Manolete Partners PLC v Nigel John Jones & Anor.
[2023] EWHC 236 (Ch)
Simon Carvill-Biggs & Anor v Ashley Valentine Reading
5 September 2024
[2024] EWCA Civ 1005
Court of Appeal
A family lived in a house owned by a company that owed money. The lenders tried to evict them, but the family fought back in court. The court initially ruled against the family, but they appealed. A higher court allowed the family to stay in the house while the appeal is heard, but they have to pay some rent in the meantime.
Key Facts
- •Ashley Valentine Reading (Appellant) and his family occupied a property owned by Rose Cottage Farm Limited (Company), a company he solely directed.
- •TFG Capital No.2 Limited (TFG2) lent the Company £2.85 million secured by a mortgage and floating charge.
- •The loan agreement prohibited related parties from occupying the property, yet the Appellant and his family resided there.
- •The Company defaulted, leading TFG2 to appoint LPA receivers and initiate possession proceedings (Bromley proceedings).
- •TFG2 appointed administrators for the Company, who then initiated their own possession application (IA Application) in Leeds.
- •The High Court Judge ordered possession in favor of the administrators under section 234(2) of the Insolvency Act 1986.
- •The Appellant appealed, arguing the administrators lacked jurisdiction and that the IA Application bypassed the existing Bromley proceedings.
- •The Court of Appeal granted permission to appeal and a stay on the possession order, pending the appeal.
Legal Principles
Administrators of a company cannot realize property subject to a fixed charge without a court order under paragraph 71 of Schedule B1 to the Insolvency Act 1986.
Insolvency Act 1986
Section 234(2) of the Insolvency Act 1986 allows the court to order a person to surrender property to which the company 'appears to be entitled'.
Insolvency Act 1986, section 234(2)
CPR 55 governs possession claims. The court considered whether CPR 55 applied to the administrators’ application and whether the administrators' actions constituted an abuse of process.
CPR 55
In considering a stay pending appeal, the court must assess the risk of injustice to both parties, as outlined in *Hammond Suddard Solicitors v Agrichem* [2001] EWCA Civ 2065.
Hammond Suddard Solicitors v Agrichem [2001] EWCA Civ 2065
Outcomes
The Court of Appeal granted permission to appeal.
The appeal raised points of law with no direct authority and wider points of practice and principle regarding the relationship between possession claims and proceedings by office-holders.
The Court of Appeal initially granted a stay of execution of the possession order.
Enforcing the order before the appeal would render the appeal academic and cause prejudice to the Appellant.
The Court of Appeal refused to set aside the stay.
The balance of injustice favored continuing the stay, as the appeal had a realistic prospect of success, and the administrators failed to demonstrate significant material prejudice from a temporary delay.
The Court of Appeal varied the stay to require the Appellant to pay £2,000 pcm into court pending the appeal.
This reduced the risk of injustice to the administrators while allowing the Appellant to pursue his appeal.