said before the strike-out applications were made in January. Plainly, the judge was anxious not to be taken to have decided the question whether Chedington had standing to oppose the Bankruptcy Application and the Liquidation Application. But equally the judge was saying nothing that made permission to amend conditional on the issue of standing being dealt with at trial. It was simply something that he was not deciding at that stage. As it happens, the matter was raised and decided on the application of 9 April 2020 before me, that is, by my judgment of 4 May 2020.

Mr Davies QC also complained, in this part of his argument (rather than in the application for a stay or adjournment), that on 6 May Chedington had added some 2670 further pages for the proposed File E for the trial bundle. He posed the rhetorical question whether these further pages were needed for the resolution of the section 283A dispute, and answered his own question “Of course they’re not” (transcript page 23).

Mr Sutcliffe QC responded on this point that File E consisted of four volumes, covering different time periods. He said the cross-examination of the Brakes’ witnesses would be likely to focus on the second volume, covering the period October 2014 to September 2015. He also said that “the vast majority of the documents in the third and fourth volumes have been included at the Brakes’ request on the basis that Chedington’s standing was an issue to be tried” (transcript page 51). Moreover “the majority of the documents in the fourth volume are vast numbers of transcripts before other judges in the litigation between the parties” (transcript page 52). He said that had the Brakes not insisted on the inclusion of documents which they said were relevant to Chedington’s standing, File E would have been about half its current size.

I am in no position to resolve this dispute conclusively, but I note that in his reply Mr Davies QC did not seek to controvert anything which Mr Sutcliffe QC had said about the contents of File E. Having been a litigation solicitor in practice myself over many years, and having been involved in large-scale litigation as large as – or even larger than – the present, I have to say that I am not very much impressed by Mr Davies’ complaint on this point. The business of putting together the trial bundle in a large case is nearly always difficult, even when the parties are co-operating closely. I certainly do not consider that this is something of any substance for the recusal application.

I turn now to the application for a stay or an adjournment. The relief sought in the application notice of 4 May 2020 is identical to that in the notice previously issued by the Brakes on 13 March 2020 and dismissed by me on 23 March 2020. It seeks:

In addition to the application for a stay or adjournment dismissed by me on 23 March, a further application for a stay (pending the making of an application to the Court of Appeal of an application for permission to appeal my order of 23 March) was dismissed by me on 6 April 2020. On that occasion, after referring to the CPR and relevant authorities, I said:

So this application is the third such application in less than two months. It is therefore incumbent on the Brakes to show why the court should revisit the question now. The application is supported by the seventh witness statement of the Brakes’ solicitor Christian Smith, also dated 4 May 2020. In it, he says

As I have pointed out earlier in this judgment, my decision on 23 March 2020 was merely that the court could not deal on paper with the question of Chedington’s standing to oppose the section 283A issue, but that it needed to be dealt with more fully, and at that time I assumed that this would take place at the trial. So my decision (as reflected in my order) was simply to dismiss the Brakes’ application by notice dated 13 March 2020 to stay or adjourn the trial on the grounds that Chedington had no standing to oppose it. I made no substantive decision as to what issues were for trial in May. All I had done up until that point was to strike issues out from the original insolvency proceedings, leaving the section 283A issue to be determined at trial. It then became apparent to the parties that they were proceeding on different assumptions as to whether or not Chedington had to demonstrate standing in order to take part in the trial in May. Plainly the matter had to be resolved as soon as possible. On 9 April 2020 Chedington issued its application for a declaration about its standing. The application was before me at the PTR on 24 April 2020, but I considered that it could not be dealt with on that occasion, and so adjourned consideration of it to 1 May 2020, handing down my formal judgment on 4 May 2020.

In my judgment, my judgment of 4 May 2020 does not represent a change in circumstances. It represents a considered decision on a point which divided the parties, and needed to be resolved before the trial. Although I had made the assumption in my judgment of 23 March 2020 that Chedington would have to demonstrate its standing at the trial, that was no part of my actual decision and formed no part of my order.

Even if I were wrong, and I had decided substantively on 23 March 2020 that Chedington would have to prove its standing at trial, this would not be sufficient change in circumstances to justify revisiting the question whether there should be a stay or adjournment of the trial. This is because the effect of my decision of 4 May

Mr Smith says in paragraph 9 of his witness statement that the application of 9 April 2020 “has caused very considerable disruption to trial preparation” and that it will be necessary for the Brakes “to go through their filed evidence with a view to excising large parts of it”. I accept that some disruption will have been caused by this application. You cannot make an omelette without breaking eggs. But I do not accept that it means that this trial has to be adjourned. There will have been some diversion of resources to dealing with the application itself. But the consequence of the judgment of 4 May 2020 is, as I have said, to narrow the trial rather than broaden it. So far as concerns the need to go through filed evidence with a view to excising parts of it is concerned, I accept that this is an exercise which would have had to be done. But in fact it has now been done. It was done in fact during the remainder of the hearing before me in the afternoon of 7 May 2020, and Chedington has taken upon itself the responsibility to produce redacted versions. All that the Brakes will need to do is to check the result, to see that it conforms to what I directed during the hearing. So that is no longer an issue.

In paragraph 10 of his witness statement, Mr Smith says that Chedington has an unusually large team of lawyers working on its litigation, whereas the Brakes legal team is considerably smaller. I am afraid that, in itself, this cuts no ice. There are many ‘niche’ or ‘boutique’ litigation law firms that regularly take on ‘Magic Circle’ or other big City law firms in large-scale litigation, requiring significant resources to be deployed at short notice. But it goes with the territory. In paragraph 11 Mr Smith in effect says that to continue with the trial as listed would be to punish the Brakes for having failed to anticipate the reversal of paragraph 38 of the 23 March judgment. I cannot accept this. First of all, paragraph 38 of the judgment is not the order that was made. What I said in paragraph 38 was based on my assumption at the time, and not on any substantive decision I had made. So in my judgment of 4 May 2020 I have not ‘reversed’ paragraph 38. On the contrary, I have for the first time answered the question put to me, which is, does Chedington need to prove its standing at or before the trial? Moreover, to characterise going on with the trial as already listed as “punishing” a party is to use over-extravagant language.

It is necessary to keep in mind that the trial which will now take place covers a narrow compass and is listed for two days of evidence (for which a timetable has been set) before the weekend and one day of submissions after it. It will deal with the three sub-issues of the section 283A issue, as agreed by the parties after the hearing on 3 March 2020, that is, (i) a legal issue as to whether a proprietary estoppel claim as yet unvindicated and not declared by the court to exist could be an interest in land for the purposes of section 283A, (ii) a factual point as to whether the cottage was the applicants’ principal or sole residence on 12 May 2015 (the date of their bankruptcies), and (iii) a question of mixed law and fact as to whether the ransom strip could be a dwelling-house for the purposes of the section. This is not a lengthy or complicated trial. I accept that there is other litigation pending between the parties, but this is all that is being tried now. I accept also that this trial will have to take place remotely, by videoconferencing, and that that will make things more difficult than usual, but the experience of the Business and Property Courts so far is that it is possible, even in these extraordinary circumstances, fairly and expeditiously to carry out even large-scale trials, much larger than this, by such means.

Mr Davies QC in his oral submissions argued that the effect of the judgment of 4 May 2020 was that Chedington’s standing was not going to be tried and would never be tried. On the other hand, if the Brakes’ appeal on standing (arising out of the strike outs on 2 and 3 March 2020) were allowed, Chedington’s standing would be tried, because the Brakes would apply successfully for summary judgment on the Bankruptcy Application, thus demonstrating that Chedington had no title. He said this begged the question as to why it was necessary to have this trial on section 283A, as opposed to waiting for the appeal to be decided, and then the Brakes’ summary judgment application heard. The section 283A issue would simply fall away, because, with Chedington excluded on the grounds of no title and therefore no standing, and the former trustee Mr Swift and his successors Messrs Gostelow and Nimmo declining to oppose it, there would be no need for a trial. Therefore holding the section 283A trial now would be a waste of time and money.

The response of Mr Sutcliffe QC to this argument was that the appeal on the standing question would not need to proceed if the Brakes were successful on the section 283A

It seems to me that this is a matter in which both sides think they have the knockout argument, and want to be able to put it first, so that the other side has nothing left to argue about. If the Brakes can show that Chedington has no title then they think that they will get to keep the cottage, because the (successor) trustees in bankruptcy will not defend the section 283A proceedings. But Chedington thinks that, if it defeats the Brakes on the section 283A issue, then their opposition to the transactions between the trustee and Chedington will fall away and Chedington will get to keep the cottage. At present, the section 283A issue is listed for trial, and, as a result of my judgment of 4 May 2020, Chedington’s standing is not. The Brakes want to reverse that position, whereas Chedington wants to keep it.

In my judgment the burden must lie upon the Brakes to show why the position should be changed. Moreover, since they have already sought a stay or adjournment, they have to show that there is some good reason why the court should revisit the question. As I have already said, the judgment of 4 May 2020 is not that reason. Nor is it sufficient to show that, if the Brakes win the appeal and then obtain summary judgment, the section 283A issue will fall away (if it will). If the section 283A issue is tried and Chedington wins, the Brakes will have no basis for complaining that they have been deprived of the cottage, because they would not have recovered it anyway.

Mr Davies QC also argued that the matter could not be tried as listed because he had not yet seen the trial bundle. This was not of his side’s making, because the application of 9 April 2020 had had a fundamental effect on trial preparation. He also complained that it was not clear what parts of the pleadings remained in force.

Mr Sutcliffe QC answered the complaint about the absence of the trial bundle by saying that it had been lodged in fact just one day later than the timetable laid down. This was essentially a two-day trial, in which both sides’ legal teams were already very familiar with the events in question and the documents which would form part of the trial bundle. No one was coming to it afresh. If the court could accommodate it, the trial could perhaps be moved back one day. (In fact at the hearing I so directed in any event, because this would mean separating the closing submissions from the evidence by the interposition of a weekend, which would assist counsel.)

Moreover, Mr Sutcliffe said that although neither he nor Mr Davies QC had so far received a hardcopy of the trial bundle (because they both lived in the country) everyone had received an electronic version, and the hardcopy would be delivered as soon as possible. So far as the pleadings were concerned, Mr Sutcliffe stated that his cross-examination of the Brakes’ witnesses would be confined to the issue whether the cottage and the strip were the principal or sole residence of the Brakes, and the issue whether the strip was a dwellinghouse within section 283A. The other issue, namely whether an unvindicated claim in proprietary estoppel could be an interest in a dwellinghouse for the purposes of the section was a pure point of law. He accepted, however, that if any necessary points of fact had not been pleaded by Chedington, then that was its problem.

In my judgment, problems about receipt of the trial bundle and preparation time would not justify staying the proceedings or adjourning the trial until after the appeal on standing had been heard and disposed of. At most, they would justify a short adjournment of a few days or a few weeks at most. But in any event I was not satisfied that the problems were as real or as significant as Mr Davies QC submitted. It was for these reasons that at the conclusion of the argument that I announced that I would dismiss the application for reasons to be given later in writing.