Price and Another v Davis and Another  EWCA Civ 26;  BPIR 494
(Court of Appeal, Arden LJ, Davis LJ, Sullivan
LJ, 21 January 2014).
The ‘statutory binding’ provided for by s 260
IA applied to an IVA agreed at a ‘further creditors’ meeting’ convened under s 262(4)(b)
Mr and Mrs Davis had obtained the protection of
interim orders pursuant to s 252 IA prior to having IVAs approved by their
creditors. The Appellants (Mr and Mrs Price) who were creditors of the Davis successfully
challenged the valuations given to their claims under s 262 IA.
The DJ discharged the interim order, suspended
the creditors’ approvals of the IVAs and ordered a further creditors’ meeting
under s 262(4)(b) IA. That suspension was to end upon approval of the
varied IVAs. As the successful parties, Mr and Mrs Price acquired a further
debt in respect of their costs. They did not vote in respect of this debt at
the further meeting. Mr and Mrs Price then served statutory demands upon the Mr
and Mrs Davis for non-payment of their costs liability.
The matter came before the Court of Appeal where
Mr and Mrs Price argued that because the original approval of the IVA had been
suspended, only those creditors bound by the original IVA were bound by the IVA
as subsequently varied.
argued that they were not bound by the IVA in respect of those costs because
the IVA only bound the original members of the IVA and that IVA had been
suspended not revoked.
The Court of Appeal decided that the real
question was whether s 260 IA bound creditors of an IVA agreed at a
further meeting under s 262 IA. The court accepted that on a literal
interpretation of s 260, only IVAs agreed at the original meeting would be
binding. However, the court also found that such an interpretation would create
anomalies which could not have been Parliament’s intention.
Accordingly, Arden LJ held that the reference to
‘a “further meeting” in s 262(4)(b) in relation to a nominee is to be read
as a “further meeting under s 257”’.
As a result, the district judge
had been right to find that Mr and Mrs Price were bound by the IVAs and was
correct to have set aside the statutory demands.